[ Page 10229 ]

CONTENTS

Routine Proceedings

Budget Measures Implementation Act, 1990 (Bill 19). Committee stage.

(Hon. Mr. Couvelier) –– 10229

Mr. Clark

Ms. Edwards

Ms. A. Hagen

Mr. Rabbitt

Mr. Lovick

Mr. Sihota

Mr. Bruce

Ms. Marzari

Mr. Blencoe

Third reading

The House met at 10:02 a.m.

Prayers.

MR. CASHORE: In the gallery this morning we have eight students of the Montgomery Junior Secondary School challenge class from Coquitlam and their teachers, Jamie Ross and Janie Kittler. Would the House join me in making them welcome.

Orders of the Day

HON. MR RICHMOND: Committee on Bill 19, Mr. Speaker.

BUDGET MEASURES
IMPLEMENTATION ACT, 1990

The House in committee on Bill 19; Mr. Pelton in the chair.

On section 1.

MR. CLARK: This clause in the bill really does more than anyone could to expose the lie of a balanced budget in British Columbia. Six hundred and eighty-four million dollars is transferred from the BS fund to the general fund. It clearly demonstrates that the budget is in deficit.

HON. MR. COUVELIER: Point of order. I'm not sure I understood the opening comments here. Was the hon. member calling the financial statements a lie, or was he calling me a lie, or who's lying here? Maybe he could explain....

MR. CHAIRMAN: Was the second member for Vancouver East impugning the motives or the integrity of the Minister of Finance?

MR. CLARK: Of course not, Mr. Chairman.

MR. CHAIRMAN: Thank you very much.

MR. CLARK: I said very clearly that this clause in the bill exposes the lie of a balanced budget. In fact, the transfer of $684 million from the BS fund to the general fund demonstrates very clearly that the budget is in deficit. Not only is the budget in deficit in British Columbia, which we've come to expect under Social Credit administrations, but clearly it's not appropriate at the peak of the economic cycle to be running a deficit of this magnitude.

The auditor-general commented on this very clearly, and I'll just read one line from the auditor-general: "There were no bank or investment accounts that could be specifically identified with the BS fund." And then, of course, in Kamloops at his speech to the Kamloops Chamber of Commerce — and I'm sure the Attorney-General (Hon. Mr. Smith) probably was there for this enlightening comment and speech by the auditor-general just before it came in — he said: "The bottom line, the balancing line, is completely flexible. So it's a meaningless figure; it doesn't mean anything."

The auditor-general was talking about this notion that there is or is not a balanced budget according to the government's books. He made it very clear that it's the transfer of money from the BS fund which artificially manipulates the bottom line. Peat Marwick Thorne, Canada's largest accounting firm, said the Socreds' BS fund can't disguise the fact that it is a deficit budget, and they say: "If the proliferation of funds to be created by this budget is any indication, the B.C. government must be pleased with the general confusion created by its budget stabilization fund Clearly the government is not assisting with the understanding of its accounts...."

But more than that, Mr. Chairman, Peat Marwick clearly demonstrated that in their report, saying: "In reality, this is not a fund at all — at least not a fund in the sense that there is money in an account identifiable with this fund."

Ron Pickerill, president of the certified general accountants, said: "I can't think of a public accountant doing that sort of thing in a private business, and I can't see any auditor allowing it In a private business. It's all smoke and mirrors."

The reality is that because there is no money In the BS fund — of course, the minister himself said there is no cash in the account — any transfer from this book account to the general fund means that there is a deficit unless there is some money that is transferred back in, and there is a small amount that is transferred back into the fund. So it's not a $684 million deficit, but rather it's a $502 million dollar real deficit. This year we're spending $500 million more than we're taking in at the peak of the economic cycle. If we go into recession as many are predicting, Mr. Chairman....

HON. MR. SMITH: Where would you cut?

MR. CLARK: The Attorney-General wants to know where we'd cut, and I'll be happy to tell him the areas we'll cut during the course of an election campaign, which I hope is very soon. It would be nice, Mr. Chairman, to look at that huge cabinet — the largest cabinet in the history of British Columbia, which is there to cover the support of the Premier — at the size of that cabinet, and see where we could cut. I'm sure that the people of British Columbia would be better off if we had less cabinet ministers.

There are several ways of describing the BS fund. Every time I'm on a talk show, there are some people who ask: "How do you describe this BS fund?" I know the minister gets the same question. I always use two examples. The minister might want to see which one he likes best.

It's like writing an IOU to yourself saying, "I owe the second member for Vancouver East $100," and then taking that piece of paper that I wrote to myself and saying: "I'm owed $100. I've got $100 to spend; someone owes it to me." Now try that with your bank

[ Page 10230 ]

manager, Mr. Chairman, and see what happens. Social Credit economics: funny money comes back to British Columbia under this administration.

There's another way of describing the BS fund, which I think many people can relate to. It's like your credit card. You have a credit limit — whether it's $5,000, $6,000 or $7,000

MR. D'ARCY: You're better off than I am.

MR. CLARK: Better off than the member from Castlegar.

Let's say $5,000 is my credit limit on my MasterCard. It's like saying I have no money in the bank, but I have my credit card and I don't owe any money on it. I say to people that I've got $5,000 to spend. I say to my family that we've got $5,000 we can spend, and it's true; we can, because we have a $5,000 credit limit on our account.

The BS fund is a bit like that. Any money taken out of the BS fund is borrowed money. It's like a line of credit. Whatever is in there is, for the average person, like your credit card limit. So it's borrowed money. And this clause in this bill transfers borrowed money Into the general fund to cover the day-to-day operations of the government. That means that it is a deficit budget. This demonstrates that very clearly.

The minister says in his estimates: "Of course, there's no cash in the account." Well, Mr. Chairman, by his own words he has demonstrated.... Of course, he's done a lot to delay the election call by his own comments. But more than anything else, the BS fund typifies the kind of attitude the government has towards public Information and being honest with the people of British Columbia. This shows how misleading the government has been. It's dishonest to say that it's a balanced budget when in fact there is a transfer of money from the BS fund, which is borrowed money. They've been caught, Mr. Chairman.

This minister has been caught by the auditor-general, caught by the certified general accountants, caught by Peat Marwick Thorne, and caught by the opposition, and the public knows that this is a deficit budget. The public knows that the smoke and mirrors have caught up with this government. The public knows that the government is running a deficit at the peak of the economic cycle, and they wonder what kind of fiscal competence that administration shows. The answer is very clear: not very much.

The answer is very clear that we are running a deficit at the peak of the economic cycle. They couldn't manage a peanut stand, Mr. Chairman. This administration and this clause of this bill shows the people of British Columbia that we are spending more money this year than we are taking in in revenue, and that's not good, sound fiscal conservatism at the peak of an economic cycle. That's why we are going to oppose this section of this bill.

HON. MR. COUVELIER: The hon. member has once again exhibited his youthful, textbook approach to accounting practices. As I mentioned last night, he has a little bit more work to do in order to acquire a mastery of the issue he is attempting to discuss intelligently. He is discussing the issue, but not very intelligently.

The member has not only exhibited his own confusion, but by his rhetoric he is confusing his colleagues. I am impressed with the fact that the member for Port Alberni, in a variety of public corrunents, appears to be thoroughly confused about this issue. The member for Port Alberni, for example, says: "This government, by keeping over a billion dollars in the budget stabilization fund is competing with the bankers of B.C. They are starting their own bank." So this member for Port Alberni evidently seems to think that there is cash and somehow or other this is put off in some bank account somewhere. If the member has any genuine desire to at least bring his colleagues on stream, he might talk to this member for Port Alberni.

The member talks about this being borrowed money. That's one of the greatest lies that the opposition have been bringing forward about this issue. The fact of the matter is that we have reduced our debt by over $700 million in the first three years we've been in office. For you to try to make the allegation that it's "borrowed money" — those are your words, uttered just a few minutes ago, hon. member — clearly indicates that you haven't read the financial statements. We have reduced our borrowing. If it's borrowed money, how is it that we've managed to reduce it? Furthermore, by virtue of efficient fiscal management this year, we're going to reduce it another $70 million. I don't know of any other jurisdiction in the country that's been able to match our disciplined approach to managing public money. It's clearly incorrect for you to couch your criticisms in that kind of dialogue.

