[ Page 10891 ]

CONTENTS

Routine Proceedings

Point of Privilege

Taped conversations of Attorney-General. Hon. Mr. Smith –– 10891

Hon. Mr. Richmond

Solicitor General Statutes Amendment Act, 1990 (Bill 62). Hon. Mr. Fraser

Introduction and first reading –– 10891

Natural Gas Price Amendment Act, 1990 (Bill 63). Second reading.

(Hon. Mr. Davis)

Hon. Mr. Davis –– 10892

Ms. Edwards –– 10893

Hon. Mr. Davis –– 10893

Mineral Tax Amendment Act, 1990 (Bill 33). Second reading.

(Hon. Mr. Davis)

Hon. Mr. Davis –– 10895

Ms. Edwards –– 10895

Hon. Mr. Davis –– 10895

Mine Development Assessment Act (Bill 59). Second reading.

(Hon. Mr. Davis)

Hon. Mr. Davis –– 10895

Ms. Edwards –– 10896

Hon. Mr. Davis –– 10897

Financial Administration Amendment Act, 1990 (Bill 60). Second reading.

(Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 10898

Mr. Clark –– 10898

Hon. Mr. Couvelier –– 10898

Assessment and Property Tax Reform Act, 1990 (Bill 49). Second reading.

(Hon. L. Hanson)

Hon. L. Hanson –– 10898

Mr. Clark –– 10899

Hon. Mr. Brummet –– 10900

Mr. Blencoe –– 10901

Mr. G. Janssen –– 10902

Mr. Miller –– 10903

Hon. L. Hanson –– 10903

The House met at 10:04 a.m.

Prayers.

MR. PERRY: Mr. Speaker, I'd like to introduce some members of the British Columbia Nurses' Union and the Union of Psychiatric Nurses who are attending the gallery this morning: Joe Gooding, Rosemarie Townsend, Judith Forster and Ellen Coates. I think most of them work at Oak Bay Lodge, if I'm not mistaken, in intermediate care, which includes some very difficult patients. I'd like to ask the House to make them welcome.

Point of Privilege

TAPED CONVERSATIONS
OF ATTORNEY-GENERAL

HON. MR. SMITH: Mr. Speaker, I wish to respond to a privilege motion. Yesterday, through a privileged motion brought to this House, it was disclosed that telephones I used have been subjected to prolonged and systematic electronic surveillance. Knowledge of that fact has left me empty and with a profound feeling of personal violation.

Fruit from the tree of that unauthorized and potentially illicit surveillance forms the sole basis for allegations that I have tampered with the administration of justice, offended rules relating to obstruction of justice and breached the privileges of either this House or a member within. Mr. Speaker, each one of those allegations is wrong.

Upon reading the material supporting the allegations brought with the motion, and upon listening to the public statements made by the motion's mover, I have reflected carefully upon the proper course I should take to address the allegations brought by and with the motion before us.

Accordingly, last evening I requested that the Deputy Attorney-General of British Columbia commence immediately an investigation into allegations that the words used by me and taken from the unauthorized recordings supporting this privilege motion amount to wrongdoing on my part. That investigation necessarily will include me. It is my view that I could not properly serve the office I hold during the course of such an investigation. I have requested of my Premier that I stand aside from my cabinet responsibilities for that reason.

I cannot find any substantive matter in the motion to support an assertion either of breach of the member's privilege or of the need to have the issue examined by a committee of this House. All of the assertions appear to bear on matters beyond the direct interest of this Assembly.

I am mindful that our practice, procedures and privileges as members underpin the freedoms and the conduct of citizens at large. Overwhelmingly, citizens in British Columbia do not electronically surveil one another, nor do they use the fruits of such surveillance to pursue their personal needs and ambitions. I pray that members of this Assembly do not lead citizens at large into believing that that behaviour now is acceptable.

Mr. Speaker, I submit that the material before you does not support the motion requested, and I urge it therefore be declined.

HON. MR. RICHMOND: Mr. Speaker, I wish to reserve my right to make a representation to you of what I believe will demonstrate that the member for Esquimalt-Port Renfrew (Mr. Sihota) and others are guilty of a contempt of this House.

Material filed yesterday and subsequent statements made by this same member demonstrate to me that interceptions of communications of a minister of the Crown were made, and there is little doubt in my mind that these interceptions were illegal. Further, in full knowledge as to the nature of these interceptions, the member for Esquimalt-Port Renfrew used this material in this House for political purposes and in contempt of the law of Parliament as enunciated in findings of a special committee on privileges of this House reported on June 6, 1980.

I rise at this time to reserve the right to make a fuller presentation once I have had an opportunity to obtain all the relevant facts.

Introduction of Bills

SOLICITOR GENERAL STATUTES
AMENDMENT ACT, 1990

Hon. Mr. Fraser presented a message, from His Honour the Lieutenant-Governor: a bill intituled Solicitor General Statutes Amendment Act, 1990.

HON. MR. FRASER: Mr. Speaker, this bill contains amendments to the Motor Vehicle Act, Parole Act, Motion Picture Act, Criminal Injury Compensation Act and Transport of Dangerous Goods Act.

The Motor Vehicle Act will be amended to provide legislative authority to make emission testing part of motor vehicle annual licensing requirements. The amendment will provide single plates to be used for collector and vintage vehicles. The Motor Vehicle Act reporting level will also be raised from $400 to $1,000. The act will also be amended to make it clear that persons renting or leasing a vehicle can be held responsible for offences such as hit-and-run and parking violations where it has not been possible to physically identify the driver at the time of the offence.

The Motion Picture Act will be amended to clarify the respective responsibilities and authorities of municipalities and the film classification division in issuing licences for film retailers.

The amendment to the Criminal Injury Compensation Act will double the allowable maximum lump sum awards available to victims from $25,000 to $50,000.

[ Page 10892 ]

Bill 62 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

HON. MR. RICHMOND: Mr. Speaker, I call second reading of Bill 63.

NATURAL GAS PRICE
AMENDMENT ACT, 1990

HON. MR. DAVIS: I'd like to make a few remarks about the Natural Gas Price Amendment Act, 1990, presently before the House for second reading. The various changes, more specifically, allow for the devolution or sale of the gas-marketing function of the B.C. Petroleum Corporation to a private sector company, which will be owned entirely by producers of natural gas in the B.C. Peace River area. These changes are made under the Natural Gas Price Act, because it deals essentially with the establishment of the relevant price of gas. It includes a mechanism to protect the royalty that the Crown receives on natural gas at the field. It defines the functions of the company, in this case CanWest, that will be acting on behalf of producers to market natural gas in British Columbia and the United States.

CanWest might be described in the terminology of the industry as an aggregator. In the United States and Alberta there are several companies — in Alberta there are three or four — that sell their marketing services to producers. Frequently the supply of gas — they line up for a particular sale, either in Canada or the United States — involves more than one producer. In British Columbia it may well cover up to 100 producers and up to 50 percent or more of gas production in the province.

