[ Page 12109 ]

CONTENTS

Routine Proceedings

Oral Questions

Value-for-money auditing. Mr. Harcourt 12109

Provincial debt. Mr. Harcourt –– 12109

Review of Year 2000 program. Ms. A. Hagen –– 12110

Ontario deficit protest. Mr. Mowat –– 12110

Resignation of former Minister of Finance. Mr. Sihota –– 12111

Victoria-Seattle car ferry service. Mr. Lovick –– 12111

Tabling Documents –– 12111

Budget address. Hon. J. Jansen –– 12111

Mr. Clark

Budget Measures Implementation Act, 1991 (Bill 3). Hon. J. Jansen

Property Purchase Tax Amendment Act, 1991 (Bill 4). Hon. J. Jansen

Introduction and first reading –– 12119

TUESDAY, MAY 21, 1991

The House met at 2:06 p.m.

Prayers.

MR. SPEAKER: There are a substantial number of guests on the floor and in the galleries today. If it could be agreed by all to have only one introduction welcoming them on behalf of all of you, it would be appropriate. Could we have that agreement?

SOME HON. MEMBERS: Agreed.

HON. MRS. JOHNSTON: I would ask the House to join with me in paying homage to Rajiv Gandhi, who was brutally assassinated today in his home country of India.

When Prime Minister, Mr. Gandhi led his country with distinction, as did his mother before him. It is indeed a loss to the process of democracy that this tragedy should have taken place 48 hours after the completion of a successful general election in India. Such barbaric acts make us acutely aware of and deeply grateful for the peace and the freedom we are privileged to enjoy in this country and in this province. Mr. Speaker, I would respectfully request that you convey the condolences of this House and the people of British Columbia to Mr. Gandhi's family and to the people of India in their mourning.

MR. HARCOURT: I agree with the words of the Premier. It's a terrible tragedy that has happened to the largest democracy in the world, a fellow member of the Commonwealth. I hope and pray that the people of India will be able to see their way through this tragedy and that the health of that democracy will endure even this barbaric and tragic act and the loss of life. We too wish the people of India well in this time of trial.

MR. SPEAKER: Is it the wish of the House that the Chair send a message to the appropriate leader?

SOME HON. MEMBERS: Aye.

MR. SPEAKER: The Chair might note that I was personally acquainted with the Prime Minister, and that we come from the same background in two respects.

HON. MR. STRACHAN: The Canadian Advanced Technology Association award of distinction is given for public sector leadership in advanced technology and is presented annually to a leading individual from the public sector in recognition of significant contribution to the development and application of advanced technology in Canada. For the first time, a member of our Legislative Assembly has won this award. Past recipients of those awards have been Ontario Premiers Bill Davis and David Peterson; Douglas Wright, president of the University of Waterloo; and the chairperson of the Science Council of Canada, Dr. Geraldine Kenney-Wallace, who is now president of McMaster University.

In awarding the award to our recipient today, the Advanced Technology Association pointed out that this member has been a strong advocate for the construction of TRIUMF-KAON at UBC, has played a strong role in establishing Science World in British Columbia, has created the Scientists in the Schools program, where B.C. scientists volunteer to teach science to elementary school students across our province, and has been a strong advocate for women in science. Will the House please recognize our Minister of Education and of Advanced Education, Training and Technology (Hon. S. Hagen) for his winning of the prestigious Canadian Advanced Technology Association award of distinction.

Oral Questions

VALUE-FOR-MONEY AUDITING

MR. HARCOURT: Mr. Speaker, last week the second member for Kamloops attacked the auditor-general's value-for-money audit, which showed that this government has squandered away much of B.C.'s rich forest wealth. The former federal auditor-general, Mr. Kenneth Dye, says that value-for-money auditing pays significant dividends — as a matter of fact, the return of $10 to taxpayers for every dollar that's spent on auditing.

My question is to the Minister of Finance. Will the Finance minister agree that value-for-money auditing should not only be supported, but should be increased to evaluate his government's spending?

HON. J. JANSEN: As one who has done value-for-money auditing in my previous life, I want to tell you that I support the value-for-money concept. As you listen to the budget speech, perhaps the philosophy will become more clear.

PROVINCIAL DEBT

MR. HARCOURT: B.C.'s auditor-general has done a service to the taxpayers of British Columbia by exposing this government's flimflam financing. As a matter of fact, he showed that this government has been trying to hide an additional $2.5 billion of Socred debt. Government agencies such as B.C. Ferries, the regional hospitals, UBC, Simon Fraser and the University of Victoria all have debts that can only be repaid in one way — that is, with more money from taxpayers. Yet this government has tried to hide this debt. Has the minister decided to come clean about this hidden debt and tell taxpayers the true state of this province's finances?

HON. J. JANSEN: Traditionally the members opposite have two or three questions, and one is a follow-up of another. His question requires quite a lengthy response because it talks about the whole question of capitalization of assets, on which there are a number of trains of thought in the accounting profession. Perhaps

[ Page 12110 ]

I could have his follow-up questions first, and then I could respond to the larger question.

MR. SPEAKER: Perhaps we could have the specific questions.

MR. HARCOURT: There was a specific question there, Mr. Speaker. I'll be prepared to say that it's the taxpayers of British Columbia that we're concerned about, not the theory of accounting.

The point is that this Social Credit government has increased the government-purpose debt to an estimated $5 billion, and last week the auditor-general uncovered another $2.5 billion, for a total estimated debt of $7.5 billion. With the budget deficits of last year and this year, it will rise to even more. When we had good times, we did not put money aside for a rainy-day fund.

My supplementary is: in light of the auditor-general's revelations, has the minister decided that the estimates documents tabled in this House will include the $2.5 billion in hidden debt and reveal the true state of this province's finances?

