1992 Legislative Session: 1st Session, 35th Parliament
HANSARD
(Hansard)
THURSDAY, MARCH 26, 1992
Afternoon Sitting
Volume 1, Number 10
[ Page 185 ]
The House met at 2:07 p.m.
Prayers.
E. Barnes: Hon. Speaker, I'd like to ask the House to join me in welcoming a friend. I am very happy to introduce someone I've always admired for her long and dedicated career serving the public, Mrs. Catherine Renee Jensen. Renee has resided in the west end of my constituency since 1940, and among other things, she helped found the West End Seniors' Network. For the past two years she has been the network's president. Her work in the community has earned her the Vancouver Distinguished Pioneer Award and the Vancouver Parks Board Volunteer Award. I would like all the members to please join in making Renee welcome.
FEDERAL-PROVINCIAL TALKS
G. Wilson: Hon. Speaker, I'd like to welcome the Premier back to British Columbia. It's nice to see you home again. My question is to the Premier on his return from his third first ministers' conference on the economy in as many months. Mr. Premier, the people of British Columbia wanted specific agreement and specific action on two matters: the removal of provincial trade barriers and an end to the federal off-loading. Will the Premier take this opportunity to tell the House specifically what agreement he has reached on those two pressing matters?
Hon. M. Harcourt: Hon. Speaker, it is indeed a pleasure to be back in British Columbia, and with some regret I said to the media in Toronto yesterday that I was going to have to return to 20-degree sunny weather, and that I unfortunately had to cut my lawn for the third time this week.
On the two matters that are before us, I can say that on the question of off-loading, this government made it very clear many weeks ago that the off-loading of the federal deficit on the provincial taxpayers of British Columbia is unacceptable and unfair. It is a huge amount of money that amounts to about $1.4 billion this year, according to the independent financial review. If you add in all the other costs of the smaller programs -- not just the EPF program for health, schools and universities, but the capping of the Canada Assistance Plan, the reduction of agriculture and all the other services -- it approaches almost $2 billion. That is unacceptable to British Columbians. It is unfair to British Columbians. I have made that very clear.
The basic structural deficit that British Columbia faces is because of conscious decisions by the federal government to give us the federal deficit through the back door -- onto our taxpayers. That is a matter we are going to continue to pursue; we're going to deal with it. You will see shortly that we're not going to use it as an excuse to get out from under the financial mess that we were left and to get our financial house in order.
On the matter of interprovincial trade barriers, I am pleased to say that we made a commitment as first ministers to continue to remove barriers within our own country. I will be following that up with our Minister of Trade. I'm meeting with the other Ministers of Trade very shortly. I'll be meeting with the western Premiers to continue the specific removal of trade barriers in western Canada that's taking place in Atlantic Canada.
I appreciate, hon. Speaker, the two questions that the leader of the opposition has put forward.
G. Wilson: I take it then, by the answer that was given, that there is no agreement on either one of those matters, despite how difficult it's going to be for the economy of British Columbia with respect to the $1.4 billion you refer to.
[2:15]
With respect to the question of the trade barriers between the provinces, the Premier must be aware that the lack of such an agreement is costing the economy of this country roughly $7 billion a year. There was an acknowledgement of the need for an agreement and indeed, there was an agreement last year. The only reason the agreement wasn't signed last year was that Quebec refused to sign on. My question to the Premier, then, is why he did not press at this time for the same agreement that was put in place and agreed to by nine out of ten provinces and the Prime Minister last year, and failed simply because the province of Quebec wouldn't sign on.
Hon. M. Harcourt: I'm trying to find a question in those last words. I don't think attacking Quebec at this particular time is very helpful. It is the Tory government in Ottawa, not on the Hull side of the river but in Ottawa, that has consciously decided to shift the federal deficit very substantially through the back door not just onto British Columbia but also onto Alberta and Ontario. I, as the Premier, and our Finance minister have been among the most aggressive in making that point.
I can tell you, hon. Speaker, that the meeting of first ministers took place not to air our differences on this -- and it could have been a very rancorous meeting. It had problems all on its own, without adding where we would agree to disagree with the federal government. They know our position on that issue. We were meeting as first ministers to help knit this country back together again, to find areas where we could agree on a national highways program, to find areas where we could agree on changing our health care systems so that we can have a community-based wellness system instead of one focusing on the existing models of institutional care and very high cost to the taxpayers of the province. We as a province introduced a whole series of initiatives to improve our trade capacity and play the role in the Asia-Pacific that British Columbia should play as the front door to the fastest-growing economic area in the world. We were talking about positive initiatives that first ministers could take to get our economy going again, rather than where we disagree and having a rancorous meeting that wouldn't give the confidence
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that Canadians want to see first ministers instilling in the people of Canada.
G. Wilson: Final supplementary to the Premier. I don't see where the Premier can expect the people of British Columbia or Canada to take any comfort in the fact that all that happened in three consecutive first ministers' conferences was a lot of talk. When they asked for concrete action, they weren't referring to what might be used to pave the Trans-Canada Highway. What they wanted was concrete acknowledgement and action taken on an interprovincial trade agreement.
I'm not attacking Quebec; I am speaking out for British Columbia. It seems to me it's high time that we had some politicians who spoke out for British Columbia.
Given that Quebec receives 31.2 percent of the federal transfer payments, in relation to the 9.3 percent that British Columbia gets -- which, on a per capita basis, is one and a half times what the average British Columbian makes -- and given that this Premier knows that in terms of Quebec being committed to a bilateral agreement....
Some Hon. Members: Order!
The Speaker: Question.
G. Wilson: My question to the Premier is this. I will be specific and direct in it so that he doesn't miss it this time. How many more $7 billion a year losses must we suffer while the Premier of this province goes to first ministers' conferences and practises executive federalism, without one single agreement that is going to help the economy of British Columbia?
Hon. M. Harcourt: The Leader of the Opposition has just committed a parliamentary first. Usually it's the government that is accused of eating up the question period clock. Here we have the Leader of the Opposition confusing question period with statements. I'm sure that he will learn the difference as the days go by; at least I hope he does.
The question is, why does the Leader of the Opposition want to promote rancour among Canadians? Why does he want to have divisive debates among first ministers? I'll tell you, I don't want to see that happen.