[10:15]

Pan-Alberta, for example, is one such aggregator. Operating in Alberta, it will no doubt be offering its services to gas producers in British Columbia, as will others. CanWest, while it will be owned by producers, does not have an exclusive right to market natural gas in this province. It will have to compete to survive, and will only survive if it does a good job in the eyes of the producers themselves.

This legislation establishes more clearly that the relevant price for natural gas, which we use as a test as to its fairness or otherwise, is the price of raw gas in the field. It's the price of raw gas before processing, before it's moved any distance, either for processing or directly to the market in Canada or the United States. It's the netback price, according to industry terminology; it's the price of raw gas in the field. We're meanwhile setting up a mechanism whereby that price will be established monthly and published — so there will be a public record. The going field price, if you like, will be known on a monthly basis for British Columbia gas produced either for use here or elsewhere.

It's highly unlikely, but it could happen that a particular sale is arranged by the aggregator or, indeed, by an individual gas producer selling individually to an industry, and that the price in the sales contract is less than that which my ministry deems to be the fair market price. One of the amendments in this legislation gives authority to the Crown to establish a fair and true market price for royalty purposes in such instances.

The government of Alberta has this power and, in respect to certain sales some years ago to users in Ontario, in fact deemed that the price for royalty purposes was higher, that the gas was being underpriced and that, as far as the Crown was concerned, revenue to the Crown was being undermined by the price arrangements. We will have similar powers when this particular bill is passed to deem a price for royalty purposes.

The aggregator dealing with the producers who have historically sold their gas through the B.C. Petroleum Corporation must obtain the consent of a majority of the producers producing over 50 percent of the gas in question to honour a particular contract. A mechanism is described in the legislation. This is common in Alberta and elsewhere, where there's a voting procedure followed by producers which in effect says that the majority favour the new contract, the price arrangements and the conditions of delivery, and this obliges the other producers that have similar contracts with the aggregator to go along with the sale.

As members can well imagine, there are some who regard this practice as ganging up or as producers working in common in order to protect the price or value of their gas. We must follow the procedures set out in this legislation in order to avoid any appearance of monopoly practice and to give the industry sufficient comfort that it won't be prosecuted by the federal combines people or others in doing what is now common practice in Alberta and elsewhere.

It limits the aggregator's cost of service. In other words, the aggregator cannot charge excessively for its marketing function, and it gives the minister discretionary power in setting a maximum price for that service if the industry is at all concerned with CanWest's take or that of any other aggregator in selling the producers' gas in Canada or outside.

To repeat, it comes under the Natural Gas Price Act, because it deals fundamentally with pricing of natural gas, how the price is established, whether it is a fair market-determined price and what the price must be for royalty purposes. If it's truly the market price, then it's fine. If it's below the deemed market price, then there's a deemed price for royalty purposes.

It governs not only what costs the aggregator can reasonably cover in providing its marketing service, but also a mechanism whereby the aggregator can obtain the approval of all the producers with which the aggregator has contracted in general terms — a majority support, in other words, for a particular sale.

Again, this is all consistent with industry practice in Alberta, in Saskatchewan, and generally across North America. We are moving — and this is really the last step away from a single entity, the B.C. Petroleum Corporation, a Crown agency, being the

[ Page 10893 ]

sole buyer of gas — to a market situation where CanWest and other aggregators can perform the marketing function if the producer or producers' group so desires. Producers can sell independently on a one-on-one basis if they wish, but they tend to sell through aggregators whose specialized marketing services give them the best price — a true market price — they can hope to get for their product.

There are expanded powers for auditing the books of producers, for price determination, for publication of the current market price at the wellhead, and for a fee to be charged by the remaining element of the B.C. Petroleum Corporation. In other words, the corporation will continue to exist, but essentially as a well-informed gatherer of facts, to determine not only production but reservoir capabilities; to determine what gas can be produced under what circumstances; and, of course, to establish the true market price for royalty purposes.

The producers will be paying a fee in the amount of one cent per thousand cubic feet for all production That fee will be used to cover all of B.C. Petroleum Corporation's fact-gathering and other expenditures which are carried out in the public interest in order to protect revenue to the Crown and in order to ensure that the facts relative to gas reserves, gas production, taxes paid and so on are indeed facts.

So there is a cost-recovery mechanism, and it will provide the funds necessary to keep the B.C. Petroleum Corporation operating as — I'll call it — a well informed, competent group, both in terms of reservoir engineering and market economics, which keeps track of what's going on in the Peace River area and publishes the information monthly for the benefit not only of the industry but of the people of British Columbia.

Mr. Speaker, I move that this bill now be read a second time.

MS. EDWARDS: As the minister has said, this bill almost completes the privatization of the BCPC and the function of marketing natural gas. What it does is put at risk the small consumers and even the small producers of the province, who are unable to have any power within the structure that operates in the natural gas industry.

The natural gas industry is a very ingrown industry, to put it as nicely as I can — the producers are the transporters, are the marketers, are the consumers. The big guys in this industry have extreme power The minister referred to that when he talked about the appearance of monopoly. It's very difficult in this industry to come in as anyone except the big powers and have any kind of control over what's happening to you in the marketplace.

Previously the bulk of the gas marketing in the province has been done by the B.C. Petroleum Corporation, which acted mainly on behalf of the producers who were too small to negotiate their own direct marketing arrangements. That being the case, one recognizes the real weakness in this proposal the minister puts forward.

Gas deregulation really has operated to the detriment not only of these small producers but also of the residential and small commercial gas consumers, who get their gas basically from utility gas — B.C. Gas — right now. These consumers are basically in a spot where they cannot easily deal with what the price might be. They're not big enough to influence the price on a market the size of what we have in the deregulated natural gas industry.

In buying from the utility, they also find that the utility has to have a certain degree of safety, because it is regulated; that's one of the requirements for utilities. Certainly utilities can always pass on the additional price that they may have to pay in order to ensure a long-term supply; they have to pass that on to their customers. That is the way it goes. This takes away another of the safeguards for consumers which used to be operated by the government through the B.C. Petroleum Corporation.

In British Columbia, since deregulation began.... My figures are not as new as I would like them to be, but after deregulation the price of gas to residential consumers fell by 12.5 percent. That sounds very good until you put it into the context of how the price fell for the large industrial consumers: that price reduction was in the range of 48 percent. This was not due to anything at the wellhead; it was due to the greater bargaining power of the large industrial firms and the export customers. They can shop around, they can look for what they want and they can buy in large quantities and on the spot market without any penalty at all. The small producers and the small consumers, through the utilities, are the ones who pay the price for this deregulation.

For that reason, Mr. Speaker, we oppose the bill. We believe that what it does is complete the process of putting the producers in charge of the whole process and giving the ministry far too little contact with the industry. The minister talks about the B.C. Petroleum Corporation people being a well-informed group who will keep track of what's going on and publish information. Without discrediting anything they can do, it's very clear that they will have far less to do with the industry and will be far less in touch with what's going on. The regulation function, which the ministry will now carry out, will be done by people not nearly so close to what's going on.

For this reason — basically the handing over of the marketing function to the producers — we oppose the bill on behalf of the small consumers, the small producers and the people of the province who are going to pay more because of the minister's drive to deregulation.

