Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, JUNE 11, 1992

Volume 4, Number 13

[ Page 2493 ]

The House met at 2:05 p.m.

G. Wilson: I'd like to introduce a constituent of mine, Mrs. McEvoy, who is from Powell River and visiting with us today. I hope the House will make her welcome.

F. Jackson: I would like to introduce to the House today a new citizen, Michael Alistair McDermott, son of Bradley Adam Murry and Gillian Clare McDermott. Michael Alistair arrived at 12:23 yesterday afternoon weighing in at seven pounds, five ounces. I would like the House to join me in making the young man welcome.

L. Krog: I have the pleasure of introducing three of my constituents to the House today. From the lovely community of French Creek, Carman and Helen Cole, good supporters of mine. Thirdly, from what is known as the shrine of the western world to those of us who we were raised near Coombs, B.C., my mother, Eileen Krog.

L. Stephens: I would like to introduce 22 grade 7 students from Credo Christian Elementary School in Langley and their principal, Mr. Roukema, to the House today. Would the House please make them welcome.

Introduction of Bills

FOREST AMENDMENT ACT, 1992

Hon. D. Miller presented a message from His Honour the Lieutenant-Governor: a bill intituled Forest Amendment Act, 1992.

Hon. D. Miller: It's my pleasure to introduce Bill 61 to the House. This bill amends the Forest Act to enable the Forest Service to improve stewardship of the province's forests. It will also enable the Forest Service to protect the financial interest of the Crown in this public resource.

The forests of British Columbia are the basis for much of the economic and environmental well-being that British Columbians enjoy. Our forest industry is and will continue to be the primary engine of our economy; equally the forests are an important element of tourism, outdoor recreation, our culture and our environment. It is very important that we plan carefully for these benefits.

We must balance the expectations for our industry, recreation and environment so that the chief forester may determine the timber-harvesting levels that best serve the public. This bill will allow the chief forester to improve these decisions.

This bill also fulfils substantial commitments made by this government in its 48-point plan and in the throne speech. This government promised that it would introduce legislation to further reduce the risk of revenue loss by inproving controls over the marking, scaling and movement of logs; to enable greater consistency and fairness in the administration of major tenures; to improve the efficiency of administering the small business and woodlot programs and to strengthen the Forest Service enforcement of reforestration obligations. This bill meets those commitments.

Bill 61 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

COMPENSATION FAIRNESS REPEAL ACT

Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: a bill intituled Compensation Fairness Repeal Act.

Hon. G. Clark: Bill 49 repeals the Compensation Fairness Act, which came into effect on January 29, 1991. The Compensation Fairness Act represented an attempt to control wages in the public sector through indirect means. It was purported that legislation was not intended to interfere with the free collective bargaining process. In looking back, it is evident that the Compensation Fairness Act did not achieve its stated objective of ensuring fairness in compensation paid to public sector employees.

It is also clear that the act has introduced distortions in the collective-bargaining process and has been an impediment to harmonious industrial relations in the province. It is our view that agreements reached between the parties should be respected. Any outside influence by legislation such as this act is an unnecessary intrusion into the free collective bargaining system. For these reasons, we believe the legislation should be repealed. I commend this bill for your consideration and urge its passage.

Bill 49, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

CONSTITUTIONAL NEGOTIATIONS

G. Wilson: Hon. Speaker, my question today is to the Premier. Will the Premier acknowledge, in light of the ludicrous proposition put forward by the Premier of Saskatchewan today on Senate reform, that it's time to say enough is enough? Will he recall the minister, and will the Premier and the leader of the official opposition go forward in tandem now to put the position of British Columbia clearly and squarely before the federal government and the negotiators -- that we will not tolerate the proposition where a reformed Senate, by weighted vote, will make British Columbians second-or third-class citizens in Canada?

Hon. M. Harcourt: I think it's that kind of tone that we've seen too much of. I think what we need to do is have the Constitutional Affairs ministers continue to work. I think there has been remarkable progress over the last few months. If you look at the areas where Canadians want to see change, where the Constitu-

[ Page 2494 ]

tional ministers have been able to reach consensus -- on the question of distinct society, on the issues around self-government in principle, on the Canada clause, on the social contract -- we are making some headway.

We agree on abolishing the existing Senate. If there's going to be Senate reform, we need to have a Senate that is elected -- we agree on that -- and it has to be effective in protecting provincial jurisdictions. As well, we're looking at the issue of how it can be made equal on a regional or provincial basis. I think there has been substantial progress, and that progress is not registered in the tone or the approach of the Leader of the Opposition. I think that's unfortunate.

G. Wilson: A supplemental. I wonder if the Minister Responsible for Constitutional Affairs has kept the Premier as well informed as he has the Leader of the Opposition, because I can tell you of the frustration that has been demonstrated with respect to the lack of progress, especially on the matter of a reformed Senate. The propositions put forward today by the Premier of Saskatchewan -- which move us away from, not toward resolution -- indicate that it's time for us to say "enough is enough" on this question. Let us come to a process for final resolution. Let us get down to the position where we can have a provincial referendum on a question that will put in place equality for all Canadians. Will the Premier commit today that he will now start to personally take charge on this matter, so that the first ministers of this country can recognize that the time has come for Canadians to be given an opportunity to vote on a package of equality?

Hon. M. Harcourt: The Leader the Opposition should demonstrate the same sort of patience and goodwill that Canadians have for this matter to come to a consensus. I think that is happening. I agree that there is some acrimony. There are some concerns around the issue of Senate reform.

I am in touch with the Minister Responsible for Constitutional Affairs. He is taking the position that your members participated in -- the legislative committee, which did a fine job. He's taking the position of British Columbians forward to this meeting of constitutional ministers. I think we should tell him to continue with the position put forward by the people of British Columbia.

[2:15]

G. Wilson: A final supplementary to the Premier. Will the Premier commit to this House today that he will personally either direct the minister...? Or will he personally intervene to make sure that the ludicrous proposition put forward by Saskatchewan is not adopted by the representatives who are negotiating on behalf of British Columbia?

Hon. M. Harcourt: Again, hon. Speaker, I want to go back to my first comment. Using words like "ludicrous" and "ridiculous" -- that sort of inflammatory language -- is part of the problem that we're seeing at the constitutional table.

There is some excuse for the constitutional members -- who are in a pressure-cooker atmosphere with each other for two or three months -- to get frustrated with each other. For the Leader of the Opposition to demonstrate this sort of petulance and truculence is unfortunate.

