Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, JUNE 8, 1992

Volume 4, Number 7

[ Page 2305 ]

The House met at 6:02 p.m.

Hon. G. Clark: I call second reading of Bill 12, hon. Speaker.

BRITISH COLUMBIA
ENDOWMENT FUND ACT

Hon. G. Clark: I move the bill be now read a second time.

Bill 12 establishes a special fund called the British Columbia Endowment Fund. This isn't a fund like the budget stabilization fund -- or BS fund, as it was called by the previous administration -- where there was some kind of book entry but there was no cash to back it up, as we've become so aware of in recent months. This is a real fund with real assets, with real money in it.

The purpose of the fund is to hold the assets of the fund in perpetuity and to keep them invested to produce revenue and economic benefit for British Columbia. This is a good-news piece of legislation, which I am delighted to bring in today. The legislation transfers the balance of the privatization benefits fund, as of March 31, 1992, into the new fund. Future transfers into the fund may include proceeds from a disposition of Crown assets or rights as specified by the Lieutenant-Governor-in-Council.

A special feature of the British Columbia Endowment Fund will be its focus on British Columbia. While the fund's objective is a market rate of return, $100 million of the $500 million fund will be specifically targeted to British Columbia value-added investments. It is intended that these value-added investments will be in the areas of venture capital, merchant banking and trade. Their focus will be on the further diversification of the British Columbia economy in non-resource and export sectors.

We are taking government assets and making them work in British Columbia in order to create jobs and economic diversification without taxpayer subsidy. Wherever possible, such funding will be co-invested with the private sector, creating a larger pool of capital available for investment. Working in partnership with the private sector, this investment portfolio will be managed to secure a market rate of return over time. That's another important innovation. What we're doing in the venture capital field is providing public money only if it's matched with private money, and then that entire fund is managed by professional people in the private sector. Again, rather than the government getting directly into the venture capital field, we're relying on the expertise in the private sector and only using government assets to lever those private sector funds and move them into the value-added manufacturing sector or the venture capital market. The bill provides a new focus and investment direction for important assets of the province of British Columbia.

I want to make a point, because someone could say: "Why don't we just take all this money, liquidate it and pay down debts?" I would say, first of all, that our borrowing costs last year were 9.55 percent. The rate of return on this fund last fiscal year was 14.5 percent. The difference in this fund has generated $25 million for the people of British Columbia in one year, money which we would not have if we did not have this fund. I'm very proud of the people who work in the Ministry of Finance in this area. We have an excellent track record, the best in the country: a diversified portfolio and cautious, prudent investing, but still getting tremendous rates of return for the public sector.

Looking at it in a broad sense, we have a $500 million fund managed to maximize the rate of return. We're very confident that we can do that with the economic leverage we have. As you know, we also manage a $24 billion pension portfolio, so an extra $500 million here gives us tremendous economies of scale. We're taking only $100 million of that $500 million and dedicating it to be invested in British Columbia. This is taxpayers' dollars at work investing in British Columbia, at no subsidy. In fact, we're making money for the public sector, which allows us to keep taxes lower than they would otherwise be or to improve services to people. This is a very positive step.

I must say that it builds on something that was started by the previous administration in a modest way. I think we are on the verge of building those kinds of financial institutions, of filling financial markets which are underserviced by the market, by levering public sector money with private sector money and managing risk in a way in which the public sector is not underwriting a risk for the private sector, but is working with and sharing risk with the private sector. I'm very proud of this initiative. I think this is the beginning of building even further the kind of financial assets we have as a province. It's one of the reasons we have this kind of innovation from the staff and treasury department of the Ministry of Finance. It's one of the reasons why we have the best credit rating in the country. It's a tremendous innovation which I think begins to move forward to try to help diversify our economic base in British Columbia.

As I say, I'm very proud of this. I commend all members of the House to vote in favour of this legislation.

F. Gingell: Much as I listen to the plea of the Minister of Finance to support Bill 12, I'm afraid that I can't. In fact, if I were to listen to his rationale, I would suggest that the provincial treasury branch go out and borrow $38 billion at an interest cost of 9.5 percent, earn on it its promised rate of return of 14.5 percent, and we won't have any deficit. That would completely wipe out our $1.8 billion anticipated deficit for the year 1992-93.

What is the province's real financial position? How much money does each man, woman and child in this province owe through the institution of our provincial government? Well, they owe $6,768, and I really don't understand, when that amounts to some $19 billion in total, why we would set aside $500 million and treat that separately and differently from our $19 billion debt.

I'm sure that you appreciate, hon. Speaker, as I am sure the Minister of Finance appreciates, that my 

[ Page 2306 ]

suggestion that the province should go out and borrow $38 billion because the Minister of Finance promises us that he will make a 5 percent greater rate of return than the cost of borrowing wasn't a serious proposal. I am sure that the minister wouldn't dream of doing that. I hope that he wouldn't dream of doing that. The $520 million in this fund is just a microcosm of that. To me, it simply doesn't make sense. If I have a mortgage on my house and I get a bonus from something, the sensible thing to do is to make an additional payment against the mortgage. It is certainly not a sensible thing, in my opinion, to put that money on one side and hope that, by playing the market, you can do better.

Talking about playing the market or picking winner and losers, the province of British Columbia, other than the investment of our pension funds and certain other trust funds, doesn't have a very good record. The government of Canada, with the taxpayers' money that they have pumped into building aircraft and all kinds of projects in the province of Quebec, haven't had any track record. The privatization benefits fund -- now called the B.C. Endowment Fund -- is going to finish up as a similar type of investment program as the previous Social Credit government privatized by giving everybody shares of BCRIC. We all know what happened there. They got a lot of people in British Columbia to invest at $6 a share, and it now trades for one-tenth of that value.

Governments should be in the business of delivering the services that are required to the people of this province at the least and most economical cost in the most efficient manner, and taxing us the amount of money that is required to pay for those services. They shouldn't be in the business of taxing us a little bit more so that they can have an investment fund. In the end, that's what this is.

Interjection.

F. Gingell: Taxing is left.... Where does the $524 million come from in the first place? It belongs to the people of British Columbia, and we're going to be taxing them all in 1992-93. We have a deficit that is just under $500 per person -- $483 per head. A quick calculation indicates that we will be taxing every man, woman and child in this province around $5,000. This government spends a little more than $5,000 on every man, woman and child in the province delivering the services of education, health and all those other things, but they tax them only about $4,500. There is a deficit. We tax 90 cents for every dollar that we spend, and this deficit is purely and simply deferred taxes that we, our children and our grandchildren will pay in the future, together with all the accrued interest.

[6:15]

In the end there's only so much money that the province has and only so much money coming in, and they can spend only so much money. In the end this $500 million would really be far better spent being applied against our provincial debt. It simply doesn't make sense. As I've said before, the government doesn't have the expertise and isn't in the business -- and shouldn't be -- of picking winners and losers.

In Alberta, government got into all kinds of things. Everybody thinks about modern research-oriented industry and the leading edge -- the cutting edge and all those fine terms -- that got them into NovAtel. NovAtel in Alberta cost every Albertan somewhere in the region of $217. Almost $500 million has been lost by NovAtel.

Governments in this province have been in the business of making loans. One of the biggest criticisms in the Peat Marwick report was the write-off of $300 million, because government really doesn't do a very good job of making these loans.

Provincial government trust funds, the pension funds and the sinking fund funds, and the other funds that the province holds on behalf of various individuals and organizations as a trustee, are restricted in the kinds of things in which they can invest. This particular bill is very interesting, because it appears to me to exempt the investments from the privatization fund, now called the B.C. Endowment Fund, from the scrutiny of the Financial Administration Act.

"This appears to bring in the back door a broadening and a loosening of the regulations regarding the money which should be done in an upfront fashion." I am sure the Minister of Finance recognizes his own words, quoted from Hansard, May 1988, when the provincial government of that day brought in the Privatization Benefits Fund Act. Further, in that same debate, when the Privatization Benefits Fund Act was brought in, the former Finance critic, the Hon. Dave Stupich, said:

"It gives the Minister of Finance the opportunity to direct how much of the earnings of this fund will come into consolidated revenue. It leaves it wide open, once again, for the government, the Minister of Finance -- whatever -- to play around with it; to put money in when they want; to take it out when they want; to take earnings out when they want or leave them in; and to use the fund, once again, for their own political purposes."

If one looks at the original provisions of the Privatization Benefits Fund Act and at the provisions in the British Columbia Endowment Fund Act, one will find those same provisions; they have not been changed. So the arguments put forward by both the then second member for Vancouver East and the former Finance critic of the NDP caucus, Dave Stupich, are both still valid.

Further, in this same debate: "It's more smoke and mirrors here from the Minister of Finance -- a very vague, open-ended statute. Money may go in, money may go out, and who will know in that revolving door what in the world is going on?" That was a quote from Bob Williams in that same debate. This bill isn't any different from the bill that was put forward at that time. It basically just has a name change and some other changes to allow it to perform the functions that the minister has proposed. In the 1990 auditor general's report, in the review of the reporting of the financial results of privatization, the auditor general stated: "The privatization benefits fund financial statements were never intended to, and they do not, provide sufficient information to judge the overall financial results of privatization transactions. To do so, an entirely different basis of accountability reporting would have been 

[ Page 2307 ]

required...." This particular act intends to also bring into the fund, upon the ordering by the Lieutenant-Governor-in-Council, future payments of this type which may arise in the province. I don't see anything in this bill which would change that or which would look after that particular problem.

I think that I have dealt with all of the particular subjects that I wish to. I do not agree in principle with the $400 million of this fund that is going to be put into what they call core investments. I don't think that's the appropriate role for government. When we come to the $100 million that is going into venture capital, merchant banking and something else too, I must admit that I have less problem with that. When the government can and does enter into those kinds of arrangements with private sector partners who will be investing with the government and bringing their skills and expertise to the investment, I find it much more within the kind of program I can accept.

With those few words, hon. Speaker, during committee stage of the bill, if the government decides to proceed -- and I presume they will -- we will wish to discuss the manner in which the reporting of the fund takes place. Standardized financial statements may not do the job. I'm sure the minister will want there to be a full, complete and fair disclosure. I might have some thoughts and suggestions for him in committee stage.

B. Simpson: Hon. Speaker, I'm delighted to have the opportunity of speaking in favour of this fund. I just want to briefly describe the various sections. Section 3 sets out the purpose of the special fund; it will be a perpetual fund that will invest its assets to provide revenue and economic benefits for British Columbia.

Section 4 deals with the initial assets and the future assets. The opening balance will be in the amount of the privatization benefits fund as of April 1, 1992, which was approximately $526 million. The section also makes provision for future development of the fund and future transfers of assets, rights and money upon various specific approvals. It also deals with investments. The Minister of Finance will have the ability to invest in assets prescribed under the Financial Administration Act, such as money markets, securities, bonds, stocks, mortgages, and also classes of investments approved by the Treasury Board and investments in companies that are in the early stage of capital expansion.

What is the situation with regard to companies now getting much-needed capital? We produce in British Columbia plenty of basic capital in the form of savings accounts, RRSPs, government pension funds and private pension funds. Altogether these funds amount to over $100 billion. The problem is that 90 to 95 percent of these funds, which are locally generated, are placed into financial institutions outside British Columbia -- in Toronto or New York. The consequence is that our own money is not accessible to British Columbia companies.

Why is there a need for local capital? It is more sympathetic, more dependable and more readily available. We will not be at the mercy of some financial institution that is headquartered on Bay Street or Wall Street. The fact is that all business financing of any significance for our businesses in the province of British Columbia comes from sources controlled outside this province.

What are the consequences of this flight of capital? Most B.C. industrial companies are now controlled outside the province. I want to cite some examples of these companies -- well-known names in the province of British Columbia -- which we have lost control of over the last couple of decades: the Bank of British Columbia, Belkin Packaging, B.C. Forest Products, B.C. Packers, Canadian Pacific Airlines, Hormark International, Continental Securities, MacMillan Bloedel, Celgar Pulp, Fields Stores, Woodward's, B.C. Telephone, Canarim Investment and Crown Forest. We're soon about to lose the gem of our high-tech industry, MacDonald-Dettwiler, to an eastern concern, Spar industries.