[10:30]

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

HON. MR. DAVIS: The hon. member essentially says that the small producer and the small consumer are both put at risk by this legislation. In order to establish CanWest, it was necessary for us to go to all the producers, since they all had contracts with the

[ Page 10894 ]

B.C. Petroleum Corporation, and ask them one by one whether they wanted to turn over the marketing function and whether they would agree to the marketing function being transferred — in effect, their contract being transferred from a contract between each producer and the B.C. Petroleum Corporation to a contract between the producer and this new private sector aggregator, CanWest. They were all approached one at a time, and they agreed overwhelmingly that they wanted this to happen. They were convinced that a private sector aggregator would be a much more effective selling and marketing entity to get them additional markets and a good price; far better, they felt, than a Crown corporation which had little experience in marketing and the principal preoccupation of which was on the supply side — call it reservoir engineering, collecting numbers in the field and so on — but not in selling. They were at a competitive disadvantage as compared to producers in Alberta, which could pick and choose among gas-selling companies — aggregators. They preferred to commit their existing contracts to CanWest. Of course, they reserved the right to sell gas over and above that formerly committed to BCPC through any other aggregator or to sell it themselves.

The small producers were canvassed and with very few exceptions saw this as a good move on their behalf. They approved it. Without their agreement to "novate" — that's the legal term — their contracts over to the new private-sector company, CanWest, we couldn't have devolved the marketing function away from the Crown corporation and into the private sector. So small producers themselves don't agree with the hon. member; they think this is a good move from their point of view.

The small consumer in British Columbia essentially is protected by regulation and by the B.C. Utilities Commission, which is a government-appointed commission whose job it is, among other things, to look critically at the gas supply contracts and to ensure that B.C. Gas, if that's the buyer supplying these small consumers, pays not only a reasonable price for the gas, but the lowest price going.

B.C. Gas, buying on behalf of the little homeowner, for example, in British Columbia, does not pay more; indeed it pays appreciably less for gas at the wellhead than would an exporter or a large industry operating in B.C. or elsewhere. Large companies — particularly large industry — can buy gas on a large-volume continuous basis, and in effect they get a wholesale price.

If B.C. Gas, in buying similar volumes and load factors, purchases gas from the same producer, B.C. Gas must get at least as low a price and as favourable terms of delivery as anyone else gets — and certainly as anyone in the export market would pay. So the small consumer is protected by regulation and by a commission which insists that these gas purchase contracts entered into by B.C. Gas are public and consistent with the government's determination that the price of gas exported is always higher than the price of natural gas paid by all consumers, small and large, in the province.

The hon. member says the producer tends to control the price. Well, that may have been the case in the open-market situations of the seventies into the early eighties, but when the world price of oil fell, the delivered price of natural gas had to fall accordingly. And latterly, through competition in the marketplace, whether it be here or in adjoining areas of the United States — or California, where some B.C. gas is delivered — the price has gone down and down, and the price paid for gas by B.C. users has gone down correspondingly. The hon. member is restive about the fact that the price has dropped further for large industrials than it has for residential users.

The fact of the matter was that under the old B.C. Petroleum Corporation mandate, when it bought all gas, it used the sales of natural gas to large industry to subsidize the residential and small commercial, etc., rates in the province. Today rates are much more in line with rates charged elsewhere. If you compare our gas retail rates for any category of user, including small residential customers, with those charged in neighbouring jurisdictions, our people pay a lower price than do residential users, for example, in Washington State or Oregon by a considerable margin. The only part of North America where the price is lower is in Alberta, but that's due to shorter distances and no other factor.

Producers have not really been in control of price for some years. They would like to be able to get better control, but that would only happen if, as and when a world shortage of energy develops; then the supplier might in some measure be in the driver's seat. But the buyer is not in the driver's seat today in this province or elsewhere.

Finally, this legislation goes some distance to control the biggies in the industry. The biggest by far is Petro-Canada, a corporation owned by the government of Canada. It's the biggest producer in the B.C. Peace River area, and it has gone along with this devolution move. At times, Petro-Canada has been difficult for us to deal with. It does tend to throw its weight around because of its size. It reserves the right, like all the other producers, to sell directly and independently, using its own marketing arm, if it so chooses. But it has large quantities of gas that were previously contracted with the Petroleum Corporation; and those contracts will from now on be administered by CanWest. They run out over time; and Petro-Canada may simply shift its marketing functions elsewhere. I trust, however, that CanWest is indeed a success. The head office of CanWest must be located in British Columbia. It must have a majority of B.C. directors. It must, in other words, be a B.C. company to the greatest extent possible. And those golden share provisions are also incorporated in the legislation.

Mr. Speaker, I move the bill be read a second time.

Motion approved.

[ Page 10895 ]

Bill 63, Natural Gas Price 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. BRUMMET: Mr. Speaker, I call second reading of Bill 33.

MINERAL TAX AMENDMENT ACT, 1990

HON. MR. DAVIS: Mr. Speaker, I'd like to call this simply a housekeeping act; it's more than that. Last year we introduced an entirely new tax system for hard-rock mining and coal-mining in this province. It's a simpler system, based essentially on cash flows in the industry. It's a system which uses the current operating accounting procedures of the companies. They don't keep separate books in order to pay our tax. The books that they use for their own operating and other purposes are sufficient for reporting the new tax liabilities. In some measure the new tax — and it's different from metal-mining and coal; they differ one from the other as to rates but not structure — is profit-related. The tax liability, in other words, of a metal-mining company, or a coal-mining company, is higher in times of high prices and large volumes; is less when the industry is having difficulty selling its coal, or selling it at a price which is close to the company's operating costs, and yields very little, if any, profit whatsoever to the shareholders in the firm.

The industry prefers this kind of tax because it pays more tax when it can afford to pay more tax; it pays less tax when it's struggling to keep the mine open, keep it operating, keep the employees on the job and not laying them off.

We brought in that comprehensive legislation last year and wiped out in its entirety the old tax system and brought in a new, much simpler one.

[Mr. Pelton in the chair.]

There's one substantial loophole which would allow the companies to deduct twice — not once — certain costs. We want to remove that opportunity to ensure that the tax yield of the new tax, the yield in revenue to the treasury, is comparable to that before we change the nature of the tax. We must close that loophole. Essentially that's the main thing that this housekeeping — I'll call it that — legislation does.

There are a few other minor changes of an editorial nature which are also being processed in this bill

MS. EDWARDS: This is not highly controversial legislation, Mr. Speaker. The minister knows that we supported the bill the last time, and these housekeeping measures seem to add nothing more or less to the bill as it was.

I want to take the opportunity, of course, of mentioning again that despite all my investigations into why coal-mines are taxed at a higher rate than metal-mines.... I'm told by various people that there are offsetting privileges, I suppose. I believe they are less. I have yet to determine why the coal-mines in my riding have to pay a higher rate of taxation than metal-mines. It's something I bring up again to the minister. It's something that I will certainly proceed with. The coal-mines in my area are having a very hard time about taxes.