[2:15]

HON. J. JANSEN: The follow-up question wasn't really a follow-up question; it was a difficult attempt to give credibility to the first question.

It is correct that the books of account of the province of British Columbia show two entries: one is a receivable and the other is a debt. The statement by the auditor-general is regarding whether that is an appropriate accounting for a Crown agency; and the other question brought into focus when you ask that question is whether you then also bring in the assets and equity side respecting that side of the entry. The Leader of the Opposition will have some difficulty understanding assets, because I think they are more focused on the expenditure and liability side in their philosophy.

Mr. Speaker, that is part of the dilemma accountants face in putting statements together, because if we showed both the assets and the corresponding equities, we would inflate our balance sheet substantially — whether or not that is the picture the Leader of the Opposition wants to show, I'm not sure. The other problem respecting the showing of the capitalization of assets is that one then talks about depreciation and what type of depreciation rules should apply respecting those assets. So there's a whole host of things.

The Leader of the Opposition, as he is wont to do, puts things very simplistically, on the basis of what he sees in the newspaper. But if he would like to have a proper response in due course, I would be pleased to give him a lengthy response, which is comprised of thoughts from auditors-general across Canada respecting this whole question of assets and liabilities, and the corresponding debenture side of the entry.

MR. SPEAKER: Perhaps if the questions were a little briefer, the answers could be a little briefer.

REVIEW OF YEAR 2000 PROGRAM

MS. A. HAGEN: Mr. Speaker, the Minister of Education has undertaken a review of the Year 2000 education reform program and has announced his intention to report to cabinet by June 1. Can the minister tell us when and how he intends to involve British Columbia school trustees and educators in his review of the Year 2000 program?

HON. S. HAGEN: Mr. Speaker, that's a pretty broad-based question, so I assume you'll allow me some time to give the proper answer. I'd like to remind the member that the process underway in the examination of the Year 2000 program — particularly the intermediate part of it, which I'm sure is the part you are referring to We are presently getting input from school trustees, the B.C. Teachers' Federation, the B.C. Federation of Labour, the Business Council of B.C., and parents, students, teachers and administrators throughout the province. As a matter of fact, we've had some 3,000 pieces of input, representing 15,000 to 20,000 individual names, come into the ministry. We are presently categorizing that information, which will be examined by the staff and by me. When that is done, I'll be bringing a report to cabinet and informing cabinet of the results of all this input from people throughout British Columbia.

MS. A. HAGEN: I think that the minister obfuscates. On April 2 the Premier announced that Year 2000 would be reviewed and a report would be in the hands of cabinet by June 1. In the throne speech on May 7, the government stated: "...education reforms currently underway will be reviewed in cooperation with the province's school trustees and educators...." It's now May 21 — ten days before that report is due — and to date no such consultation has taken place. Can the minister tell us whether he intends to honour his commitment to meet and consult with school trustees and educators about that review announced in April and repeated in the throne speech?

HON. S. HAGEN: I challenge the member for New Westminster in her facts, because, in fact, I met as recently as last Thursday afternoon with the minister's advisory council, which includes the president of the B.C. School Trustees' Association. The president of the B.C. Teachers' Federation did not choose to attend that meeting.

We are receiving input continually from the B.C. Teachers' Federation and the B.C. School Trustees' Association. All of that input will be taken into consideration, but only as part of the input, because I am more interested in getting input from the parents, children and teachers than I am from a specific organization.

ONTARIO DEFICIT PROTEST

MR. MOWAT: My question is to the Minister of Development, Trade and Tourism. Last week we saw 2,500 small business men converge on Queen's Park in

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Ontario to protest the NDPs record-breaking deficit. They were furious with that government's $9.7 billion assault on their livelihood. Can the minister tell this House what steps he is taking to ensure that each one of those threatened entrepreneurs is extended a personal invitation to come out and do business in British Columbia?

HON. MR. DIRKS: Mr. Speaker, I'll keep my answer very brief. I appreciate that question. Let me assure the member and this House that we will work with any of those entrepreneurs who want to come to British Columbia to make sure that they do indeed settle in our great province.

RESIGNATION OF
FORMER MINISTER OF FINANCE

MR. SIHOTA: Given the spirit and the recommendations of Mr. Owen's inquiry, could the Premier explain why the legal opinions governing the former Minister of Finance have not yet been made public?

HON. MRS. JOHNSTON: Mr. Speaker, the opinion given by the Attorney-General's ministry to the Premier's office is in a client-solicitor relationship. I would suggest that if the member opposite would like further clarification on that type of situation, the question would be better put to the Attorney-General.

MR. SIHOTA: The Premier doesn't seem to understand that the people of British Columbia, the taxpayers, and this assembly are the clients in this case.

All opinions rendered by the Attorney-General's department were protected by solicitor-client privilege prior to this report. This report said that a government ought not to be able to hide behind that privilege.

Again, to the Premier. You released it under the same situation involving the former Premier, and you released it with respect to the former Provincial Secretary. Why in this instance, given the same pattern of facts, are you not prepared to release it in the case of the former Minister of Finance?

HON. MRS. JOHNSTON: Once again, it's strange that we have to continually repeat the responses to questions from the member for Esquimalt-Port Renfrew. Might I suggest that the question would be better put to the Attorney-General.

MR. SIHOTA: Question to the Attorney-General. Will he agree that this opinion was rendered with respect to an individual who holds public office and rendered with respect to an investigation by the Attorney-General's department? If he agrees with that, why does he not comply with recommendation No –– 8 of the ombudsman's inquiry?

HON. MR. FRASER: As the member should know, the situation does not apply. But as we've learned from the Owen report, that member might know a whole lot about law but not a heck of a lot about justice. [Applause.]

VICTORIA-SEATTLE CAR FERRY SERVICE

MR. LOVICK: It's nice to see the other side have something to cheer about for a change.