Of the 25 companies in Canada ranked by sales, 52 percent are headquartered in Ontario, 32 percent are headquartered in Quebec, 12 percent are headquartered in Alberta and none are headquartered in British Columbia. Of the top 100 companies operating in Canada, only four are headquartered and controlled in British Columbia. Alberta has eight, even though it is a far smaller province than British Columbia. Why is that? Because the Alberta government throughout the last two decades has invested in local industry. In Alberta, over $8 billion went into the provincial economy through the government-owned Alberta Treasury Branches and $12 billion through the Alberta Heritage Fund. Among the four largest Canadian provinces, only British Columbia lacks both public and private financial institutions of significant stature to channel investments into local industry. The establishment of the B.C. Endowment Fund is the start of British Columbia regaining control of our economic destiny.

What will the lending and investment policies of the B.C. Endowment Fund be? First of all, we will not be handing out grants or subsidies. The funds will be co-invested with the private sector to get larger pools of capital to invest. The purpose will be to generate wealth by investing money into small, growing high-tech companies. We must take a long-term, conservative approach. We must avoid speculation. We should only lend money to British Columbia companies where there is almost a certainty of the money being repaid. We should avoid companies which have financial problems, like Moli Energy and Cassiar Asbestos. We must avoid falling into the trap that the Saskatchewan development corporation found itself in -- its losses exceeded its original equity -- and the B.C. Development Corporation, which had losses greater than its equity.

[6:30]

Let's talk about the future of the endowment fund. Our ultimate objective in British Columbia should be that we have a fund similar to the one Singapore has. Over the last 25 years the Development Bank of Singapore has accumulated over $30 billion for investment purposes. Such an ambitious project would require close cooperation with the business and labour communities. Our citizens should be prepared to put a portion of their savings into such a fund. The pension 

[ Page 2308 ]

funds, which are in excess of $12 billion, could be tapped for investment purposes.

Let's stop the flight of capital to outside financial institutions. Let's invest in British Columbia companies in a way that will make them more competitive in the global economy. It's time to be creative. Our government is displaying such creativity in the development of this endowment fund. It is time to control our economic destiny. The endowment fund will develop into a serious financial institution, which is so desperately needed in the province of British Columbia.

R. Neufeld: I don't think that our caucus has a great amount of trouble with the B.C. Endowment Fund, but we do have some small problems. We wonder why the government of the day did not continue on with the privatization benefits fund instead of simply introducing another bill to transfer it around, unless there is an ulterior motive that isn't to be seen at this time.

The other thing we'd like to do is correct what the minister tried to leave out: that this was a fund with real money, not like the BS fund, and they were starting it with real money. Yes, it does have real money in it. There was real money in it when the Social Credit government left power -- some $500 million that was transferred over. This government is now the steward of that $500 million. This isn't something that magically appeared from the sky; it was already there. I would like to put that correction in. It's a fund that was generated by selling off some of the assets of the taxpayers of British Columbia and paid off quite well -- according to the Minister of Finance, some $25 million last year, 14.5 percent interest. Obviously it was a good move at the time that it was done.

We would rather have seen that fund stay intact with only the interest used for government purposes. If you are going to do anything at all with the fund, we would rather have paid down direct government debt. We would rather that that happened. But so be it. This government has elected that they're going to put $100 million into investment in British Columbia, into businesses, to get the economy going again. If it works out that it helps the economy and it's what's needed to stimulate the economy, then fine. We can go along with that also, if it works well. As has been stated before by the Minister of Finance and also in the Peat Marwick report, government should possibly not be doing this, because it is a dangerous place to get into. I think we're all aware of some of the businesses that the government of British Columbia loaned money to that ended up not being able to pay the money back. I'm going to tell you that this is going to happen again. This is not a phenomenon that took place over the last 20 years. It is going to happen again. There are going to be companies and corporations that this fund will invest in that will go under and not return the money to British Columbia. Then we will be down to $400 million.

The other problem we have is the transfer of $15 million to the Natural Resource Community Fund. We feel that there is a real possibility that we could drain this fund fairly quickly with what's going on in British Columbia because of the moves of this government in taxation in different areas and not making British Columbia a hospitable place for business to invest. They are chasing them away. It's no secret that it's going to probably cost some $15 million or $20 million to look after Cassiar, to move the people out of there and to do whatever is necessary to bring those lives back into order. As you can see, that $15 million goes fairly quickly. That's only one resource community. When that $15 million is gone, what do we do? Do we go back to the pot and get another $15 million? If we continue this, it does not take long before we've blown or disbursed our $400 million.

We look forward to third reading. Like I say, the fund had money in it when the NDP government took power. It had over $500 million that had been producing excellent dollar returns for the province. We would rather have had it stay and be invested exactly as it was. It was sure that they were going to get that kind of return. Right now their return may be diminished quite a bit.

Hon. D. Zirnhelt: I'm pleased to rise in support of this bill. I'd like to start by commenting on the last speaker, the member for Peace River North, who suggested that we should take this money and put it into the debt. We're paying 9.5 percent on our debt. Last year this one brought in an average of 14.5 percent. We hope it'll bring in more. That would have lost another $25 million. We would have indirectly increased the debt by not investing it. I don't think it's good....

R. Neufeld: It was between 9.5 and 14.5 percent.

Hon. D. Zirnhelt: That's quite a bit. It's 5 percent. A lot of these investments will raise more than that. That's the objective here.

As he alluded to, it's really important to stimulate parts of the economy that are badly in need of capital. In doing so, we'll probably increase wealth in the province and thereby jobs. With the creation of this fund, I think the government has provided one more important means to pursue our economic objectives without increasing the budget or the deficit. We have to remind the House of that. We'll also be able to assist businesses, especially the small-and medium-sized ones that we're targeting to obtain capital financing without the need for grants or subsidies. Furthermore, we'll be able to do all of this while obtaining appropriate market returns for the assets in the endowment fund, thereby maintaining and even increasing these assets in perpetuity. More importantly, we will work as partners with the financial and business sectors in order to achieve our common ends, develop the British Columbia economy and improve its competitiveness. The sectors that we will invest in are essential to us, creating momentum in the economy to allow us to compete.

Since the beginning of our history we've depended on exports of our resource-based industries. These industries are still a large and important part of our economy. As part of our economic development strategy, the government, together with private investors and everyone else, must constantly strive to 

[ Page 2309 ]

improve the competitiveness of these resource-based industries on a sustainable basis. We cannot forget that. What is important to a lot of these resource-based industries is that the next tier of activity, the tertiary and value-added sectors, are invested in to support the further development of the products that come from the primary, resource-based industries.

Our government has taken measures to improve the competitiveness of some of these industries and help communities make needed adjustments. I allude to Bill 11, which will give proactive planning capabilities to communities to say: "These are the industries that we think can work here." Where you can't deal with the structural changes, you can help the human resource that remains in that community to get ready for other economic activity.

We have to remind the House that this is the part of the strategy where we try to bring some vigour into the economy. If we look back at the Commission on Resources and Environment, which is settling in now, the fact is that we are getting at the land use strategy that's so essential to investors who want to come in. They want to know what the working resource base is. We've put in a process that has a lot of confidence.

Only one member over there was shaking his head, but he would probably be a doubter no matter what we did. But if he sat back and relaxed a bit, he'd probably say: "Yes, you've done well." So I'm not too worried about him.

Within my own ministry, a number of measures have been undertaken or are under way. The expansion of the job protection commissioner's budget, to help threatened businesses adjust, and, as I said, the creation of Bill 11, to help downsizing or right-sizing where necessary, are only two of the initiatives. They're part of redeveloping regional economic development strategies, which we are continuing to work on.

An important part of these strategies will be continued diversification. Studies suggest that technological innovation has been the primary generator of wealth for years, and it is the presence of strong and growing high-tech or knowledge-based industries that contributes strongly to technological innovation throughout the economy. B.C.'s high-tech sector is growing between 15 and 20 percent a year, compared to about 2 percent for our resource industries. A large portion of the high-tech sector's output is exported, maintaining our tradition as a trading economy.

There is much potential for continued rapid growth in the high-tech sector, resulting in the creation of high-quality jobs. We need to improve the competitiveness of our high-tech sector and help it reach its growth potential. We have to ensure that there is access to a good supply of competitively priced equity capital, and this access will, to a large extent, be addressed by the B.C. Endowment Fund.

We have been advised by experts in and outside government that the emerging high-tech businesses and successful medium-sized businesses looking to expand are constrained by their inability to acquire venture capital for medium-tier financing, often called merchant bank financing. We have found a way to help these businesses acquire venture capital and financing for expansion. By doing so, we've found a way to help diversify the economy. We have found a way to do this while at the same time ensuring a good return on the assets for the fund, which belong to the people of British Columbia, and without providing grants and subsidies or increasing government expenditures or the deficit. Finally, we're doing it all in partnership with the private sector and without disrupting the capital markets. We think this is a win-win-win.

V. Anderson: As I listen, I become more confused. It seems to me that the people of the province will be confused as well. So I rise to question some of this. On the one hand the government says that we're in debt and we have to raise taxes from small businesses, big businesses, the taxpayer -- and everyone else; on the other hand, they say we have a bunch of money that we can spend in order to tax businesses more if they make more money. So it's an in and out. The question is: when is a debt a debt? On the one hand we have a debt; on the other hand we have lots of free money to spend.

On the one hand we hear about fiscal responsibility regarding the planning of the government, and on the other hand, in bill after bill -- including this one -- they take away the checks and balances. The money comes in, but at the discretion of the minister and the Lieutenant-Governor-in-Council, the Financial Administration Act, which is to govern and protect, can be overridden. Again and again the checks and balances are being eroded.

[6:45]

When the Minister of Finance is questioned about some of these overriding concerns, his main response -- with a big grin on his face -- is: "Trust me. Don't trust the legislation. Don't trust what you see in front of you. Don't trust what is written and made into law. Trust me, the minister." We shouldn't have to trust the minister, because we've basically been taught to trust the laws in this country. Even though the minister may be trustworthy at this point -- and I'm not saying he isn't -- he could be mistaken, like some of the rest of us. He also could be changed for another.... He may go on to higher aspirations than this. And so we may get another Minister of Finance, who has a different concept or understanding of what trust is. If it's built again and again on the word of a person rather than the quality of the law itself, then I have some real questions that we should be concerned about.

It has already been mentioned that the experience of governments in trying to be a business is not that successful across the country in many provinces, including here in British Columbia. That has been true under a CCF government, an NDP government, a Social Credit government, a Conservative government, even a Liberal government. Trying to do private business is not the business of government. Therefore it's a concern that this government, of any government, should be trying to move into that kind of undertaking with all its risks.

I'm wondering what they will say to their partners, because of the way they've been moving when there is a default. When something goes wrong this government has moved to say that there is no compensation. This 

[ Page 2310 ]

government has moved to say that if something goes wrong, we'll be paid first. Are they saying to their partners in business in the kind of promotion that we've been hearing: "You become a partner with us, but if something goes wrong, we'll get paid, and you'll be left in the lurch"? That's the way to promise the people of the province that we won't be stuck with it, but I'm not sure what the partners in business are going to think about that kind of arrangement.

Hon. D. Zirnhelt: We're tough business people. We'll deal with it.

V. Anderson: I know you are. That's what concerns me: that businesses out there are going to be saying that you're so tough to deal with that we're not going to risk the undertaking.

I'm concerned about the double messages we continue to get as we look at the legislation that's coming before us. I raise these questions because these are the questions that the people out in the constituencies are beginning to raise more and more. They listen to us. They evaluate what they hear and what they can read. With all its high hopes, the evaluation is beginning to be questioned and to become doubtful. I urge this government to re-examine what they're presenting so that there is a consistent message, not a message that comes across as either/or, good or bad, black or white, and we're not quite sure what's happening. This is another illustration of the confusion they're putting forward

W. Hurd: This is another bill before the House today where, if we think back to earlier in the session, we recall that there have been two phrases on the lips of the government since the opening day of the budget address: the independent financial review and the mess we inherited. Well, the mess we inherited could be paid down with the prudent use of this particular investment fund.

As a result of the mess we inherited, the government has slapped a corporation capital tax on all corporations in the province with $1 million in assets. We have a made-in-B.C. environment policy which will cost the pulp industry an additional $600 million in this province. We have a Mineral Land Tax Amendment Act. Because of the mess we inherited, we had to raise taxes on the resource sector. We have a $l.7 billion deficit in this province. With the $500 million available to the government, they decide to put it into an endowment fund supposedly to help the very businesses that they're taxing into the ground. It makes absolutely no sense. But then I guess the previous privatization fund made little sense either when we consider the financial mess the government inherited.