[10:15]

As further proof of the responsible attitude we bring to this issue, I'd like to provide the House with a comparison of the debt-servicing costs of the provinces for the '90-91 fiscal year. B.C. leads the country in debt-servicing costs per dollar of revenue: we are paying 3.3 cents per dollar of revenue to service our debt. All of us think of Alberta as being a rich province, with its Heritage Fund: 8.5 cents per dollar of revenue goes to service debt. Saskatchewan is 11.5 cents; Manitoba is 10 cents; Ontario, that rich province in central Canada, pays 9.7 cents of its dollar to service debt; Quebec, 12.9 cents; New Brunswick, 12.8; Nova Scotia, 16.3; P.E.I., 13 cents; Newfoundland, 15.7 cents; and the federal government — God help us, 34.5 cents of the revenue dollar goes to service debt. Contrast that with British Columbia: 3.3 cents, the lowest in the country.

It boggles my mind how you people could sit there with straight faces and try to build a fictitious argument that this is borrowed money we're using; that somehow or other there has been a misrepresentation of the public's business. The auditor-general has given a clean bill of health to our financial statements; the comptroller-general has done the same thing. It is widely recognized across the country that this marvellous province of ours is fiscally in

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the best shape of any of the provinces, or the federal government, by a country mile.

In his comments the member for Alberni (Mr. G. Janssen) seems to assume that this budget stabilization balance is sitting in some cash account. It clearly is not, as I've said repeatedly. We use the daily cash receipts to buy down our debt. We can't have it both ways. We can't take the cash we get in every day and reduce our debt, and at the same time have cash in the bank at the end of the fiscal year in this fund.

It is a book account. The effect of the book account is quite simply that when we have the need to deficit budget, rather than flowing that deficit right through to the bottom line to show a deficit for that year, we will draw funds from the book account and insert them into the operating statements — the general fund statements — so that that year's presentation has a balanced budget. We have done this consistently for the last two years.

The member opposite conveniently forgets that we asked the B.C. citizenry to tell us how much should be in this rainy day account. We wanted a public dialogue; we wanted input. The public told us they felt a billion dollars was enough to cover us over the rainy day. With that decision to cap the fund at a billion dollars, the natural consequence is that any revenue surpluses in any year flow through the fund at year-end and out again to finance the next year's programs. That's the natural consequence of capping the fund at a billion dollars.

To try to fabricate some kind of an argument that it's a continuation of the smoke and mirrors, which was the allegation made two years ago when we introduced the concept, is clearly an improper and inaccurate reference. Twenty-nine U.S. states have budget stabilization funds. They do it for the very same reason we do it: it's important in a cyclical economy like British Columbia's that we have some device to level out revenue rises and falls. We have boom-and-bust syndromes on the revenue side of our budget.

Quite clearly, if you believe in a multi-year budgeting approach, which is what we said when we instituted this process two years ago.... We believe that in order to manage our economy effectively, we must take a multi-year approach not only to revenue but also to expenditure patterns. If you believe in that, then it's absolutely imperative that you have some kind of account through which you can flow those year-to-year anomalies. There's no other way you can accomplish a multi-year budgetary approach, unless you have that kind of a cushion.

The opposition do not seem to have understood that it is critically important that we do take a long-range view to developing our economy, to managing it and to creating a sense of husbandry about public business in the minds of all the citizens of B.C. In our budgetary presentation this year we expanded the concept to include not only a multi-year approach to revenue but also a multi-year approach to budgeting. We've created some long-term funds for transportation and highways, and we've created some long-term funds for the sustainable environment

These are initiatives which further illustrate the wisdom inherent in our decision made two years ago to treat revenue anomalies in this fashion. Had we not treated them in this fashion, we would be a billion dollars overspent.

It's ironic that the members opposite seem to be making so much of the budget stabilization fund when most of the knowledgeable commentators around the country admit that it was a wise, creative initiative and one which will, in the fullness of time, be used by all other jurisdictions in the country who have an accrual basis of accounting.

The province of Ontario, for example, is on a cash basis and has the capacity to move year-to-year revenue anomalies from one budget to the next. If you look at Ontario's budget this year as an illustration, you will see that they have moved funds over a three-year timespan — the year past, the current year and the year forward. With that device they are able to do the same thing that we are doing with our budget stabilization fund, admittedly only over a three-year cycle.

We are on an accrual basis of accounting, and that means it is generally accepted as being the most responsible way to report expenditures and revenues. It is generally understood by anybody who keeps a set of books that you should be recognizing your committed obligations at year-end, and you should be recognizing your revenue captures at year-end. If you want to capture those boom-and-busts on the revenue side, you must have this kind of an account to do it with.

From every angle, if you want to compare us to other jurisdictions, they are doing it. If you want to compare us to the jurisdictions in the States, 29 American states have the same kind of facility. If you want to compare it to the assessment of critics whose job it is to judge the worth of our bonds and paper from this province, how would you explain the fact that all four of those international rating agencies have improved our rating? If it's such a plaything, as you suggest, and such an irresponsible way to report the fiscal performance of the province, how do you explain that fact? It boggles my mind that you should have this kind of a mind-set.

I quote also from our auditor-general. As I understand it, he has been quoted as admitting that the B.C. government transferred funds from the budget stabilization fund and the privatization benefit fund to and from the general fund to show a balanced budget. This is an accounting practice similar to the heritage fund in Alberta. That's the auditor-general himself making that statement.

All in all, the member opposite continues to try to obfuscate the issue, but the facts kneecap any sustained development of that argument, because clearly we're seen around the country and around the world as being very capable, responsible administrators of public funds.

MR. CLARK: My colleagues want to get to speak, but I just have one question arising out of the minister's response. He talked about a multi-year

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budgeting approach and using this money for a rainy day. Is it raining in British Columbia, Mr. Minister? This is the question.

This clause transfers $684 million of borrowed money, essentially, into the general fund to cover current operating expenses. By the minister's own logic, is it his view that we should be running this deficit today, at the peak of the economic cycle? Is this what the government means by multi-year budgeting-that when we're in an economic boom we borrow money, so that we can slash and cut when we're in an economic downturn?

HON. MR. COUVELIER: I wonder why one even bothers to answer some of these childish questions. Clearly the member didn't hear a word I said. I could repeat it, I suppose, but that would be tedious and repetitive. I don't want to be guilty of those sins.

The B.C. economy is predicted to grow this year at a rate of about 3 percent. We anticipate a good increase in retail activity. But there are some danger signals which the Premier alluded to in the comments surrounding the throne speech presentation, and which we further defined in our budget material that we submitted when the House opened.

In my judgment, there are probably three critical time-frames that the province must continue to watch closely. In the short term, for the duration of this fiscal year, we're predicting continued growth in the economy. We're saying that with the capital investments that have been started in this province, there will continue to be a growth in the economy, because those decisions to invest are only now starting to come to construction stage. That will, in our judgment, continue to drive the B.C. economy in the short term — the immediate year.

I think there's a time-frame beyond the immediate year which we described as being very fragile and which we are extremely concerned about. The prospects of a recession worldwide and the sensitivity of our economy to the export market prompt us to be very concerned about the midterm, if you like — year two, out a few years.

This is why we make constant reference to the "fragile economy." The fragility can be adversely affected if our public sector wage settlements continue to get so far out of line with the private sector wage settlements. The fragility would be adversely affected if there's a loss of confidence among our citizens in the opportunities that are out there.

[10:30]

I think there are a variety of issues that are beyond our ability to control which also put our economy and our economic growth at some risk. Not the least of these is the value of the Canadian dollar vis-à-vis the American dollar. Also, the current high-interest-rate policy that is being imposed on us by the Bank of Canada is of equally serious concern. So there is that mid-term area or number of years that we are sensitive to and that give us some concern.