INITIATIVES AND RECALL PROCESS

R. Neufeld: My question is to the Premier. Last fall over 80 percent of British Columbians voted in favour of MLA recall and an initiatives process that would be binding on government. You promised you would live by the people's viewpoint; in fact, you even voted in favour of it. Your honour and your credibility are on the line at this time, Premier. Have you deceived the people, or are you simply afraid of democracy?

Hon. M. Harcourt: I'd like to say to the hon. member that I am committed to referendum and recall. The principle is one that our caucus supported when the matter was before the Legislature; we support it now.

R. Neufeld: I'm sure that the people in Kamloops would enjoy recall right about now. I don't know why you folks are so afraid of recall and a democratic process through initiatives.

The Speaker: Your question, hon. member.

R. Neufeld: What specific steps is this government prepared to take right now to give British Columbians the legal right to initiatives and recall?

Hon. M. Harcourt: The member has raised a very good point. As I have said earlier on this topic, a number of very practical questions have to be answered -- questions that I raised, by the way, when the legislation was before this Legislature. A lot of very practical issues and questions were raised then. As you will recall, the legislation was phrased in very vague and general terms. The support that we had on both sides of the Legislature should be shown again, and it will be shown through a legislative committee that will be appointed to look into such practical questions.

A press release of September 5, 1991 from the previous Premier, when she announced support for this legislation, is one that we should listen to:

"If there is a yes vote on recall...we would establish a broadly based impartial committee to undertake extensive public consultation and help develop the framework for that legislation.... If the people vote yes on initiative, the committee seeks public input and guides us in framing legislation."

I think that's good advice, and we will follow it.

The Speaker: A final supplemental, hon. member.

R. Neufeld: During the throne speech you promised to expand the committee system, Mr. Premier. We now ask that you put this to the parliamentary committee on reform and have them bring forth legislation at the next session of the House.

[ Page 2495 ]

Hon. M. Harcourt: I thought that that's exactly what I said, but I guess I will have to repeat it. There will be an expansion of the committee system. Our House Leaders have been talking about that, and I hope they're keeping you informed of those discussions. The committee will be established to look at questions such as how many citizens per petition, what percentage will be required for recall, what sorts of issues should be put forward.

I think there are some very important practical questions. We can make sure that the people of British Columbia are well served. I think the committee, although it's future policy.... I've said before that such a matter will be before a legislative committee to report back as soon as they're ready to report back to this legislature.

ABSENCE OF LABOUR MINISTER

W. Hurd: My question is for the Premier. The opposition recognizes the efforts of the government's Minister of Labour, Consumer Services and Minister Responsible for Constitutional Affairs back east. My question is: how does he expect his Labour minister to address from Ottawa the growing labour chaos in this province?

Hon. M. Harcourt: We have the Leader of the Opposition asking that our Minister Responsible for Constitutional Affairs be putting forward the position of the people of British Columbia. He is doing just that. Now one of the members of his caucus is suggesting that he should be back here intervening in the collective bargaining process. I wish they'd make up their minds.

W. Hurd: This Premier may not be aware of it, but we have an escalating pulp strike, we have Westar workers on the bricks, teachers' contracts up and ICBC in chaos. We have 35,000 employees coming up and 350 contracts.

Interjections.

The Speaker: Order!

W. Hurd: This minister has been out of the province for four days a week for the last eight weeks. Who's minding the store?

The Speaker: A point of order has been raised by the member for Columbia River-Revelstoke. Can that point of order be taken after question period?

J. Doyle: Yes.

The Speaker: Has the member stated his question?

W. Hurd: I have.

The Speaker: Does the hon. member have a final question?

W. Hurd: This is a Premier who said he didn't want to fiddle on the constitution while the economy burned. His Minister of Labour has been gone for eight weeks. Who's in charge of the government's own labour...?

Interjections.

The Speaker: Order! Would the member please take his seat. Hon. members, question period, as I recalled the previous day, is very short. If we cannot hear the questions and if we cannot hear the answer, then it does not serve the purposes of the House.

Hon. member, if you do have a question, please state it directly.

W. Hurd: My question is to the Premier: who's in charge of this government's labour bill?

Hon. M. Harcourt: I'm glad we've finally got a direct question from the member. The Minister of Labour, as you know, has appointed a very fine panel. They are highly representative of business and labour, and are specialists in the area of labour relations. They are working very actively and diligently with employers, with employees and with others who want to bring a model labour code to this province to bring about fairness in labour-management relations and to make sure that free collective bargaining works.

I would hope that the member is not disagreeing with the direction in which the minister is trying to take us, and that he is not suggesting that we fiddle with free collective bargaining and intervene unnecessarily in the free collective bargaining process.

NORTH AMERICAN
FREE TRADE AGREEMENT

D. Mitchell: I have a question for the Premier. In response to a question regarding the North American free trade agreement, the Premier said to this House, "We are at the negotiating table, and we will stay at the negotiating table," yet he has written to the Prime Minister, pleading that we should cut off talks now and take all of our marbles home.

Can the Premier tell us whether he has changed his mind about the ability of Canadian negotiators at least to discuss the agreement, or is he still convinced that if we stay at the table any longer, the government of British Columbia is going to lose all of its marbles? How can the Premier traipse around the Pacific Rim talking with billionaires from Asia when in dealing with our largest trading partner, the United States, he folds like a cheap camp stool?

Hon. M. Harcourt: I'll try and answer very succinctly, because I'll follow your very wise directions in this matter of giving succinct answers to, hopefully, succinct questions. What I will do is give the response that I gave earlier: this government has a profound disagreement with the trade policy that the North American free trade agreement is based on, which is the United States setting up a spoke and wheel approach.

[ Page 2496 ]

We want to see a freer trade relationship in the world, starting with a hemispheric trade deal, instead of the United States driving it with one neighbour against the other. I think that is a very wise trade policy for a hemispheric trade deal that could then expand into GATT.

We are making that known now, before the deal is initialled -- while we're sitting with the federal government, expressing our concerns in private. The hon. House Leader of the opposition wanted to have secret documents that we could not make available. I'm saying that we have to have that debate now, in public, before our national government, which negotiates treaties, signs the trade deal. We're making those profound disagreements known right now, before the deal is signed.

D. Mitchell: I have a supplementary question to the Premier. The Premier told this House recently that NAFTA was a Reagan-Bush-driven trade strategy, and that Canada was only a spoke in the wheel instead of the hub. He referred to that again today. Would the Premier not agree that if the wheels of trade are rolling in any event, we're better off driving in the truck than sitting on the road in front of the truck?