I was rather struck by the comments from the member for Vancouver-Fraserview, who pointed out that we've lost control of corporations in the province. Far from it. We've actually attracted investment to this province. He mentioned corporations that have gone out and raised capital on foreign investment markets. That has been seen as a sign of strength in these companies. People in foreign markets were willing to put their money into corporations in British Columbia because they felt that it was a safe haven. Based on what they've seen in the past five months, I'm wondering whether that commitment will still be there. In the case of the "made in B.C." environment policy, the pulp industry alone will be facing $600 million in investments before they even deal with air and odour emissions, which is more than the entire amount in this endowment fund.

It seems obvious that if the government were really interested in creating a favourable investment climate in this province, they'd use at least $400 million of this fund to pay down the debt, and get it from $1.7 billion to a more respectable $1.3 billion. That would send out the kind of signal to the investment community that's needed.

There's no shortage of investment capital in this province for profitable, healthy corporations. What there is a shortage of is direction from government, confidence in government and a tax structure that is competitive with the rest of the country and the western United States, with whom we compete. It seems almost incredible that the government would be removing hundreds of millions of dollars from corporations with the corporation capital tax and then saying that we've got a $500 million fund to loan you money from -- in case you still have an operation left in the province after we've charged you the litany of tax increases that we've seen for the corporate sector.

I urge the government to consider paying down the debt. Let's allow private financial institutions, international investors, bond-rating services, banks, trust companies, the people who have some knowledge of lending money to businesses, get on with doing their job while government gets on with doing its job, which is to give us a budget deficit that doesn't represent a serious drain on our children in the future.

D. Mitchell: Here we have it: another fund. Another fund from the same people who, when they were in opposition just a year ago, criticized the myriad special funds that had been created by the previous administration. Even the Minister of Finance, who is the sponsor of this bill, was famous -- maybe infamous -- for criticizing the previous administration for all the special funds that had been set up for special accounts and special purposes. We had the budget stabilization fund, the famous BS fund, which was castigated and pilloried by the same Minister of Finance who is now bringing in yet another fund. We had the privatization benefits fund, which is the father or mother of the fund that we're being asked to approve with this bill tonight.

It's hypocrisy for this government to now be creating yet another special fund when they were critical of this very practice by the previous administration. They were rightfully critical, because there's a lack of accountability with all of these various funds. When referring to the issue of financial control of special funds, the famous Peat Marwick manifesto -- the basis for this budget, which spawned these special funds -- criticized the lack of financial control of all of these funds. Yet what do we have now with bill 12? We have the British Columbia Endowment Fund, yet another fund.

[ Page 2311 ]

We have a concern about the lack of control. I'm not saying that everything with respect to this fund is bad. There are issues here with respect to about $100 million of this over $500 million fund that is going to go towards venture capital already committed in this province, and I think we can support that kind of investment. We have some of it going toward the B.C. Trade Development Corporation, and we can support that because we think that corporation can and should do some good work in terms of expanding trade links for British Columbia. So some modest amounts of this fund are actually going towards very useful directions, but the great majority of this fund is to be put aside for the discretion of this government with virtually no controls. This bill provides no controls, no checks; it's simply Treasury Board approval. Having no checks or balances on the usages of that fund is wrong, and for that reason we can't support this bill.

We can't support it because the Minister of Finance says -- as the member for Vancouver-Langara indicated earlier -- "Trust me." When we pass a bill into an act of this Legislature, that bill or act isn't passed because of our confidence or lack of confidence in a particular minister of the Crown. When we pass a law we're talking about process that goes on in perpetuity. We're passing a law because we believe in the principle of it, not because of the personality of its sponsor. So when we look at the principle of this bill -- and that's what we're debating here this evening -- we have to decide as legislators: can we support this?

The reason we can't support it is that we do not support the notion that government should decide; that government should pick winners or losers in the economy of British Columbia. We know how atrocious the record of government is in picking winners and losers when it comes to picking investments in the economy of British Columbia. So we take a look at this and we say: do we want to vest in this government, in this Minister of Finance, the authority to pick winners and losers in our economy? I think we have problems with that, and that's another one of the reasons why we can't support this bill. We don't believe that the government should decide. We don't believe that any government has a great track record in picking winners or losers.

I'd like to refer to something that's rather interesting, and the Minister of Finance might be interested in this. I recently did a survey of my constituents of West Vancouver-Garibaldi, a detailed questionnaire asking all of my constituents what they thought the top priority should be for government in terms of spending taxpayers' dollars. What should the top priorities be? This represents all the residents of my constituency: West Vancouver, Bowen Island, Lions Bay, Squamish, Whistler, Pemberton, D'Arcy -- a broad cross-section of communities.

The number one priority of all my constituents -- by far the number one priority -- they said should be debt reduction. That's what my constituents said government should be doing: giving the highest priority to committing taxpayers' dollars towards reducing the debt of British Columbia. Here we have a perfect opportunity. We have a perfect opportunity with a sizeable sum of money -- some half a billion dollars -- to be reducing the debt of our province, or at the very least reducing this year's annual projected deficit of $1.7 billion. The government decided not to do that. The government decided not to take the prudent course to reduce debt, but instead created another separate fund, a slush fund, for the government. They haven't decided to reduce the debt. I think it's laughable to listen to the very feeble defense of this bill.

I invite the Minister of Finance in his closing remarks to address some of the concerns that have been raised here this evening, because his colleague the Minister of Economic Development has indicated that the reason this money hasn't been earmarked to reduce the debt of the province is that the government can do so much better by investing it themselves. This government, in all its brilliance, can generate such a high return from its wise and brilliant investment policies that they can do better for the province than they could do if they were to reduce the debt. Now isn't that wonderful? If we are to accept that logic, then what we should be doing is inviting this government to go out and borrow billions upon billions of dollars because they can do so much better than reduce the debt. In fact, why should there be any limits? This government should just go out and borrow and borrow and invest because they would do so much better than they could do otherwise. Why would we even worry about reducing the deficit? Why would we worry about reducing the public debt of this province? Hon. Speaker, I think one can easily see through that line of argument, and it will come back to haunt this government. It will come back to haunt this Minister of Finance for arguing something so specious, so utterly false, so transparent. We can see through that. It makes no sense.

[7:00]

This government wants to be the banker for British Columbia, but there's a lack of vision in this bill. We can't support it. We need to reduce the debt. We need to do that now. We need to send a signal to British Columbians that we're committed, as legislators, to reducing the debt. We must reduce the tax burden as well, not create special slush funds for the government so that the government can engage in social experimentation or experimentation in the private sector. For those reasons, hon. Speaker, we cannot support this bill, and I would urge all members of this House to vote against second reading of Bill 12.

Hon. G. Clark: I'm very disappointed that the opposition has chosen not to support this innovative piece of legislation. Negative Nellies, hon. Speaker. They're opposed to everything. They ran a campaign saying they would be constructive, but they've done nothing but oppose, oppose, oppose.

I want to say first of all, just to clear up any misconceptions left by members opposite, that if we were to liquidate this fund, it would make not one dollar's difference to the deficit. This is money that has already been brought into the consolidated revenue fund by the sale of Crown assets. It would reduce the debt, but it would not reduce the deficit one penny.

[ Page 2312 ]

Why should it be treated differently? Precisely because of that. This is the sale of publicly owned assets, the biggest of which, of course, was our natural gas utility. When the government of the day sold those assets, they chose wisely -- one of the few things they chose wisely -- not to spend that money on operating costs but rather to put it into a fund to be invested in perpetuity. What we have done is taken that fund and said: "We think we can do a little better than that. Let's take a small part of that fund -- $100 million; 20 percent -- and invest it in British Columbia in areas that we know are needed to promote the further development of British Columbia." We want to build on our assets. We want to invest in British Columbia, fill gaps in the financial markets. There's a crying need for diversification, and I think everybody knows that. There's a crying need for venture capital, and I think everybody knows that. I'm disappointed that the members of the Liberal Party wouldn't recognize the need for venture capital in British Columbia.

We heard a few speakers say that we should rely on the banks, rely on those eastern banks to develop British Columbia.

An Hon. Member: Didn't say that.

Hon. G. Clark: Yes, the member for Surrey-White Rock said precisely that: rely on the banks. That's why we have these gaps in the financial sector, because British Columbia has been historically discriminated against, and we want to be prudent about it. So all we're doing is matching private sector contributions for venture capitalists, people who know the business, people like Michael Brown of Ventures West -- matching their privately raised funds with public funds to further develop the British Columbia economy. All of the brokerage community, all of the financial services community in this province -- which is growing -- support this legislation and the government's approach, and I'm surprised that the Liberal Party would choose to oppose it.

More importantly, all of those people who are struggling, trying to find venture financing for new innovations to create jobs in British Columbia, to diversify the British Columbia economy, were looking for some leadership from the former government. We chose not to get involved in giving away government money in grants or loans; we chose to do it on a prudent businesslike basis, simply using the strengths we have, using the assets we have, using the ability of government to borrow inexpensively, to build on British Columbia.

This is prudent. This is good businesslike government. This is ma�tres chez nous, masters in our own house, building on our strengths in British Columbia. This is using the public sector creatively, and I ask all members to reflect upon that and vote in favour of this legislation.

Motion approved on division.

Bill 12, British Columbia Endowment Fund Act, read a second time and referred to a Committee of the Whole House for consideration forthwith.

BRITISH COLUMBIA
ENDOWMENT FUND ACT

The House in committee on Bill 12; E. Barnes in the chair.

Sections 1 to 3 inclusive approved.

On section 4.

F. Gingell: With respect to Bill 12, I must admit that I wasn't expecting it to come up this evening. If it passed second reading, which I thought was in question and in doubt, I did want to prepare an amendment which would cause it to have a set of financial statements that would be very clear and concise, showing a very good history of the fund from the beginning of each year to the end of each year, showing the assets that were transferred in, showing the various investments that the fund has and showing the income that is earned from each particular investment, so that the members of this Legislature could easily follow, clearly understand and appreciate the fine rate of return which the Minister of Finance has promised us.

I don't have that amendment prepared at this time, but I would appreciate the minister making a comment on the question of whether this fund might have financial statements that are a little more explanatory, a little more in depth and a little more informative than we are used to in the public accounts.

Hon. G. Clark: I'm not quite sure of the purpose of the question. We do provide the list of assets of the fund in table form in public accounts. I don't think more is required, in the sense that we list the asset classes of investments -- whether they're government bonds, real estate, foreign or domestic equities -- and we give the total amounts. I don't know if you're requesting a detailed breakdown of which government bonds are borrowed, the series and the coupon rate and everything else.

Sure, we could provide it for the member; I don't mind doing that. I think I would have a little bit of difficulty with that in terms of the published form and complicating the matter for members of the public, in addition to the fact that we do manage billions of dollars of pension funds. Essentially we're imposing on this fund the same reporting requirements that are imposed on the pension funds, as I understand it.

F. Gingell: Does this mean that these funds are going to be just part of the trust funds and pensions funds that are managed by the Ministry of Finance treasury operations? Or are these to be managed outside that area?

Hon. G. Clark: Essentially the management, of course, is the same people. Doug Pearce, from my ministry, is in charge of that. The $100 million will be 

[ Page 2313 ]

managed outside of the ministry by those private entrepreneurs we talked about, but the remaining $400 million or so will be managed in the same way we manage the pension fund or trusteed assets. In fact, that gives us a certain leverage in terms of the ability to manage it.

It's not governed by the same rules in terms of their fiduciary responsibility and the breakdown required in pension fund legislation vis-�-vis money markets versus equity versus the basket clause, etc., but it is still managed by the same people. Obviously we keep separate funds and keep separate track of the assets that are purchased on behalf of it, but we do manage the funds in essentially the same way. Essentially that's by private sector managers for a big part of the portfolio. That gives us certain leverage in terms of managing the total portfolio or assets of the government of the day.

F. Gingell: I thank the minister for that explanation, but in this particular case we are dealing with a completely different asset mix from those in which we invest our pension funds and our other trustee funds.

In addition, under section 6 when we get to that point, the investments of this fund have a wider scope or an ability to invest in the type of investments or percentages that is not appropriate for our pension funds.

I'm not suggesting that we need to have a listing of each of the particular bonds that you held, because I can understand that the bonds would probably be a share of the bonds that are held by your treasury department. But I do think it will be of interest to members of this Legislature to know where the equities have been invested -- whether it is in MacMillan Bloedel, Westar Mines or some company that might be associated with a political party of whatever stripe.