My question to the Minister of Transportation and Highways is: could he advise the House what steps his ministry has taken to encourage the re-establishment of car ferry service between Seattle and Victoria?

HON. L. HANSON: I guess the simple answer is none. The original run between Victoria and Seattle had some difficulties. There have been some offers to purchase it, and those people may institute the service again, but we have no intention to.

Orders of the Day

HON. J. JANSEN: Mr. Speaker, I move that the House at its next sitting do resolve itself for this session into a committee to consider supply to be granted to Her Majesty.

Motion approved.

Hon. J. Jansen tabled the comptroller-general's report of interim financial statements for the 12-month period ending March 31, 1991, and the balanced budget plan and debt reduction plan as required under the Taxpayer Protection Act.

ESTIMATES OF SUMS REQUIRED
FOR THE SERVICE OF THE PROVINCE

Hon. J. Jansen presented a message from His Honour the Lieutenant-Governor: Estimates of Sums Required for the Service of the Province for the fiscal year ending March 31, 1992, and a supplemental to the estimates for the fiscal year ending March 31, 1992, recommending the same to the Legislative Assembly.

Hon. J. Jansen moved that the said message and the estimates accompanying the same be referred to Committee of Supply.

Motion approved.

HON. J. JANSEN: Mr. Speaker, I move, seconded by the hon. Minister of Forests (Hon. Mr. Richmond), that Mr. Speaker do now leave the chair for the House to go into Committee of Supply.

[2:30]

Budget Address

HON. J. JANSEN: Mr. Speaker, it is my honour to present the 1991 provincial budget to the Legislature and to the people of British Columbia. Our outstanding fiscal record is something we can all feel proud of, particularly my colleague the member for Saanich and the Islands, who deserves much of the credit. His management of the province's finances was outstanding. Thanks to him, British Columbia's message of fiscal

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responsibility is being heard across Canada, and it is a message that deserves repeating.

This budget today is more than a recital of cold numbers in the province's ledger books. This budget will demonstrate our commitment to delivering caring, compassionate and fair government — government that helps those in need. We can do this despite a national recession, because this government delivers the best fiscal management in Canada.

In preparing this budget we faced difficult choices. North America is in recession and unemployment has risen. People's needs increase as government revenues decline. There is a temptation to borrow against the future, a temptation that some governments have failed to resist. Furthermore, we are also seeing the federal government back away from commitments to social programs. This is the inevitable consequence of fiscal irresponsibility, of borrowing against the future.

These are not easy times, Mr. Speaker. We had tough decisions to make, and we made them. This budget is fair; this budget is honest; this budget renews our commitment to invest in people; but we will not leave today's bills to tomorrow's taxpayers. Our debt per person is the lowest of any government in Canada, and it's going to stay that way. We will continue to make good on our promise that people's money will be managed responsibly.

This budget is made in British Columbia, by British Columbians, for British Columbians. It serves no hidden agenda or outside interests. We have no political ties with other jurisdictions. We are a British Columbia government. We have avoided the spending and debt spiral adopted by others. We will not mortgage the future to follow some bankrupt ideology. We can be proud of our way of doing things. We can be proud of our accomplishments and excited about the future.

This budget paves the way with four key commitments: we will protect today's taxpayers with taxes among the lowest in Canada; we will protect tomorrow's taxpayers by reducing the burden of debt; we will protect services to the people in spite of weaker revenues; we will lay the foundation for a prosperous future — a future with good jobs, stable jobs and lasting jobs for British Columbians.

Mr. Speaker, this is a free enterprise government. We understand that economic success is driven by business in all regions of British Columbia. Government's job is to set the stage, not interfere.

We will continue to provide a competitive business environment for the 1990s. To do this means low taxes, cutting red tape, making investments in infrastructure, providing an educated workforce and delivering efficient and effective services. This government has provided a good base for business to build on, and this budget continues this commitment.

Thanks to the province's strong economic performance in recent years and this government's excellent fiscal management, we are in good shape. With one good look across Canada we can see that British Columbia is weathering the current economic storm much better than most other provinces. Twenty-four thousand more people were working in British Columbia this April than in April of last year. In stark comparison, consider that 332,000 jobs disappeared in the rest of Canada over the same period.

However, after several years of strong growth the British Columbia economy did slow during 1990. Weakening international commodity markets, high interest rates, the high value of the Canadian dollar and slowing growth in the North American economy have dampened exports. Lower exports mean rising unemployment and lower incomes. It is a message that the Bank of Canada must heed, Mr. Speaker.

Fortunately, British Columbia has diversified its export markets, making the current economic downturn far less severe than the recession of the early 1980s. British Columbia will rebound. Our economic prospects remain bright as we continue to diversify our economy and strengthen our links with the Pacific Rim.

While we are confident about and planning for the longer term, the government is working to solve problems in the short term. We are addressing today's needs while building on the future.

The job protection commissioner is acting to preserve existing vital jobs in communities throughout British Columbia. We are creating new jobs across the province through government capital investment.

In Prince George, for example, construction of the University of Northern British Columbia will provide greater access to education, create jobs and increase wealth. In Abbotsford, the Rick Hansen Secondary School is being built at a cost of $23 million. Powell River is getting a new hospital. Dawson Creek and Fort St. John will have new health centres. A new multilevel care facility is being built in Port Alberni, and planning is underway for another one in Chilliwack. Kelowna, Delta and Masset will get new courthouses.

The government is increasing capital expenditure on health, education, justice and other social areas by almost 50 percent over '90-91. Approved social capital expenditures are $1.3 billion this year.

The economy weakened, but we were prepared. By making investments in people, we are helping those hurt by the economic slowdown. We are able to do this even though the federal government is shifting its problems onto our backs. This recession is testing provincial governments across Canada. The federal government is making things worse by off-loading the responsibility for funding social programs. It is cutting the transfers that helped provinces fund health, education and social assistance. Ottawa's actions threaten our basic social fibre. These are core programs, not expendable luxuries.