Beyond that, Mr. Chairman, if we want to take a look ten years out, I think that everyone would agree that British Columbia is uniquely situated to continue to grow and prosper and that if we have a government that has the wit to understand the opportunities in the Pacific Rim and the wit and determination to capture those opportunities, then I think that we can look forward to the year 2000 with great optimism. B.C.'s future has never looked better. That's a tribute to the leadership of this administration. It's a tribute to our sense of responsibility to the public, which both of us serve. The success we've enjoyed since 1986, since taking office, speaks volumes for the ability of this administration to deliver on its economic promises.

I don't know of any similar kind of scenario in B.C.'s political history where we've had an administration that has been able to deliver to the extent that this one has on its campaign promises, as they related to the economy and as they related to some of the social-policy issues also, which we campaigned on when we asked the public to support us back in 1986. So I'm proud of what we've been able to deliver. I'm proud that we've created the budget stabilization fund. I'm proud that we've been able to create some long-term expenditure funds so that we can truly bring British Columbia into the 21st century with a long-range view to managing public affairs and determining public policies. Our record is unassailable, Mr. Chairman.

MS. EDWARDS: This looks like a fairly simple clause in the bill. It says, "For the fiscal year ending March 31, 1991, the Minister of Finance and Corporate Relations" — notwithstanding whatever the clauses are that say they shouldn't do it — "shall pay money out of the fund into the general fund in the amount of $684 million."

Mr. Chairman, the whole business of whether or not this is an honest and fair representation of what's going on brings to mind the occasion three years ago when the government was saying very clearly that funds were not what we wanted in our budget. We didn't want to have funds. It was dishonest to have funds that were sitting there. We changed them all into accounts, and we said very clearly — and I remember particularly because I was interested in the habitat conservation fund.... And the minister said, "No, no, no, no, we don't want to have funds, because funds mislead, and they might lead someone into thinking we're going to spend all of that fund for what it was meant for, and we changed them into accounts and we're not going to have funds."

When the minister, with some dancing around, decided the following year that he had some major problems that could otherwise not be hidden — ie., deficit financing — the interesting thing was that he had to create a fund. This time he created the kind of fund which is — as any number of people in this province have indicated — one that does not tell the public straight out what's happening. It's been very clearly stated — despite what the minister says — by reputable accountancy firms, by the auditor-general and by a number of other people — that this fund is simply a shell game. It's a multilevel sort of understanding. You'd have to have multilevel ideas of

[ Page 10233 ]

what's going on to understand that the transfer of funds to the general account is there simply because there is a deficit in our financing and not because we have a rainy day. That's the next matter of great issue, Mr. Chairman.

The issue is this minister, who doesn't seem to quite understand the terminology enough to keep it consistent. He talks about rainy days, and he talks about good economic times. And they seem to conform; they exist at the same time. They co-exist; they are there together. The minister calls the best economic times that British Columbia is in a rainy day, and we're taking money out of a credit fund, a non-cash fund, and putting into our general revenue on what he calls a rainy day. He has even said that we thought that one billion dollars would be enough to last us over any rainy day and then calls these times where the growth is up to a predicted 3 percent this year a rainy day.

Then he stands up and suggests that really the reason for the fund is to fool the credit raters. If they don't really know that we don't have the money in the right place, then our credit rating stays very fundamentally good. The minister doesn't seem to know whether he's a bean counter or somebody else is the bean counter. The issue is one of straightforward and direct representation of what the government is doing to the public. This is the public's business In British Columbia; the budget is the public statement of what the minister is trying to do.

The first clause allows the government to move money around in bookkeeping entries without doing what it indicates it's doing: stabilizing what's happening in the budget. It suggests to the public that we have balanced accounting, when in fact we don't. That is unforgivable. It's not appropriate to suggest that this fund is saving us on a rainy day, and then to go out at the same time and say: "We don't need saving. We're running a balanced budget and days are good." It suggests a political deception, and any agreement by us to go along with it would indicate that we are party to that deception.

Mr. Chairman, I would say to the minister that he is trying to talk out of both sides of his face when he suggests that it is a rainy day but a good day. He is saying that it is a reasonable fund, but there isn't any money in it; that it is great to run this province like a business, but that business accounting practices are not necessary, so you don't pay any attention to the accountants who say that this would never be allowed in business accounting procedures. That is the major problem with this clause and with the bill; this clause is the essence of that problem.

HON. MR. COUVELIER: Each speaker provides me with an opportunity to read a bit more into the record, and I'd like to seize that opportunity.

The last speaker seems unaware of the comments that have been made by internationally recognized authorities about our rainy-day fund, or budget stabilization fund. For example, Standard and Poor's, one of the internationally recognized rating agencies, said in their recent assessment of the offerings of B.C. Hydro:

"The provincial government eliminated its budgetary deficit over the last two years by keeping tight control of expenditures while the economy stayed strong. Maintenance of a budgetary stabilization reserve positions the province to offer greater stability in program spending....

"The province has established two funds outside the general fund to achieve particular policy goals. The budget stabilization fund, which receives budgetary surpluses and lottery funds' — one year we did use some lottery surplus — "is used as a buffer against revenue volatility and allows greater stability in program spending."

The second-most-recognized rating agency in international circles is Moody's, which said in August 1989: "Attention to improved financial performance since 1987, including significant reductions in the annual operating deficit and the institutionalization of a budget stabilization reserve fund, are positive trends."

Here we have members of the opposition, who are elected to criticize government, doing their job. But you cannot deny the kind of evidence that I'm tabling this morning and that I have tabled consistently over the last two years regarding the implementation of the budget stabilization fund.

MS. A. HAGEN: The hon. Minister of Finance just noted that we were elected to criticize government. We were elected, Mr. Chairman, to ensure that this government is open and honest in reporting what it is doing on behalf of the people of the province. The reason we are objecting so strenuously to this particular clause is that the government is anything but open and honest in this regard. In fact, the Socred government's record in respect to this fund is one of bluffing the public into believing that what doesn't exist does exist. We're here to call that record to account. We know that the public is very much aware of the way in which this government manipulates information, supposedly to put its best foot forward. The public is not amused, and the public is not deceived.

The word "fund" is one of the most basic in the English language. When we hear that word, we automatically think of what it should represent: money. Well, this government has a record of establishing funds. We are dealing with three or four of them this year in legislation, in the auditor-general's report and in their announcing elaborate intentions for those funds. But there's never any actual money in these accounts, and they seldom live up to the advance billing.

With this legislation and this clause, we are dealing with a fund established two years ago. Mr. Chairman, I don't think I need to remind this House that the fund was quickly dubbed the BS fund; in fact, the minister is wont to refer to it by that short edition. It is not possible for me to define what BS means in most people's minds, but I don't think I need to say very much about the literal and figurative representation of that particular acronym.

[ Page 10234 ]

It really means for most people the "hot air" fund, the "what are you trying to fool us with now" fund and the "now you see it, now you don't" fund. It's the fund that allows us to play around with what the public really understands. What the public really understands is that if we spend more money than we earned, we have a deficit. We are spending more money this year in British Columbia than we are earning, and we have a deficit. This clause simply allows the government to call the deficit by another name. It allows the government to fudge the books and to confuse the public.

As MLA for New Westminster, I know that my constituents have a right to know what the government is about, to be informed about the management of their taxes and know how the province is doing. The use of the BS fund to hide a deficit and the use of the sustainable environment fund — which we're going to be debating, I understand, later on this morning — to pretend that there is new money available for environmental initiatives, when in fact we're simply moving money around from one line in the budget to another, is wrong. It is fundamentally wrong; it is fundamentally dishonest to be reporting to the people of the province in this way.

The results are best described in the language of accountants and people like the auditor-general who do dispassionately and objectively tell us about our funds and how they are being managed. The quote I like best is this one: "If the proliferation of funds to be created by this budget is any indication, the B.C. government must be pleased with the general confusion created by its budget stabilization fund, the so-called BS fund." That's a statement by Peat Marwick in its review of the 1990 budget.

[10:45]

The only good thing about the debate we're having this morning is that it allows the curtain to be raised, albeit very briefly, on the reality of the government's deficit. It allows it to be raised very briefly so we can have in this bill and in the public record an acknowledgment of what the deficit is this year — $684 million, less a modest transfer into this non-existent fund.