As the minister knows, mining companies are perhaps the most vocal and loudest people talking about taxes. I take that simply as a very loud and a very frequent voice among many others; everybody complains about their taxes. This is not to stand and talk about that, Mr. Speaker, so what 1 will say is that I believe this bill has met with the general approval of most of the people involved.

[10:45]

HON. MR. DAVIS: The hon. member asks why the coal-mining industry is paying more or a higher rate of tax under this particular legislation than are the metal-mining companies. Historically the coal-mining industry's royalty — if one goes back far enough — amounted to a certain number of dollars per tonne mined. It was that kind of tax initially. It yielded more revenue than did taxes on copper, lead, zinc or gold mines — in other words, hard-rock mining.

The Minister of Finance (Hon. Mr. Couvelier) is a hard taskmaster, and he didn't want to lose too much revenue, so I managed to get his agreement that we would effectively reduce the tax burden in the coal-mining industry — largely because of its current difficulties — by some $15 million a year. The metal mines will continue to pay roughly the same number of dollars into the treasury under the new tax regime as they did under the old and more complex regime. The coal-mining companies in total are paying much less tax than they used to pay, but, as the hon. member says, the rates are higher. The rates— and that's about the only difference in the legislation — are higher in respect to coal-mines than they are in hard-rock metal-mining company cases.

That's not to say that it should always be thus, but always, when you are bringing in tax changes through an administration, you have to deal with the Minister of Finance and his need for revenue. He did make a concession, but it wasn't sufficient to bring the rate for coal-mining down to parity with the metal-mining companies.

I move the bill be now read a second time.

Motion approved.

Bill 33, Mineral 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. BRUMMET: Mr. Speaker, I call second reading of Bill 59.

MINE DEVELOPMENT ASSESSMENT ACT

HON. MR. DAVIS: This legislation converts to law, expressly, in a piece of legislation passed by this

[ Page 10896 ]

House, the practice of the government in respect to new mines or approvals of major mine extensions or modifications which has existed since the late seventies. It's a process that sees the Ministry of Energy, Mines and Petroleum Resources acting as the chairman or the single desk that takes the application by the company — either to open a new mine or to modify a mine or to have its mine-reclamation procedures modified or approved — to government. My ministry chairs the meeting, and other ministries' representatives sit around the table. The company comes to one place, lays out all its plans in detail, whether they have to do with environmental protection or the impact on a local municipality or a regional district or perhaps on Crown lands. Those other ministries are all present at the table. So we provide a single desk, a single window for the industry.

The industry applies through our ministry but sees its application, which may initially be rejected or certainly modified, dealt with at one time by all ministries whose permits or authorization are needed for the development or modification of the mine to proceed. It's process. It's efficient administration. It ensures that all ministries have their say when it comes to the establishment of a new mine or the modification of mine operations. The mining industry likes it primarily because it's a single port of call in government. They get all the good news or all the bad news at once. The paper doesn't have to be carried by the company at separate times to different ministries. The paper is submitted in one package to one place, and the ministries speak with one voice in ruling on modifications required before the mine can proceed — or indeed with one voice if the application is turned down, and one voice when it comes to such important matters as adequate provisions for reclamation of the mine site once commercial operations cease.

Essentially it puts in law up front what has been the practice for a good while. It also makes it clear that the province does have in place a procedure that can involve public hearings, etc. It puts the federal government clearly on notice that the province does occupy this field and invites the federal government, if it has such concerns as fisheries, to also participate in the process of approval. But it makes clear to all concerned — the industry, other levels of government — where we believe the final say, go or no go, rests. It rests with the province. It's a process which is open. Reports, analyses, critiques are generally made available to the public. It's an open process. It's a process through which any substantial mine development must wend its way.

I'm thinking of — for a notable example for the future — the Windy Craggy development. The initial plans have already been turned back, and the company has been asked to modify its plans before the committee. The interministerial committee will look seriously at any application in this case. It was geared up to deal with a possible metal-mineral development on the Queen Charlottes, which has gone by the board. It would have seen federal participation through Fisheries and Oceans and the participation of the aboriginal people — the Haida — in an open forum.

To repeat, this puts explicitly in legislation a process which has been used and which does, from the mining companies' point of view, streamline the approval or otherwise of an application to develop. It allows all ministries to have their say and the public, depending on the public interest in the matter in question, to be fully informed as to what's going on.

I move that the bill now be read a second time.

MS. EDWARDS: Well, as the minister no doubt knows, our side of the House agrees with him that this mine development review process should be in legislation. With that principle we certainly agree that the mine development review process, as the minister says, was set up and was certainly a model. It has been a model for some good work, not only in other resources within British Columbia, but also in other provinces and even beyond the country's borders.

What we may have some concerns with, as far as the principle of this specific bill is concerned, is the public involvement in it. It seems that the whole tenor of activities today in the resource industries across the province is for the people to want to have a say. We all believe that the people should have a say in their own resources. The minister says that they may if he decides.

I believe that there is a place in this legislation for the possibility. I'm not saying that every project should have a hearing, because that may be so, but there should be a point at which the public has access to see whether or not they would like to initiate or approach the minister.

I believe there may be a place where local government might want to initiate, and I'm not sure that they have the access to the information beforehand. I believe that the whole business of public involvement could be broadened a bit within this particular bill. The minister talks about one agency, and I do believe that is one of the benefits of the bill and that the people who work with it probably appreciate it. I see no point to dispersing that.

I also believe with the minister that if this process works well, and works well for British Columbia's resources, we will not have the people of the province asking for the federal government to come in and review again. We don't need duplication of those efforts if we do our social, environmental and economic costing well. Since that is the goal of this, I certainly support that goal.

It seems again — and perhaps it is related a bit to the public involvement issue — that there may be a point where there could be a place for an arm’s length decision about whether or not a process goes ahead, rather than leaving it with the minister totally; a point in the process where there could be an arm's-length person or agency designated to make that kind of decision.

We have some concerns about the number of processes that are going on in the province. I under-

[ Page 10897 ]

stand from talking to some of the minister’s staff that he also has some concerns and that the staff has looked at whether or not we should have a mining review process and an energy project review process and a Utilities Commission process and a major projects review process and so on and so forth. So far, as I understand it, the ministry hasn't found that they could all be combined.

We would urge again that a lookout be kept, because without losing the very character of what we're looking into, it might be easier for the public, which genuinely wants to have this say.... If they learn a process about a mine, they might know better how to deal with the process about a pulp mill — that kind of thing.

I notice that no placer mines are involved in this, and I'm not sure that that might not be another idea that I would put to the minister — that some placer mines might be subject to this process.

With that, I would like to say that we on this side of the House support the bill.

DEPUTY SPEAKER: The members are advised that pursuant to standing order 42 the minister closes debate.

HON. MR. DAVIS: I am one of those who believe that where there is a line ministry — Mines or Forests or Agriculture — that ministry should provide the single-desk opportunity to operators in the industry to deal not just with the line ministry but with government generally.