Some provinces have had to resort to harsh measures in order to cope. Newfoundland has eliminated 2,500 public service jobs and frozen public sector wages for a year. New Brunswick has frozen public sector salaries for a year and is expected to eliminate 225 public sector jobs. Manitoba expects to cut over 900 positions this year. Alberta plans to cut more than 800 jobs from its public payroll and plans to spend less than last year.

Then there is Ontario, which took the "spend now, pay later" approach. We are shocked by Ontario's massive deficit — almost $10 billion. It is a fiscal horror

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story. It amounts to borrowing over $1,000 for every woman, man and child in Ontario. What's even worse is that spending will continue to spiral, resulting in a doubling of the debt in just four years. It will hurt us even here in British Columbia, as it drives up interest rates.

Consider, too, the monster made in Ottawa: a legacy of debt allowed to grow unchecked; deficits piled on top of deficits on top of deficits. Excessive federal spending and borrowing have damaged our economy. They have fuelled high interest rates that kept the Canadian dollar high, harming our exporters and helping to tip us into the current recession. Regrettably, the cycle continues.

In 1991-92, interest payments alone will eat up more than one-third of federal revenues. Federal debt will reach $419 billion by the end of this year. That translates into a debt of almost $16,000 for every child and adult in Canada — more than $62,000 for a family of four. There is just one word for this, Mr. Speaker: frightening. Very frightening.

This cycle of borrowing and debt is a major reason why many are demanding a re-examination of Canadian federalism. British Columbians want a strong, united Canada. But they also want change. They want more influence over decisions that affect them. They want government decision-making to be closer to the people.

Taxpayers are fed up with paying more and more and getting less and less in return. They want the public sector to be more accountable, with responsibilities clearly assigned to each level of government. Today the people see overlap, duplication and financial crisis.

[2:45]

Mr. Speaker, this country can be made to turn around and be made to work better than ever before. The government of British Columbia will lead the way in finding solutions.

Canadians benefit from one of the best health care systems in the world. We want our national health care system protected. We don't want to see a hodgepodge of health care systems and coverage across the country. Universal access is important; national standards are important. Our health care system is a living symbol of what Canada is all about.

Canada is a compassionate, caring society. Let us all work together to keep it that way. To maintain Canada's social programs, we must deal with the country's fiscal problem. All levels of government must re-examine their spending responsibilities and revenue-raising capabilities. We must define and separate the roles of federal and provincial governments. Taxpayers must know which level of government is responsible for specific spending and taxing decisions. If governments don't work together to reduce inefficiency, duplication and overlap, our caring society will be in danger.

Some would say that we can't afford to maintain the quality and extent of our programs. We disagree. We believe it can be done by making government more efficient. That is our goal. It was reflected in our Premier's decision to reduce the size of government by three ministries. Within our provincial government, we are exploring ways of doing things more cost-effectively. Our goal is to provide more value for the taxpayers' dollars.

We have called on our public servants to find new and better ways of meeting the public's needs. It's working. Our employees are taking up the challenge, and I offer my congratulations. Suggestions offered by employees have saved British Columbia $5 million over the last four years.

I'm also pleased to announce several new initiatives. Later this year, we will introduce a telephone service called WasteLine B.C. This phone line will accept people's comments on government operations and suggestions on how we can do things more efficiently.

Our second innovation is the establishment of new ways of managing government activity. This will improve the delivery and cost-effectiveness of government services. We will set performance targets and make managers more accountable for results. By measuring outputs as well as inputs, we can achieve a better return from the tax dollar.

Third, we will undertake within the Ministry of Finance, and Corporate Relations value-for-money management reviews and audits. This function will ensure that public funds are used wisely and accountably; after all, efficiency is one of the yardsticks by which the public service should be measured.

Our fourth innovation is the earmarking of funds to allow ministries to invest in efficiency projects that will reduce operating costs and yield measurable improvements.

Finally, we will extend the program under which the private sector is encouraged to offer products and services that will improve government efficiency and reduce costs. This will build on the success of existing government purchasing programs.

Taken together, these initiatives will give British Columbians better value for each tax dollar they send to Victoria. The efficiency plan I've just outlined demonstrates the government's commitment to providing quality services at a cost taxpayers can afford. In this budget we maintain our commitment to fiscal responsibility. We maintain our commitment to social programs despite transfer cuts announced by the federal government that would cost us another $2 billion by 1994-95.

To afford quality programs for people now and in the future, we have set in place a new fiscal strategy. This government knows that prosperity does not come from government spending but from the dynamic activity of the private sector across the province. Responsible fiscal management by government allows this to happen.

Thus there are four key elements to our fiscal strategy: the budget will be balanced over five years; government spending will be limited to growth in the economy; public sector wage increases will reflect ability to pay; and government debt will be reduced.

Families have to balance their budgets and carefully plan their financial futures. Governments must do the very same.

Tax revenues swing with the economic cycle, while spending pressures continue to grow. The plan that we

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have adopted recognizes this. Deficits in years of slow economic growth are offset by surpluses in years of stronger economic performance.

Today I have tabled the first five-year balanced budget plan as required under the Taxpayer Protection Act. Government spending and revenues will be balanced over five years.

Mr. Speaker, a wise family spends only what it can afford. The same principle applies to multibillion-dollar provincial budgets. One way to apply this principle to government is to set limits on spending. This is the option we have chosen. Who would argue that we can spend without limit?

The Taxpayer Protection Act limits growth in government spending to 8.1 percent in 1991-92. This is the average rate of growth in the economy over the last five years. This will provide discipline and control over spending. Spending will also grow at a more steady rate, minimizing inefficient stops and starts in government programs that result from a single-year focus.