We are dealing with smoke and mirrors; we are dealing with anything other than an open and honest government in its management of our affairs. That's one of the reasons this legislation is to be opposed. It is legislation that should not exist. We need to get back to honest accounting that the public can understand and recognize reflects the true picture of our accounts in British Columbia.

MR. RABBITT: It's an interesting debate this morning, because many of us in British Columbia know that the strength of this province basically depends upon the financial strength of the government. Of course, in the last three and a half years this Minister of Finance has done an exemplary job in putting together a financial package that has taken British Columbia from a deficit situation into a positive situation.

We hear huffery and puffery. We hear the finance critic from the opposition huff and puff. He talks about NDP scenarios and about IOUs. I think it was probably the scenario I used earlier in the year that identified a balanced budget which is really applicable here. It was the one where the leader of the opposition, when he was the mayor of the city of Vancouver, went to a reserve fund and used money to balance his budget. Isn't that amazing? When he did it, it was right; but when the Minister of Finance does it, it isn't right.

Let's look at municipal governments throughout this province. Most of these municipal governments have reserve accounts. The municipal critic over there knows that, or at least he should know that. Yet these municipalities use that money throughout the year. Are you going to stand here in this House and tell us that those municipalities don't have reserves? No, of course not. This is all opposition huffery and puffery.

We have thousands of small businesses throughout this province that have retained earnings in their companies. Again, do they have cash in the bank? Of course not. They use those retained earnings to buy assets. They use them for stock, land and buildings, vehicles and a multitude of things. Do they have cash in the bank? Of course not. But you people of the opposition are out there creating this myth.

It's opposition huffery and puffery that's strictly out of line, because we've got here before us a budget that has been balanced by the minister by using reserve funds. It's no different than balancing of the city of Vancouver budget when the Leader of the Opposition....

Interjection.

MR. RABBITT: The member for Vancouver–Point Grey should know that the $7 million that year to balance the budget.... Yes, a balanced budget; read my lips. Not only has this government brought forward two balanced budgets; it has reduced the deficit by over three-quarters of a billion dollars in three and a half years.

AN HON. MEMBER: How much?

MR. RABBITT: The debt has gone down over three-quarters of a billion dollars. We now have the lowest per capita debt of any province in Canada. Has that happened by accident? No, it's happened with good Social Credit government.

You talk about a clean bill of health. Let me tell you, we've got a clean bill of health from every reputable national and international accounting agency that follows the province. Coast to coast and around the world, the financial world recognizes that this minister and this government, under the leadership of our present Premier, are delivering good government.

AN HON. MEMBER: What happened to the cash?

[ Page 10235 ]

MR. RABBITT: I hear the member across the way yelping about what has happened to the cash. We spent that cash on good things: the delivery of education, the delivery of health care, the delivery of social services. The money goes to people for good programs brought forward by a strong Social Credit government.

We listened to the opposition take part in a debate which they don't thoroughly understand; I don't think they understand it a bit. They don't understand, so what they do is deceive the public by delivering a myth. Even the finance critic does not understand. He understands that balancing the budget is having both hands in the taxpayer's pocket; that's not bal—ancing the budget.

I think the minister has done a good job. You can certainly count upon me, Mr. Minister, to support this clause.

MR. LOVICK: Mr. Chairman, as I listened to the Minister of Finance carry on a few minutes ago with his usual fulminating and frothing, I thought that he is the individual I would most like to see on the campaign trail defending this measure, because it seems to me that the more he speaks, the more we feel vindicated in all of our criticisms. But then, after I listened to the member for Yale-Lillooet, I began to think that by that measure of braggadocio and bravado he ought perhaps to be the stump speaker for the Socreds in the next election. Either of you would do nicely. We hope you accept the challenge, and we hope you accept it soon.

On section 1, which provides for a transfer of $684 million from the budget stabilization fund to the general fund of consolidated revenue, we really ought not to have to say a great deal more. The matter has been canvassed in the throne speech debate a little, in the budget debate and in the supply bill. But as I listen to all of this, I realize that my conscience demands that I at least get on the record as saying how outraged I am by this practice.

A simple question to start, if I may. The minister points with some pride to his government's financial record and claims that they can stand up and be recognized by the world for their accomplishments. Why, then, is it that we haven't had the election called? Why, then, is it that the common and received opinion in this province is the point made by the Province columnist who used the memorable line describing the Minister of Finance...? You recall it, Mr. Chairman. He told us that the Premier of the province had the smell of an election in his nostrils. He wanted to go, and he tiptoed gingerly out to the end of the board, stretched his muscles, looked up high and was ready to take the plunge. Then he discovered that the Minister of Finance had drained the pool. That's what happened. The Minister of Finance drained the pool, because we have yet one more example of the kind of duplicity, deviousness and phony false advertising this government has come to be associated with. That's the predicament.

The first time I ever spoke in this chamber — remember it vividly — my theme was cynicism.

MR. WILLIAMS: We all remember.

MR. LOVICK: My colleagues tell me it was a memorable event and has never been forgotten. I'm saying that ironically, Mr. Chairman, should anybody be reading the transcript of this debate.

My point is that the issue of cynicism on the part of the electorate is alive, well, pressing and indeed frightening. It's frightening because more and more individuals are dismissing politicians, governments and legislatures as being either irrelevant or — worse — malevolent creatures whose interests are diametrically opposed to the interests of the people they are ostensibly there to serve.

The tragedy of a measure such as the budget stabilization fund is that it foments and furthers that kind of cynicism.

MR. RABBITT: No, you do.

MR. LOVICK: That's the tragedy.

You know, the member for Yale-Lillooet is still searching for his moment of immortality in this chamber. He continues to heckle, hoping that he will be recognized. Well, I'm happy to tell you, Mr. Member, that we do indeed recognize the vacuity of your comments, and I'm happy to note that they will not be recorded in Hansard. So take comfort in that.

Mr. Chairman, the point I'm making about cynicism is just that when we have a budget that the principal financial watchdog of this province.... I should say that when we have a measure in the budget-namely the budget stabilization fund —  and we have that measure criticized, castigated and, frankly, ridiculed by the principal financial watchdog of the province, what then can people conclude except that government is playing in a smoke-and-mirrors game? What else can they conclude?

Interjection.

MR. LOVICK: Somebody across the way says: "Tell the whole story." Let's tell the whole story just briefly. You recall, Mr. Chairman, that every enunciation of the criticism of the BS fund that has been put forward in this chamber has been answered by the Minister of Finance with the same line. The line is that there are certain people in the accounting profession who know what we're talking about, and they think this is okay.

What he does in that answer is beg the question about the real responsibility: namely the responsibility of a government to make clear to the people what it is doing with the people's money. That's the point.

Interjection.

MR. LOVICK: No, it hasn't changed the story one whit, to the member opposite. What the auditor-general, Peat Marwick, our finance critic and people on this side of the House have been pointing out is that your fund is a paper transaction. There's no money

[ Page 10236 ]

behind it. You're trying to balance the budget using that accounting trick.

To be sure, it may be acceptable in accounting circles. But the problem is that the people out there — and the member for Yale-Lillooet knows it full well — do not believe for one moment that you've balanced the budget.

That is why all those members are leaping to their feet. I understand they take a beating every time they return to their constituencies. Everybody asks them the obvious question: "Hey, is there really any money in that fund?" Everybody is asking that question because they don't know, and the answer would seem to be a resounding: "No, there isn't any money in that fund."

Mr. Chairman, I'm not going to take more time repeating the comments that have been made by my colleagues. Suffice to say that the jury has returned the verdict. The verdict is that the BS fund is indeed smoke and mirrors. The tragedy of it is that it sets back the cause of honest, open and forthright government, and it encourages the growth of cynicism in this province. That's the tragedy of the BS fund.

[11:00]

MR. SIHOTA: Mr. Chairman, I want to talk about the BS fund and the illusion of a balanced budget. I couldn't help but note the comments that the member for Yale-Lillooet was making with respect to the so-called balanced budget and the BS fund.