The Speaker: The hon. Premier for a brief reply.

Hon. M. Harcourt: You tell that to the lumber industry. It just got run over by a logging truck from the United States. If you think that this free trade agreement is to the benefit of the forest industry in this province, then I don't know what province you're living in, but it certainly isn't British Columbia. We're not only expressing our disagreement with the policy behind the North American free trade agreement, but we are at the table -- the minister has made it very clear -- expressing our concerns about its impact. If the deal is initialled and it goes ahead, the North American free trade agreement could have an impact on our agricultural and textile industries and others. We are at that table. We are making sure that B.C.'s interests are taken care of.

I can tell you that we are going to expand our trade into Mexico and the other Central American and South American countries whether there is a trade deal or not.

J. Doyle: A point of order. My point of order concerns when the hon. member for Surrey-White Rock was speaking. It would be my intention to remind that member that private members' statements are Friday a.m. Also, standing order 47A(b): "Questions and answers shall be brief and precise, and stated without argument or opinion."

The Speaker: The last part of the point of order, hon. member, was certainly in order. I would remind all hon. members to review standing order 47A, perhaps on a daily, or at least a weekly, basis.

Hon. G. Clark: Thank you, hon. Speaker, an excellent point of order.

Orders of the Day

The House in Committee of Supply B; E. Barnes in the chair.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

On vote 35: minister's office, $325,213 (continued).

[2:30]

D. Mitchell: I'd like to ask the minister responsible for TRIUMF-KAON a question about the status of the project. This is a national science project, of course, and it has tremendous implications for the economy of British Columbia. We know that the KAON project at the TRIUMF centre situated at the University of British Columbia has tremendous economic benefits for British Columbia, but we're concerned about the status of the project today. We know that there's a lot of wrangling going on between the federal and provincial governments, and we wonder whether or not that constant wrangling and quarrelling can possibly inspire the confidence that's going to be required for this project to proceed.

I wonder if the minister initially could give us a very brief status report on the KAON project, and could he express his own view as to whether or not the project is in fact going to proceed?

Hon. G. Clark: If I can begin by introducing my staff, on my left is Eric Denhoff, who is the chief negotiator for the TRIUMF-KAON project office; in fact, in charge of a little team in that regard. Next to me is my deputy minister, Michael Costello; next to him is my senior financial officer, Brian Mann; and just coming in are Mike O'Connor from B.C. Transit and Rick Krowchuck, the financial officer from B.C. Transit.

I might say that the TRIUMF question is a very good question. TRIUMF-KAON is a British Columbia project which enjoys all-party support -- one of those rare occasions. The previous minister responsible, Mr. Stan Hagen, deserves a great deal of credit for driving this onto the national agenda. I've been privileged enough to make use of that and essentially to continue on with the multi-party approach. When we had a breakfast recently to make a new offer to the federal government, Stan Hagen attended, which I was delighted about. My spokesperson opposite, the member for West Vancouver-Garibaldi, attended as well. I think that is indicative of the multipartisan support that this project has.

The reason for that is very simple: British Columbia does not get its share of funding for federal science projects. We are, as usual, underrepresented at the national centre. If we were to receive funding for the TRIUMF-KAON project office, it would only raise British Columbia's level to 8.4 percent of the national funding for science. As you know, we represent 12 percent of the population, and clearly we should be getting something more in keeping with the taxes we send to Ottawa. The TRIUMF-KAON project is of British Columbian significance, it enjoys all-party sup-

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port and it is reasonable, and it should be provided for a province of British Columbia's stature.

We do enjoy some support at the national level in the form of Kim Campbell, the senior minister, and other members of the Conservative government who are from British Columbia, as well as members of the NDP; and certainly the lone Liberal member, John Turner, is a strong supporter of the KAON project. Having said that, you would think the logic would be that we should receive significant funding from the federal government, but unfortunately the federal Minister for Science, Mr. Winegard, is not as sympathetic to the project as the facts would indicate and should indicate. They have been wriggling to get out of the commitment that they made before the election for a share of the capital cost by maintaining that they would not share more in the operating costs.

[R. Kasper in the chair.]

I must remind all members that every national science project in the country is fully paid for by the national government. The previous administration made an historic offer, and I think it was the first time that any provincial government said: "We will pay one-third of the capital costs of KAON, up to $300 million in provincial government funding, for a national science project." We supported that in opposition, and the government supported it. They still refused to come to the table to negotiate something satisfactory, even though we had made this historic offer.

At that breakfast a few days ago, which the member opposite and members from all parties attended, there were 1,200 British Columbians. We made yet another offer on the KAON project: that as a provincial government not only would we provide one-third of the capital cost of this project, for the first time in Canadian history, but we were also prepared to fund some of the operating costs, particularly around the provision of hydroelectric power. I won't put a number on that, because it varies. But the full cost of the electricity, when the project is up and running, could amount to up to $10 million a year. We did not commit to providing the full operating costs, but we're prepared to negotiate. I think that sends a message to the federal government that we as a government are serious, British Columbians are serious and all parties are serious about this, and they should come to the table and be reasonable in the way that they have been with other science projects.

Everybody knows that in the last few months hundreds of millions of dollars have been given to the province of Quebec in the form of procurement contracts. There has been some $500 million for a bailout of De Havilland Aircraft in Ontario. The federal government has paid for those, and there has been nothing -- not a penny -- for British Columbia. We're not asking for something which is not right, not proper or not reasonable; we're just asking that British Columbia get a share of federal science funding more commensurate with our population.

In spite of that new offer, there has not yet been an appointment of a negotiator from the federal government. To get to the specifics of the question of where we are at today, I have talked to Mr. Winegard recently. He's concerned that the one-third of the capital costs that were committed by international partners is not as solid as it should be. Obviously I'm concerned about that as well. What I said to him was: "Appoint a negotiator. Start sitting down with British Columbia. We're prepared to support the federal government in going around the international community to firm up the international support for TRIUMF-KAON." But I also made it clear that British Columbia is not a nation. We don't have the infrastructure; we don't have the embassies around the world. We can't do that kind of negotiations -- Minister of Science to Minister of Science -- in the national arena. We're prepared to go. I'm prepared to go. My deputy in this regard, Eric Denhoff, is prepared to travel with the federal government as part of the delegation to show we're serious, to show we're supporting it. But the federal government has to take the lead on the international question. That's what the country's all about.