I was asked by the first ministers at our last meeting to put together a meeting where first ministers could get together to reach positive agreements, based on consensus, with papers that were put together in five weeks. I will tell you, my deputy, George Ford, did a magnificent job of working with the other Premiers across this country. He put together some action-oriented papers on a whole range of areas, including interprovincial trade, international trade, national highways and infrastructure proposals, and shifting our UIC and training programs to provide skills to the 1.5 million Canadians who are unemployed but who don't have the skills to fill the 300,000 jobs that employers can't fill. I say that's the kind of positive, constructive change that the people of not just British Columbia but Canada want from first ministers, and that's the kind of meeting I helped put together.
FAIR WAGE POLICY
L. Hanson: I have a question for the Premier. Since this House first sat on March 17, the government has been asked 12 or 15 times about the so-called fair wage policy, and we're still waiting for a firm commitment from government that they will bring that policy to this House for debate. This seems like a reasonable question in that the throne speech made direct reference to the policy. Can the Premier tell us now, yes or no, whether he will bring the fair wage policy to this House in the form of legislation prior to its implementation?
Hon. M. Harcourt: I will give the same answer I gave the last time. The answer is yes.
L. Hanson: Supplementary to confirm. The Premier has just assured all British Columbians that no fair wage policy will be implemented in the province until it is passed in this House in the form of legislation. Clearly, is that correct, Mr. Premier?
Hon. M. Harcourt: There were three questions there. I said, in answer to your question, that the fair wage policy will be before this Legislature for debate, yes.
The Speaker: A last supplemental.
L. Hanson: The Premier seems to be avoiding the direct question. The direct question, in simple terms, is: will he bring forward legislation to this House for debate before the fair wage policy is implemented through an order-in-council or other means.
Hon. M. Harcourt: It is a policy that will be before this House for debate.
USE OF GOVERNMENT AIR SERVICES
K. Jones: Hon. Speaker, yesterday the Minister of Government Services confirmed that her colleague the Minister of Labour was the lone passenger on a government jet between Vancouver and Comox. She is today quoted in the Victoria Times-Colonist saying: "I'm not going to question Mr. Sihota. I don't think it's acceptable for me to question my colleagues when they tell me they're on government business."
My question is to the Premier. If this minister will not question her colleagues, then who in your government will be accountable to this Legislature for possible abuse of this taxpayer-granted privilege?
Hon. M. Harcourt: As you know, hon. Speaker, I was at the first ministers' meeting over the last three days. I saw that this matter was raised, and I have talked to Mr. Sihota about it. I was satisfied that the Minister of Government Services has brought in some excellent reforms to the government fleet so that we have more aircraft now for ambulance service for
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British Columbians. With the moves we have introduced as a government, we will save the taxpayers of British Columbia $1.7 million. We will have a coordinated regional travel service that again will save taxpayers money. I am quite satisfied, from my discussions with the minister you refer to, that he has stayed within the guidelines that were established and are known. If you would like the details -- because I'm sure you would, being a fair-minded person, hon. Speaker -- from the minister himself, he is more than pleased to provide those details.
Interjections.
Hon. M. Sihota: The member wants an answer, and I'll be happy....
The Speaker: I will allow the minister a very short response.
Hon. M. Sihota: The member opposite talked about accountability and about the Times-Colonist. I note that he says in today's Times-Colonist that there was a flight available through Time Air some five or ten minutes after I departed -- he says at 1:45. The House should know, Madam Speaker, first of all, that the hon. member can't read a government flight log -- because I did not leave at 1:45. More importantly, he cannot read an airline schedule. I have here with me the airline schedules for both Air B.C. and Time Air, and they indicate very clearly that there was no commercial flight at all from Vancouver to Comox at the time that the member indicated or, in fact, within two hours on either side of the time that the member indicated.
The Speaker: Supplemental.
Hon. M. Sihota: And, if I may, the facts of the matter are that I left at...
Interjections.
The Speaker: Hon. minister....
Hon. M. Sihota: Well, let me conclude....
The Speaker: Order! I have already called for a supplemental from the member for Surrey-Cloverdale.
K. Jones: Hon. Speaker, a supplemental to the Minister of Government Services. It is alarming and astonishing that this NDP government, when it was in opposition, spent five years attacking the previous government for misuse of government aircraft. Does this minister not care how this incident will today be perceived by the people of the province? Is she now saying to the people that her ministry is not accountable to the honest and hardworking taxpayers who are paying for it?
Hon. L. Boone: We certainly are accountable, and as the member opposite knows.... He was at the news conference when I released some very innovative and exciting plans to improve the services of government air and make it work on behalf of the people of British Columbia. This government air service will no longer be a priority service for cabinet ministers only. It will be there to serve the people of British Columbia. Government employees and court witnesses will be able to travel throughout this province, reaching places in one day's time, back in another day's time, without cost to the public. It is an innovative way of doing things; it's an exciting way of doing things. It's saving the public money. It's improving services. I'm proud of the work that my people have done on behalf of the people of this province.
[2:30]
PEAT MARWICK REPORT
D. Mitchell: Hon. Speaker, I rise on a question of privilege. I've given the Chair notice of this question of privilege under standing order 26, practice recommendation No. 7.
I believe the Minister of Finance has shown contempt for this House, and he has impeded members in the performance of their legislative duties. In my view, the minister's actions constitute a prima facie case of privilege. If the Chair agrees, then I am prepared to move the necessary motion for the consideration of this House.
The question of privilege pertains to the minister's refusal to table in this House the reports and related documents of the Peat Marwick review of the province's finances. On several occasions during oral question period the minister has been asked to table in this assembly the reports and background working papers for this study, as well as the resumés of all those who prepared these materials. Specifically, he was asked to provide these documents to the House prior to the delivery of the government's first budget so that members of this assembly could satisfy themselves that the reports which provide the foundation and rationale for the budget to be presented here today are in fact both independent and credible.