In fact, I have here a column dated May 16, 1990, in the Merritt Herald which speaks to the matter of the BS fund and the balanced budget. It's written by the member for Yale-Lillooet. No, he didn't write it. I want the members to know he didn't write it, because the same column — with one paragraph which I'll talk about in a second — appeared in a number of MLA reports mailed out by a number of Social Credit members.

It wasn't as if the member for Yale-Lillooet even wrote this. Eli Sopow or somebody else in the sausage factory of the Social Credit propaganda machine wrote this column. Of course, there is one modest paragraph that refers to the member, which I'll get to in a minute. So it wasn't even something that he wrote.

It says: "As you probably know by now, once again our Social Credit government has balanced the budget." Then the modest paragraph that refers to the member that wasn't in all the other columns, but is in his column, says: "Indeed, as your MLA" — that was in everybody else's, but the following phrase wasn't — "and the Parliamentary Secretary to the Minister of Finance" — that modest member for Yale-Lillooet — "I am very pleased to report that the 1990 budget is a good-news budget that responsibly addresses the needs of the people and the economy and the environment."

So wrote the member for Yale-Lillooet to his constituents. He quoted from the Investment Dealers' Association of Canada, and somehow the column that he wrote and sent to his constituents would leave them with the impression that this budget has been balanced by the provisions of the BS fund.

Some would call the column b.s., but I would simply say that the member for Yale-Lillooet forgot to tell his constituents the other half of the story. He told them only half, and only picked one selective quote from the Investment Dealers' Association of Canada.

Why, when dealing with the matter of the budget and whether it's balanced, did not that member — and other Social Credit members who mailed out the same column to their constituents with that one minor change — quote from Peat Marwick Thorne, one of Canada's largest accounting firms, which says that the Socreds' BS fund can't disguise the fact that the so-called balanced budget is actually running a deficit of $502 million for this year alone?

Interjection.

MR. SIHOTA: Oh, the member wants more quotes. I'll give you more quotes.

Why was it that he didn't mention that Peat Marwick concluded that there was a $502 million deficit in British Columbia, not a balanced budget? Why did that member for Yale-Lillooet not tell his constituents? Why didn't he tell them that the budget was not balanced? Why didn't he tell them the other half of the story? And why didn't he include the quote from Peat Marwick, which I will quote now for the record: "If the proliferation of funds to be created by this budget is any indication, the B.C. government must be pleased with the general confusion created by its budget stabilization fund.... Clearly the government is not assisting with the understanding of its accounts...."

The members say: "Give us another quote." How about Ron Pickerill, the president of the Certified General Accountants' Association of British Columbia, representing 8,000 members. He criticized the government, and he says: "I can't think of a public accountant doing that sort of thing in a private business, and I can't see any auditor allowing it in private business. It's all smoke and mirrors."

Why did the member for Yale-Lillooet not include the opinion of the president of the Certified General Accountants' Association of British Columbia in his report? I'll tell you why. Because he doesn't want his constituents to know the truth: that this is not a balanced budget and that this is a smoke-and-mirrors practice engaged in by the government to try to create the impression that they've balanced the budget.

But they were caught, and they weren't just caught by the accounting firm Peat Marwick. They weren't just caught by the certified general accountants of British Columbia. They were also caught by the auditor-general, the independent watchdog of government, who has been hired by the Legislature to examine the public accounts of this province. He revealed on May 1 that there was no money in the government's BS fund.

[ Page 10237 ]

I note that the Minister of Finance, in response to comments from my colleague for Vancouver East, admitted the other day that there was "no cash in the account." But the auditor-general says: "There were no bank or investment accounts that could be specifically identified with the budget stabilization fund." All of this prompted the Times-Colonist to write in their May 2 editorial: "Auditor-general George Morfitt has painted a picture of a bumbling government whose accounting practices, quality control and security procedures are often inept, frequently incomplete, and have cost taxpayers millions of dollars."

So we have on one hand the propaganda column issued by a number of MLAs, including the member for Yale-Lillooet — not even an original column written by him, but one copied from what others have written — which doesn't contain any form of fairness. We have on one hand the column distributed by the member that's been recycled — borrowed from others, not even penned by him. In that column he fails to tell the real story to his constituents about the so-called balanced budget and the BS fund. He fails to tell his constituents that the auditor-general has revealed that there is no money in the BS fund. He falls to tell his constituents that the Minister of Finance has confirmed that the fund does not exist. He has failed to include in his column the fact that the president of the Certified General Accountants' Association says that the BS fund is all "smoke and mirrors." He has failed to tell his constituents that Peat Marwick, the largest accounting firm in Canada, has concluded the government has a $502 million deficit.

This member has failed to tell his constituents the opinions of community leaders throughout British Columbia with respect to the state of the province's finances. He has misled them by suggesting the budget is balanced; it's not. The accountants have indicated very clearly that it's not. The auditor-general has indicated that the fund that purports to balance it doesn't even exist.

If the member for Yale-Lillooet and the other Socred members who recycle this column had even an ounce of....

MR. RABBITT: On a point of order, the member for Esquimalt–Port Renfrew, in his low-level debate, has tried to malign my character. I would ask him to withdraw his comments immediately.

MR. CHAIRMAN: Was the member for Esquimalt–Port Renfrew impugning the reputation or the character of the hon. member?

MR. SIHOTA: I was talking about the practice of mailing out columns without referring to both sides of the story.

MR. CHAIRMAN: So you were not impugning the motives. Let's continue.

MR. SIHOTA: If I may continue, Mr. Speaker.

MR. RABBITT: On the same point of order, the member distinctly said that I misled the House and my constituents. I ask that that be withdrawn, and I will not accept anything less.

MR. CHAIRMAN: Would the member for Esquimalt–Port Renfrew withdraw that remark, please.

MR. SIHOTA: Mr. Chairman, let me just put that in its proper context. The point I was making — and, I think, the statement I made — was that the column misled the constituents with respect to the conclusion of a balanced budget. The practice....

HON. MR. SMITH: On a point of order, the Chair has asked specifically that an action be taken by that member. That is not an opportunity for him to make another speech to reinforce that which he has done to impugn the House. I would ask you to uphold the rules, sir.

MR. CHAIRMAN: Would the member for Esquimalt–Port Renfrew take his seat, please. I should point out to the House that in order for the Chair to demand a withdrawal, the member must have been accused of deliberately misleading the House. I have asked the member for Esquimalt–Port Renfrew, who I know is an honourable man, if he would withdraw what he said. I think the debate can then proceed.

MR. SIHOTA: Sure, Mr. Chairman, to ensure that we do proceed, I'll withdraw the comment, and I'll continue.

It seems to me the practice of issuing these kinds of columns is deceptive, in that the member for Yale-Lillooet and the others who recycle this column from the Social Credit Party led their constituents to believe that the budget was indeed balanced, and lacked any modicum of fairness.

MR. CLARK: On a point of order, I find the comments of the first member for Okanagan South (Mr. Serwa) very offensive to this chamber. On several occasions he has made comments with respect to the member for Esquimalt–Port Renfrew which I find offensive in the extreme. I ask him to categorically withdraw his last four or five interjections with respect to the member for Esquimalt–Port Renfrew.

MR. CHAIRMAN: I thank the second member for Vancouver East for his comments. I must point out that just because any hon. member finds something that somebody has said offensive, it doesn't necessarily make it unparliamentary. As it so happens, I didn't hear the comments of the first member for Okanagan South, but I'm sure that if that member made any comments that might be found offensive by anybody, he'd be quite prepared to withdraw them.

MR. SIHOTA: To make the point I was trying to make, the practice of issuing columns — by the member for Yale-Lillooet and the other Socred members

[ Page 10238 ]

who recycle this column — and suggesting to their constituents that the budget has been balanced and not showing a modicum of fairness in outlining the comments of the largest accounting firm of Canada, who say that you are running a deficit of $502 million, and the president of the certified general accountants, who criticizes the government's BS fund as all smoke and mirrors without disclosing the information of the auditor-general and says that the budget stabilization fund doesn't exist, that amounts to deception on the part of the member, and clearly the member should issue another column stating the other side of the story and the opinions of these leaders in British Columbia....

MR. CHAIRMAN: Hon. member, the Chair finds the use of the word "deception" unparliamentary, and I would ask you to withdraw that, please.