In addition, we said: "Let's talk about all of the other ramifications: about overruns and who would be responsible for that; what are the real operating costs and how we can start talking about that." We've made this generous offer -- a very generous offer -- of some of the operating costs. They have not responded, and it's a great concern.

I share the member's concern that getting into this kind of ping-pong and partisan debate on this question is not necessarily productive; nevertheless I think all British Columbians expect the province of British Columbia, their government and other members of the House to stand firm when it comes to getting our fair share from Confederation, and we have not got that in the science field.

We have got to take the tough position with the federal government for them to come to the table, because I fear, frankly, that this will be another Polar 8 agenda. There's a federal election coming. Every time someone questions a payment to Quebec, a payment to the Ontario government, the Prime Minister, Brian Mulroney, stands up and says: "Ah yes, but we're giving all this money to KAON in British Columbia." That's his response every time in the House of Commons, and he wants to keep saying that through an election campaign, and then kill it after the election campaign; exactly what they did to British Columbia shipyard workers when it came to building the Polar 8 in North Vancouver. We're not going to allow that to happen, and so that means we have got to be tougher on them. We have got to turn the heat up in a multi-party way, and we have got to get them to the table to talk about this very important issue.

We're inching them along with this pressure. I have talked to Mr. Winegard recently. We're hoping they'll appoint a negotiator. I have talked to Kim Campbell as well, I must tell you, and she is very supportive of this project. I have told her quite candidly that she has an obligation on the part of British Columbia not just to represent Canada in British Columbia, but also to 

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represent British Columbia in the national capital in Ottawa. Sometimes I'm not sure our federal Tory MPs understand that. They're very good at taking the message from Ottawa back to British Columbia, and telling us why we should support the GST and all these other wonderful things that I would say they are foisting upon British Columbians, but they're not as effective about taking British Columbia interests and going to Ottawa and representing us in Ottawa.

I've had a fairly frank discussion with Kim Campbell. I'm satisfied she's a strong supporter of KAON. I put it to her that she has to take this seriously and drive that agenda in Ottawa. I have confidence that she will do that. At this stage, we have not seen a counteroffer from the federal government, nor have we seen an appointment of a negotiator.

D. Mitchell: Could the minister responsible for TRIUMF-KAON inform this committee how many employees are directly funded by the provincial government with responsibility for TRIUMF-KAON?

Hon. G. Clark: The only person who is directly funded by the provincial government is Eric Denhoff -- one person. We have other people on contract. They are funded through a grant that we provide to TRIUMF, which then pays contracts out to people. The amount of the grant to TRIUMF is $300,000.

D. Mitchell: Could the minister indicate whether or not in the last little while there have been any reductions in staff or contractors with responsibility for KAON?

Hon. G. Clark: This happens from time to time. These are contractors. When contracts expire, they're not automatically renewed. We review the status of the project at all times. Frankly, with the failure of the federal government to come to the table with a negotiator, we want to make sure that we're being prudent. Once they come to the table, and we need the staff resources to apply to a tough negotiation process, the government of British Columbia is prepared to do that. At this point we're putting on as much pressure as we can, but they haven't come to the table yet.

D. Mitchell: The minister indicates that employees and contractors come and go from time to time. I recognize that there have been some reductions in staff recently. In particular, some real expertise has been lost from the project recently. I wonder about the minister's comments with respect to the fact that the federal government has failed to appoint a negotiator. Perhaps some recent staff layoffs indicate a lessening of any commitment to the project on the part of the province.

Hon. G. Clark: No, absolutely not. Quite the contrary. If you attended that meeting with 1,200 British Columbians, you may have seen the ads that we ran. If you haven't seen them, I should have provided them for you. They ran in every Conservative Member of Parliament's constituency. They had a picture of British Columbia at the table and empty chairs at the other side. The headline was "Time is Running Out on TRIUMF-KAON." As I said before, Conservative government MPs from British Columbia have to carry British Columbia's message to Ottawa. On this issue, as on other issues, I fear that that's not happening. We wanted to make sure that they heard that message.

I want to tell you that we do have a budget. The budget is significant, as you can see. I think it's $800,000 in total for TRIUMF-KAON. When you think about it, that's a significant amount of money to deal with this question. We don't want to spend all the money now and then have a negotiator appointed so we'd have to draw on contingencies. We're trying to be prudent about it.

I can tell you frankly that our commitment is stronger today than it ever has been in terms of my resolve and the government's resolve to get a resolution to this problem.

[2:45]

D. Mitchell: The minister indicated that he has a great deal of concern and shares my concern for the future of the project. We're all concerned, because it's an important project. It's a national project with tremendous potential benefits for British Columbia. We don't need to debate that, because that's a point of agreement.

The wrangling between the federal and provincial governments right now, some of which has taken place in public -- media attention has been devoted to it -- certainly hasn't been constructive in terms of trying to see the project through to completion. If the wrangling is an honest attempt to get KAON on track, that's great. But I worry. I'd like to know if the minister would care to comment on whether or not, from the province's point of view, the wrangling might represent some positioning on the part of the provincial government to lay the blame on the federal government should the project not proceed. If that's the case, that would be very unfortunate.

A number of noted scientists have commented recently that some of the very best and brightest scientists we have are leaving for either Texas or Europe. In fact, the wrangling that's taking place between the federal and provincial governments right now is accelerating the brain drain from our province. That's unfortunate.

I wonder if the minister could comment on the question I've asked: whether or not this is simply an attempt to lay the blame on the federal government should the project, tragically, not proceed.

Hon. G. Clark: No, that's not the case. When you see the federal government strategy, which is to drag this out through an election campaign and pretend that their commitment is there without appointing a negotiator or anything else, it's obvious that we have to turn the heat up. We're working away sending letters and privately, quietly talking to them, and nothing's happening. That means we have to get tough on them in public and in private. The quiet, private approach of trying to work with these people to move this project along wasn't working. As I say, with an election coming, we want to make sure that.... Now is the time to bring 

[ Page 2499 ]

them to the table. You see $3 billion annually for the Quebec space agency and you see increased funding for helicopter purchases for Ontario and Quebec -- all of this stuff happening. And the Prime Minister is repeatedly talking about TRIUMF-KAON, as if this was their big commitment to British Columbia. When you get right down to it, they're not doing anything. It's just dribbling along. We have an obligation to turn up the pressure on those politicians and make them listen to British Columbia. While I agree with you that that is generally unfortunate, and unfortunately too common in this country, that's part of the tension that we go through in federal-provincial agreements and relations. We simply have to put the pressure on to get them to the table.