The minister agreed to provide these materials to the House. I refer members to Hansard for March 18, 1992, pages 12 to 13 and March 19, 1992, page 38, and to yesterday's Hansard as well. Specifically, I would refer members to the minister's responses to questions from the member for Surrey-White Rock. In spite of his undertaking to do so, the minister has not provided this House with the said documents. As a result, I believe he has demonstrated contempt for the rights and privileges of all members of this assembly. Furthermore, by not providing to the House materials that he agreed to table prior to the delivery of the budget, I would argue that he has impeded members in the performance of their legislative duties.
How can members of this House receive this budget today, respond to it and provide proper scrutiny to the spending estimates that will be tabled with it, along with the legislation that will be introduced to enact its measures if the government will not provide to the House the background papers and other materials
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which were requested and agreed to be tabled here in this assembly? Surely this is a gross contempt for this assembly and all of its members. It is a violation of our rights and our privileges.
I regret that I am compelled to raise this matter in this manner. However, I am aware that a question of privilege must be raised at the earliest opportunity. Because the House is now about to receive the provincial budget, I am obliged to raise this question now. I recognize this is a very serious matter. Sir Erskine May's Parliamentary Practice provides the best explanation of the issues involved here, and I quote from page 69 of the twenty-first edition:
"Parliamentary privilege is the sum of the peculiar rights enjoyed by each House collectively, as a constituent part of the high court of parliament, and by members of each House individually, without which they could not discharge their functions....
"When any of these rights and immunities is disregarded or attacked, the offence is called a breach of privilege and is punishable under the law of parliament."
I believe the Minister of Finance has committed a breach of privilege. I believe I have established that a prima facie case of privilege exists here. If you agree, hon. Speaker, I am prepared to move the necessary motion, which I will now tender to you, along with a copy of my statement relating to this question of privilege.
The Speaker: Attorney General, do you have a submission to the Chair on this matter?
Hon. C. Gabelmann: I do, hon. Speaker. The alleged question of privilege is weak. It's interesting that it would come today, in the full glare of the publicity around the budget. If the member had been in this chamber for years, as some others have, he would recognize that this indeed is not a question of privilege.
Questions were asked of the Minister of Finance about the tabling of various documents. Some of them were relating to the report of the accountants directly; some of them were relating to the curricula vitae of personnel connected with the accountants' work. The minister said he would table all of those documents, including all of the curricula vitae. He answered in the House that he would table them when they were available. The curricula vitae are now being gathered -- they have not yet arrived -- and will be tabled, as the minister promised, when he has them.
The answer to the question was: yes, the documents would be tabled. The documents will be tabled.
The Speaker: The Chair will take this matter under advisement and come back with a later ruling.
Hon. G. Clark: Hon. 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. G. Clark tabled the comptroller general's report of interim financial statements for the ten-month period ending January 31, 1992.
ESTIMATES OF SUMS REQUIRED
FOR THE SERVICE OF THE PROVINCE
Hon. G. Clark 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, 1993, and a supplement to the estimates for the fiscal year ending March 31, 1993, recommending the same to the Legislative Assembly.
Hon. G. Clark moved that the said message and the estimates accompanying the same be referred to Committee of Supply.
Motion approved.
Hon. G. Clark: Hon. Speaker, I move, seconded by the hon. Minister of Women's Equality (Hon. P. Priddy), that the hon. Speaker do now leave the chair for the House to go into Committee of Supply.
Hon. G. Clark: Hon. Speaker, it is my honour to present the first budget of this New Democrat administration. Five months ago British Columbians voted overwhelmingly for change. They voted for a change of administration, a change of priorities and a change in the way government operates.
The challenge we face in this budget is to implement this mandate, given the unfavourable fiscal situation left to British Columbians by the previous government. Our task is to get our spending priorities right while bringing British Columbia's finances under control. This means pursuing policies that are fair to all British Columbians. It also means ensuring the stability and investor confidence essential for creating wealth and realizing our economic potential. This government is determined to take the leadership necessary to secure our long-term future and to create the economic conditions necessary to help British Columbians achieve their aspirations.
In introducing our first budget, let me lay out the goals that will guide our economic policies over the coming years. First, we are committed to openness and honesty. During the election campaign, we committed to open government, and we have begun to act on that commitment. One of the first acts of our government was to give a full and open briefing on the state of British Columbia's finances -- the first time that such a briefing has been given in the history of this province. We then commissioned a comprehensive and independent financial review, so that British Columbians have a clear and objective picture of the province's current fiscal situation. We have also prepared this budget in an open manner by seeking advice from British Columbians in all regions and all walks of life. I held formal consultations and briefings with business, labour and community groups.
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Second, we are committed to fairness. That means pursuing policies that don't play favourites -- policies that are in the interests of all British Columbians. We are committed to fairness in the delivery of public services. That means safeguarding the basic services that protect individuals and families. We are committed to fairness in the tax system. That means raising the revenues necessary to maintain essential public services on the basis of people's ability to pay.
Third, this government is committed to sound and prudent management of the province's finances. Without a sound financial base, it is impossible for government to address adequately the priorities of its citizens. Prudent fiscal management means getting British Columbia's budget deficit under control.
Fourth, we are committed to policies which foster economic stability and confidence. Both consumers and businesses need stability in order to plan their economic future. For working British Columbians, stability means less anxiety about job security and greater consumer confidence. For business, a stable environment means less risk and greater ability to compete. This is particularly important in British Columbia, which depends on secure trade and financial links with the international business community. By taking a long-term strategic perspective, we will ensure the stability necessary for investor confidence and economic growth.
Let me turn now to a review of our economic situation. While British Columbia's economy has fared relatively well compared to the rest of North America, our economy did not grow in 1991. The Canadian economy, as a whole, shrank by 1.5 percent last year, while British Columbians experienced a decline of about one-half of 1 percent. Many communities in British Columbia have felt the weight of the recession. Ottawa's high interest rates and the high value of the Canadian dollar have had a particularly severe impact on resource exports which sustain many of our communities. Our forest and mining industries have lost 18,000 jobs over the last two years.
However, moderate economic growth is projected to resume this year. Consumer spending is expected to pick up with lower interest rates. A recovery in housing starts is already contributing to stronger investment this year.
Stronger economic growth internationally in the second half of 1992 should lead to further improvements in export markets, provided our trading partners do not raise new barriers. In summary, we expect the economy to grow by 3 percent in 1992, resulting in an additional 30,000 jobs.