In theory, I think we would endorse the idea that there should be only one process and it would apply to all industries, all activities and so on — a major project review process, one might call it. The province is considering legislation along those lines, but it may take a year or two before they get the legislation all ironed out to everyone's satisfaction.

[11:00]

I personally believe that line ministries should deal with matters within their scope directly. Forests, for example, would deal with the licensing of pulp mills. My ministry would deal with the approval or otherwise of a new mine. It's the rest, the generality otherwise, that would be covered by general project review legislation. It's mostly because the people involved in the actual approval process are more familiar with their particular industry; they are more hands-on; they know the terminology, the history of individual mines etc. in the province, their shortcomings, the need for reclamation provisions and so on. It's one specialization. Two, the industry deals with people.... Most of its dealings are with people in government whom they know, and the responsibility is on our individual line ministries to ensure that we do a good job in screening these projects.

As to the size of project or the degree of public involvement, I think the hon. member can take some comfort from the fact that this government, and I believe most governments in Canada nowadays.... If they sense that there's an appreciable public interest, it's going to be as much as possible a public process.

We haven't defined some threshold-level quantity or whatever which says it's necessary for not only this new mine to go through this assessment or project review process — go through these hoops — but all projects. I can assure the hon. member that where there are other possibly conflicting interests — aboriginal land claims or fisheries impacts or other environmental impacts and so on — there will be an opportunity for the public not only to sit in on hearings but to get copies of studies, etc., which governments insist be prepared prior to any approvals, and to get that information ahead of time so that as interveners they're both well informed and well equipped to make their views known to government and, as part of this process, appeal or apply and act as what I'll call interveners.

We do want to involve the federal government and indeed local levels of government — municipal, for example. Wherever a development is likely to impact on federal powers — fisheries, navigable waters, international effects — we want to involve the federal government, and especially its expertise, from day one, and have those federal departments and their technical people involved from the very beginning so that there isn't a need for duplication or a repeat hearing by a federal board of some kind or other.

Mr. Speaker, I've already moved the bill be read a second time, and those are my remarks at this stage.

Motion approved.

Bill 59, Mine Development Assessment Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. BRUMMET: Mr. Speaker, I know that the Minister of Finance (Hon. Mr. Couvelier) will be listening on the speaker in his office. I also know that he is eager, if not anxious, to proceed with amendments to the Financial Administration Act, and I know that he will be rushing to the chamber. I can only hope that his skateboard doesn't break down on the way here.

Mr. Speaker, I call second reading of Bill 60, Financial Administration Amendment Act, 1990, in the hope that we can proceed very shortly.

DEPUTY SPEAKER: Government House Leader.

HON. MR. BRUMMET: Mr. Speaker, it would appear that the pollution-free skateboard broke down, so I would suggest that in the best interests of all, the Speaker declare a 10-minute recess.

DEPUTY SPEAKER: The Chair will call a 10-minute recess, and we'll ring the bells when it's time to come back.

The House recessed at 11:07 a.m.

The House resumed at 11:13 a.m.

[ Page 10898 ]

[Mr. Speaker in the chair.]

MR. SPEAKER: We now have a quorum. Would the Minister of Finance care to move second reading of Bill 60.

FINANCIAL ADMINISTRATION
AMENDMENT ACT, 1990

HON. MR. COUVELIER: Bill 60 amends the Financial Administration Act to address two issues. The first basic thrust is to give the government more flexibility when it borrows money for the purpose of making loans to Crown corporations and government bodies. Current legislation suggests that the government should borrow for this purpose only when a government body has already made a request for funds. This could cause us to miss the best market opportunities for borrowing money.

The new legislation will clarify that the government can borrow in advance of receiving a specific request. Until these funds are needed, they will be fully invested by the Ministry of Finance and Corporate Relations. This procedure has important benefits. The province can take advantage of the best financing opportunities as they occur in the international financial markets, and the province will be more responsive and flexible in the financing it arranges for government bodies. During the period when the government is "warehousing" the funds, a small profit will be generated.

The second major thrust of this legislation is to clarify the types of financial agreements into which the government is authorized to enter. At the moment, most such agreements are entered into under a general power. Legal counsel has advised that a more specific authority is preferable. The agreements referred to in this section include financial service agreements such as banking arrangements.

Also included are agreements which enable us to manage and reduce various financial risk exposures. For example, if the province was to borrow in a foreign currency, it could simultaneously enter into a currency exchange agreement to eliminate currency risk. These amendments are minor but important for the running of the province's treasury operations. I now move the bill be read a second time.

MR. CLARK: Mr. Speaker, I was here before and the minister wasn't, I guess the minister was here when I wasn't. I haven't had the benefit of listening to his remarks.

[11:15]

This is a curious bill. We are asked to support the government's initiative to make borrowing easier. It's kind of ironic — isn't it? — that this government that professes to be such good managers and to be concerned about debt wants us to make it easier to borrow more and more money. This bill removes the mandatory requirement that a specific government agency requests a specific loan before the government itself sets out to borrow any money. Then it also gives the government the authority to use the money borrowed for one purpose, transfer it and lend it for another purpose — to use it for another purpose.

I don't understand why or how the government could expect the opposition to support such legislation — or the public for that matter. We've seen real problems with the government in terms of borrowing money, moving money between sub-votes, problems with the estimates, accountability and the lack of accountability in this administration. Here they ask us to approve something which makes it easier to borrow money for one purpose and then not use it for that purpose.

I'm sure that people in the ministry would like that flexibility. I've got some real concerns about it. I think it might be sufficient to allow the government to use money for other than the stated intention, but there should be some way in which notice must be given to the public or to the House in some manner in order to assure the public that money being borrowed is used for a specific purpose and that everybody knows that, That's the whole principle around this building, Mr. Speaker: that the public — through their MLAs — have full knowledge of government borrowing; that they have knowledge of what that money is spent on; that they have the assurance that it's not being moved from one thing to another.

I think this bill is a little too wide open for my liking but we'll have more discussions of the details of it. I may even think of some amendments that might deal with my concerns in committee stage.

HON. MR. COUVELIER: Mr. Speaker, I move the bill be referred to a Committee of the Whole House to be considered at the next sitting of the House after today.

Motion approved.

Bill 60, Financial Administration 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. BRUMMET: Mr. Speaker, I call second reading of Bill 49.

ASSESSMENT AND PROPERTY
TAX REFORM ACT, 1990

HON. L. HANSON: It is my privilege to put forward Bill 49, Assessment and Property Tax Reform Act, 1990. The bill contains measures designed to bring stability to the province's assessment and property tax systems. It also contains measures to streamline the assessment appeal process and to return certainty to the industrial tax base.

The bill contains amendments to the Assessment Act, the Municipal Act and the Vancouver Charter. Regarding the Assessment Act, the bill extends the definition of "occupier" to include certain houseboat owners. This measure plugs a loophole in the existing

[ Page 10899 ]

legislation that allowed certain houseboat residents to escape property taxation.

The bill clarifies and simplifies the information gathering requirements necessary for the production of an accurate tax roll. These measures will reduce the numbers of appeals based on the lack of information or on faulty information.