This government respects the taxpayers' ability to pay. To do so, we must control the costs of government. Wages for public employees are the largest single cost of government. About 53 percent of the provincial budget is consumed by salaries of direct government employees and indirect government workers, such as teachers and health care professionals. Even though job security is greater in the public sector, 1990 marked the fifth consecutive year in which the public sector wage settlements exceeded settlements in the private sector. Recent settlements between school boards and teachers have resulted in wage increases in the 6.5 to 7.5 percent range.

In this slow economy we could have followed the path of many other provinces and laid off government workers. We could have frozen wages or eliminated programs. None of these options was acceptable. Instead we chose to ensure that collective bargaining would continue — but in a fair way that would balance the interests of workers with taxpayers' ability to pay. We did this through the Compensation Fairness Act. Our commitment to pay equity continues. We are implementing this program in consultation with our employees.

Mr. Speaker, this government will not leave a stack of unpaid bills for our children. We promised to reduce the burden of government debt, and we've made good on that promise. Since 1987 we have reduced the burden of debt relative to our provincial economy by 17 percent. Provincial debt per person is lower in British Columbia than in any other province, bar none.

As well, interest costs to service the British Columbia debt account for only four cents of each revenue dollar the provincial government receives. Compare that to 34 cents of every dollar Ottawa collects. So today, in keeping with the Taxpayer Protection Act, I have tabled the first debt reduction plan, which appears in the budget document.

We have informed the public of our budgetary targets for the next five years. We will report on our progress next year. British Columbians will be able to measure the government's performance against these targets. We're proud of our stewardship of public finances, and we're proud to present a frank and honest accounting of what we're doing.

I will now review the province's financial results for 1990-91 and our revenue and expenditure plan for 1991-92. I will then announce a series of revenue measures made necessary by our fiscal situation.

Despite spending pressures caused by the slowing economy, we were able to bring spending in below budget last year. We did this with firm control of discretionary spending. However, the economic slowdown affected revenue. Total provincial revenues were $242 million lower than forecast in 1990-91. Natural resource revenues, social service tax, corporate income tax and property purchase tax revenues were lower than expected. However, this was partly offset by stronger than expected personal income tax revenues. The revenue shortfall was offset by an additional transfer from the budget stabilization fund, bringing the transfer total in at $926 million. As a result, we were able to meet budget targets last year. In 1991-92, general fund revenue is projected to total $16.15 billion. This includes the remaining $839 million in the budget stabilization fund.

A caring government does not balance its budget by making wholesale cuts in services to people. We are committed to maintaining the integrity of key social programs, and we are committed to the spending growth limit in the Taxpayer Protection Act. We have made some tough decisions. We have increased expenditures, but we have kept them within the 8.1 percent cap specified in the act.

[3:00]

The estimate of general fund expenditures for 1991-92 is $16.55 billion. The largest increases are for health, education and social services. Spending on these three areas will rise 11.1 percent, or almost $1,000 per household. While total government expenditures will grow 8.1 percent this year, revenues will increase only 5.5 percent. As a result, in 1991-92 there will be a general fund deficit of $395 million. This deficit is well below the huge shortfalls expected by the federal and many provincial governments.

For example, the federal government's deficit equals 19 percent of its spending; Ontario's deficit equals 18.4 percent of its spending. British Columbia's deficit, on the other hand, equals 2.4 percent. While we would have preferred a balanced budget, British Columbians can take comfort in the relatively small size of the deficit, and they can take comfort in the fact that the budget will be balanced over five years under the balanced budget plan.

Assisted by the strong credit rating, the deficit will be financed in public bonds at relatively favourable interest rates. In fact, in recent months British Columbia has been able to issue bonds at interest rates much below those offered on Ontario's debt. The size of the province's direct government-purpose debt will rise to just under $6 billion in 1991-92; this equals 7 percent of provincial gross domestic product. Provincial debt per person will be the lowest in Canada. By anyone's standards, that is a sign of good fiscal management.

I began this speech by committing this government to delivering services in a caring and compassionate

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way. This budget protects our basic social services in these times when they are most needed. I have explained how the recession and off-loading by the federal government have reduced our revenues. I have reaffirmed our commitment not to burden future generations with an unmanageable debt.

We must be honest: this cannot be done without increasing revenues today. I would like to freeze tax rates, but that is not possible in this time of need. This budget will not be balanced on the backs of those least able to afford it. In these circumstances, we made the difficult decision to raise some taxes. The revenue measures I am announcing today will generate an additional $209 million this fiscal year and $247 million over a full year. They have been carefully chosen. They are balanced; they are fair. They place the increased cost of our society on those who can most afford to pay.

First, the general corporate income tax rate is increased by one percentage point to 15 percent, effective January 1, 1991. The small business rate, on the other hand, remains unchanged at 9 percent. British Columbia's corporate tax rates remain competitive with other jurisdictions. The new tax rate will continue to be the second-lowest in Canada. This revenue measure is expected to raise an additional $33 million this year.

The second major revenue measure is a temporary personal income surtax that affects only high-income taxpayers. This tax will be used to reduce the budget deficit. In accordance with the balanced budget plan, the legislation has a sunset clause. When the deficit is eliminated, the surtax will disappear. The surtax is 10 percent. It will become payable at an income level of just under $80,000 for single taxpayers and just about $93,000 for a family of four. A surtax credit will be given for each dependent amounting to $50 in this and future years. As an example of the effect of the surtax, a person earning $100,000 per year will pay a surtax of $100 to $300 annually, depending on family circumstances. Revenue from the surtax is forecast at $32 million in a full year.

The third new revenue measure affects the tobacco tax. Our tobacco tax rate is the lowest of any province. Effective May 22, 1991, I will add 34 cents of tax for a package of 25 cigarettes. This will bring our tobacco tax rate close to the Canadian average during the current year. The rate for loose tobacco will also be increased by one cent per gram. These measures collectively will raise $75 million this year.