Hon. Speaker, the fiscal situation we inherited from the previous administration is much less favourable. The government's 1991 budget projected a deficit of $395 million. However, when adjusted for the budget stabilization fund, the real deficit was forecast to be $1.2 billion. The previous government's budget also contained projections showing the deficit disappearing by 1994-95. In October of last year, when we finally had an opportunity to examine the province's books, they revealed a completely different picture. The deficit forecast for 1991-92 was $1.7 billion and rising. This situation was confirmed by the independent financial review, which we commissioned shortly after taking office and which reported earlier this month. It projected that the real deficit for the fiscal year just ending would be $2 billion more than the previous government estimated in last year's budget. Furthermore, the review concluded that, without government action, the deficit would rise to $2.8 billion this coming fiscal year and $3.2 billion the year after. This situation is clearly unacceptable.
Provincial government expenditures have grown by an annual average of 12 percent in the last three years -- far in excess of revenue, inflation or economic growth. The independent financial review concluded that this fiscal deterioration was due in large part to the spending policies and poor financial management of the previous government.
It was also due to unprecedented cutbacks in federal transfer payments. The federal government has repeatedly cut back its share of health and education funding. It has arbitrarily capped its contributions under the Canada Assistance Plan to the so-called have provinces: British Columbia, Ontario and Alberta. It has cut millions of dollars in other shared-cost programs covering everything from farm assistance to reforestation to social housing. The cost of this off-loading to British Columbia will be $1.4 billion during the coming fiscal year. In addition, the federal government has increased its own deficit and that of the provinces by its misguided high interest rate policy.
[2:45]
The challenge we face in this budget is to address the priorities of British Columbians while bringing the province's finances under control. This means steady concerted action to bring the deficit down -- not draconian restraint with its legacy of hardship and economic instability. Specifically, it means levelling with British Columbians about the true state of the province's finances; ensuring that spending is targeted to high priority areas; eliminating waste and getting spending under control; and ensuring that the additional revenue needed to maintain essential services is raised fairly.
This budget meets the challenge. We have cut the growth of government spending in half, while safeguarding basic services. And we have reduced the deficit to $1.79 billion -- a cut of $1 billion from the level projected by the independent financial review.
This budget demonstrates that we have started to restore British Columbia's financial health. The independent financial review has made recommendations to improve financial accountability. A number of them have been adopted in this budget. The review confirmed what British Columbians have known for some time: the budget stabilization fund and the so-called balanced budget plan served only to mislead the public and create confusion. We have accepted the review's recommendation that the so-called Taxpayer Protection Act, with its discredited balanced budget plan, be repealed. This year we have taken the first step on the road to a balanced budget by concrete action, and we will take additional steps in future budgets.
In addition, in order to give a more accurate picture of the province's finances, the estimates I have tabled
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today have been prepared on a consolidated revenue fund basis. This change will prevent government from using devices such as the budget stabilization fund to manipulate the bottom line.
The independent financial review also recommended that government consider changes to the way in which it accounts for operating and capital expenditures. We will be reviewing this and other recommendations carefully and making appropriate changes.
When British Columbians voted for change last October, they wanted a government that was prepared to get spending priorities right. This government believes that the highest priority must be given to safeguarding essential services to people. The spending decisions we have made in this budget reflect that priority.
British Columbians place the highest priority on maintaining first-rate, universally accessible health care services. In order to maintain those services we have provided an additional $409 million in this budget. This represents an increase of 7.4 percent.
To help ensure that health care remains universally accessible, Medical Services Plan premiums will be frozen. Over the coming year we will be considering options for reducing or eliminating these premiums, as recommended by the Royal Commission on Health Care and Costs.
In addition, this government will continue to take a strong stand nationally against the reintroduction of medical user fees in Canada.
The royal commission has documented other challenges facing our health care system. These include maintaining universal access to health care, keeping costs under control, putting more emphasis on prevention and developing innovative, community-based alternatives. In fact, the royal commission concludes that redirecting health care dollars towards community-based and preventive programs is essential for the very survival of universal medicare.
To begin meeting this challenge we have provided an additional $64 million to enhance community-based family health and prevention programs. These funds will be targeted to those in greatest need: low-income families, children at risk, persons with disabilities and, in particular, those suffering from mental illness. A further $15 million has been provided to fund new disease prevention and public health initiatives in schools and communities. Strengthening health care in these areas will pay future dividends in the form of reduced costs for expensive acute-care hospital services.
Hon. Speaker, over 20 percent of all provincial health spending goes to physicians -- a total of almost $1.4 billion during this coming year. We will be taking steps to eliminate the doctors' pension plan, cap the overall growth of physicians' billings, and reallocate these savings to other high-priority health care areas. Such action is essential if we are to maintain the viability of our health care system.
During the election campaign we promised to earmark half of all revenues from provincial lotteries to health care. To fulfil this commitment, we have set up the Health special account. Half of all lottery proceeds will flow directly into the account and will be used to finance urgent health care priorities.
While we have given priority to maintaining health services in this year's difficult fiscal environment, growth in health spending is considerably below last year's increase. Maintaining quality care will require increased efficiency in the spending of health dollars as well as the cooperation of all health care workers, professionals and administrators.
Education is also a high priority. We will ensure our children continue to receive a quality education. Education spending in this budget is up by almost $300 million over last year's level. That represents an increase of 9.1 percent, enough to fund projected cost increases and population pressures.
Operating grants to universities, colleges and institutes will increase by $41 million in 1992-93. This represents an increase of 4.3 percent. This increase includes funding for an additional 2,800 full-time post-secondary spaces to help keep pace with population growth and increased demand. We will also freeze post-secondary tuition fees this year while we undertake a comprehensive review.
Maintaining British Columbia's social safety net represents a particularly difficult challenge. More British Columbians are out of work, and many Canadians from other provinces have moved to British Columbia in their search for better economic opportunities. At the same time, the federal government has introduced changes which make it more difficult for people to collect unemployment insurance benefits. The result has been a large increase in families and individuals requiring income assistance.