It would be very unfortunate if this project doesn't succeed. Obviously I want to make sure that if it doesn't succeed, British Columbia has done everything possible to make sure that we've come to the table. That's why these operating costs -- for the first time in Canadian history the provincial government is prepared to pay some of the operating costs for a national science lab -- prove, beyond any doubt, our commitment to this project.

D. Mitchell: Can the minister inform the committee as to why the responsibility for this national science project lies within the Minister of Finance and Corporate Relations?

Hon. G. Clark: The short answer is that the Premier gave that responsibility to me. The other answer is that it's a big dollar item. Some commitment was made very superficially just before the election campaign, and we had to turn it into a public relations gesture. Maybe that's unfair, but a press release from Kim Campbell before the election.... We wanted to turn it into a real negotiation session. We wanted to make sure that there was the expertise in the Ministry of Finance to assure ourselves of the costs so that we're better positioned to do the negotiations.

There's clearly a very close liaison in this area between the Ministry of Advanced Education and the Ministry of Finance. It is done through a project office which has its own staff and resources, but we also want to be able to draw on the expertise of the Ministry of Finance people when we get into tough negotiations.

Again, to be candid, it was a bit of a surprise for me. I just assumed that we would then get into negotiations. I didn't anticipate running into a brick wall in Ottawa, with obfuscation and continual delay. While we are engaging in a more aggressive political exercise to bring them to the table, that wasn't my original intention. We just wanted to turn it into a real tough bargaining session with the expertise required. I think that was the Premier's intention when he gave me this responsibility.

D. Mitchell: If the intent was to give the responsibility for this national science project to a minister who would take a tough, aggressive and political approach, then I worry. If that's the approach that the government wishes to take, may have picked the right guy, but they may have picked the minister who is going to be too tough, too aggressive and too political to allow this project to succeed. It's a concern that a very tough, combative stance may be exactly what is not required in order for a project that is going to require some federal-provincial diplomacy to succeed. That diplomacy extends to the international participants in this project as well. We're looking to some international participation in order for this project to succeed.

I know that the search for funding from foreign countries has been proceeding. The federal minister, Mr. Winegard, went to a meeting at the end of May, I believe, with a number of G-7 science ministers. But he had no formal request for foreign government funding for the project, apparently because of a wrangling over the disagreement over the wording of a letter to the foreign ministers, and how British Columbia could be represented in that letter. My question for the minister is: did we lose, at that time, the opportunity to secure foreign funds for operating and capital costs, because of the federal-provincial jockeying for a negotiating position?

Hon. G. Clark: First of all, that's a smokescreen from the federal government. There have been two joint federal-provincial trips internationally to confirm science funding from international partners. The science adviser to the President of the United States, Mr. Bromley, has confirmed the $100 million commitment to this project from the United States.

What you're seeing, and what you're saying, is the kind of thing the federal government repeatedly says to pretend that the province is not doing its bit. These are international questions that have to be done by the federal government.

To go back to your earlier comment about me being tough and belligerent on this question, which I don't mind wearing.... That would be a better argument if we had not made the most generous offer of any provincial government in the history of this country on operating and capital costs on this national science project. While I may sound tough -- I am the Minister of Finance -- I've opened the door to significantly more contributions from the provincial government. That demonstrates the generosity and commitment the government has to this project. I don't think anybody can argue.... Erich Vogt and others have welcomed that participation as a generous new offer from the provincial government. I think that proves beyond any doubt that we're serious about this. I may be tough -- and I hope I am -- on these negotiations, because I think that's required. But it's also tempered by the very real fact that we want this project, and we're prepared to pay something for this project -- even beyond what the previous government committed to it.

D. Mitchell: I agree with the minister that the province's offer to contribute a portion of the operating cost, particularly in the form of a portion of the B.C. Hydro cost for the construction period and for the operating period, hopefully will be useful. But I don't believe that to date there has been any response from the federal government. I worry that it might not be enough leverage to get the federal government to 

[ Page 2500 ]

appoint a negotiator and come forward with a meaningful offer.

I worry about the foreign investors that we're seeking to obtain on this project. I worry about how it looks to those potential foreign investors when the federal and provincial governments in Canada are quarrelling publicly; there is media coverage about that. How does it look to those foreign investors when the province and the government of Canada cannot agree? How can we expect them to contribute under those circumstances?

I worry, as well, and wonder whether or not it was the case that the province did not want foreign governments to commit at all, because that would have meant the province would have been held to a financial commitment that perhaps the province can't meet. What I'm referring to there is the Peat Marwick report. The Peat Marwick report commissioned by this government -- the Peat Marwick manifesto, the infamous document -- actually referred to KAON. It referred to KAON in some quite negative terms. In fact, it recommended that we should back away from long-term, highly variable project commitments. If I could just quote from the document very briefly -- just one sentence, Mr. Chairman -- it said: "The government should...reconsider open-ended commitments to any long-term and highly variable projects.... A further case in point is the long-term commitment that could be part of the KAON project. The problem here is not the projects so much as it is the commitments to unknown levels of cost."

I worry about this, and I'm not trying to weave some kind of conspiracy theory at all. I wonder whether or not the province is secretly undermining the project because it cannot meet the financial commitments. If that's the case, I think the province and the minister should simply confess.

Hon. G. Clark: I think that even Eric Denhoff knows more about particle physics than Peat Marwick.

It's kind of puzzling, Mr. Chairman. Members opposite accuse the government, and me in particular, of writing the Peat Marwick report, of taking everything that it has suggested, and now they are using the Peat Marwick report in an area where I've rejected their recommendations, trying to use that as an argument for the province somehow being opposed to this project.

Peat Marwick is not 100 percent correct. In this particular case, we believe that British Columbia's interest lies in pursuing this national science project. We obviously are concerned about costs, as Peat Marwick was in this regard. It's not an open, blank cheque. But we're moving to try to provide some leverage to the federal government to get this project off the ground.

I have a letter here from Bill Winegard, the minister, dated May 21, 1992, after our offer of operating costs: "I am encouraged by this movement on the part of the government of British Columbia. It will help convince foreign governments of your commitment to this project." You asked a specific question about whether foreign governments would be concerned about where we're going on this. The minister responsible has taken our offer to the science ministers at the G-7 and has talked to them on our behalf about this project. Our concern and the wrangling at the time was that I didn't want the federal government asking foreign participants to pick up some of the operating costs. That has never been in the cards, never been on the table; none of the trips has ever talked about operating costs. Every country in the world that runs a science lab pays all of their operating costs. It looked clearly like they were trying to blame the international partners for their own failure. That's where the wrangling was, because I felt they should be trying to nail down the capital side and that they should come clean and take responsibility for the operating side.