Confidentiality requirements have also been amended to ensure that everyone involved in the assessment function is under a duty of confidentiality, These measures protect taxpayers who have in the past been concerned about the need to divulge confidential business information in assessment appeal hearings.

Amendments to the Assessment Act also reinstate improvements on Crown timber tenures to the roll. This amendment is of particular benefit for the Mount Waddington regional district and the Port Clements boundary extension. A previous amendment relating to section 10 of the Forest Act had resulted in serious financial consequences for these two areas. This clarification corrects the error and restores the inclusion of improvements on Crown timber tenures to the roll.

Regarding the Municipal Act and the Vancouver Charter, the bill empowers municipalities to impose separate tax rates on residential land and improvements. These measures alleviate large increases in taxes where land values have increased much more than the value of the improvements. Because this is an option to be used at the discretion of the municipalities, the amendment allows greater flexibility in revenue raising. The bill also empowers municipalities to impose a flat tax on residential property for general municipal purposes. This flat tax is designed to assist taxpayers in municipalities where assessments have fallen. Taxpayers whose property assessment decreased by less than the average were faced with large tax increases in 1989. These measures allow the prevention of similar situations.

I would like to emphasize for this House that the option of a flat tax has the support of the Union of B.C. Municipalities. Furthermore, it was one of the recommendations of the "Financing Local Government" study.

This proposed tax has been criticized as being similar to the poll tax recently imposed in the United Kingdom. This tax, in fact, differs fundamentally from the British community charge in that it will be levied against a parcel of property, not against an individual, as is the case in the United Kingdom.

In addition, my government recognizes the possibility of regressivity. This proposed legislation, therefore, specifies that the tax must he levied in conjunction with the property value tax. Furthermore, the homeowner grant, which is worth more to lower-valued properties, further cushions the impact of the flat tax.

Our municipalities have asked for more flexibility in tax instruments, and this bill will give them that power. The flat-tax option is not mandatory. Taxpayers who have concerns about the flat tax will be able to raise their concerns with their local councils, the people who are closest to the issues and directly empowered to make decisions on revenue collected.

A final feature of this legislation is that it extends tax exemption for places of public worship to churches under construction. This exemption in the Municipal Act will now parallel the exemption allowed churches in rural areas and furthers our aim for exemption consistency.

Mr. Speaker, it is my pleasure to move that Bill 49 be read for the second time now.

MR. CLARK: I have very serious concerns about this bill. They were the subject of a privilege motion, as the Speaker knows, at the outset of the House. The option of allowing municipalities to levy a flat tax is something which I think is very dangerous. It is, I acknowledge, permissive, not mandatory, on the part of municipalities. It has to be levied in conjunction with the current value-based tax system, both of which mitigate the potential damage but nevertheless leave us open to fundamental change.

We have in this province the best assessment system in North America — acknowledged by everybody. It was brought in in 1974, not as a partisan initiative but by an all-party committee, unanimously supported. It put British Columbia at the forefront of assessments, because we totally got away from politicians interfering in the value of a home and moved it to what I suppose could be called a value-free and neutral benchmark. It said that the assessment is neutral. It is a market-based assessment. Politicians don't tamper with it. All politicians agreed. It removes the fooling around with the assessment system which took place in British Columbia and which takes place in virtually every jurisdiction in North America. So we got rid of that and brought in a neutral assessment system.

This bill does not deal with that assessment system, and I don't want to say it does. However, it starts to introduce into the system an element that does not have anything to do with the assessment system. In other words, we have a so-called value-free market test, a market measure of the value of a home upon which the tax can be levied. By allowing an option of a flat tax which bears no relationship to that assessment— a value-free market-based measure — the assessment is then meaningless. If you allow the tax to be based on something other than market value, why have the expense — it is very expensive — of a valuation of every home in the province every two years? You start to creep into this realm we were in prior to 1974, which other provinces have struggled with for years.

A year ago there was art international conference in British Columbia of all assessment authorities in North America to review the system in British Columbia. This starts to play around with taxes based on the value of the property. It means that we can have a situation where taxes are based on something other than value. That's clearly the intent of this bill, and it makes it potentially unfair.

Obviously there is some problem with someone having an asset worth a lot and not having income

[ Page 10900 ]

with which to pay. Those are most often senior citizens, and that is dealt with by way of the deferment. This government recognized the problem inherent in having an asset and no income, and reduced it to 60 years of age last year. We on this side of the House supported reducing it to 60 years of age. Anybody 60 or over who has a very large asset and very little income need not be concerned about value-based assessments, because of the initiative of the previous government and initiatives of this government. So we're dealing with a handful of people, potentially, who perhaps have an asset and very little income, and we're playing around with the entire system. It just doesn't make any sense.

In Vancouver the municipality has the option now of listening to a handful of well-organized, very affluent, very articulate citizens from one part of the city whose homes are extremely valuable, at the expense of those in other parts of the city who have very modest bungalows. Very clearly, the municipality is now faced, with this permissive legislation.... For the life of me, I don't understand why the city of Vancouver would want this, unless it's to do something that is unfair. They now will not have an option. Potentially they will have a group of homeowners, from Shaughnessy or somewhere, in million-dollar mansions — who undoubtedly are articulate and often are professionals, who could perhaps hire the best lobbyists in the world and who probably finance political parties and otherwise — going before city council and demanding that the government impose a flat tax and thereby shift the burden from Shaughnessy to East Vancouver. How will the municipality withstand the furious and intense lobbying from those well-heeled individuals, given the option that now exists for them in this act?

I understand the municipality's desire for more flexibility; I understand that there are unique circumstances in places like Kimberley. That may well be the intention of the government. But it is not acceptable to introduce that element — potentially the element of regressivity — into the legislation and into our assessment system.

[11:30]

We've already had tax-capping from this administration; they have already allowed the city of Vancouver to cap the tax increases. That had the result of citizens in East Vancouver last year paying roughly $30 more than they would otherwise pay under the normal system. Very few people in East Vancouver complained about it, because in East Vancouver our taxes did not go up. The system works this way. If the assessments rise dramatically on one side of the city and not on the other side, and if the government does not want more revenue or only wants a cost-of-living increase, it has the effect of shifting the taxes to the area where the assessments have risen. All members should know that these things even out, and next year, no doubt, it'll rise faster on the other side of the city. Nevertheless, because the assessments rose so fast on one side, the tax burden rose dramatically on that side. The politicians in the city of Vancouver succumbed to that pressure and lobbied the provincial government, and the provincial government gave them the option of capping their taxes. That meant that people with very modest bungalows in East Vancouver paid more tax. The burden shifted from the west side to the east side of the city last year — albeit modestly, but it was shifted.

This is a whole new ball game. This allows not just a very small shifting by way of capping; this allows the municipality to levy a flat tax across the board, so that a bungalow in East Vancouver worth a tenth of a house on the other side of the city could potentially pay virtually the same tax, or at least more equal taxes than they currently pay. And that's not fair. It is unacceptable to shift the burden in that manner. In my view, it is unacceptable to give the municipality that regressive option.