Even with all these tax measures, our tax burden is low. For example, total provincial taxes on a family of four earning $45,000 are the second-lowest in Canada.

People have told us that they are willing to pay more to support our excellent health care system. I question, however, whether our current Medical Services Plan premiums are the best way to raise revenues fairly. I therefore will review replacement revenue measures once we have in hand the report of the Royal Commission on Health Care and Costs. In the interim, to ensure that funds are available to provide quality care, we are increasing Medical Services Plan premiums, effective July 1. As an example, the rate for a family of four will rise by $8 per month. Overall, Medical Services Plan increases will generate an additional $58 million.

Many government services are fully or partially funded by charging user fees. These fees generally reflect the cost of services provided or the benefits received. It is only fair that those who receive the benefits help pay for the costs. Ministries review their fees on a regular basis and increase them in line with program costs. We expect to raise an additional $16 million this year through increased fees and other charges.

Fairness has been our key concern in designing these revenue measures. No one is asked to contribute more than their fair share to make up the revenue shortfalls.

But along with these increases comes tax relief. Last year we made a commitment to homeowners to provide relief from the burden of residential school property taxes. We made good on that commitment by introducing the supplemental homeowner grant. This year, as promised, we are increasing the supplemental grant to 50 percent of the amount by which school taxes exceed the maximum basic homeowner grant. As a result, many homeowners will pay lower property taxes this year.

The provincial property tax known as the rural area tax required special attention this year. We have passed an order-in-council to reduce this tax rate by 24 percent. This will keep the average rural tax burden at a level no higher than last year. Without this action, rural homeowners would have paid much higher property taxes. Reductions will also apply to business property.

Finally, renters will continue to be eligible in 1991 for the full renter's tax reduction.

Since taking office this government has balanced social programs with good fiscal management. In applying this balanced approach we have always leaned towards people. We said in our first budget that we must invest in children, in families, in seniors. We've delivered on this promise, and more.

Spending on public school education has more than doubled since 1986-87; spending on health care has increased nearly 60 percent, to $5.4 billion. This year is no different. We are taking a balanced, caring approach in our expenditure plan for 1991-92.

As I have said, all governments in Canada are facing difficult times. As the economy slows, the demands on governments increase. Rising unemployment puts great pressure on social services. The weak growth in revenue makes it difficult to pay for these additional services.

Mr. Speaker, we're asked to do more with less, but in all our decisions, we have put people first. Health, education and social programs remain our number one priority. We have seen to it that declining revenues do not affect these essential services for people. Spending on health, education and social services will total $11.9 billion for 1991-92, a $1.2 billion increase from the previous year. Over 70 percent of total government spending in 1991-92 will be in these three areas.

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This government stands by its commitment to ensure quality health care for all British Columbians. Spending on health care will total $5.4 billion this year, a $590 million increase from 1990-91. This spending will amount to more than $1, 680 for each woman, man and child in the province in 1991-92. It has become the largest single area of expenditure, consuming one third of the total provincial budget.

[3:15]

In recent years our philosophy has been to bring health care closer to people through community-based care. For example, our mobile mammography unit is providing service around the province. In addition, we are building new cancer clinics outside of Vancouver and Victoria.

This year too, Mr. Speaker, the Medical Services Plan will be expanded to include a travel allowance system to assist patients who have to obtain specialized treatment away from home.

British Columbians are justifiably proud of our health care system. It is second to none in the extent of its coverage and the quality of care, and this government will protect that accessibility for all British Columbians. However, the increasing cost of our health care system is a major concern to taxpayers. To help pay for the fast-rising costs of prescription drugs, we are raising the Pharmacare deductible by $50.

Last year the government created the Royal Commission on Health Care and Costs to look closely at the effectiveness and efficiency of the province's health care system. I look forward to reviewing the suggestions of the royal commission when it presents its final report later this year.

Mr. Speaker, the quality of our health care system depends on the people who provide the services. This government recognizes the dedication of our nurses, doctors and other caregivers. Working in partnership, we are building a system that can harness the best new technologies and meet the challenges of the future.

Society cannot tolerate the human and economic costs of alcohol and drug abuse. People are killed, families are ruined and workplaces are disrupted. The province has committed major resources to help deal with this problem. In '91-92 we will spend almost $50 million to provide substance abuse treatment, detoxification centres, outpatient clinics and residential treatment centres.

Our government knows the importance of preparing the younger generation. They are our most important investment for the future. Our children will have to compete in a fast-changing and increasingly competitive job market. But education is more than an economic issue. Education allows people to be full contributors and participants in society. It helps them to understand life's complexities and leads to a richer life.

Even in these more difficult economic times, the schools of British Columbia are well funded by the provincial government. Funding will total $3.3 billion in '91-92, a $232 million increase from last year. This increased funding will ensure quality education for over 530,000 students in public schools and 35,000 students attending provincially supported independent schools.

Mr. Speaker, the Year 2000 initiative in education puts British Columbia in the lead across North America in providing quality opportunities for young people. The success of this initiative depends on the dedication of teachers, school boards and parents alike. But changes as sweeping as these can bring uncertainty. The Minister of Education will be meeting with those affected to ensure that their concerns are addressed and that we achieve the goals of this important blueprint for the future.

Children can't learn if they are hungry. We are working with school boards around the province to put in place a school lunch program.

Beyond public school, this government promised to make post-secondary education accessible to more British Columbians in all regions of the province. We have taken action on this promise. The government's Access for All initiative is now well on its way to achieving its objective of upgrading and expanding post-secondary education.

We have provided funding to start construction of the new University of Northern British Columbia in Prince George. This university will be accepting students in the fall of 1993.