It just seems to me that if we are going to move away from government securities guaranteed by the government of Canada or by another province in Canada, and we have a much larger percentage of the fund in the equities market, it would be appropriate for the financial statements to detail what those equity investments are and the income that flows from them.

Hon. G. Clark: I don't know if it gives the members any comfort, but in the merchant banking and the venture capital funds that are matched with private sector funding, there will be separate financial statements for them, as is normally required for a kind of management of funds, particularly the private and public sector. They won't necessarily be in public accounts, but they will be publicly available to people to see where they're being invested.

In addition, I've just been advised that this fund is invested -- you're absolutely correct -- in the same unit pools as the public sector funds in terms of equities, government bonds and the like. It's not difficult to break out, because obviously we have to for the purpose of this fund and accounting. We have a detailed breakdown of the assets of the fund by class. I have no hesitation in providing that information for you at any time, or for members of the House. I guess I have some hesitation in establishing a different level of reporting for this fund vis-�-vis all other funds. I'm reluctant to do that.

R. Neufeld: Are there any anticipated sales of Crown assets in the near future?

Hon. G. Clark: Nothing at the moment. There are some residuals, actually. There were some small transactions in process after we were elected, so there were some funds in there. There is a possibility, as time goes on, that there may be sales of public assets. As members probably know, there are Crown land sales all the time, and that has its own special account. At this time we're not anticipating moving any money into this fund from that source. It is a big province with lots of assets. We're not ideologically driven on this side. There is a possibility that there would be the odd sale of a government asset sold to the private sector. We would like the flexibility this provides to enable us to move it in here, particularly if the fund takes off. If there is lots of take up on the venture capital side and we're making a good rate of return, we might want the ability to top up the fund in some way. But nothing is contemplated at this time.

[7:15]

R. Neufeld: The assets that you're talking about are all assets of the Crown that would be sold other than land. Is that correct?

Hon. G. Clark: Crown land. If the Lieutenant-Governor-in-Council decided, we could move money in from a Crown land special account as well. I believe that's the case, anyway. Essentially it's the disposition of assets other than Crown land. You're absolutely right.

R. Neufeld: As I said earlier, I'm a little bit worried about the $15 million that went into the natural resources fund, that we're just going to continue to top that fund up if there are more Cassiars on our hands, which could invariably come; we don't know. Is it the intention of this fund to continually top it up to keep it at a certain level, or will that determination be made at different points in time, depending on what is happening?

Hon. G. Clark: That's an excellent question. I am concerned about the natural resource community fund as well. You're right. The temptation now to liquidate it in the face of some serious problems in some of the regions.... I shouldn't say the temptation; it may be good public policy when we have a serious crisis on our hands, like a Cassiar.

At this point the intention is for that Natural Resource Community Fund to be self-sustaining as well. That $15 million is also managed by my ministry in the natural resource community fund. It's making a rate of return. Particularly now as we have a downturn in the regions of British Columbia we will want to provide more assistance. It is possible and it is in fact contemplated that the interest income on this fund that we're debating today could be transferred to the Natural Resource Community Fund to top it up in 

[ Page 2314 ]

order to ensure that there is money in there to deal with some of the hard-pressed regions of the province.

R. Neufeld: I was a little comforted when you said interest off of the endowment fund. If that's what's going to top up the Natural Resource Community Fund, then I don't have much problem with that. But if we were just going to continue to delve into the fund itself, it could get depleted fairly quickly. Could you just confirm that for me?

Hon. G. Clark: That's absolutely correct. If you can imagine, a $526 million fund made 14 percent last year; it may not make that much this year. Our borrowing costs, of course, are plummeting as well. The interest income is around $50 million. There is significant income there, which we can transfer. Even you net out our borrowing costs to make it a purer and more appropriate test, there's still significant revenue to top up the Natural Resource Community Fund. But it's only intended that it would be the interest income.

R. Neufeld: The reason I'm really nervous about the Natural Resource Community Fund is that at one point in time I listened to one of your members speak about how that fund would be used for retraining in their community. They were applying to get money out of it right away to put into a certain part of the province. Our nervousness on the Social Credit side has to do with how that fund could be depleted in an awfully big hurry.

V. Anderson: I'm concerned about the same issues. I understand that you would be selling off assets or rights and getting income into the endowment fund. But a little later on, when we move to section 5, not only does it mean that this endowment fund would be used for special projects that would be up to the minister to decide upon, which gives a lot of freedom and flexibility, but it also means that it's a way of getting money back into the consolidated revenue fund. It's just another channel into the consolidated revenue fund and is a different form of taxation.

People aren't always expecting funds from community groups or other groups that might, under (d), put in money from other sources. I know that people are often interested in giving money to an endowment fund in order that special projects can be undertaken, but they're not so often interested in giving money that will be used for day-to-day operating funds. This account allows for the money to be used for day-to-day operating funds. Without any checks or balances, it could be used totally for day-to-day operating funds, and no special projects will necessarily be undertaken. There are no checks and balances there, and that's a concern.

The Chair: Were you referring to section 5 as well as 4?

V. Anderson: Section 4 and....

Hon. G. Clark: I just want to make sure that we have it clear here. It is contemplated that the interest income on this fund can be transferred to the general fund to pay operating expenses, which I think you should welcome. That reduces our requirement to raise taxes and the like. It is obviously not contemplated that we would liquidate the fund.

It's important for you to know that because of the open way in which we are now doing the accounts in British Columbia, this fund is fully captured. It's subsumed by the consolidated revenue fund; it's a subset of that fund. We cannot hide any income made by this fund, as was the case previously. We cannot pretend it made money and leave it off-book. It's part of the consolidated revenue fund. Any interest income that we make is income to the government of British Columbia, to be spent on whatever we like in terms of government operating costs. If it makes $25 million in interest and we don't transfer into the general fund, our deficit and our income would be $25 million higher.

We've cleaned it all up. It is impossible for us to try to hide any money coming in or going out of this fund. It's all subsumed by the consolidated revenue fund, which is essentially the way it used to be under the Bennett regime, and the way in which the auditor general has recommended, although I think he would go one step further and include Crown corporations, which we have yet to do. So this is very clear and it is contemplated.

We did receive a $50,000 -- or of that magnitude -- bequest to the government of B.C. Someone passed away; in their will we received $50,000 from them to assist the government with its duties in trying to serve people -- a very generous gift which I think all British Columbians are thankful for. We would have the option to put that money into this fund; you're quite correct. But that is an option the government now has, having receipt of a very generous donation from someone's estate.

F. Gingell: I just wanted to go back to the exchange that took place between the minister and my learned friend over here. When you were talking about the natural resource fund, I thought that the revenues that went into that were a percentage of a series of clearly defined natural resource revenues, and that there was a maximum amount, where the fund was going to start at $15 million, and this given percentage of these natural resource revenue streams wasn't going to go into the fund, and it can't be greater than $25 million, and that was the way it was going to be handled. Now I thought I heard you say that there's a possibility of income from the British Columbia Endowment Fund being transferred to that particular fund. Perhaps you could clarify that for me, Mr. Minister.

Hon. A. Charbonneau: Hon. Speaker, could I have leave to make an introduction?

Leave granted.

Hon. A. Charbonneau: I would like to introduce some friends from Saskatoon: a classmate of 

[ Page 2315 ]

mine from the University of Alberta and a director of the transit system of the city of Saskatoon, Al Ross, and his wife Doreen. I would ask the House to welcome them.

Hon. G. Clark: The member is correct. It's one-half of 1 percent of revenue from forestry and mining to go into the fund. But this does provide us a vehicle, should we need it, to transfer the surplus funds from this fund to the Natural Resource Community Fund -- the interest on it, yes. It's not contemplated. It's not something which I hope happens. It's not off-book anyway; it's all part of the consolidated revenue fund. It has no impact on our balance sheet at the end of the day, because this is fully accounted for. But we do have that flexibility to do that, should we run into a Cassiar or the like.

R. Neufeld: I just want to have you say a little bit more about before -- about the revenue, Minister of Finance, that came from the privatization fund. That went into general revenue, and that's how that fund was designed all the time. So it wasn't a hidden thing that happened; it was something that went directly into general revenue before, as I understand it. Right?

Hon. G. Clark: Actually, what happened was that it was a couple of years of surplus. What they did was, in order to hide the surplus and to pretend that it was either a balanced budget or.... In the year of a $700 million surplus, the government of the day pretended that there was a deficit. The way they did that was to move some money very quickly, sort of off-book, into the privatization benefits fund.

That's one way in which they chose to calculate it. But in the consolidated revenue fund you can't hide that, so at the end of the day, when Public Accounts was published, it was clear that there was a surplus in the consolidated revenue fund. But that never showed up in the government's accounts on budget day, because they used the general fund and the special funds. But you're right, actually the main way in which they hid it was through the BS fund and this as well.... They had the BS fund, they had the privatization benefits fund and it was a way in which the government of the day.... And they had the general fund, and that allowed them to manipulate a little better. But at the end of the day, the consolidated revenue fund was published in Public Accounts. And all of the revenue received that's in this fund now was received from government at that time. That's why if we were to liquidate the fund, it would have no impact on the deficit number, because this money is all fully accounted for. It's already been entered into the books and written off.

Section 4 approved.

On section 5.

F. Gingell: This is transfers to the general fund?

Hon. G. Clark: This is the section we were debating.

F. Gingell: I know, but I was waiting for this moment to quote you again, because I wasn't sure if you were listening during second reading debate where the first member from Vancouver East in May 1988 said: "It's more smoke and mirrors here from the Minister of Finance -- a very vague open-ended statute. Money may go in, money may go out, and who will know in that revolving door what in the world is going on?" I love to bring these things back from your own fellow caucus members to remind you, as you would do exactly the same, Mr. Minister.

Hon. G. Clark: First of all, let me just say that that was obviously with a previous administration with a checkered past. I think the public was quite concerned about the way in which government might find it. But I think also the benefit here is that because it's now part of the consolidated revenue fund, because we have subsumed this fund under the consolidated revenue fund and the consolidated revenue fund is the primary set of books for the government of the day, it is fully accountable. I think any transfer in or out is now much more easily identified for the public, for the opposition, and holds us accountable. I think that's gone a long way to dealing with the concerns of my former colleague from Vancouver East.

Section 5 approved.

On section 6.

C. Tanner: The Minister of Finance in the last section just quoted what he thought of this sort of legislation the last time he was in the House. Now apparently he thinks that because he's in charge, everything's going to be fine and we're all going to be living in paradise. Living off the income and living off the interest is nonsense. It was that government in 1972 which was so bright and invested the money in Ocean Falls, and we've never recovered since. It was that government that made all those dumb investments in 1972 to '75 which got the province into trouble in the first place. When did they get so smart? What's happened since?

The other thing is that there's a contradiction in this legislation in that on one hand they're going to invest money and on the other hand they're going to lend money to those people who can't get it from the regular sources. I mean, that's ridiculous. Have we got this legislation to make money or to help those who can't get regular finances from the regular sources, so they come to the government as a banker of last resort? It doesn't make sense.

But the most worrisome thing about it is this paragraph right here. It says -- let me make sure that everybody understands this -- "The Minister of Finance and Corporate Relations, notwithstanding that act, may invest money that is in the special fund in any investment of a class that is approved by the Treasury Board." Well, who makes up the Treasury Board? It 

[ Page 2316 ]

isn't bureaucrats; it's politicians like him, and they're going to be making those decisions.

[7:30]

They've already proven in the last six months where their allegiance lies. Their allegiance lies to helping social services, education and medical bills. That's what they're going to be paying with this money. They're going to be investing in the wrong things. It'll never show a profit. The public isn't with the government on this. The public is terrified of the government doing things just like this. This should not pass unless there's an amendment that says that somebody other than the Treasury Board is making the decisions.

Sections 6 and 7 approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 12, British Columbia Endowment Fund Act, reported complete without amendment, read a third time and passed.

Hon. G. Clark: Hon. Speaker, I call committee on Bill 35.

TAXATION (RURAL AREA)
AMENDMENT ACT, 1992

The House in committee on Bill 35, E. Barnes in the chair.

Section 1 approved.

On section 2.

F. Gingell: With respect to the proposed section 11.01(2)(c), it reads: "if the taxes were levied in respect of a taxation year before the year in which the supplementary taxation notice is mailed, the penalty equals 10% of the unpaid taxes." I would appreciate advice from the minister on whether this means that if there is a reassessment that happens in a subsequent year, if that is possible, is there always automatically a 10 percent penalty?