I know the government and our side as well are very sensitive to the needs of the Union of B.C. Municipalities. I understand their desire always for more power, which any elected official would want in terms of designing a tax regime and getting more tools to deal with nuances and problems. But the flat-tax option should not have been afforded.

There is another option there which allows a municipality to impose a different rate on land and on improvements, which is another innovation. I don't have a problem with that. However, it is of some concern to me. It has some potential to raise the tax more on land than on improvements in order to encourage development and to encourage the supply of housing. I fear the reverse will be done.

MR. ROSE: Parking-lots.

MR. CLARK: Or to encourage development. I fear the reverse will be done: municipalities will use this option to shift it more onto improvements than on land, and will try to skew development in an unfair way. I just think that that option, while I support it.... I'll deal with my own municipality on that question, because I think there are some positive side effects to it. I don't really have a problem. It may give them some more flexibility.

However, the flat-tax option is not one which I support. I very, very strongly oppose a move to introduce that kind of regressivity into our system. I think that, at least in Vancouver, it can be used at the expense of those who are not as articulate, who are not as wealthy, who are not able to mount the kinds of campaigns that we are going to see now from elements of the city. Therefore, while there may be a case for this in certain municipalities — and I'm not privy to that; I'm not the critic in this area, and I defer to the other members who have knowledge of their own particular area — in the city of Vancouver this is bad news. In the city of Vancouver, this means that people will ultimately pay more taxes at the expense of those who can most afford it.

HON. MR. BRUMMET: I do want to get briefly into this debate to register my surprise — I shouldn't say surprise — my interest in how the socialists on

[ Page 10901 ]

the other side keep flip-flopping as to what they stand for.

When we were discussing school tax, there were some pretty clear statements from that side that a person's property value going up in a neighbourhood is no indication of that person's ability to pay. Therefore, using a constant mill rate and applying it against every property regardless of the person's ability to pay was somehow or other evil and wrong, and some adjustments should be made.

We now find that the member contradicts that position, and says any adjustments to that principle are somehow or other wrong. I guess the greater concern is the implication of the member for Vancouver East's statement that you should not give any discretionary power to the Vancouver city council or to other councils because — implicitly — he says they can be bought. He says they shouldn't have any discretionary power, they shouldn't have the right to make any of those decisions on behalf of their taxpayers, because they can be lobbied; there can be campaign contributions; there can be those sorts of things. I guess he's saying that the people on the Vancouver city council - at least he must assume the majority — can be bought. That's certainly implicit in his statement.

I'm concerned that taxation is okay in one bill, but it's not okay in another bill — situational ethics or values, I guess you'd call it -and that you cannot trust a local council to serve the interests of their constituents. I guess that's what socialism is about, isn't it? Socialism takes the attitude that big government decides how it should be done, and that other people at the local level are not to get that discretion.

I would certainly urge the minister to proceed with this, to provide options and to have the faith the opposition members don't have that council members are people with integrity and are not that easily bought, as that member implies.

MR. BLENCOE: Because of all the various other things that have transpired in this session and in other pieces of legislation which have got attention, this bill probably hasn't got the attention it deserves. Really, this bill is a major shift. When you look between the lines at the implications, the perceptions and the reality for local government, it is — or could be, if municipalities decide to use the flat-tax option — a dramatic, revolutionary change in how we pay for local government.

I realize that it's permissive; in a way, I suppose it's clever of the provincial government to do that. But my concern is that it's there. My concern is that local councils, in their wisdom, may decide to introduce what I think is basically a very unfair property tax system. The minister said that this isn't a Maggie Thatcher poll tax; but if used carefully, it's a variation on the theme.

My overall concern is that we have, in the last few years, tinkered with the assessment system, the property tax system and the ability to cap — again, permissive. We've done artificial reductions of assessments. My colleague the Finance critic is correct that in this province we are going to continue to utilize the real property tax as a major component in paying for local government. It's a good system. It's basically fair; it's based on true value; it's applied equally. Once you start playing around with that and you start tinkering with it artificially, it doesn't work. It falls apart. It no longer remains an equal system.

I'm concerned that we continue to tinker with the system rather than really taking a long-range, total overview of the entire way we pay for local government. I've spoken on this many times in this Legislature. What's happened in the last 50 years is that municipalities and the services they provide have dramatically shifted and changed. It used to be that local government, in collecting money, applied that money to services that directly service land — police, fire, roads and those sorts of things.

But local government — and this is good — has got into other jurisdictions and other areas. We are devolving many of the things we've done at the senior level to local government. I don't want to get into that topic, because there's a whole can of worms there in terms of how you pay for it by local government.

The nature of local government has changed in what they do and what citizens expect them to do. Of course, one of the reasons citizens expect more from local government is that they understand it. They can see it. They can get to it. They can get changes made. I believe there's a lot more accountability at the local level. You can see your mayor or your alderman or your regional director, and you can have a direct impact on bylaws very quickly and efficiently.

People have wanted change, and they have wanted more services carried out at the local level, but we've made — I don't think on purpose — a mistake. We haven't looked at that dramatic change over the last 40 to 50 years. We haven't looked at the way we pay for those services at the local level. We continue to utilize and rely on the real property tax system.

I know there have been many royal commissions. I've read them, and I'm sure my colleague across the way has looked at them. Other jurisdictions have tried to find different, innovative and progressive ways to pay for local services. There has never been a real answer.

There have been suggestions on how we should pay for local government. One of the better ways would be a greater share by municipal government of the progressive tax systems that are available to the provincial government and a greater share of the income tax system that the provincial government utilizes; a greater share of those resources applied directly to local government and therefore less reliance on the real property tax system.

MR. LOENEN: More taxes.

MR. BLENCOE: No, I'm not talking about more taxes. Rubbish! I'm talking about a fairer system.

Interjections.

[ Page 10902 ]

MR. SPEAKER: Order, please. Perhaps the members could have a look at the clock and realize it's not that long until lunch. We'll feed them something and they'll be better behaved.

MR. REID: Tell him to tone down his comments.

MR. SPEAKER: Would the member for Surrey-White. Rock -Cloverdale please restrain himself.

MR. BLENCOE: Mr. Speaker, it's very unfortunate that when we try to have a discussion about problem-solving and looking for solutions, we continue to get the silly old rhetoric from the other side.

All I'm saying is that we have the ability and the talent in British Columbia to really take a look at how we pay for local government rather than just tinkering with it and applying Band-Aids. Quite frankly, local governments and the UBCM have been calling on the provincial government for a major revamping— but before you do that, a major investigation of what's happening to local government in terms of the services they provide and the way they find money to pay for those services.

Mr. Speaker, local government is going to become far more important in the years ahead. The word "decentralization" has been made a bad word by the government across the way, but in the years ahead we are going to be talking about devolution of power and about putting services closer to the people. We've got to talk about how we pay for that at the local level. There's going to come a time when we're going to have to have the equivalent, if you will, of a royal commission or some way of fully reviewing local government financing and how we pay for it. We cannot continue to tinker and to find Band-Aids Quite frankly, this is a Band-Aid, in my estimation.