Traditionally, the federal government has shared the cost of income assistance with the province on a fifty-fifty basis. However, the federal government's arbitrary decision to cap the increase in its contributions means that British Columbia now bears almost the entire burden of the growing demand for social assistance. The impact on British Columbia this coming year is dramatic. Last year the rapid growth in the demand for income assistance resulted in total spending of over $1.2 billion, well over the original 1991-92 estimates. Simply funding the existing income assistance program is projected to cost an additional $231 million in the coming fiscal year -- a 19 percent increase over last year's levels.
In summary, hon. Speaker, the budget safeguards basic health, education and social services in the face of serious fiscal constraints. However, maintaining these services has meant limiting, or even reducing, expenditures in other areas. For example, the Government Services, Tourism, Economic Development, Energy and Mines, Agriculture, and Transportation and Highways ministries will all spend less in the coming year. In fact, hon. Speaker, after subtracting the amount required to maintain basic health, education and social services, the growth in other program spending -- excluding debt service -- will decline by 3.6 percent in 1992-93. By cutting wasteful spending and trimming operating costs, we have saved over $40 million.
Let me outline just a few of the specific measures being taken to achieve our efficiency targets. The
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Ministry of Transportation and Highways will reduce its overtime bill by almost $2 million and its contracting bill by another $10 million through more effective use of its staff. The Purchasing Commission is implementing changes, including new bidding procedures, and anticipates savings of up to $5 million. The government's Challenger jet will be sold for an annual operating cost-saving of $340,000. The air services branch will reduce health care costs by approximately $1 million by allocating another aircraft full-time to air ambulance duties.
The Ministry of Government Services is eliminating an assistant deputy minister position and a redundant policy unit, for a saving of $500,000. The Ministry of Economic Development, Small Business and Trade is eliminating an assistant deputy minister position and program staff, for a saving of $3.4 million. The Ministry of Agriculture, Fisheries and Food has closed the underutilized Victoria office of the Agricultural Land Commission. Ministries across government are curtailing their advertising expenditure, for a saving of over $5 million.
We are also eliminating a number of redundant government entities. The office of the compensation fairness commissioner is being eliminated. The Lottery Fund and a number of other special accounts will be eliminated. Lottery funds will now be spent through individual ministries and be subject to clear program guidelines. The Hazardous Waste Management Corporation, which was poorly administered and failed to achieve its objectives, will be eliminated. Strategies to deal with hazardous wastes will be developed by the Ministry of Environment, Lands and Parks. The Forest Resources Commission will be wound up. Much of its important role is now being performed by the new Commission on Resources and Environment. The transportation museum in Cloverdale will be closed.
The independent financial review has identified the existence of 179 separate boards, commissions and Crown agencies. We are determined to reduce this number. We will review these agencies to identify those which are redundant and could be abolished.
We also believe, hon. Speaker, that elected officials must do their fair share to reduce the cost of government. During the coming fiscal year we will initiate a one-year freeze on the salaries and allowances of all MLAs and cabinet ministers, and we will abolish the Board of Internal Economy and replace it with a new independent mechanism to review MLA's salaries and benefits.
The elimination of wasteful spending and the achievement of maximum value for the taxpayer's dollar is a long-term task. The independent financial review has concluded that the government currently lacks the mechanisms and resources to undertake a complete ,longer-term assessment of spending decisions. Over the coming year we will be moving to address these problems. We will strengthen and expand the role of Treasury Board to deal more effectively with cost control and program evaluation. In this year's spending estimates, we have provided an additional $350,000 to increase value-for-money auditing. It is an investment that will repay itself many times over in new efficiencies and reduced program costs. These initiatives will allow us to achieve cost savings in future years without jeopardizing services to British Columbians.
We have achieved significant savings on the spending side of the ledger. Spending growth has been cut in half. Unfortunately, as the independent financial review has shown, spending controls alone are not enough. New revenue measures are unavoidable if we are to maintain services and avoid being swamped by uncontrolled deficits. While all British Columbians are being asked to pay a little more, it is important that these additional revenues be raised fairly.
[3:00]
We also recognize that our tax rates must be competitive with other jurisdictions. Therefore the revenue measures I am announcing today are directed to those who can most afford to pay, and will maintain British Columbia's competitive tax position. First, the basic personal income tax rate will be increased by one percentage point effective July 1, 1992. The impact of this increase will be offset by the federal government's reduction of its income surtax so that middle-and lower-income earners will not pay more. It is important that British Columbians recognize that this federal tax cut was financed by the reduction of federal government support for essential programs like health care and education.
Effective July 1, 1992, the personal income surtax rate will be increased and will become payable at income levels over $60,000 for a typical single taxpayer. This increase will be in addition to the existing surtax on individuals earning more than $86,500. These personal income tax surcharges apply to only the wealthiest 8 percent of taxpayers, those most able to pay a little more. The increase represents an additional 3 cents on each dollar earned above the surtax threshold. For example, a single taxpayer with an income of $80,000 will pay $278 more this year and $566 more next year. This surcharge will not affect the 92 percent of British Columbia taxpayers in the middle-and lower-income ranges. These changes will make British Columbia's personal income tax system more progressive. Additional revenue from personal income tax measures is forecast to be $147 million in 1992-93.
Second, corporations will be asked to pay their fair share. Since 1985, rates have been cut on a wide range of taxes paid by corporations while individual taxpayers have been burdened with large tax increases. This trend was confirmed by the independent financial review. Effective January 1, 1992, the general corporation income tax rate will be increased by one percentage point from 15 to 16 percent of taxable income. This change returns corporate income tax rates to pre-1987 levels, and British Columbia's corporation income tax remains competitive with other provinces.
In order to maintain the relationship between the corporate and personal income systems the small business rate will also rise by one percentage point to 10 percent. This remains below the 11 percent charged in 1987.
The corporation capital tax currently paid only by large financial institutions will be reintroduced for all
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corporations with paid-up capital in excess of $1 million. The tax rate will be three-tenths of one percent on paid-up capital for corporations other than financial institutions. The current capital tax for large banks will be increased to 3 percent from 2 percent. For smaller financial institutions the rate will be 1 percent. These changes take effect April 1, 1992. These new corporation capital tax rates are fully competitive with those in other provinces.