Mr. Speaker, the government is also studying the establishment of a degree-granting institution in the upper Fraser Valley. The demand for higher education is growing quickly in this area of the province. We will identify the best way to meet the needs of Fraser Valley students quickly and efficiently.

This year our contributions to the operating budgets of the province's three public universities will total $428 million. Funding of $374 million will be provided to the province's 15 colleges and five institutes. In total, spending by the Ministry of Advanced Education, Training and Technology will increase by 8.3 percent over 1990-91.

We can take great pride in the success of the public-private partnership represented by the university matching fund program. This program has resulted in $100 million in new initiatives for our universities. In recognition of this success, it is being extended for another two years. Even in uncertain times, we must have the courage to build and invest for the future.

Mr. Speaker, a caring government helps people. Our social programs give assistance to those permanently in need and help those experiencing temporary economic hardship to return to the workforce. In a slowing economy, government social assistance programs become even more important.

Higher unemployment and changes to the federal unemployment insurance program have increased the costs of our safety net. To cope, the Ministry of Social Services and Housing will receive a budget increase of $273 million in 1991-92 to almost $2 billion.

Programs for independence, which provide temporary income assistance to eligible residents, will increase by $233 million in 1991-92. We will spend a total of $1.2 billion on this critical social service.

Mr. Speaker, we will continue to deliver programs that support the social values of independence and self-sufficiency. We must avoid chronic dependency on

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government assistance. To this end, we will be negotiating a new five-year agreement with the federal government to help income assistance recipients obtain employment.

Further, to meet increased demands for service, we have added staff to serve those in need. More staff will help to ensure that those responsible for the payment of family maintenance meet their financial obligations.

Our social programs help many people who face very difficult situations in life. These include adults and children with mental or physical disabilities. This year we continue our commitment to them through increased funding.

With this budget, we reaffirm our belief that people are the number one priority in this province.

Mr. Speaker, our Premier and this government are committed to the family. We are now seeking ways of strengthening families to meet the new challenges of our society. These efforts include improvements to child care services and programs to stop family violence.

In July 1990 the government established the Task Force on Child Care. The task force recommended that the quality, accessibility and affordability of child care be increased. In response, $12.1 million has been committed in 1991-92 to increase child day care subsidies and improve the effectiveness of services.

People are very concerned about the rise in family violence. This government shares those concerns. In British Columbia, we provide a wide array of services for women and children affected by family violence. The province currently operates 59 emergency shelters for battered women and their children. We have a victim assistance program which primarily helps victims of family violence and child abuse.

The Task Force on Family Violence, which was formed earlier this year, will consult with families, community groups and professionals. I look forward to its recommendations over the next few months. But we will do more. We have committed $4 million in 1991-92 for programs to deal with family violence.

We are particularly saddened by the growing problem of elder abuse. The need for urgent attention to this issue was made clear to us by the Seniors' Advisory Council. It's time to recognize the problem and make people aware. This tragic abuse takes many forms, including violence, and we must stop it. The Seniors' Advisory Council has travelled the province, listening to concerns and suggestions, and recommending action to government. I congratulate the council on its excellent contribution.

This government values our seniors. The health, well-being and independence of British Columbia's senior citizens is supported by many government initiatives. The Shelter Aid for Elderly Renters pro gram, for example, assists British Columbians 60 years and older with their rental costs. Funding for the SAFER program will total $17.7 million. The govern ment also provides subsidized bus passes to eligible seniors and low-income British Columbians to ensure that they retain their mobility within their community. In addition, the province supplements the income o eligible seniors to ensure that they receive an annual income which affords dignity with retirement. Recent health care initiatives stress wellness, preventive care and community-based services. These all focus where they belong: on seniors, not on institutions. These and other programs reflect society's appreciation for the contribution of our seniors. They have made our province what it is today.

[3:30]

Mr. Speaker, the government is proud of its achievements under the two-year-old housing action plan. Successes include 2,000 new social housing units per year for seniors, the disabled and low-income families, 6,500 new affordable rental units built or under construction through the rental supply program, and over 20,000 homebuyers assisted each year by the property purchase tax relief and mortgage assistance programs.

The government will build on these successes. The emerging challenges include increasing the supply of affordable housing and helping British Columbia's families buy their first homes. This government believes in home-ownership. In particular, young families should have the opportunity to purchase a home in the community they call home. This government will consult the housing industry and interest groups to determine the best way of achieving these goals. Funding for new initiatives will come from the earnings of the privatization benefits fund. What better investment in our province's future than to help British Columbians buy homes in British Columbia with the help of the proceeds of our privatization program?

There is a group of people having particular difficulty finding adequate accommodation. The shelter needs of the mentally ill are of great concern to this government. Therefore we intend to create a legacy fund from the proceeds of the sale of properties at the Riverview and Woodlands sites in the lower mainland. This fund will help develop community-based housing for the mentally ill.

We support the desire of native British Columbians for greater economic and social self-determination. In August 1990 the provincial government announced that it was prepared to join with the federal government and native organizations to negotiate a just settlement to land claims. Although the federal government bears primary legal and financial responsibility for land claims in British Columbia, the province will contribute its fair and proper share to resolve these historic grievances. By being an active participant, we will ensure that land claims settlements protect and benefit all British Columbians. The budget for the Ministry of Native Affairs Will increase nearly 75 percent to fund the land claims negotiating process, while an additional $4.8 million will be allocated to t other ministries' budgets to assist in the process.

British Columbia communities rely on our law enforcement and justice systems. This government is committed to maintaining high standards of justice and protection.

During 1991-92, the Ministry of Attorney-General's capital budget will increase to $25 million for the expansion, upgrading and construction of court facilities in all regions of the province. In addition, the I Solicitor-General will have completed three new adult

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correctional centres which will fully replace the Oakalla facility in '91-92.