[11:45]

I think the flat tax is a very dangerous move. I know it's permissive, but you could have under this legislation, if it is used as intended, a municipality deciding that the owners of a million-dollar piece of property— or indeed, a very wealthy person — will pay the same amount on the land portion as a senior citizen next door on a very limited income.

Interjection.

MR. BLENCOE: The Minister of Education (Hon Mr. Brummet) says: "Trust us." Boy oh boy, Mr. Speaker! That's the danger in this legislation.

My colleague from Vancouver East has given the example of the Eastside bungalow. I've got them in my community: the small bungalow in James Bay or in Fairfield paying the same amount for taxes as they pay in the Uplands or as the owner of some mansion in a wealthy area of our community pays.

When a government brings in legislation, property owners have the right to be assured that they will not be asked to pay more than their fair share. That's what I'm trying to get at. We need to ensure that legislation passed in this House does not give the ability to make those who are not quite as well off as some who own very valuable pieces of property pay more than their fair share. That's the issue.

Mr. Speaker, I have come to the conclusion that we really need to have a far more fundamental look at how we pay for local government. This flat tax is dangerous; it is tinkering; it is another Band-Aid. I know that the UBCM suggested that it's a good idea, but we in this Legislature have to look beyond that sometimes and see the full and potential implications of legislation in terms of fairness.

So, Mr. Speaker, when we come to committee, we will look particularly at sections 7 and 8. There are some good sections in this legislation, which are required and give more power to the Assessment Authority and which we have no problems with. But we have some grave concerns about the flat tax, and we need to think much longer and harder about the full implications of this legislation. That will be done in the days and months ahead.

MR. G. JANSSEN: It's rather surprising to see the Social Credit Party presenting legislation that interferes in the free market system, a system they adhere to and propose continuously. Yet they propose legislation that....

Interjection.

MR. G. JANSSEN: To some degree it's their religion — correct, Mr. Member. But here they are definitely interfering in the free market system by saying that property value assessed by an independent authority.... The Assessment Authority had a convention in Vancouver last year, and all the assessment authorities of North America came. I went there. I know the member opposite didn't bother to go, because he obviously knows it all. But I was there, and all those other North American assessment authorities praised the British Columbia system. They said it was the best system. It has been praised even by Social Credit members, even though it was brought in by a New Democratic government.

It's a fair system. But here we see this government interfering in that fair, free market system where land or residential property is evaluated by an independent body, and a fair market value is put on it, and people pay taxes in accordance with that. But we're not going to see that anymore with the flat tax proposal in this bill, because whether you own an expensive piece of property or a less expensive one, the flat tax will be exactly the same. It's another example of this government taking from the poor and giving to the rich.

There are problems — agreed — and the band-aid approach of capping taxes of the rich so they can be passed on by municipalities to those people who can't afford those houses and who don't have the income or the means with which to live in more desirable accommodations.... I'm sure many members of this House have gone through that experience, as I have. When my family first moved to Canada, we lived in a very modest home because we didn't have the means to own property that was more comfortable and therefore more expensive.

[ Page 10903 ]

It's inherent that people, as their means in life expand, as they become more comfortable and as their incomes grow, end up owning more expensive pieces of property and trying to provide better homes for their families. But what we're seeing with the flat-tax proposal in this bill is that if you are wealthy and can afford a more expensive piece of property, and as your assets in life increase, you purchase that property and live in a more desirable part of the community perhaps — where certain services are provided because the taxes are higher, because the assessment is higher — then that's no longer the case.

Those people who live in an area of the community where those services aren't available are going to pay the same flat tax as those who live in the more wealthy area of the community. We could, in fact, be forcing people in those areas to not even be able to afford the modest homes that they live in today. We could be forcing them out of communities, because they can't even afford the very modest homes that their incomes dictate to them.

It's interference in a free market system. I think this government is attempting to influence the Assessment Authority's impartiality in setting rates. They've already done that by the band-aid approach of capping, and now they're attempting to do it by bringing in a flat tax.

The minister says it's not at all like the poll tax in England. It's skirting the issue of the poll tax because it has seen the disastrous results that it has brought about in England. It has seen the demonstrations, looked at television and newspapers and seen the kind of trouble that that government is in by bringing in the poll tax, so they've skirted the issue by bringing in a flat tax on property.

No matter what your income level, no matter how expensive or inexpensive the property is that you own, you will in fact pay the same amount of tax on that property. That is inherently wrong in our system, and we in this party will not support that.

If we are going to revamp the tax system.... There are, undoubtedly, problems with the tax system we now have and with the Assessment Authority In my own community of Alberni, housing prices are very low; the average house price there last year was $46, 000. That's not even a down payment in Vancouver. As a matter of fact, with the income level in Vancouver, I think you must have an income of something like $83, 000 in order to even qualify for a mortgage. When many members of the government side of the House face unemployment after the next election, they might consider selling their homes in Vancouver, moving to Alberni and buying a piece of property out of their retirement benefits.

We oppose this bill. I'll give the minister an opportunity for his closing remarks.

MR. MILLER: Relating not to the municipal taxation but to section 27, in terms of the taxation of managed forest lands, there is a basic anomaly that needs to be addressed in terms of the ability of people who are on managed forest lands and are receiving a tax benefit as a result of being required to submit harvesting and silvicultural plans with absolutely no requirement that those plans be lived up to. If they are not lived up to, there is no ability on the part of the government to recover the tax concessions granted in previous years.

It's a gaping anomaly in terms of some of the big problems we've got, particularly in the Gulf Islands. Additionally, unmanaged forest land where the value of the standing timber is assessed acts as an incentive for landowners to harvest that timber even though they may not want to do that.

There was one particular case - the minister should be familiar with it -on the northern part of Vancouver Island where that occurred. There are anomalies in terms of how the Assessment Act is applied to these lands. Some assessment districts appear to be doing something; others appear to be doing nothing. There are gaping holes In terms of that section,

The minister advised that section 27 clarifies things with respect to taxation on forested land. It does not clarify~ in my view, what are the most gaping anomalies in that whole process. So I'll be pursuing that in committee.

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

HON. L. HANSON: It is interesting to hear the members of the socialist party over there talk about free enterprise. I am quite astounded. I must give them a compliment, though, because their imagination certainly goes far beyond reality~ I have some difficulty understanding the relationship that the member for Alberni was making to this bill in questioning the integrity and the process of the assessment board. That really does take some imagination and stretching of reality.

In any case, the government, the Social Credit Party, has the greatest of confidence in those duly elected people who represent our municipalities and our regional districts around the province. The legislation is permissive. The people who are elected to handle the affairs of those communities are also accountable at the polls. I'm sure the fears that this legislation seems to raise with our opponents will be handled very well by those very capable people who run our local governments. I'm sure that the Union of B.C. Municipalities and the various municipal councils around the province will be interested to hear the amount of confidence that the socialists have in their ability to run government.

Mr. Speaker, I move second reading of the bill.

Bill 49, Assessment and Property Tax Reform 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. Brummet moved adjournment of the House.

Motion approved.

The House adjourned at 12 p.m.