Hon. G. Clark: The answer is no. They have the 38 days after the statement date on that notice.

Sections 2 and 3 approved.

On section 4.

F. Gingell: I wondered if the minister would explain this to me. I went back to the original act and tried to follow what the meaning of this date change was. It now reads "July 24, 1990," rather than "the day this act receives first reading." I wondered if he would explain that to the committee.

Hon. G. Clark: I'll just read this to you:

"This subsection clarifies the commencement date for revised refund provisions added to section 23 of the act on July 24, 1990. The amendment makes the refund provisions apply to taxes paid or payable before that date, limited by the standard six-year period for claiming a refund under the section. The present wording of the subsection erroneously makes the revised refund provision applicable to taxes levied prior to the commencement of the Taxation (Rural Area) Act in 1948."

Essentially, this is cleaning up something which was brought in in 1990 in error.

Section 4 approved.

On section 5.

F. Gingell: I note in section 5, in the new section 38.1, (1.01)(a), a prescribed fee has been added. I understand the minister's desire to add to the tax base of the province, but perhaps he would be good enough to advise us how much he intends this prescribed fee to be. It's to be paid by the poor individual who has finally saved up enough money, borrowed from all his friends and relations, no doubt, to be able to buy his land back that has been forfeited for non-payment of property taxes, and you want to charge him a prescribed fee, Mr. Minister. Could you advise me how much?

Hon. G. Clark: The revestment fee has always been there; there is absolutely no change to that. For several years it has been $500, but there has always been a fee. All we're doing in this section is adding the fact that the Ministry of Environment, Lands and Parks, after the date of forfeiture, may expend public moneys cleaning up a site. If someone who has forfeited repurchases the land, essentially revests himself of the land, we would like the ability to recover costs actually expended by the Ministry of Environment on that site.

This is modern legislation. We're trying to deal with contaminated sites in most of our legislation. You're going to see other legislation over the coming years, hon. members, if not this section, dealing with the very serious issue of contaminated sites. This is a modest example of where we're amending it to deal with forfeitures. In amending the statute, we're simply adding the ability of the Ministry of Environment, Lands and Parks to recover their costs.

Contaminated sites are, of course, a big issue, and this doesn't deal just with that, but there are a lot of ways in which the Ministry of Environment may be required to clean up a site for public safety or other reasons. We've added those costs as part of the repurchase price of the property.

F. Gingell: I did go through the act as it exists, and I didn't see a revestment fee anywhere. I couldn't see it in section 38.1, but you assure me that it was there, that it has been $500 in the past and that it will continue to be that amount in the future.

[ Page 2317 ]

Hon. G. Clark: It will be that forever.

F. Gingell: Yes, I can believe that.

Moving to subsection (1.01)(d), the question I have is the one I brought up during second reading. Would any of these costs, that were incurred by the Minister of Environment, Lands and Parks and are now to be recovered from someone buying back their property, be appealable under section 2(2) of the act so that there would be some court of law or some means by which a property owner who felt they were being poorly or unfairly treated would be able to find some redress?

Hon. G. Clark: Well, it's not really an appealable issue. It's for actual costs incurred, so we're reluctant to get into a legal argument to deal with the question of paying for costs incurred by the Ministry of Environment. If there are actual costs, they can be documented and demonstrated, and that's the only way in which they will be levied.

My staff have reviewed this question, and it would be extremely difficult to have an appeal procedure just for this section, which is what would be required, frankly. The amendments the member talks about are not possible to simply add here, because they deal with assessments, which is something fundamentally different from the costs incurred by the Ministry of Environment.

However, in further research it's pretty clear that it would be the domain of the ombudsman, because it's a question of administrative fairness. If in fact there was a suggestion that the Ministry of Environment did not incur those costs or had inflated those costs for whatever reason, then an individual could file a complaint with the ombudsman and have a full review up to and including a hearing on the question of whether those costs were reasonably incurred.

I think that best protects the public from any problems that may arise out of this. We simply can't very easily have a whole appeal procedure simply for the Ministry of Environment, so we've chosen not to do so.

F. Gingell: It isn't very difficult to think about the kinds of examples that could cause a problem here. Action taken on some other land such as a spill of PCBs that would run down the hill or get into a stream which finished up in a pond on someone else's property could very well cause the Minister of Environment to spend a lot of money and leave the property-owner in a very difficult position.

I can appreciate that it would not be appropriate for this kind of appeal to go to a property tax assessment appeal board. I'm not a lawyer, and I'm not sure what routes are appropriate for a forfeited-property owner to go to the ombudsman. I'm wondering whether the minister would be willing to make an amendment to the act that would clearly allow that to happen, because I really do have a concern that this is a section where some bureaucratic third party is going to spend some money and charge it against a particular piece of property. The property-owner needs to have some means of appeal that are standard, simple and reasonable. That's really the only complaint I have with this bill. We support it other than that.

Hon. G. Clark: I'd be more sympathetic, but I think you have to put this in perspective. Someone does not pay property tax for thirty months. So they have not paid a penny for almost three years, and then it's forfeited. Then they have three more years in which they can repurchase the land by paying their taxes. They have six years in which to accommodate this. In something like half of all forfeitures, people want them forfeited for whatever reason -- it's a small piece of property and they can't pay the taxes, and they don't want to. They'd just as soon have the government take it over. It's not worth the price of the property tax. It's a very small amount of money. So half of the forfeitures are essentially at the property owner's request, or they've just walked away from it.

[7:45]

Crown Lands does not know which half people have walked away from and which half people want to repurchase. So they act in the public interest. If it's a toxic spill, they go and clean it up. They don't say: "this individual is trying to buy it back, so we should treat it differently," or "we're worried about it and this individual isn't going to buy it back." We're only dealing with a small number of properties. We're only dealing with forfeitures. You get literally six years in which to pay it back without having paid any money, and we think it's reasonable that where there is an action on the part of the Ministry of Environment to deal with a public interest problem, they be charged -- that the owner has to pay the cost incurred before they can repurchase the property. If they're not happy with the amount, they can as a right of citizenship -- we have had this checked out, and there is no amendment required -- appeal to the ombudsman to have it reviewed.

Sections 5 and 6 approved.

On section 7.

Hon. G. Clark: I move an amendment to section 7, that section 7 be deleted and the following substituted: "Section 56(1)(b.1) is repealed and the following substituted: (b.1) prescribing fees for the purposes of section 38.1;"

On the amendment.

D. Symons: Are we being supplied with copies of this? It went by me very quickly, and I didn't have a chance to digest it.

Hon. G. Clark: It's a drafting error essentially. As you can see, we have set fees in here, in terms of the Ministry of the Environment's ability to recapture costs, and we apparently don't have the legal ability to do it by regulation without this section. It was missed by legislative counsel in the drafting. It's essentially a technical amendment to enable us to do what we've just passed in all the other previous sections.

[ Page 2318 ]

Amendment approved.

Section 7 as amended approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 35, Taxation (Rural Area) Amendment Act, 1992, reported complete with amendment.

The Speaker: When shall the bill be read a third time?

Hon. G. Clark: With leave now.

Leave granted.

Bill 35, Taxation (Rural Area) Amendment Act, 1992, read a third time and passed.

Hon. G. Clark: I call second reading of Bill 42.

AGRICULTURE, FISHERIES AND FOOD
STATUTES AMENDMENT ACT, 1992

Hon. B. Barlee: Amendments to both of these acts -- the Agricultural Land Commission Act and the Soil Conservation Act -- are long overdue and are basically housekeeping. I think they're both important to my government's farmland preservation program, and I believe that most members of the House will agree with that. Agricultural land is an important provincial resource, and the Agricultural Land Commission Act, through the agricultural land reserve, protects approximately 11.5 million acres of agricultural land in the province. That's about 5 percent of the total land mass of the province.

[E. Barnes in the chair.]

The Agricultural Land Commission Act, the first act mentioned, provides an application system for land to be included or excluded from the agricultural land reserve. Landowners in British Columbia may seek these changes by making an application to the Agricultural Land Commission, commonly known as the ALC. There are, as I alluded to last week, approximately 1,000 of these applications annually.

The second act being amended is the Soil Conservation Act. It provides a permitting system for removing soil from or depositing fill on land within the agricultural land reserve. A landowner may obtain these permits by applying concurrently to the ALC and to local government in the various areas. There are usually somewhere between 80 and 100 of these applications annually; it probably averages around 90 per year. Before a decision is made on applications under these statutes, the Agricultural Land Commission and local governments must cooperate administratively to ensure that each matter is properly considered. So both levels of government will cooperate on this. Both the Agricultural Land Commission and local governments must employ highly skilled staff to review and comment on each one of these applications.

This bill does five important things. It standardizes and clarifies the existing application process under both statutes. Most applications are submitted first to local governments for their review prior to being forwarded to the Agricultural Land Commission, and that's a logical first step. So it goes to local governments, and then it goes to the Agricultural Land Commission. It also recognizes the existing partnership and cooperation between the Agricultural Land Commission and local governments, so they are essentially equal partners on this.

Thirdly, it establishes a statutory basis to charge application fees. Fourthly, it authorizes the sharing of the application fees between local governments and the Agricultural Land Commission. The sharing of fees will recognize the important role that each plays in reviewing applications and the cost to them of providing that service, so each one of them shares in the fees that the applicant is charged. The fees themselves will be established by regulation. Fifthly, this act requires the Agricultural Land Commission's portion of application fees to be deposited into the consolidated revenue fund, and this is consistent with my government's commitment to responsible fiscal management.

R. Chisholm: We realize that this bill rationalizes the fee structure with regard to the ALC and applications for removal. There is little room for debate when a bill appears to merely fine-tune the fee structure; however, I hope that in the future this government will show some leadership and initiative and deal with the issues of unprofitable farmland that has as its only option anything other than farming.

We should protect our agricultural industry, not only for the sake of the thousands of families in B.C. who rely on farming as a livelihood, but for the security of all British Columbia residents. Otherwise, in the future the need to protect farmland may become irrelevant, because there may not exist anyone willing or able to farm it.

We intend to support the bill. However, there are a few sections that need to be clarified in committee stage.

H. De Jong: I would just like to make a few comments. The minister said at the outset that this was basically a housekeeping bill. I have a little difficulty understanding that, and maybe during third reading those things will become clearer. However, I read something into the bill, and whether it's there or not I am somewhat skeptical of the approach taken here. The way I read this bill, an overall fee will be set for an application which first of all generally goes to local government and then on to the provincial land commission. The government provides a number of different services, and the land commission is no different in 

[ Page 2319 ]

providing a service than, for instance, the Health ministry with its medical services plan. If people require assistance from the medical services plan, they don't have to pay an application fee in order to find out what's going on. The land commission supposedly has this large public support for the agricultural land reserve and....

D. Symons: Point of order. I'm having difficulty hearing this speaker, and I think that those members who are not partaking of the debate could excuse themselves and have their party elsewhere. It would be appreciated.

The Chair: Thank you, hon. member. Your remarks are well taken. Would members please consider the concern there.

H. De Jong: I'll continue with what I was going to say about the fees to be charged. I was on the trail of comparing some other ministries with getting information from a particular ministry and particularly this one, being the land commission. The land commission is in fact paid by this government for providing a service to the agricultural community and to the public at large in terms of preserving that agricultural land. There are a number of applications made each year. I can see that municipalities and regional districts have, over the past number of years, charged a fee for these types of applications to be proceeded on to the Land Commission, because it was not their legislation.

When a person asks for a rezoning application at the local level, which is totally within the municipal jurisdiction, there is no fee payable to get that basic information, whether it's available or not. If it in fact goes further, yes, some fees will apply. What I read into the bill is that the Lieutenant-Governor is going to set a prescribed fee to cover the municipalities, the regional districts and whatever other level of government is going to be involved, including the land commission and its review of the applications. I'm very fearful of this particular position, because a number of things come into play here.

For instance, if the local government does not support the application, the person who made the application has already paid the entire fee, whether it goes to the land commission or not. Again, that's a question we'll get to in third reading: whether the applicant can withdraw the application and get their money refunded at that time, so that he doesn't pay the entire fee.