We are also providing an incentive for new investment as part of the corporation capital tax. This new investment deduction in the capital tax is the first of its kind in Canada, and shows we recognize the importance of wealth creation and a positive business climate. Taken together, these corporate revenue measures fulfil our promise to implement a minimum tax on large corporations to ensure they pay their fair share of education and health services in British Columbia. The corporate tax measures which I have outlined are forecast to generate $268 million of additional revenues in 1992-93.
Third, we are introducing two changes to school property taxation to help maintain quality education while improving overall tax fairness. Effective in 1992, the supplemental homeowner grant will be removed and replaced with a 5 percent increase in the basic homeowner grant from $430 to $450. The grant for seniors will increase to $720. Unlike the basic homeowner grant, the supplemental grant was not equitable because it conferred a disproportionate benefit on the owners of higher-priced homes. In addition, the non-residential school tax rates will increase by an average of 6 percent to restore some of the balance between residential and non-residential contributions.
Fourth, we are introducing a new levy on legal billings to help offset rising legal aid costs. The provincial government's contribution to these services has more than doubled over two years to $72 million for 1992-93. The choice was to curtail legal aid for those lower-income people in need or to find new revenue. We will also be considering a range of options for delivering these services more efficiently.
Fifth, we are introducing a number of commodity-specific revenue measures, including an increase in the jet fuel tax and higher liquor markups. We will also undertake a major overhaul of British Columbia's pollution discharge permit fee system this year. Simply put, the more you pollute, the more you'll pay.
I am well aware that nobody likes to pay higher taxes. During my pre-budget consultations many groups and individuals strongly urged us not to increase any taxes. Unfortunately, adopting this advice was simply not possible. It would have meant going beyond the cost savings we have made in this budget to curtailing those essential services that all British Columbians rely on, or it would have meant letting the deficit we inherited run out of control and seriously undermine confidence in our economy.
The independent financial review concluded new revenue measures are an essential part of any realistic strategy to maintain services while getting the province's finances under control. The measures we have taken will raise approximately one-half of the $1.4 billion we will lose this year from the cutback in federal cost-sharing. This revenue package is also balanced with the additional burden being borne equally by individuals and corporations.
We have avoided a sales tax rate increase in this budget. It maintains British Columbia's competitiveness with other jurisdictions. Overall, our tax rates will remain the second-lowest in Canada. This package is fair. While everyone is being asked to pay a little more, the level of increase is based on ability to pay.
Let me now outline this budget's fiscal plan. Expenditures for fiscal '92-93 will total $17.98 billion, an increase of 4.7 percent. Excluding write-offs and other adjustments arising from the independent financial review, this expenditure level represents an increase of 6.8 percent. This is one-half of last year's expenditure growth rate. This budget contains the lowest spending growth in five years. Prudent management has allowed us to maintain our basic services while cutting spending growth to a more manageable level. Revenues for fiscal '92-'93 will total $16.19 billion. This represents an increase of 9.2 percent over the current year's revenue. The resulting deficit for fiscal '92-93 is $1.79 billion. This is a significant reduction from the $2.34 billion deficit recorded last year, and it is $1 billion below the deficit that the independent financial review estimated would have resulted if no action had been taken.
This government is committed to getting British Columbia's financial house in order. However, our commitment goes beyond simply managing this province's finances more effectively. We are convinced that our longer-run future depends on the development of new and innovative solutions to emerging economic and social challenges. We believe that requires a longer-term strategic perspective. While we recognize that now is not the time to initiate large, expensive new programs, we believe that it is prudent to begin laying the groundwork necessary to address emerging problems while they are still manageable. For this reason, we have reallocated some of the cost savings we have made to fund a limited number of new initiatives.
Equality for women is one of our highest priorities. The current situation in British Columbia, where women earn only 67 cents for each dollar earned by men, is not acceptable. We promised during the election campaign to achieve pay equity, and we will keep that commitment. We realize this goal cannot be achieved overnight, but we are determined to make a start. Therefore we have allocated an additional $32 million this year to improve pay equity in the public sector. This includes funding for year two of a pay equity program for the direct public service and the extension of pay equity to post-secondary and health care workers. In addition, we are allocating $29 million for a new initiative aimed at achieving wage parity between low-paid employees in funded agencies and those in the public sector.
Many parents are unable to realize their potential because they lack accessible and affordable child care. This year we are increasing child care support programs by $17 million.
Equality for women is more than an economic issue. Too many women live in fear for their personal safety.
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We have allocated an additional $6 million this year to programs aimed at preventing crimes of violence against women and providing assistance to its victims.
Hon. Speaker, this government is serious about protecting our environment. That's why we moved quickly to issue tough, new pulp pollution regulations that will finally phase out toxic pollution. During the coming fiscal year we will spend $4.5 million to improve pollution-monitoring, enforcement and environmental protection. As noted by the independent financial review, such investments pay large economic dividends by avoiding the need for costly environmental rehabilitation. This year we will be undertaking a comprehensive review of environmental legislation and will issue British Columbia's first state-of-the-environment report.
Cooperation between the private and public sectors is essential to create the wealth necessary to preserve and expand services for people. New private sector investments are currently underway despite the economic slowdown. They will help ensure our future prosperity.
In January, provincial tax incentives were used to help create a new Working Opportunity Fund to encourage British Columbia workers to invest in new British Columbia enterprises. To date, over $7 million in new investment capital has been raised by this fund.
Creating wealth also requires public sector investment in schools, hospitals, universities and other facilities. We will undertake close to $1 billion in new social capital investments in communities throughout British Columbia.
Crown corporations will also make major investments. For example, B.C. Hydro will undertake capital expenditures of $550 million for new transmission lines and other facilities. B.C. Ferries will invest $130 million to construct new ferries and terminal facilities. These investments build essential infrastructure while maintaining jobs and supporting economic recovery. In total, public sector capital projects will sustain 16,000 jobs this fiscal year.