D. Mitchell: My concern extends beyond KAON. I worry that we might be hurting science and technology in British Columbia with this wrangling between the federal and provincial governments.

The minister mentioned earlier and here in this committee that a former minister, Mr. Stan Hagen, did a good job in keeping the project alive. Indeed, I think Mr. Hagen does deserve some real credit for keeping the project alive under very difficult circumstances. I hope that this minister will not be the minister who kills it or who is responsible for its death.

I just want to ask a question on TRIUMF itself. The KAON facility.... We all hope it goes well. We wish the minister well with his efforts. We hope that the efforts are sincere and that he can be successful. We hope that he can get the federal government to appoint a negotiator. We hope that he can encourage the project to proceed.

A final question on the TRIUMF facility itself, which is the home base for the potential KAON project. Can the minister assure the committee today that the TRIUMF facility will not be put at risk, whether or not the KAON project proceeds, and that it will not be put in a position of risk -- that it will continue, and that it will continue as a centre of science and technology in British Columbia?

Hon. G. Clark: TRIUMF is fully funded by the federal government, and we've been very aggressive in trying to ensure that it continues to be fully funded. You're absolutely right, and I agree with the sentiment, but at this point we're not accepting responsibility for a federal lab, which is fully funded and always has been by the federal government. We want to keep the pressure on to maintain that weak federal commitment to science funding in British Columbia at the very least.

Let me say, in conclusion, because the member opposite has praised Stan Hagen -- and I share those views -- that Stan Hagen did not pursue this on the national agenda by quietly meeting behind closed doors and begging the federal government for support. There was a major event about every three months where he was attacking the federal government for not coming to the table on this project. I just want to make sure there's no revisionist history here. The federal government has had a long and aggressive position on this, and I'm maintaining that tradition. I might be slightly more belligerent with the Tories. Stan Hagen probably was a Tory; he has been appointed by the federal Tories to a 

[ Page 2501 ]

national board -- and I won't hold that against them. But in that respect, I think British Columbia has a long tradition that goes beyond Stan Hagen. As the member, a noted historian, knows, in British Columbia terms, we always have to fight with the federal government for every penny we receive, and I make no apologies for that, because to do otherwise is to continue to receive the short end of the stick.

[3:00]

F. Gingell: If we may, Mr. Chairman, we'll now turn to B.C. Transit, and we have a couple of questions on that particular subject. The first question I have is whether the budgeted subsidy for the year 1991-92, in the amount of $231.5 million, was sufficient to cover the operating costs for that year. Or what is the status for the year?

Hon. G. Clark: The answer is yes.

Hon. C. Gabelmann: I've just retrieved my chair for a moment to make an introduction, if members will give me permission.

Leave granted.

Hon. C. Gabelmann: I want to have the House welcome the students in the gallery this afternoon from Central Elementary School in Campbell River. They have come to watch us in action and see how the Minister of Finance does answering questions in the House this afternoon. Welcome.

F. Gingell: Can you advise us what the results are for the year ending March 31, 1992?

Hon. G. Clark: There was no deficit.

F. Gingell: Dealing with the way the contributions to British Columbia Transit are shown in our estimates and the way the financial statements of B.C. Transit are presented in both Public Accounts and in the report, one would think sometimes that we were looking at two completely unrelated documents. The government makes a contribution that is divided into operating contribution and capital contribution, but the B.C. Transit statements don't show it in that form; they show it completely differently. I've had an awful job trying to sort through the B.C. Transit accounts, trying to find out exactly what comes where. It's a real struggle. I wonder if it would be possible in future for the estimates and the B.C. Transit accounts to be presently in exactly the same manner so the amounts can be reconciled in our minds.

Hon. G. Clark: That's generally a good idea, and I'll take it under advisement. I'm not sure which accounts are appropriate.

Can I also publicly make an offer to the opposition spokesperson on this issue that my staff are available to you, as you know. You've taken advantage of it in the Ministry of Finance, but I don't believe you have at B.C. Transit. It is a kind of weird and wonderful and complicated financing formula, which varies between capital and operating for the ALRT and for each community as well. It varies around the province. So it does get quite complicated. You may want to take advantage of one of your spare moments, hon. member. Maybe in August or something we could arrange for you to have a full and thorough briefing on the subject.

F. Gingell: I thank you for that, and I will certainly do it.

In order to get everything sorted out and on the record, perhaps it would be a good idea, Mr. Minister, if you would delineate the various forms of subsidy that B.C. Transit receives -- whether it be from the hydro tax or the gas tax -- and just indicate where they all come from and what arrangements there are for the calculation of the subsidy that is provided under vote 40.

Hon. G. Clark: I don't mind doing that, but it may get a bit complicated. Maybe I'm not answering your question, but let me try, at least in a general sense. First of all, we have funding from what's called the local share. In Vancouver in '92-93 they have operating revenue, which I assume is mostly fares, of $129.5 million. The gas tax is not really a local funding source; it's a provincial source. In a way it has been convoluted. At 3 cents per litre it raises $51 million. The hydro levy, which is a regressive tax, is $1.90 per month per residence, regardless of how big or small your house is. It raises $13 million. Non-residential property tax, which is the only true local tax that we have in our local share, is expected to raise $26.5 million in '92-93. Interest income is $1.4 million. The total of local share funding sources is $221.4 million. The provincial share, as you know, is $204.2 million. That's in Vancouver.

The share breaks down this way: $94.8 million for bus, $101.4 million for rapid transit capital and $7.8 million for the custom handyDART program. If you would like exactly the same for Victoria and for the small communities, I have it here.

F. Gingell: No.

What causes the Vancouver bus provincial grant to be $94.8 million? Is there some agreement as to how that's arrived at?

Hon. G. Clark: It's a very complicated funding formula that drives it, but it is a formula. In Vancouver it's a 68.8 percent local share for operating and non-rapid-transit capital costs; 31.2 percent is the provincial share, and that's for operating and non-rapid-transit capital costs. Rapid transit capital costs, phase one, after the guideway grant, are 35 percent local, 65 percent provincial. Phase two of SkyTrain is 26.25 percent local and 73.75 percent provincial. Additional vehicles have the same formula, so any additional vehicle is 26.25 percent local, 73.75 percent provincial.