The money collected by the Agricultural Land Commission is simply another collection agent for general revenue for the province. It's another taxation. They've found another loophole whereby they can gather a few dollars from a number of applicants, whether it's needed or not. It's another cost to those who wish to make some application -- be it for a subdivision for the son or daughter from a piece of farmland, making two farms out of one or whatever the case may be. I think it's another tax grab by this government that said they would not put in any more taxes or charges of this nature. This is why I'm opposed to this type of thing being as open-ended as it is.

[8:00]

[The Speaker in the chair.]

The Speaker: The minister closes debate.

Hon. B. Barlee: First of all, it is not a significant bill; it is a housekeeping bill. I believe the member for Abbotsford well knows that a number of the local governments are charging significant sums to each applicant. The total to be raised by this bill is $300,000; that adds up to 9 cents per person. That 9 cents per person, or $300,000 per annum, is shared between the local governments and the Agricultural Land Commission. It is not a tax grab; it is essentially a housekeeping bill. I believe it's a fair bill that's long overdue. It is not financially onerous on anyone.

Some of these municipalities are charging nothing for doing the same service, whereas another municipality may charge $550. This is a leavening of the loaf. When you consider the overall cost to the province of British Columbia, it comes out to about 9 cents per capita -- under 1 cent per person per month. I don't think it's an onerous tax burden. I think it's long overdue. I think it's a bill that provides more of a level playing-field to all the municipalities than the previous system. The previous system went from zero dollars to $550 with a lot in between. I believe that if the member looks at the previous record in this area, he will concur that this is essentially a fair-minded bill.

Motion approved.

Bill 42, Agriculture, Fisheries and Food Statutes Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

AGRICULTURE, FISHERIES AND FOOD
STATUTES AMENDMENT ACT, 1992

The House in committee on Bill 42; E. Barnes in the chair.

Sections 1 to 4 inclusive approved.

On section 5.

H. De Jong: I have a question on this one. It would appear to me that this section will give the bureaucrats more formal guidelines on how to process the applications. It requires the application fee to be paid. On what basis is the application fee going to be set?

[D. Streifel in the chair.]

Hon. B. Barlee: By regulation of cabinet.

H. De Jong: That doesn't give me much comfort, because we know what that will be. Can the minister provide any figures as to what is currently being 

[ Page 2320 ]

charged by regional districts or municipalities for those applications?

Hon. B. Barlee: We have a list of the municipalities in British Columbia. Many of them charge zero; a number of them charge from $25 to $100; another section charges from $125 to $175; a fourth section charges from $200 to $550. It depends which municipality you are in whether you're charged $550 or zero dollars. We think that there's a great deal of work that goes into this by both the regional district and the Agricultural Land Commission. We believe that it's fair-minded, because it means that everyone pays the same. There's not that vast gulf of difference between zero dollars and $550.

H. De Jong: I'm not sure whether I'm asking this question at the appropriate time or under the appropriate section. If a person makes an application to the local authority -- let's say the municipal council; and the municipal council usually refers these to the regional district, so there are two local governments involved in it.... If both of these local governments would not lend their support to the application, is the applicant still required to pay the full fee, or can he at that time withdraw the application and only pay that part of the fee which is due to the local governments?

Hon. B. Barlee: First of all, there isn't a three-tiered process. What happens is that the municipal council goes directly to the Agricultural Land Commission, as does the regional district -- so there isn't a third member in there -- and they pay the full fee at that time.

R. Chisholm: The fee is paid to the Agricultural Land Commission. If the person who puts in for the application decides to cease with this process, is there any way of that person getting a refund before it is distributed to the different levels of government?

Hon. B. Barlee: The fee is actually paid to the local government, not to the Agricultural Land Commission; then the local government remits part of that fee to the Agricultural Land Commission. There is, however -- I think both members were perhaps worried about this -- a hardship waiver in this clause. If an individual is economically unable to pay that sum, then that case is examined independently, and that hardship waiver is brought into play. I think that's fair. I think that it possibly answers some of the questions that were alluded to by the member for Abbotsford and the member for Chilliwack.

R. Chisholm: Thank you for the answers to the question I didn't ask. I was going to ask that a little bit later, on the hardship clause. What I'm referring to is an individual that has an application in and decides to cease with the application. Is there any way of that person getting a refund from this government, or whatever level of government it's at at that time?

Hon. B. Barlee: That's a decision which he must make before submitting that application. It's quite obvious. He has that decision to make. If he decides to submit the application, surely he knows he must pay for it. He must decide that before going before the regional government.

R. Chisholm: The fees ranged anywhere from zero dollars to $500. What is your department proposing as the fee?

Hon. B. Barlee: This has not been set yet. It will be set by cabinet. The Agricultural Land Commission has recommended that it be around $500, to be shared between both levels: the municipal government and the Agricultural Land Commission.

A. Cowie: My question, now that we're changing the fee structure and.... I agree with that, and it will be laid out clearly. Hopefully, 50 percent to the municipality or regional district and 50 percent to the commission will be fair. What I would like to hear the minister at least clarify is that in this process the applicant would get an independent report back from the commission. We all know that a number of regional districts -- at least municipalities -- sometimes use the Agricultural Land Commission as a way of controlling zoning, whether it's good agriculture or not. What I would like to see is a totally independent Agricultural Land Commission that would report on the application regardless of how the municipality sees it; in other words, it's looking at it from an agricultural point of view and nothing else. That's what I've heard it professes to do. I'd like to see that. I'd like to be assured that we are going to get an independent report if we're moving to this fee structure.

Hon. B. Barlee: First of all, you're referring to the Agricultural Land Commission and the agricultural land reserve being used as a shield, I believe. Indeed, I may not necessarily disagree with that, but I can see what the member is getting at. I think what the member is mentioning is basically beyond the scope of this act, but we are considering reviewing that process. I think perhaps it's somewhat fair comment in that I think it should be reviewed, but that does not come under the specific scope of this particular piece of legislation.

H. De Jong: I again want to make my point that I made during second reading: while there have never been fees charged by the Agricultural Land Commission for reviewing the applications, why is it now all of a sudden required? Again, when you consider that municipalities have had an application fee for these kinds of things because it was not within the jurisdiction.... They were required or requested to make a study and to provide an answer for the Land Commission, but it was not their legislation. The Land Commission was not a part of the local government. It was to provide information to the Land Commission. Hence, I guess, an application fee was appropriate for local governments. But, again, why now an application fee for the Land Commission?

[ Page 2321 ]

Hon. B. Barlee: I think there are several reasons, and I think the reasons are logical. First of all, there's an increasing workload on the Agricultural Land Commission. It goes up year by year. Our population is increasing about 3 percent. There's significant pressure on the land in many of the areas of British Columbia. It requires a great deal of work by the Agricultural Land Commission and those individuals sent out to examine that land to determine what quality of land it is: whether it's class 1, class 2, class 3, class 5 or class 6. This demand is increasing almost geometrically. It's gone up dramatically.

We have attempted, because of this increasing workload, to bring in a prudent user-pay service. It is not onerous. If they really can't afford this, they can ask for a hardship waiver. That will be examined very closely. I think the member and I both agree that there are certain members of the public, certain individuals, who have their backs to the wall. Therefore, if they are in this position, we will examine it very closely. If it is found to be reasonable, that fee would be waived to those individuals.

H. De Jong: The point is that we've already approved the Land Commission's budget through the minister's estimates. These moneys are additional funding for the general coffers of the Minister of Finance, and that's the difference. The money is not being used to offset the work connected with the applications. It's put into a different coffer.

[8:15]

My question to the minister is: what criteria is going to be used to determine which are hardship cases? I understand that the same question comes in the second part of the bill -- as to those who apply for gravel removal, for instance. Gravel removal is usually a fairly lucrative operation, yet this hardship clause is in that part of the bill as well. Can the minister give me some enlightenment as to who may be considered a hardship case?

Hon. B. Barlee: I do not pretend to be a lawyer. In some respects I'm very pleased with that -- present company excepted, of course. First of all, that all falls back on local government, on the municipality and on the Agricultural Land Commission. They make that decision between them. These are elected members of local government. They would have considerable input into that decision, which would be confirmed by the Agricultural Land Commission.

R. Neufeld: Just one quick question. Will the fee for regional districts or municipalities that are applying for a change in status be the same as for a private individual?

Hon. B. Barlee: It will probably be the same. The commission has recommended that it be kept the same.

Section 5 approved. On section 6.

R. Chisholm: One quick question to the minister on exempting classes of persons from payment of the prescribed application fee. Just where will we find the criteria for exempting these people?

Hon. B. Barlee: This particular section will be passed by cabinet. We do not anticipate using it, but it can and will be passed by cabinet.

Section 6 approved.

On section 7.

H. De Jong: Can the minister describe what the difference would be in determining whether an application should succeed or fail if the land was or was not zoned prior to when the agricultural land reserve came into being? The minister should know that there were many municipalities and regional districts that did not have a zoning bylaw prior to 1972. I read something in this bill here that says that if the land in question was zoned as farmland before the Agricultural Land Commission Act came into force, then the local council or regional board can refuse the application. What difference does it really make whether it was zoned before the freeze or after the freeze?

Hon. B. Barlee: I believe the member may have made a mistake. We have already passed by the section he's referring to. We're referring to section 7, not subsection (7). The other one is under section 5.

The Chair: For clarification, we are on section 7.

Sections 7 to 11 inclusive approved.

Title approved.

Hon. B. Barlee: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 42, Agriculture, Fisheries and Food Statutes Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. A. Hagen: I call second reading of Bill 52.

FARMING AND FISHING INDUSTRIES
DEVELOPMENT AMENDMENT ACT, 1992

Hon. B. Barlee: As Minister of Agricultural, Fisheries and Food, I am responsible for several important pieces of legislation that are designed to help the agricultural and fishing sectors to secure markets both at home and abroad. Another distinction of this legislation is to promote high-quality British Columbia products to supply those various markets.

[ Page 2322 ]

The Farming and Fishing Industries Development Amendment Act, 1992, is also a housekeeping act. Each of the producer groups covered under this act may levy that group various funds to raise funds for their own group. They use the funds to work together on projects such as market promotion, research, technology transfer and many other areas; they have a wide option here. This work is important to the success of many of these producers and can be achieved best through the cooperative efforts of a group. It is much stronger under a group.

I believe this act is long overdue. The legislation has been used by a number of groups since 1989, but it does need some improvement. This bill introduces two changes to the existing legislation which are critical to its ongoing improvement and the continued success of the producers relying on it. These two changes are an option for a no-refund system -- that is an option, so again it is open -- and the ability to develop clear administrative roles and obligations for all people involved in collecting the levy with producers. I think that's fairly straightforward.

Referring to the optional refund or no-refund system, the amendments allow producers to determine whether the levy system they request will be refundable or non-refundable. The group has the option to decide. Indeed, that should lie not with the government but with the individual groups. Each individual group will choose the system that they believe will work best for them. We're in consultation with these groups, so I think it's fair.

There are five specific groups which now have levy systems under the legislation. They are the British Columbia Agricultural Industry Development Council, the Blueberry Industry Development Fund Council, the Raspberry Industry Development Council, the British Columbia Peace River Grain Development Council and the British Columbia Salmon Marketing Council. They may continue with their present refundable system, but they will have the option to switch to a non-refundable system if sufficient numbers of producers support that change. I understand that these councils, established to manage the producers' funds, are much in favour of this change and may choose non-refundable systems. They may also elect not to choose them, so they have a wide option.

Producers of commodities which do not yet have councils and who want to establish a new council and a fund under this act may choose and vote for either a refundable or non-refundable levy system. There are a number of other commodity councils that may come into being, and they will have this wide choice.

A non-refundable fund would be more easily managed and more predictable and would eliminate free riders on the system. In other words, in certain of these systems there may be several thousand individuals. Three of those individuals will take advantage of the price and elect a free ride, but if it comes to a vote they may be forced to be levied by the other members of the system. It's a democratic process in play, and I don't argue with it.

One of the key elements of this levy system is that the money is spent on initiatives and work, such as commodity advertising, that benefits everyone -- some of the groups are practising commodity advertising; the Salmon Council is one of them -- or in ensuring the latest technology is available to every producer levied. The grain growers in fact do this.

Producer groups, in deciding which type of system to choose, will consider whether it would be unfair to allow certain producers to benefit from the work of the group when they do not share in the costs. In other words, there are certain producers that take advantage of the system. This allows the councils to block that under a democratic process.

I saw one of the members looking askance at me, but I think it's the right way to go and that this member will probably agree with me.