Hon. Speaker, I am pleased to announce the creation of the British Columbia Endowment Fund. This fund will be seeded with the assets of the former privatization benefits fund. The British Columbia Endowment Fund will be a perpetual fund with a mandate to invest prudently in a range of diversified financial assets. In particular, we have earmarked $100 million, approximately one-fifth of the total fund, for investments in business enterprises, including venture capital. The focus of these investments will be in British Columbia, providing a new source of capital to businesses, creating jobs, enhancing value-added production and expanding British Columbia's export opportunities. Working in partnership with private sector investors, this portfolio will be managed to secure a market rate of return over time. There will be no subsidies and no grants. Our goal is wealth creation coupled with an attractive return to the British Columbia taxpayers.
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We will be consulting widely and reevaluating our policies to develop a new approach to regional economic development. In June the Premier will be hosting a special economic summit on trade and the British Columbia economy. Without question, any development assistance must be targeted strategically to obtain maximum results for our scarce dollars. Experience has shown that economic and regional development problems cannot be solved by throwing money at them. The independent financial review has clearly shown the consequences of that approach. It found that business loans and guarantees have been costly, often ad hoc in nature and subject to excessive political involvement. This government has begun to lay the groundwork for a more rational development strategy.
First, we are undertaking initiatives to improve the management of our natural resources and resolve conflicts. In early January we set up a new Commission on Resources and Environment as an essential first step in resolving land use and forestry resource conflicts. In the coming fiscal year we will be providing funding of $4 million to allow the commission to fulfil its mandate. We are supplementing this initiative by providing new funding of $15 million to the Ministries of Forests and Environment to undertake badly needed planning and inventory work.
Second, we are undertaking a number of initiatives to increase the stability of resource-dependent communities. This year we will be setting aside $15 million to create a new Natural Resource Community Fund. Its purpose will be to provide a stable source of funding to deal with the problems facing resource-dependent communities. Each year 0.5 percent of natural resource revenues will be paid into the new fund. Natural resource revenues will add another $5 million to the fund this year.
We are increasing funding for the Job Protection Commission by 20 percent to support its efforts to avoid the unnecessary closure of key businesses during this economic downturn. Recently we provided emergency funding to revitalize our Okanagan tree-fruit industry.
Third, we are taking a number of direct job creation measures aimed at those most in need. We are reducing the penalties faced by GAIN recipients when they enter the workforce. The monthly GAIN earnings exemption will be increased to $100 for single persons and to $200 for persons with dependents. This assistance for low-income earners will cost $16 million during the coming fiscal year.
In addition, we are providing total funding of $57 million for the employment opportunities and job action programs -- a 43 percent increase. These direct employment programs are designed to provide job skills and experience for those in greatest need, particularly young people currently receiving income assistance. They are also targeted to communities with high unemployment rates.
Hon. Speaker, regional economic growth and diversification over the long term also require a just and honourable resolution of aboriginal land claims. The settlement of aboriginal claims is essential to removing the economic uncertainty which now hinders new investment and job creation in many regions. It will also result in the injection of new, badly needed capital into British Columbia's regions and communities. In order
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to ensure settlements which are fair to both aboriginal and non-aboriginal people, all British Columbians must be fully consulted. We have provided $4 million for new initiatives associated with negotiating land claims.
We faced a challenge when preparing the first budget of this New Democrat administration. The challenge was to get our spending priorities right while bringing British Columbia's finances under control. In preparing this budget, we were faced with a fiscal situation that was rapidly deteriorating. We were faced with $1.4 billion of unprecedented cutbacks in the federal government's contributions to our most essential programs and services.
In this budget we have successfully met the challenge. We have reduced the deficit while protecting our basic services. We have done this by shifting the government's spending priorities while cutting the rate of growth in government spending in half. We have reduced waste and begun to achieve efficiency savings.
We have used some of those savings to target a limited amount of new spending for our more urgent priorities: reforming the health care system to ensure the survival of universal medicare; moving towards equality for women; protecting our environment; and investing in British Columbia's future and helping regional economies suffering from the recession. We have ensured that the additional revenues needed to protect basic services are raised fairly. We promised to pursue the priorities of British Columbians within a sound fiscal framework, and today we have delivered on that promise.
Our vision, however, goes beyond simply managing the province's finances more effectively. We look forward to providing a government which is honest and open with all British Columbians. We look forward to helping build a society which is fair to all its citizens, and we look forward to building an economy which is stable and confident. In this budget we are laying the foundation necessary to achieve those goals.
F. Gingell: Hon. Speaker, we have just heard a Minister of Finance who has tabled the budget with the largest deficit that has ever been proposed in this province. This budget does very little to protect the jobs and paycheques of working British Columbians. What it does is to propose to take an additional billion dollars out of their pay packets through increases in personal, corporate, property, fuel, tobacco and liquor taxes at a time when taxpayers can little afford it.
As the official opposition warned in question period this week, this government pays far too much attention to British Columbia's competitive position with the other provinces of Canada, instead of worrying about our competitive position with the western United States and countries of the Pacific Rim. Jobs will only be created when our manufacturers are competitive in the Pacific Rim. That is critically important to us.
This budget significantly reverses the trend to remove the burden of operating our schools from property taxes by a reduction in the homeowner grant of at least $72 million, before one even considers the impacts of inflation.
Hon. Speaker, this budget pays no attention whatsoever to the problems seen by consumers and small businesses in this province that lead to the flow of capital south of the border through cross-border shopping. We see nothing in this budget to help with that problem. But it does raise revenue levels and expectations that we will get increased taxes from liquor, tobacco and motor fuel. I would like to suggest to you that it is particularly those things that cause people to shop south of the border. Look at the numbers.
The corporation capital tax is a most ill-advised proposal and will certainly lead to increases in the numbers of unemployed men and women in British Columbia in the coming months. This House can expect to hear more on this subject and others tomorrow in a more detailed reply.
Meanwhile, the official opposition also notes that there is no commitment here not to spend money that people don't have. There is no commitment, hon. Speaker, to balance the budget over a five-year business cycle. There is no commitment here to do something about the rising public debt, projected to now rise to in excess of $22 billion.
Thanks to the dire warnings of the Peat Marwick report, this government is able to table a budget with a deficit of only $1.7 billion. This is far higher than the public would normally like to see from a British Columbia government. We think there could have been a better way. We will be back tomorrow, hon. Speaker, to talk about it.
F. Gingell moved adjournment of the debate.
Motion approved.
Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: bills intituled: Taxpayer Protection Repeal Act; Budget Measures Implementation Act, 1992; Income Tax Amendment Act, 1992; Corporation Capital Tax Act; Home Owner Grant Amendment Act, 1992; Motor Fuel Tax Amendment Act, 1992; Social Service Tax Amendment Act, 1992; Health Special Account Act; Natural Resource Community Fund Act; British Columbia Endowment Fund Act; Medical Practitioner Fee for Service Apportionment Act; Professional Retirement Savings Plan Agreement Extinguishment Act; Legislative Assembly Allowances and Pension Amendment Act, 1992.
Hon. G. Clark: Hon. Speaker, these 13 bills implement the budget measures that I announced earlier today. In moving first reading of each of these bills, I will state its primary purpose.
Bill 3, the Taxpayer Protection Repeal Act, repeals the Taxpayer Protection Act retroactive to December 31, 1991.
Bill 4, the Budget Measures Implementation Act, 1992, provides that eight special accounts in the privatization benefits fund be discontinued. The lower mainland's public transit system may be funded on a part-year basis for the 1992-93 fiscal year. In the absence
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of such an arrangement, existing funding sources are continued into 1992-93. The tax rate on premiums paid to unauthorized insurers is increased. References to the Ministry of Forests are removed from the Sustainable Environment Fund Act, and the types of revenue that may be paid into the fund are broadened. Tobacco tax indexing is eliminated, and new tobacco tax rates are established.
Bill 5, the Income Tax Amendment Act, 1992, increases the basic income tax, income surtax and corporate income tax rates. The bill also delays the phase-out of the renter's tax reduction and makes several technical changes.
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Bill 6, the Corporation Capital Tax Act, repeals the existing act and introduces a capital tax on all corporations with paid-up capital of $1 million or more.
Bill 7, the Homeowner Grant Amendment Act, 1992, eliminates the supplementary homeowner grant and increases the basic grant.
Bill 8, the Motor Fuel Tax Amendment Act, 1992, removes the quarterly indexing of motor fuel tax rates and sets new rates. In addition, this bill introduces a new rate for jet fuel, exempts alcohol-based fuel, raises the maximum amount of fuel tax rebated to disabled persons annually and amends several definitions.
Bill 9, the Social Service Tax Amendment Act, 1992, imposes the provincial sales tax on purchases of legal services, extends the application of the tax to non-voice telecommunications services and changes the sales tax treatment of certain interprovincial and international aircraft.
Bill 10, the Health Special Account Act, establishes a special account which provides for one-half of the net revenues of the British Columbia Lottery Corporation to be used to fund health care initiatives.
Bill 11, the Natural Resource Community Fund Act, will provide a stable source of funding to address the problems facing communities dependent on a single-resource industry in the event of closures or downsizing in that industry.
Bill 12, the British Columbia Endowment Fund Act, establishes a new special fund which will hold its assets in perpetuity. This fund's investments will yield revenue to an economic benefit for British Columbia.
Bill 13, the Medical Practitioner Fee for Service Apportionment Act, provides the means for the Medical Services Commission to manage physician payments on a fee-for-service basis in 1992-93 to ensure that costs are contained within the available funding.
Bill 14, the Professional Retirement Savings Plan Agreement Extinguishment Act, removes any requirement or obligation of the provincial government to fund retirement savings or similar benefits for medical practitioners, beginning in the 1991-92 fiscal year.
Bill 15, the Legislative Assembly Allowances and Pension Amendment Act, 1992, freezes the indemnities, expenses and salaries of Members of the Legislative Assembly for the 1992-93 fiscal year.
Hon. Speaker, I now move first reading of Bills 3 through 15.
Bills 3 through 15 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. G. Clark: Hon. Speaker, I ask leave to introduce a motion without notice.
Leave granted.
Hon. G. Clark: I move, seconded by the hon. members for West Vancouver-Garibaldi and Peace River South:
"Be it resolved that this House hereby authorizes the Committee of Supply for this session to sit in two sections, designated section A and section B; section A to sit in such committee room as may be appointed from time to time, and section B to sit in the chamber of the assembly, subject to the following rules:
"1. The standing orders applicable to the Committees of the Whole House shall be applicable in both sections of the Committee of Supply.
"2. Subject to paragraph 3, within five sitting days of the tabling of the main estimates, the House Leader of the official opposition and the House Leader of the third party may jointly advise the government House Leader in writing of three ministerial estimates which they require to be considered in section B of the Committee of Supply and, upon receipt of such notice in writing, the government House Leader shall confirm in writing that the said three ministerial estimates shall be considered in section B of the Committee of Supply.
"3. All estimates shall stand referred to section B, save and except those estimates which shall be referred to section A on motion by the government House Leader, which motion shall be governed by the provisions of standing order 60A. Practice recommendation No. 6 relating to consultation shall be applicable to this rule. In the absence of the consent of the House Leader of the official opposition and the House Leader of the third party, estimates from nine ministries only may be referred to Committee A.
"4. The Committee of Selection shall appoint 22 members for section A, being 14 members of the New Democratic Party, six members of the Liberal Party and two members of the Social Credit Party. In addition, the Deputy Chair of the Committee of the Whole, or his nominee, shall preside over the debates in section A. Substitution of members will be permitted to section A with the consent in writing of that member's Whip, such consent to be delivered to the committee Chair prior to the commencement of the committee sitting.
"5. At 30 minutes prior to the ordinary time fixed for adjournment of the House, the Chair of Committee A will report to the House. In the event such report includes the last vote in a particular ministerial estimate, after such report has been made to the House, the government shall have a maximum of ten minutes, and each opposition party a maximum of five minutes, to summarize the committee debate on a particular ministerial estimate completed, such summaries to be in the following order: (1) third party; (2) official opposition; (3) government.
"6. Committee B shall be composed of all members of the House.
"7. Divisions in section A will be signalled by the ringing of the division bells four times.[ Page 196 ]
"8. Divisions in section B will be signalled by the ringing of the division bells three times, at which time proceedings in section A will be suspended until completion of the division in section B."
Motion approved.
Hon. C. Gabelmann moved adjournment of the House.
Motion approved.
The House adjourned at 3:38 p.m.
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