MR. SIHOTA: I'll withdraw the word "deception."

I think the member for Yale-Lillooet and others who recycle this column owe it to their constituents to issue another column stating the opinions of these opinion leaders in British Columbia. The opinion of these people in British Columbia who are not politicians and who don't have any partisan axe to grind — they're as honourable as the auditor-general of British Columbia — should also be put in front of their constituents.

So I want to challenge the member for Yale-Lillooet in his capacity as the Parliamentary Secretary to the Minister of Finance, as he notes in his column, to issue another column to his constituents stating the opinions of all these individuals: the certified general accountants, the auditor-general and Peat Marwick. Let his constituents decide fairly and honestly with all of the evidence in front of them: the member's column and the opinions of these people.

If he chooses not to, then of course, he does it at his own peril. Thank you, Mr. Chairman. That concludes my comments.

[11:15]

MR. BRUCE: I always find it somewhat interesting to listen to the opposition. The budget stabilization fund really does cause them a problem. It grates on them to a tremendous degree, and I suppose it's because we in British Columbia have probably one of the strongest financial positions of any province in Canada — actually, in any government jurisdiction in Canada.

I might point out to my colleague for Esquimalt–Port Renfrew and also to the first member for Nanaimo that the auditor-general has made it very clear that in respect to the financial reporting process and the standards of this government — in both form and content — we have, without a doubt, the best recording process of any jurisdiction in Canada, provincially or federally.

I hear this diatribe about what accounting firms are saying. Like a group of lawyers, you can put a group of accountants together, and if there are ten accountants, you'll get 25 different opinions. If there are ten lawyers, you'll get 25 different opinions. It's no wonder, when you hear the comments from the member for Esquimalt–Port Renfrew, that there seems to be a variety of mish-mash coming from him, and that is what comes out of a grouping of accountants or lawyers.

I think one has to look —at the fact that when we talk about balancing the budget and this whole budget stabilization account, it is a situation in this province where the revenues in exceed or equal the expenditures out. They clearly do, and they have for several years.

Regardless of how you add it or subtract it or what you want to say about it, in my way of thinking, you have a balanced budget. You have not found that taxes have gone up. You've found the accumulated debt has gone down. I would have a hard time rationalizing how you can get the accumulated debt to go down without having a balanced budget or a budget with a surplus. I don't know how you can reduce the accumulated debt without being in a position of balance or surplus.

We've done that for several years in a row. It's fine for these members in opposition to go on and expound at great length about the budget stabilization account and to read into the record comments from other accounting firms. But I think that if you actually read in detail what Peat Marwick and several other accounting firms have said, you will find that they, too, echo the final analysis that the financial picture in the province of British Columbia is, without a doubt, in the strongest and best position of any provincial or federal authority in this country. They will say that as well.

So when our colleague talks about a column that comes in or out on both sides of the question — he's left already — perhaps he, too, would like to share with his constituents and the people of British Columbia the fact that we are spending more money in the service ministries — actually in all ministries in this province. We have indeed not raised taxes; we have reduced our accumulated debt.

Maybe he would like to stand in this House and mention that, if we really want to talk about all sides of this question. Perhaps he would like to read into the record other words of other accountants beyond just the one paragraph that's brought out at a particular time which has been clarified by virtually all those who offered comment at the time the budget was presented in regard to what they think of the financial picture of the province of British Columbia.

You know, it's no surprise that the opposition — the NDP, the socialists, the social democrats or whatever they're calling themselves today — get upset when we're debating and talking about those things that are financial. As I was trying to bring to the information of this House and to the people of this province last Friday, as one looks around and analyzes those countries in this world that have experimented with socialism, with labour, with social democracies, one finds in the instances of Sweden, of Denmark, of Norway, of New Zealand the fact that their budgets have never balanced. Their budgets

[ Page 10239 ]

have increased in expenditures at a great rate. In every one of those countries where they purport to be the party that looks after those in respect to unemployment and finding them jobs and all the rest of it, you will find that after they came to power — that's the socialists, the social democrats, the labour parties, the communists; they're all in the same bag — their unemployment rates, which were in many instances a low rate prior to their coining to power, went right up through the roof. It's no wonder that they stand in this House here today and offer all sorts of bafflegab when it comes to the fact of the Budget Stabilization Fund Act. It just amazes me.

We've heard time and time again from a number of leading authorities that the financial position of this province is the strongest that one will find anywhere in Canada — in fact, in virtually many of the western democracies in the world. If we are in that strong a position, and we have a budget stabilization account — call it by any other name, or whatever you wish — it would seem to me that things are working. We have a strong and vibrant economy. We have more people working today in the province than have ever been working before. We have increasing activity in the business sector. We have greater spending on all the service sides of the budget of this ministry to help some of those people who are in need. We have a vibrant and energetic economy as a province. What is it that the socialists, the NDP, the social democrats, or whatever it is they are...? What is it that causes them to have such a problem with the budget stabilization process?

I'll tell you what the problem is. The fact of the matter is that they do not like good news. They would much rather this province be in the throes of a depression. They would much rather there be great numbers of people without work. They would much rather we be in a position of deficit, a position where we are having to borrow. Then they can stand up and bleed and bleep and plead that everything is rotten in this province.

For too long I had to listen in my constituency, represented by the opposition for many years — too many years — to the down-and-out type of story. Never was it a comment of what's going on in this province, how things can be built and how the future looks bright. No, always it was: let's look at the negative. Let's look at the darkest cloud we can possibly find in the sky and say: "That's what's happening around the world. That's what's happening in this province."

Indeed, that's not the case. If the Budget Stabilization Fund Act helps us manage the dollars and cents of this province and puts us in a position where we have one of the strongest financial positions of any jurisdiction in this country, why not stand up and say that these are good things happening? Let us reinforce it one more time: the fact is that we have more revenues coming in, or in surplus, than we have in expenditures going out.

Does it really matter that a group of accountants — the 20, 30, 50, 100, 1,000 or however many there are — comes up with a variety of different opinions?

Quite frankly, I could care less. As a mayor I used to argue with my accounting firm all the time about the budgeting process. But I'll tell you that in that instance, always, in the end result, what counts is how the general public is taxed in their back pocket. Are they paying more in taxes? We in this province are not. The opposition will have you think, as has been the case and proven in history in the countries I mentioned — Sweden, Denmark, Norway, New Zealand — that always taxes have gone up. Yet even in Sweden today, the Minister of Finance says that one of the first things they should be doing to try and turn their economy around is to lessen the tax rate, to take that 72 percent personal income rate — and that comes into effect when you're making $35,000 a year; 72 percent of your dollar goes to sustain the government in that country — and reduce it to 53 percent. He has already acknowledged that. He even went on to proclaim — he and the others, the architects of the great social democrat model in Sweden — the fact that they actually might have to look at privatization as a means of turning their economy around. I ask you, my friends: do they learn?

The world has moved; it has changed. The simple fact is that spending more money than you have will not work. It doesn't work anywhere. And this government here today, this year and years past has proven that it does not work. So we've employed an accounting process of budget stabilization. Shame on you, Mr. Minister, for bringing in budget stabilization. Shame on you for balancing the budget. Shame on you for spending less money than we take in.

I just can't believe that they would stand here in the House and argue and go on and on about budget stabilization. But we know why they do that. It's simply because, here in the province of British Columbia, good things are happening. I must reiterate and reinforce one more time: we have a situation where taxes did not go up; we have a situation where the ministries are spending more money on behalf of the citizens of the province of British Columbia than they were last year.

What are we talking about? In health alone, $500 million more. What did I hear today in one of our committee meetings? Do you know what they're talking about? We should take all the lottery dollars that come in and put them into health care. We won't bother with all of those little community groups and organizations that take a dollar or two and multiply that, in many instances, tenfold or even twentyfold before they spend it. Each one of them helps their own communities and the groups they represent. We won't do that anymore. We'll just take all that money that comes from lotteries and put it into health care.