The changes in this bill will allow the flexibility to put in place a non-refundable program only when the producers support that model. I think there are also clear administrative roles and certain responsibilities. Producers depend on many other partners to get their products to market. These partners share in the producer's success. There may be truckers, processors, retailers and wholesalers. A whole bunch of people come down the line on this. The amendments in this bill will allow producers to recommend to government who their partners are, and who will collect and remit the levy on their behalf to their council. So the producers recommend to government, not the other way around. These are the individuals on the ground. They know what they're doing. It isn't the government deciding; it is the producers deciding. The current legislation does not have this capability. That's why this bill is necessary. With this change, levies will be collected with much more efficiency, and I think much more easily.

This bill makes minor amendments to the existing act -- and these are minor amendments. They cover the establishment of a plan for establishing a council and improving reporting by councils, which I believe is long overdue. Some of the councils did not report often enough, and we have to keep track of some of the councils. I see some of the members nodding. I think that's very important. Council membership comes into it, and participation also, if they so wish, in national levy systems.

The changes to the Farming and Fishing Industries Development Act introduced by this bill are in response to many of the concerns by various groups. I don't care whether it's the grain growers of the Peace River country, or the blueberry producers of the Fraser Valley. They essentially want this bill, and there's been lots of consultation with them. They understand it. They know they have lots of latitude. They make the decision, not the government. This is not the heavy-handed government. It's a rational decision by the various producer groups and the various councils. The existing councils have been consulted regarding these changes, and I think they're extremely important changes.

The agriculture and fisheries industries in our province are committed to being successful. Most of them are relatively successful. Some of them are real winners in the marketplace. My government is committed to providing their tools to achieve these goals. In some cases, we have councils that are rather weak 

[ Page 2323 ]

because of breakaway groups, because of individuals who have elected to be free riders, and we feel this blocks this.

[8:30]

These amendments will provide changes to an existing legislative framework, the Farming and Fishing Industries Development Act. I believe these changes will ensure that the valuable work of councils may continue, and may expand in an equitable way; in other words, recognizing the many partnerships in that alliance, in their industries, whatever their industry may be. Many more are partners in the industries, some of them very simple indeed. So these partnerships are between producers and other members of their industries, between the producers, and in the final analysis between the producers and the government.

R. Chisholm: We understand that this bill was done in consultation with the industry and the British Columbia Federation of Agriculture, and we commend the minister for that. Regardless of whether we are a minister of the Crown, an opposition critic, or a government backbencher, we must represent and address the concerns of the constituency we find ourselves responsible for. It's unfortunate that not all pieces of legislation that this government introduces in this House could go through the same process of consultation. I hope that more members of this House will appreciate the fact that we were elected to represent the views and concerns of our constituents.

In principle we support this bill, but there are a few sections that need to be clarified, and we will deal with them in committee.

H. De Jong: Just a few comments. I believe, as the minister stated, that it was highly essential that this bill come before the House, and I agree with him. I appreciate the intent of the bill: the individual commodity groups can do their advertising and promotion and also work towards the furtherance of the industry together with government. I think the minister forgot to mention that, but undoubtedly, while he may have five organized groups coming to his doorstep, he will have some more after this bill is completed.

I commend the minister for bringing this piece of legislation forward. I think it will serve the agricultural industry well.

K. Jones: I'm not too clear on the status of these councils vis-�-vis the marketing boards. Is there some way that we could get an explanation as to how they fit together and what their relationship is?

The Speaker: Perhaps those questions can be addressed at the committee stage when the minister can answer them.

Hon. B. Barlee: I would like to thank both opposition parties for their rational look at this legislation, which I concur from their responses is long overdue and is generally a fair piece of legislation. I would now move second reading of Bill 52.

Motion approved.

Bill 52, Farming and Fishing Industries Development Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

FARMING AND FISHING INDUSTRIES
DEVELOPMENT AMENDMENT ACT, 1992

The House in committee on Bill 52; D. Streifel in the chair.

On section 1.

K. Jones: With reference to my earlier statement, could you explain what the status of these councils vis-�-vis the marketing boards is? Do they have a more senior role to play than the marketing boards? Do they constitute a voice for the producers that oversee the decisions of marketing boards? Or do they just work as an advisory body?

Hon. B. Barlee: There is no relationship between the supply management or the marketing boards and these councils. These councils are drawn by the producer groups. Often they get together and decide to form a council. They then decide to carry on the aims of this council to levy a certain amount of money on each one of the individuals who belong to that council. Prior to this, that was a refundable levy. We are saying that now they have the option to pass, whether or not by a majority vote, whether it is refundable or whether it is not refundable. So it really has nothing to do with the supply management system. Indeed, we have only five or six major councils like this; we could have 100. That is not the case with supply management, as the member well knows.

Section 1 approved.

On section 2.

R. Chisholm: One part of this section, hon. minister, is the supply of goods or services to the producers. I just want a clarification on what we're calling a supplier of goods and services. Are you considering a bank a supplier of goods and services? That's under (4)(a)(3)(a), hon. minister.

The Chair: Hon. member, that's part of section 1 on this bill, for a point of clarification.

Sections 2 to 7 inclusive approved.

Title approved.

Hon. B. Barlee: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

[ Page 2324 ]

Bill 52, Farming and Fishing Industries Development Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. G. Clark: Hon. Speaker, by leave, we could do the wrap-up of the Agriculture estimates before we proceed to the next bill. I see both the opposition spokespersons for Agriculture here, so if we could, I'd ask for leave to do that wrap-up of that committee-stage estimates debate.

Leave granted.

The Speaker: I would call on a member of the third party for a five-minute summary of the estimates debate from committee A.

H. De Jong: It's a bit unexpected, so I have to look at my notes very closely. It's fair to say that we have canvassed the Ministry of Agriculture very closely on all aspects -- Fisheries and Food as well. I want to express a couple of concerns at this point in time that came up during the discussion of the estimates. I believe it's important that these be known and on the record.

I have considerable concern about the administrator and chairman position at the Agricultural Land Commission, as was indicated during the estimates. I believe that is next to a conflict-of-interest position: being the chairman of an appointed board and also the administrator administering the policies of that board. I do not believe that will serve the best interests of the public nor of the Land Commission itself.

I'm saying this because of the Land Commission's narrow mandate, which is basically to preserve agricultural land. Further in connection with that, I'm concerned about the potential, as I see it, for the appeal process to be eliminated by this government. In view of that, if that should happen, then I would like to see a broader mandate given to the Land Commission, so that they could also look at the expansion needs for certain communities that are surrounded by agricultural land. We know that communities grow, and some of them grow very quickly in the lower mainland. I believe they should have the opportunity to grow, but also to provide an expanded market for the farming community.

I was pleased to hear the minister's response to the expanding education for the industry in order to keep pace with technological changes. I'm also pleased with the minister's response to a faster response approach in order to react to new types of equipment toward the exemption of the social services tax.

I believe the minister is very sympathetic toward the grain growers in the Peace River area. I trust he will perhaps consider that the feed-grain assistance program be expanded upon, so these farmers could be helped more.

While the Buy B.C. program is a good program, I believe it should be expanded. I know the minister will be travelling to Japan in the next couple of days. I'm sure, as he has already indicated during estimates, that he will be taking some smoked salmon to Japan to display there and to have people taste the good salmon of British Columbia. I hope he will also take some strawberry jam and the good fruit juices from the Okanagan, so they get a complete taste of all of British Columbia.

[8:45]

R. Chisholm: Hon. Speaker, the committee gave me an opportunity to express to the Minister of Agriculture, Fisheries and Food the many concerns of the agricultural and fisheries industries. I took this opportunity to question the minister extensively and in detail on all aspects of his department. I pointed out the problems facing the Fraser Valley and facing the Okanagan fruit growers, the Cloverdale farmers, the Delta growers and the grain growers. These problems were financial, due to free trade, cross-border shopping, the recession and taxation policies.

We discussed marketing boards, the ALR, soil preservation, pesticides and farm disposals. I stressed the inequities in these areas and the need to ensure that our food supply is protected. We emphasized that we must protect agricultural land. Once destroyed, it cannot be replaced.

I urged this government to assist B.C. producers in maximizing their efficiency and competitive position in both domestic and international markets, to increase farm incomes, employment and their competitive position. We should encourage the use of the land for more profitable crop alternatives and encourage the development of cheaper and more efficient production methods and improved transportation technology.

We should work closely with the agricultural industry in developing methods that would enable British Columbian producers with the greatest export potential to compete more effectively in international markets. Specific attention would be given to improving the competitive export positions of beef, apples, raspberries and blueberries.

We should improve the value-added content of British Columbia's food products by assisting in the development of agricultural processing plants. Value-added processing would further strengthen our agricultural sector and create agriculture-related jobs.

We should review the land use policies, in cooperation with the province's municipalities, to ensure that good agricultural land is preserved and that land genuinely unsuitable for farming is released to its highest use.

We should increase the funding for rural agricultural research and extension education programs to ensure that the most up-to-date methods and technologies are developed and communicated readily to British Columbia farmers. The number of agriculture-related courses offered at the province's colleges would also have to increase.

We should establish an agriculture research advisory board to provide a more formal and ongoing dialogue between farming communities and the agriculture research institutions.

We should establish a provincial agriculture assistance apprenticeship program as a means of providing direct jobs and hands-on farm experience to young 

[ Page 2325 ]

people interested in pursuing active farming as a profession. Successful graduates of the program would be eligible for loan incentives in order to enter farming in British Columbia. In addition, there would be a recognition of excellence for those graduates most successful in their courses.

In the Fisheries area, we discussed offshore processing of British Columbia's fish and how that is hurting our economy. Better regulations and stringent licensing and inspection are required. We have to ensure that no new fish-farms are established in areas that have not been assessed through a coastal resources investigative study, so as to minimize conflicts with existing foreshore uses -- both natural, as in the case of spawning fish, and industrial, in the case of anchorages for commercial fishing fleets.

We should continue to accommodate studies into the environmental and economical impacts of the aquaculture industry, with particular emphasis on the effects of this new industry on wild fish stocks. We must press the federal Fisheries department to alter the regulations governing the operation of seine boats, to allow for their use in rounding up fish that have escaped from farms, and we must generally set procedures in place to follow this event.

We should try to minimize the concentration on salmon-farming alone by aiding research and development on the farming of other species of fish and shellfish, such as mussels and shrimp prawns.

We should call for the creation of a permanent council, comprised of members from appropriate provincial and federal agencies, fish-farms and the commercial and sports fishing industries, to minimize foreshore use conflict and to work together on marketing. We should assist the industry with the establishment of a marketing council for farmed fish, so as to take advantage of a current world interest in increased fish production.

We should make B.C. a world leader in aquaculture research by attracting funding for universities and research institutions within the province for this purpose.

The Speaker: I regret, hon. member, your time has expired. Would the Minister now please summarize his estimates debate in ten minutes.

Hon. B. Barlee: I'd be delighted to do that. I should, however, thank both of the critics in the opposition parties for their good nature, and for their understanding of the farming community and how important it is. I appreciate that. We went through a rather long process, which is fine. It expresses your interest in what I consider a very important part of our economic picture in the province. We have essentially passed the budget for 1992-93, and I think I should allude to a few things that possibly the public at large does not know, and I think they should.

First of all, this is an $11.4 billion industry, and it employs, when we include agriculture, fisheries and food, 208,000 people. This is a significant number by anyone's standards. Through recession, depression, good times and bad times it has an annual growth of about 3 to 5 percent. It is essentially recession-proof and depression-proof. I think this is extremely important in times of economic duress. It is also the economic mainstay of a number of rural communities in British Columbia -- on the coast, Vancouver Island, the upper coast, north coast and the interior. A number of towns depend upon either fishing or agriculture to carry them economically. Certainly both critics know that 98 percent of all B.C. farms are owned by British Columbians. This is almost unequalled in any other resource or any other industry, and there are between 19,000 and 20,000 direct jobs right on the farm. Sixteen thousand fishermen are engaged in the fisheries offshore in British Columbia, mostly on the coast. That's valued at about $0.5 billion, with another 8,000 jobs in processing. The total sector is between 4 and 5 percent of the workforce of British Columbia.

The budget proposals I introduced to this House had several key objectives. I believe that both critics and both opposition parties generally agree with these objectives. One is to implement programs which significantly improve the stability and development of rural and coastal communities. I don't care whether that's Chilliwack, Abbotsford, Armstrong, Williams Lake, Oliver or any of those small towns in the interior, Fraser Valley, on the coast; it does help because these dollars are British Columbia dollars that circulate almost exclusively in British Columbia. The profit that's made on the farm and in the fishing community stays at home.