New rapid transit extensions. This is where we're still debating; the Whalley extension is essentially still being debated. During the election campaign the previous government said they would pay 100 percent of that even though that had never been the case before, and that is one of the sources of dispute now between 

[ Page 2502 ]

the regional transit commission and the provincial government.

F. Gingell: One notes with interest that the B.C. Transit statements always come out to zero. There are subsidies made to transit that are exactly equal to their operating loss. The amount that comes from the municipalities or the local portion is the amount that is required to produce these shares that we've discussed -- or the amount that is transferred from the regional subsidy trust fund. That's not quite the right term, but there is an account that you carry called the regional transit fund. Is it the case that the hydro levy, rural taxation and gas tax go into that account, and then you transfer out an amount that is the result of the calculation? Is that the way it works?

Hon. G. Clark: Yes, that's right. That fund was carrying a surplus, and so that surplus is essentially being liquidated, as we speak, because there is a deficit in the Vancouver Regional Transit Commission.

I want to clarify something that I said earlier. During the election campaign the previous government committed to.... If you recall, phase one, phase two and additional vehicles had this formula that was roughly 70:30. The previous government said they would pay 100 percent of phase one, phase two, any additional phases -- all of SkyTrain would be 100 percent funded by the provincial government -- and that would have made up the shortfall that they currently have.

I want to leave the current formula in place until we deal with the much broader question of how we're going to pay for transit and how we're going to govern transit in British Columbia. Because of the current complicated formula and a very strange governance model I really don't think it is workable in the long run.

F. Gingell: The light is beginning to slowly come on in my mind. So this positive balance at March 31, 1991, of $22.868 million, which is the fund balance at that date.... Do I take it from what you say that during the year April 1, 1991, to March 31, 1992, the $22.8 million and the revenue that came in from the gas tax, hydro tax, etc., were not sufficient to pay the local and regional government share of these calculated...?

Hon. G. Clark: It's a bit confusing. This is March '91 year-end, and you can see that $18 million for Vancouver on page 49 -- the fund balance at the beginning of the year. That at March '92 is $1.5 million. So as you can see, what's happened is.... It's why there is a problem, which the previous government decided to fix during the election campaign by agreeing to pick up 100 percent of the capital costs of SkyTrain. My concern is that that is another band-aid for a serious problem.

If we do nothing, I believe the subsidy increase required by the provincial government over the next few years will be about 30 percent. Some of the bills from SkyTrain are only now starting to come payable, and just on that part alone, without any bus service improvement, we'll see a provincial taxpayer subsidy increase of about 30 percent.

F. Gingell: The 30 percent increase would just be the amount of the subsidy, so at that point it's just debt service, basically, for all these additional costs that will be coming in. I take it that during the year to March 31, 1992, Vancouver's share must have increased from something like $90 million, that they contributed, to something like just over $100 million. If the regional area's share went up to $100 million, surely the requirement by the province was that much greater.

Hon. G. Clark: The local share of expenditures in '91-92 was $227 million, and in '92-93 it is $250 million. The provincial share I capped, essentially. In Vancouver, it's gone from $205.6 million to $204.2 million.

F. Gingell: Could you explain to me why it has gone up for the regional district, but come down for the province? Is that a change in...?

[3:15]

Hon. G. Clark: The major reason is refinancing from 20 to 40 years. To be candid, I'm not sure I would have done that today, but at the time we were trying to grapple with this deficit problem at Transit in a tough fiscal environment, going through the budget process in a new government, and at a request of the transit commission, because it also reduced their share, I agreed to extend the amortization over 40 years. That's the principal reason.

F. Gingell: That, of course, didn't change the amount of the interest charged. That only changed the amount of the principal payment for that year. So the amount of the principal payments required under your bonding indebtedness does come into this calculation, does it? Going through the accounts, I can't see where there is a capital contribution that doesn't flow through the income statement. Do you charge depreciation up sufficient to cover the capital portion?

Hon. G. Clark: I'm not sure how it shows on the statements, but it's a 40-year sinking fund. That's generally the way we capitalize assets in B.C.

F. Gingell: The question that is under discussion with the regional transit commission or body -- which one has heard something about in the press -- is of the method by which their fund-raising sources will be enhanced for them to look after their ever-growing demand to subsidize. If I may just add to that, there was something in the paper about a proposed downtown business core and parking tax. I wonder if you would comment on those for me.

Hon. G. Clark: The real fundamental question is: who should pay for transit and who should run transit? Right now we have, in some respects, a poor system. I was going to say almost the worst of all worlds. Maybe that's overstating it, but what happens in most cities -- I think all cities in Canada, probably most cities in North America -- is that there is a local bus company, a transit authority; in most cities there is payment for that from property tax, or part of it's paid by property tax, if 

[ Page 2503 ]

not all -- fares and property tax. In fact, in every city in British Columbia that has transit, except for the Victoria and Vancouver regions, local people pay property tax for transit. That's true in other cities in Canada. That is an option that the transit commission can use now.

Their position, and I have some sympathy for it, is: "We may be prepared to put in a little bit of property tax for transit, if we have control. But we don't have control; the province has control through B.C. Transit." So we have what's euphemistically called "local share" funding, and they're all provincial sources of revenue, like the gas tax. I put a challenge to them recently, and I said: "I'd like to fundamentally rethink the governing structure." I think they have a case. Should we, as a province, be running the bus company in the lower mainland, or should it be some kind of local authority? The current system is that the transit commission sets the service levels. So they do control service to some extent. Then they just come to the government and say: "Give us more money." If I say no, then they say: "Big, bad provincial government's not providing any more money, and we have to cut routes and everything else." We need to fix that, I think. We need to say that if you're going to set the routes and if you're going to expand service, then you have to pay -- in order to have some clear lines of accountability in our society, which I think are blurred too often in this country among federal and provincial and other levels of government. I'd like to try to change that.

The province will always be at the table, because major capital expenditures require senior government participation. It's not like the province is giving up on transit. We will always have a major role to play. We are currently paying more for transit -- as a provincial government for the lower mainland -- than any other province in Canada. Some of that is because decisions have been foisted on the local people, like SkyTrain. Some of that is also because we have this convoluted structure.

I'm very sympathetic to the notion of a parking lot tax and I'm very sympathetic to some notion of a benefit or tax which may include downtown. My view is that those are genuinely local sources of taxation. My personal view is that those options should be available to the transit commission. The government of B.C. should also be prepared, if they were to exercise some of those genuinely local.... In other words, if they were to genuinely increase their local share, then we would have to devolve more authority to the local transit authorities. That's a very complex question. It's a kind of bargaining and discussion that we are just beginning. I think that the alternative is for us to simply pay more from the provincial government and maintain, I think, an unsatisfactory structure.