Didn't anybody ever tell them? I've not heard of an instance when we get to the end of the year — or maybe we get to December — and we may have budgeted $4.5 billion for health, and on December 15, $4.5 billion is rung up on the cash register.... Do you go into the hospital and say: "Sorry, no more health care. Everybody out of the beds. You've got to go home." That's not what happens. If there's a need, you continue to pay.

[ Page 10240 ]

So what's the point? We're going to take that lottery money and put it into health care? Quite frankly, when it comes to the health critic.... He says in his analysis of health care that perhaps we should spend just a little bit more. That's what he said in a newspaper article written as an analysis of the health care system of the province of British Columbia. Regardless of the fact we're spending $500 million more this year than we did last year, he says that perhaps we should spend just a little bit more. When is a little bit more enough? Will it ever be enough? No, it will never be enough, and so it's no wonder that they can't understand the aspect of balancing the budget. It's no wonder they don't understand what the budget stabilization account does.

I don't care how you want to explain budget stabilization. The fact of the matter is that taxes didn't go up, government spending went up, the balanced budget that we have in this province is the best that you'll find anywhere in this jurisdiction in Canada, and the accumulated debt has gone down.

Let me just reinforce.... Tell me, how is it that you can take that accumulated debt down if your budget hasn't been balanced or is not in a surplus position? Can somebody explain that to me? Because I would like to know. I've got a few business debts of my own to which I'd like to figure out how to apply that same process.

The simple fact of the matter — and it's around the world — is that socialists and social democrats only understand one thing: tax, tax, tax and spend, spend, spend.

[11:30]

So, Mr. Minister, if it's creative budgeting, smoke and mirrors or however it is you want to describe it; If you can guarantee to me and....

MR. CHAIRMAN: Sorry, but the hon. member's time has expired.

MR. RABBITT: I find my colleague's remarks most enlightening, and I would like to see him continue to deliver a good message to this House.

MR. BRUCE: Thank you, hon. colleague. I appreciate that, because there are some other things that I would like to talk about here.

When we look across this country and see that British Columbia, as compared to the other provinces of this country, has a very low debt-servicing cost per dollar.... I think that should be read into the record. Manitoba...

AN HON. MEMBER: They had a socialist government.

MR. BRUCE: They did some years ago.

...has 10.2; Saskatchewan, 11.5; Newfoundland, 15.7. What do you think British Columbia would be? Let's take a look at Ontario, that great bastion of Bay Street and all that goes on there — they have 9.7. Where do you think British Columbia is?

SOME HON. MEMBERS: Where are we?

MR. BRUCE: Shall we let them have a guess? I know what they would say. Let's see, here's Newfoundland at 15.7. They would say we're about 20.4. But guess where we are: 3.3.

It may be creative financing, but I'll tell you, the simple fact is that when you look around the world today, there are people in Sweden, Denmark, Norway and New Zealand who would love to have had some of the creative financing we've been able to employ In this province. They would have loved to have had a government similar to the one we had in 1983 — one that was prepared to stand up and bite the bullet in the face of thousands of people who weren't prepared to go along with it at that time to do what was necessary to strengthen the economy of the province. They would have liked to have had leadership like that in those countries, but they didn't get it. Do you know why? Because they had labour-socialist-social democrats.

People who were in power in those countries during that time when the world was in a recession and when many places were in a depression.... But not here in this province. We had a government that was prepared to face the challenges of the future and plan for tomorrow, and that was not prepared to sit back and just do the easy thing: tax some more, take some more money from the people and the businesses of this province. We had a government that was prepared to stand foursquare in front of the people and tell them: "Listen, this is going to be tough. It is going to hurt, but we are spending more than we have coming in, and we can't carry on with that."

The federal government has not realized that yet; the federal government hasn't understood that. They, too, are going to have to learn that lesson. The social democrats, the socialists, the NDP and the labour movements of those countries that have had socialist-style governments have never, ever learned it. Why have we seen such change taking place through all of those eastern-bloc countries? Is it because they woke up one day and said: "Aha! Peace — how great it will be. Wouldn't it be wonderful"? As much as I would like to believe that that is what happened, it's not what happened.

The economies of those countries were in a shambles. People were hungry; food wasn't on the shelves. There were not the necessary agricultural workings within the farms to sustain the livelihood and the well-being of the people of those countries. The leaders of those countries knew at that point that they could no longer carry on with the direction of government they were leading, because the people would revolt. People have to be fed; people have to be full. People have to have the ability to get a job, to work for their future and their children's future. Those people in those countries, those leaders — particularly Gorbachev in the Soviet Union.... He saw his economy falling apart. We know it's falling apart; it was in a shambles. Because of that, he could no longer offer the protection to the other satellite

[ Page 10241 ]

countries that they enjoyed in the past. So they fell too. All of them have fallen because of a single, simple fact: they did not balance their budgets.

Interjection.

MR. BRUCE: Relevancy? They did not balance their budgets; that is the relevancy of it all. They spent more money than they had coming in. They still do not understand that all of this comes down to the simple fact that you cannot spend more money over a period of time than the people of a country have the ability to pay.

As I was mentioning in respect to the budget stabilization account, whether it is smoke and mirrors, creative budgeting or creative accounting — call it whatever name you want — if these members are going to stand in the House and challenge my friend and colleague from Yale-Lillooet to talk about all of the relevant items in respective columns that are released, I challenge them, too, to stand and tell their constituents the actual truth of the matter and to ask their constituents whether their tax levels are out of sight. Are they paying more today than yesterday? Is it a fact that we are spending more on our social service ministries than before?

I want them to ask that and to tell their citizens these things as well. I want them to stand and tell the people of the province that in respect to health we're spending $500 million more this year than last year We spent more money last year than the year before, and that year we spent more money than the year before that. In fact, the rates have gone up every year with respect to health care. But if we listen to our colleagues the socialists — the NDP, the social democrats — talk, you would think that health care expenses have gone down and that we have spent less money. In fact, the truth is we that have spent more money on health.

We have spent more money on education. We have spent more money on highways and transportation. In fact, as I mentioned, we're spending more money right across the board, and they should stand up and say that. They should tell the people of the province, as the loyal opposition, that we are spending more money in each one of those ministries.

Interjection.

MR. BRUCE: Yes, the friends of Social Credit, my friend. And there are thousands and millions of friends of Social Credit, and that is why Social Credit keeps getting returned as government in the province of British Columbia. Certainly I hear this "friends of Social Credit." You know, that was something that was mentioned in Public Accounts, talking about the lotteries — friends of Social Credit. Who are the friends of Social Credit? All the church groups, all the senior groups, the disabled who were looking for some assistance through that, the sports groups; it goes on and on. It's actually quite remarkable. There are thousands and thousands of millions of friends of Social Credit. Why? Because this party, this government, provides good, stable government. It looks after the financial affairs of the people of the province of British Columbia.

Mr. Chairman, as I come back to the fact that the minister.... If this BS fund, as he likes to call it sometimes in jest, this budget stabilization fund account, the smoke and mirrors, whatever it is that the opposition wants to call it.... If you, Mr. Minister, can tell me and the people of the province of British Columbia that through this particular device we will continue to have a balanced budget, that in the directions that we have been able to take we'll be able to continue to look after the needs of and services to the people of this province, and that we'll be able to continue to reduce our accumulated deficit, then let me say I'm proud to stand and speak in support of this section of this bill, because it means good government. It means less taxes for the peo—ple. It means better services for the people of the province, and it means a strong financial future for British Columbia.

MS. MARZARI: I've enjoyed the travelogue that we've suffered through for the last few minutes from the member for Cowichan-Malahat, through the Russian steppes and into the Swedish fjords. Why, we've been all over the world — eastern Europe — and here we come flying in, back to British Columbia. I enjoyed the canvassing of all the different funds that have been established by the Social Credit government to keep their friends happy out there in the province at large. I've enjoyed the Lottery Fund. I've enjoyed the BS fund. After all, the member for Cowichan-Malahat says it may be smoke and mirrors, it may ba a shell game, it may be any one of a number of things, but it works. He says it works for British Columbia. And how does it work for British Columbia? During his rant, he talked about being in private business himself. And being in private business himself, he'd love to have a little of that magic dust sprinkled on his head, because he'd like to know himself how the Minister of Finance manages to get away with the BS fund, because he thinks he could use a little of that magic dust in the private sector. Well, Mr. Member, in the private sector they call it overdraft. The difference here is that when you have an overdraft in the private sector, you pay for it. With the BS fund, the situation is that we pay for it. That is the difference between private sector funding and public sector funding. The BS fund legitimizes it.