We will assist our communities in the fight against violent crime. We will not tolerate gang violence. Investigative operations will be supplemented, and increased funding will be provided for Crown prosecutors. We will do our utmost to ensure that criminals are brought to justice.

British Columbia has a diversified economy, but our forests remain the backbone. It is critical that they continue to provide jobs and incomes for British Columbians while we preserve our natural environment. Earlier this year the Minister of Forests announced the forest renewal plan. This plan commits $1.4 billion over five years to improve the management of the province's most important natural resource. The plan includes a four-year, $200-million federal-provincial forest resources development agreement.

The forest renewal plan will benefit British Columbians now and into the future. The plan will reforest poorly restocked lands and increase the growth rates and quality of our second-growth forests through intensive silviculture methods.

I'm always proud when visitors to our province comment on British Columbia's scenic beauty and our clean environment. It is a priority of this government to preserve this natural heritage. Last year we demonstrated our commitment to protecting the environment by establishing the sustainable environment fund. This fund continues to support environmental protection initiatives throughout the province.

Ministry of Environment and sustainable environment fund spending will total $184 million in 1991-92 in support of a wide array of programs. For example, vehicle emissions testing will begin in 1991-92 in the lower mainland. This will help to alleviate air quality problems particularly in the Fraser Valley. The provincial tire and battery recycling programs will be implemented at an estimated cost of $7.4 million. Work will continue on the Okanagan water quality program. Mr. Speaker, $3.8 million will be spent on fish and wildlife habitat acquisition and enhancement. The Environment Youth Corps, in partnership with the Ministry of Social Services and Housing, will be at work around the province with funding totalling $7 million.

Our care for the environment knows no boundaries. We are committed to working with the states of the Pacific Northwest to protect our natural heritage. We have joined forces to find new ways to protect our precious coastline from environmental disasters. We are collectively taking steps to improve our air quality, water and land in the southwest corner of the province. Our coastal waterways must be free of pollution of every kind. We cannot say often enough that our quality of life depends on the quality of our environment. This government will ensure that it is protected.

We've delivered a people-oriented, fiscally responsible budget. We've protected government services to people, and we've protected the taxpayer. We've put in place legislation to ensure that responsible budgeting continues into the future and that the burden of debt is reduced.

We've worked hard to soften the blow of this economic downturn. We've said time and again that we learned valuable lessons from the recession of the early 1980s, We learned to diversify our economy and to keep taxes at a manageable level. We saw again the vital importance of small business in this province. We learned to save money when times were good, and because of this we don't have to lay off hundreds of workers and we don't have to slash programs. In fact, we're able to increase spending this year. We are improving programs again, but within the taxpayer's ability to pay.

We're not imposing a wage freeze. We've managed our finances well enough that we can deliver fair wage settlements.

We have a better British Columbia than ever before, with better health care, education and people programs. We're better prepared for the challenges of the 1990s. We are providing a strong, competitive climate for business prosperity into the twenty-first century — the Pacific century. We're doing it our way — the British Columbia way — with budgets designed for the people who call British Columbia home. No transition teams.

Mr. Speaker, British Columbia's future is in a stronger, united Canada. Now is the time to do what must be done. We must decide what government should do and which government should do it. We must give taxpayers full value for their money. This government will lead others in Canada by initiative and by example.

MR. CLARK: As in the normal course, I will be making my detailed comments on the budget tomorrow. I would like to take this opportunity, however, to make a few introductory remarks.

This is the fifth and final budget of this government, and quite frankly it is the worst. This budget has a forecast deficit of $1.2 billion, the largest deficit in British Columbia's history. This comes on the heels of a $746 million deficit for last year and continued deficits for the next three years. The direct debt for government purposes has gone from $3.2 billion when this government was elected to $6 billion this year. They have doubled the direct debt in four short years.

This budget contains tax increases of $208 million, and $58 million of this increase is in medical service premiums — one of the most regressive taxes we have.

Again, this budget continues unsound financial practices condemned by the auditor-general. This is a budget and a government bereft of ideas — the last gasp of a disgraced and humiliated government no longer fit to govern.

[3:45]

This government has a litany of scandals and resignations second to none. This government has a financial record that has been under constant attack by the auditor-general. This government has consistently misrepresented the finances of the province by its fraudulent use of the BS fund. This government will run up the largest deficit in the history of the province. This government continues to ignore the priorities and needs of British Columbians in the areas of health,

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environment, education, housing, social services and job creation.

No government in the history of British Columbia is more deserving of defeat, and no government in the history of British Columbia will be more deservedly defeated.

Mr. Clark moved adjournment of the debate.

Motion approved.

Introduction of Bills

BUDGET MEASURES
IMPLEMENTATION ACT, 1991

PROPERTY PURCHASE TAX
AMENDMENT ACT, 1991

Hon. J. Jansen presented a message from His Honour the Lieutenant-Governor: bills intituled Budget Measures Implementation Act, 1991, and Property Purchase Tax Amendment Act, 1991.

HON. J. JANSEN: Mr. Speaker, these two bills implement the budget measures I announced earlier today. In moving first reading of these bills, I will briefly describe their major provisions.

Bill 3, the Budget Measures Implementation Act, introduces a temporary high-income surtax, raises the general corporate income tax and the tobacco tax rate and delays the phasing out of the renter's tax reduction.

Bill 4, the Property Purchase Tax Amendment Act, clarifies the fair market value on which tax is paid in light of a recent court decision, introduces a new exemption for property which will be protected for environmental reasons and amends the exemption for transfers of principal residences between related individuals.

Bills 3 and 4 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: I would remind the members that pursuant to standing orders we will sit tomorrow afternoon. Having said that, I wish everyone a pleasant good evening, thank the minister for his wonderful budget and move the House do now adjourn.

Motion approved.

The House adjourned at 3:49 p.m.