We also want to protect and strengthen the land and water base on which we depend. We're working at it all the time. We're admirably situated, as far as our potential is concerned, to facilitate the success of our food industries in the new global environment. We're facing the free trade agreement, the GATT agreement, hopefully not the NAFTA agreement, but possibly. So we have to look down the line into the twenty-first century.

We are also trying to stress the importance of environmental sustainability and food quality, and we've done a pretty good job on that. It's not perfect, but it's much higher than our competitors. We're trying to resist the federal initiatives to offload onto the province. That seems to be an ongoing process. My ministry recognizes that many rural and coastal communities are dependent upon either farming or fishing. Also, this ministry impacts on a number of other ministries. It certainly impacts on tourism, and I notice that the Minister of Tourism is here. Farming and tourism go hand in hand. Farming and small business go hand in hand. Farming and the environment go hand in hand. So it impacts on three or four of the line ministries.

I also believe that we will improve the economic vitality of rural and coastal communities. That 3 to 5 percent growth per year is important. We're doing this through the consultative process. We're being very careful to see every group and to make sure we are consulting with them.

We're trying to strengthen the integrity of the agricultural land reserve. We spent a great deal of time during the budget estimates going over the importance 

[ Page 2326 ]

of the agricultural land reserve and the Agricultural Land Commission.

We also support the principle of the supply management system and strengthening the B.C. marketing board so that it can operate effectively on behalf of both the consumer and the producer. There are two players in that game, and we're looking at both. Both of us benefit, probably because we have the second-lowest food prices in the world.

We're seeking new opportunities in the fishing sector and also in the aquaculture sector. We think this may be an area where there is the greatest possible growth that we may obtain. We have competitors in that area: Chile, the United States, Japan, China and so on, but we are beautifully positioned. We think we can make great progress economically and otherwise. We will continue to work in this direction. We will continue to work with the federal government to restructure financial programs, to ensure that during this changing global environment, whether it is the GATT or the free trade agreement, or the NAFTA and hopefully it isn't -- we work with the federal government. They are perhaps our logical partners. We're looking for these niche markets. We're looking for areas of opportunity. We're looking for options, and some of them are there. Most of the sectors are doing very well.

I thank all members of the House and about 24 different individuals from both sides of the House who participated in the debate. We look forward to an exciting and, hopefully, a very productive year.

Hon. G. Clark: I call second reading of Bill 46.

SCHOOL AMENDMENT ACT, 1992

Hon. A. Hagen: As with many amendment bills, there are a number of clauses in this particular statute that are best addressed through committee stage. I will spend a very brief moment highlighting some of the issues in this bill. Many of the amendments are of a technical, housekeeping nature, but there are a few clauses that I think deserve some attention.

One of them relates to an amendment to section 16 of the School Act, which includes the duty by school boards to report the resignation or termination for misconduct of a teacher teaching under a letter of permission. Currently the college is informed of teachers holding full certification, but there is a gap in the legislation that this amendment serves to fill.

There are some clauses that relate to student records and the fact that we need to have some process regarding the confidentiality of records that are required by helping agencies such as Health or Social Services for the coordinated work of schools and community agencies in support of children's learning.

There is a clause that relates to facilitating elections where a member has resigned due to conflict of interest to ensure that appeal processes are taken care of before there is a by-election to ensure that there is no problem with that by-election process going ahead in a straightforward manner.

We have some strange anomalies in our legislation that we are correcting. There's some language that might suggest that a very bright student who completes graduation requirements might not necessarily be funded as he or she continues to go to school to the end of grade 12 taking extra courses. So we clear up a few of those issues.

There are some matters relating to taxation and processing of land. I think we can best deal with these at committee stage, where we are able to look at each of these amendments on a clause-by-clause basis. So I look forward to that stage of our debate, because that is the portion of the debate that will inform us of the issues before us in these amendments. With that, I move second reading.

[9:00]

J. Dalton: When the minister introduced this bill in first reading, she made comments about housekeeping, and she has basically reiterated those statements tonight. We don't have any quarrel with that. In fact, I have checked with both the BCTF and the BCSTA very recently, and both of those constituent groups assure us that there's nothing in this bill that we need to be nervous about. As we go through section by section, we will no doubt be raising a few points, and I think with the minister's assistance we'll be able to clarify those.

I might just make a comment to the minister that this might have been an appropriate time -- maybe the next time we're looking at amendments to the School Act, we should perhaps take the opportunity -- to clarify some of the references to student records. The minister did comment just briefly a moment ago about that. There are various sections in the School Act that refer to student records, and it is probably very confusing -- certainly to parents who have contacted us -- on the questions of access to student records, where the various references in the School Act are to be found and what ministerial orders may be made in that connection. I just make that as a general point of comment, and perhaps as we go through the bill section by section we may have some further opportunity to talk about student records, because there certainly are a few points of concern in that regard.

Other than that, I have no further comments at this point in second reading.

Hon. A. Hagen: Hon. Speaker, I believe the members of the House have indicated that it's their intent to examine this bill through the committee process, and so I would move second reading.

Motion approved.

Bill 46, School Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

SCHOOL AMENDMENT ACT, 1992

The House in committee on Bill 46; D. Streifel in the chair.

Sections 1 to 4 inclusive approved.

[ Page 2327 ]

On section 5.

J. Dalton: Perhaps it's a rather narrow point -- I hope nobody will accuse me of nitpicking -- but this section amends section 9 of the School Act. The reference in there is to "a" student. The amendment in part also adds "of school age," and we have no problem with that. The amendment also changes "the" to "that." I'm just wondering if there may be some possible confusion or misinterpretation. What I'm basically referring to is that the section as it would be amended will read: "a student and the parents of a student of school age." Is it not possible that a student could be over school age? The reference to "that student" may confuse some people. It would refer only to the student of school age that the parents would be seeking information on. I should say that perhaps that's a rather narrow point, but I'll invite some comment.

Hon. A. Hagen: The word "that" to which he refers is simply intended to make it very clear that we are talking about a student of any age and the parents of a student of school age. Obviously we have adult students in our schools, who are studying to complete their graduation. We're simply clarifying that we are talking about the student of whatever age and, in the case of a school-aged child, the parents of that particular student.

J. Dalton: I thank the minister for that response. I think that satisfies me that perhaps I'm looking at it with too much of a critical eye. I don't think that there will be any criticism or confusion coming out of that.

However, I have another point on the substance of this amendment. It deals primarily with the content of section 9 of the School Act. We've had a number of parents communicate with us about the access to student records. The main concern that the parents seem to have.... We certainly recognize that they're entitled to examine the school records in the presence of a principal or some other designated person. Some parents would like the opportunity to actually have a hard copy of any records that they're able to examine to take with them. I was wondering whether the minister may be contemplating, through ministerial order or order-in-council, the possibility of this area of confusion being tidied up. I understand that some school boards may allow this as policy, but it's certainly not consistent across the province. I invite the minister's comments.

Hon. A. Hagen: The member is asking a question outside the substance of the amendment that we're dealing with, but I'm pleased to provide him with information. We have been advised by the Attorney General, who interprets our statutes, that according to the Interpretation Act of the province, copies of school records may be made. We have so advised all school boards and asked them to review their policies in the light of that information. Every school board has received that information. If the member would like any further detail on that, I'd be happy to provide it.

D. Symons: I have concerns about that very point, because I've had letters from people. I'm wondering whether this letter that you sent regarding section 12 of the Interpretation Act is something recent, because not too long ago I heard again where some boards have not allowed copies to be made and other boards have. I believe one board just recently changed its policy from allowing copies to be made to not giving copies to parents who ask for them. Was this a very recent directive? Wouldn't it have been be easier to have made that clear, "to examine and have copies of, if they so wish," or something to that effect. A few words in there would mean that you would not have to refer to the Interpretation Act; it would be right here in the School Act.

Hon. A. Hagen: This is not a subject of the amendment, but I can tell the member that school boards were advised. There was an advisory letter to them that went out sometime in February. I can't remember the exact date, but it was sent to all boards in February.

Sections 5 to 14 inclusive approved.

On section 15.

D. Symons: I have some concerns here, having read all of the relevant parts. When it says that the minister can write off the uncollectible school taxes, it seems to me that this may end up leaving the board holding the bag for the moneys uncollected. I'm wondering if somewhere in here we could not have it so that somehow the ministry would reimburse the board for those moneys that they are now writing off.

Hon. A. Hagen: This simply clarifies that the minister we are talking about is the Minister of Finance and Corporate Relations, so it's very much a technical amendment.

D. Symons: I'm still left without the answer to my question. Is the effect going to be that the school board will be left with this expense and that they're going to have to devise other ways of filling in the money that they now have had removed from them for being uncollectible? It's something where the boards might not be able to budget ahead of time. They're going to have difficulty if the Minister of Finance writes off uncollectible loans. I know the term means that they can't collect it, but they had the option or the possibility of collecting it before this was written in. Now they don't have that. Are they going to be reimbursed by the Ministry of Education or the Ministry of Finance, or does the board have to go to the taxpayer?

Hon. A. Hagen: The municipality is the collector of taxes, and those taxes are forwarded by the municipality to the provincial government. All disbursements are made to school districts by the provincial government. There's no penalty to school districts as a result of this clause.

[ Page 2328 ]

Section 15 approved.

On section 16.

V. Anderson: Section 16(4)(b) concerns farm improvements. The interpretation has indicated that some areas are not included, like machinery and similar things. What is included in the words "farm improvements?" Is that simply buildings, drainage ditches or land alterations? There's a whole variety of improvements on farms, and I'm wondering what "improvements" means in this category.

Hon. A. Hagen: It's my understanding that "farm improvements" are those improvements as defined under the Assessment Act, so these are determined by that statute.

Sections 16 and 17 approved.

On section 18.

J. Dalton: This is one of these sections that I made a comment on earlier in second reading -- about student records. This is actually a new provision that will be added to the School Act. In light of what the minister commented on earlier, and there were some points of confusion when we pointed out that some school boards do not seem to be consistent in their dealing with requests for student records by parents or guardians, would it be a possible interpretation, referring in particular to the first part of this amendment dealing with the use of student records by boards, that the minister, through ministerial order, could order that school boards clarify this point and therefore make sure that every board in this province would be aware of the situation that they must provide hard copies of student records if parents so wish?

Hon. A. Hagen: This particular clause sets out the powers of the minister where we need to have specific authority relating to groups, such as the child and youth secretariat, which are working with school districts in providing support for children who require extra services. We needed to have the authority to do that, respecting the confidentiality of student records and processes that would, in all aspects, deal with that exchange of information among professionals. This particular clause has been added to ensure that we do have that authority, and we've checked this carefully under the new freedom-of-information legislation to ensure that the fundamental principle of that legislation around the privacy of individuals is respected in this regard. I believe it is a good amendment. It clearly defines that there is a responsibility there and that there's a due process whereby we can deal with it appropriately. This particular amendment will help us in our service to children, recognizing as we do that the school is the place where children are, and very often we are looking to cooperative work with other agencies in support of children and families so their education may proceed well.

V. Anderson: Following up on the same issue, I understand that during the time the youngster is in school there are other groups working with the youngster who may be helped by having access to these records. Would this imply, by an open interpretation, that after the youngster has left school, for whatever reason, one could go back and also release that information to them at a later date? It's open-ended there, and one intention might lead to another one.

Hon. A. Hagen: The intent of this particular clause is associated with the child as a student in the school. I just talked to Peter Owen regarding whether that is possible, and I suppose it might be, but the intent of the legislation is clearly around the child, the student in the school and the support services of the community that work with the school. It is intended, as I say, to ensure the confidentiality and privacy of the child while the necessary exchanges can be there to assist the student.

V. Anderson: I appreciate the intent, and I'm worried, particularly with the freedom-of-information focus that there is now, about people wanting to get out records and prove points later on. Is this something that might be covered later on by regulation, just so it was clear if it isn't in the bill itself?

Hon. A. Hagen: I would note that this clause permits me to make a ministerial order in respect to this. I take the member's comments and cautions as important ones to note around the setting of that order, and I thank him for his comments.

Sections 18 to 20 inclusive approved.

Title approved.

Hon. A. Hagen: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 46, School Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. G. Clark moved adjournment of the House.

Motion approved.

The House adjourned at 9:20 p.m.

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