The member talked about getting 25 economic analysts and accountants in a room, and said you can get anything out of them. I'm going to send that comment from the member to Peat Marwick. I'm going to send that comment from the member to the auditor-general's office and to the CGA. I think they'd be pleased to know that 25 accountants gathered in a room to discuss the BS fund were called dupes of the socialists. They'd like to know that, because the private sector can see through the BS fund faster than anybody. They understand who actually pays for overdrafts in the real world out there as opposed to the fantasy land we've created

[ Page 10242 ]

inside this House since we came up with the BS fund - coined, I might add, by the minister himself.

It's a little like being in Kansas. It's a little like being in the middle of the Wizard of Oz. It's a little like being Dorothy. It's a little like standing in front of the big screen with the Wizard of Oz up there telling us: "Don't pay attention to the little man behind the curtain, Dorothy, because it's all going to be okay. The BS fund is going to see us through."

The BS fund is an overdraft. The BS fund is creative financing — I will agree with the member on that item. The BS fund basically has no money in it. The BS fund was created as a borrowing authority with no money in it. This is what we know about the BS fund.

It has been used as almost what we call a laundering agency through which money can flow into other accounts. We know money actually flows through it occasionally because — get this — it collects interest. Public Accounts actually shows interest collected on the BS fund, a fund that has no money in it.

We proceed from there and say that funds in and of themselves make a lot of sense. They can help bridge gaps. They can help amortize payments. They can help take money into areas which need it through a fiscal year and beyond. But when we use funds, we have to make sure that they are accountable, that there is an appropriate reporting mechanism for the use of the moneys in funds. In fact, Bill 19 sets up a number of funds. As I read through Bill 19, section 6, I believe, sets up an emergency assistance fund. Now, setting up funds is one thing, but providing reporting mechanisms and making those funds accountable is another.

As I look through all of Bill 19, in none of these sections do I see adequate reporting and accounting mechanisms to ensure that the public sector — we, the Legislature — is properly informed on how these funds are going to be used. No criteria, no reference points, no ministerial committee, no advisory group is established in any of these funds.

[11:45]

Of course, the major offender here is the BS fund itself. At least with some of these other funds, one can imagine that real money will be spent and real money will be situated in those funds, such as the provincial treasury operations fund or perhaps even the emergency assistance fund. But the fact is that the BS fund does not contain money; it does collect interest; we do suffer a deficit in this province. The BS fund does not kid anyone anywhere along the line that, in fact, those situations don't exist.

My recommendation would be that the BS fund be deleted altogether, so that we can have a proper accounting for moneys spent. Yes, we have a rich province. Yes, we have a lot of British Columbians who might be doing better than they were a few years ago. But yes, we do not have a government that brings to the public accounts appropriate reporting mechanisms for what they do spend. The BS fund is the worst offender in that long list.

HON. MR. COUVELIER: Well, it's great fun, Mr. Chairman, but maybe we've all finished or got it off our chest. I just want to repeat the basic facts. This administration has reduced borrowing. This administration has reduced sales tax. This administration has increased expenditures in the essential social services — education, health care, even social services, despite a declining workload. This administration has improved the province's credit rating. This administration has consistently delivered on its campaign promises.

We have much more material we could use if the debate is to continue, but I am satisfied that the facts speak for themselves.

Section 1 approved on division.

On section 2.

MR. CLARK: I would just like the minister to explain the farm products industry improvement fund — what it was and why it has to be deleted.

HON. MR. COUVELIER: This section amends the Farm Product Industry Act to terminate the farm products industry improvement fund special account. So the amendment repeals the section of the act which established the special account. The remainder of the act is left intact to provide the Minister of Agriculture and Fisheries with power to make grants, loans or loan guarantees through the voted appropriations.

Sections 2 and 3 approved.

On section 4.

MR. CLARK: I'm just a bit concerned about the use of the special account practice, and I know the minister.... This is a policy decision of the government, I am sure, and this bill accommodates that. I am worried particularly about the ability to confound public accountability with respect to, for example, transfers within sub-votes, and I think this kind of question has been a problem in the past. I wonder whether the minister could give some assurance that the special account mechanism which is contemplated in this bill, and now in other aspects of government.... Does this in fact change the estimates process whereby debate is held on votes and sub-votes so that there is that kind of scrutiny?

If it changes the presentation of the estimates or scrutiny with respect to these special accounts, then how does it change that — and the practice of debate in the House? To give an example, this clause contemplates an initial balance in the special account of $2 million, and then certain funds flow into it and out of it. I just worry that we won't get the level of detail on these accounts in order to debate them in the House during the estimates.

HON. MR. COUVELIER: I'm happy to advise the member that the details are in estimates by STOB so

[ Page 10243 ]

that there is full disclosure. The difficulty we're trying to address here, of course, is that the treasury's revenue is dependent upon market conditions to a great extent. So to enable a consistent management process to flow, this device will enable us to accomplish the better fiscal management of our affairs.

Sections 4 and 5 approved.

On section 6.

MR. BLENCOE: I wonder if the minister could back up a little bit. I was wondering about the requirement for a special fund for emergency assistance within the Revenue Sharing Act. If the local government or area has emergencies, surely the funds would be found for emergencies anyway. I just wonder what the rationale is for creating another fund; I have some concerns about that. If there is an emergency, government can always find the funds to achieve that. If there is an emergency, and the government in its wisdom feels there's an emergency, so be it. I assume this has something to do with Kimberley. I'm not sure. Maybe the government can give me some background on this.

HON. MR. COUVELIER: I think it's a valid point the member raises, Mr. Chairman. Obviously any sensitive, responsive government will deal in a responsible manner with emergencies as they arise There are and have historically been situations in the province that create unique hardships on communities. Kimberley is a good illustration of that this year. In discussions with the UBCM, it was agreed with the Ministry of Municipal Affairs that it would be helpful for there to be a dedicated, targeted sum to help meet those unique situations.

MR. BLENCOE: Was this a recommendation that came from consultation with local government? Or how did the minister arrive at setting up such a fund? Was there representation, for instance, from the UBCM on this issue?

HON. MR. COUVELIER: As a matter of fact, Mr Chairman, the ministry, as you know, works closely with the UBCM on these kinds of issues. It's intended to deal with the prospects of a severe impact by environmental or economic shocks. Kimberley is a good example of it. The implementation of this process is going to be similar to the way other payments from the fund are made. The UBCM are cognizant of the proposal, and those kinds of discussions have taken place.

MS. EDWARDS: I am curious, Mr. Minister. You talk about Kimberley being a good example. The kind of relief that presumably is being asked for, in view of the closure of the Sullivan mine, is mainly relief from the loss of taxation. Is that the type of thing that you anticipate this being for? Do you also anticipate that kind of thing happening, for example, if there is a flood, an avalanche or some sort of thing which gives huge property damage? Are all those kinds of emergencies considered to be in this? What's it for?

HON. MR. COUVELIER: No, that kind of natural event — landslides and flooding — is almost a normal annual occurrence somewhere in the province. That's handled basically with the emergencies program administered by the Solicitor-General.

This is more to deal with basic structural deficiencies that might arise from a mine being mined out or a forestry resource being logged out — that kind of event.

MS. EDWARDS: In subsection (4) it says the L-G-in-C may make regulations establishing circumstances and conditions under which the grants would be given, and they would have to d—o with municipal taxation situations. When do you foresee that these regulations would come out? Could you give us some better idea of what you see happening under subsection (4) ?

HON. MR. COUVELIER: I think those kinds of questions might more properly be put to the Minister of Municipal Affairs (Hon. L. Hanson) during his estimates debate. My role here is to create the fund, but he will be administering it.

Sections 6 to 8 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 19, Budget Measures Implementation Act, 1990, reported completed without amendment, read a third time and passed.

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 11:57 a.m.