There is a third alternative, which is to abolish any pretence at regional control by regional transit commissions and take it all in-house as a provincial Crown and determine routes and fares and everything else. That's not a preferred option for me, and not really one that I think is necessarily on the table.

When you think about it, those are the kinds of options we have before us. It kind of compels you to try to move in the direction of giving more local autonomy and having those local people be accountable by having to raise a little more of their share from the local taxpayer. Perhaps rather than a residential property tax -- which I think would be problematic, and which I would feel uncomfortable about -- a kind of parking lot tax, at least at the beginning, and some other innovations would be desirable. That's my personal view. We're not going to foist it upon the region. We want to work with the region to try to solve this problem. It is difficult because there is obviously some tension in terms of the tax base that they want to protect for there own purposes. All governments are having difficulties these days, and all taxpayers are obviously beleaguered. We all understand that. These are difficult and challenging questions.

I might tell the member that the current deficit is also an opportunity to try to deal with this problem; in other words, to try to fix the problem rather than just throw another band-aid at it. It may take a little while. I might as well say to the member opposite that -- to put him on notice -- we may have to allow the deficit to carry over for maybe a year while we try to negotiate a fundamental restructuring of transit in the province of B.C. The province has a big subsidy there. That subsidy is not in danger. As much as I would like to cut it, that's simply not in the cards. I'd like to try to restrain the growth in that subsidy by putting it on a sound governance model.

F. Gingell: For the year '92-'93 this deficit in the regional transit fund is just beginning to commence. The balance in the regional fund came down about $6 million in the past year. If things stayed at a level basis, you would expect the amount of the deficit could be as high as $20 million at the end of March '93?

Hon. G. Clark: If absolutely nothing is done -- in other words there's no fare increase -- the highest deficit that we anticipate is $29 million.

F. Gingell: When were fares on the SkyTrain or on the bus system in Vancouver last adjusted?

Hon. G. Clark: I'm just advised that it was last July, by 8 to 10 percent.

F. Gingell: In looking at the Vancouver regional transit system statistics on page 40 of the report, it shows that your revenue as percentage of operating costs has been gradually diminishing from $53.06 million for 1989-90 to $51.57 million in 1990-91.

The interesting thing is that, from a comparison point of view, this is a new way of showing it. In previous years you showed the revenue as a percentage of total costs, and this year you switched it to operating costs, which meant I wasn't able to go back very far. But can you tell us what that number is for 1991-92? Has it continued to drop even after the increases that went through in July of 1991?

Hon. G. Clark: I am advised that the fare increase for 1992-93 is about 48 percent. Actually, I think the member has hit on another problem, and that is that 

[ Page 2504 ]

costs are rising faster than revenues. I'm advised that fares had not been increased for three years prior to last summer, when they went up by 8 to 10 percent. That was a bit of a bump, but they hadn't been keeping pace.

F. Gingell: So in 1992-93 that's anticipated to be 48 percent. For 1991-92, which is actually the question that I asked...?

Hon. G. Clark: Just from memory here, I think it's about 52 to 53 percent. That was the bump with the rate increase.

F. Gingell: Mr. Minister, do you have some statistics handy that would show us the cost per passenger-kilometre for SkyTrain versus buses? Do you have any of those things so we can get an idea about the costs on SkyTrain versus costs on buses?

[3:30]

Hon. G. Clark: If you include capital costs -- this is very crude -- buses are about $3 a ride and SkyTrain is about $6 a ride. If you just count operating costs, the average in the system in 1992-93 is $2.06 -- operating costs, not counting capital. That's for both, and I don't have the number for operating. I suspect the operating costs on the SkyTrain side would be very, very low; I am advised it's about $1.

F. Gingell: That is per ride? Are you able to keep track of or make a statistical calculation of the cost per ride-kilometre or passenger-kilometre?

Hon. G. Clark: We have that, and we could give it to you, but I think it would be a bit fruitless now. I've struggled with these as well.

Let me try to explain it. People don't just get on SkyTrain and go a few blocks. They go across on the SeaBus, take a bus, take the SkyTrain and transfer again. We have this debate -- I don't fully understand it yet, to be candid -- between riders and boardings. If you use boardings, you get a different number, and if you use passengers, one passenger makes several boardings. It gets very complicated -- by route and by system and by region.

We have all that information, and I'd be delighted to share it with you. I know it makes great bedtime reading -- as my wife says -- because it puts you to sleep. These are some of the things that I've just been looking at to try to familiarize myself with the system and how it works. But it is a surprise to me how complicated it can become.

F. Gingell: Perhaps I could just finish this off with the question of whether, from your perspective, you could give us some gut feelings that you have about the costs of SkyTrain versus the costs of busing. For instance, if one puts ALRT into Richmond, which I presume would diminish the requirements for bus service, are there any big cost differentials from the point of view of operating costs and capital costs, or is SkyTrain substantially less to operate and substantially greater in capital costs?

Hon. G. Clark: I think it's pretty clear that SkyTrain is an expensive system on the capital side and is significantly cheaper on the operating side. If you want my gut feeling, my sense is that buses are almost uniformly a cheaper system. Obviously buses in North America don't provide the kind of service, at least not historically, that can attract large volumes of people out of their cars. The SkyTrain system has very expensive capital costs and is very popular; it moves people very quickly. That attraction in our system or our society can be very appealing.

On the Richmond route, for example, I think there's no question. I guess I shouldn't say there's no question. My view is that SkyTrain is clearly a very expensive option, but will certainly provide better service to people than the bus system and will move people faster in the system. If your public policy goal is to simply move people out of cars and onto public transit efficiently and to promote economic development and all of those other things that rapid transit can do, then rapid transit is a compelling option. But if you're looking for the cheapest way of transporting people, I think it's still buses and probably will be for some time. Sometimes there are trade-offs.

The problem with buses is that you have road congestion and the like, and one of the appeals of any rapid transit route, and in some respects particularly one that's elevated, is that you're creating a right-of-way just for rapid transit in perpetuity. Of course, that has efficiency gains and other appeals. You have to weigh them in the balance. I think it's pretty clear that we are going to need more rapid transit routes both to the northeast quadrant -- the Coquitlams -- and at some point to Richmond.

I would be surprised if any government would say that we could service both of those communities in the long run just through buses. I think that we are going to require some major capital expenditures in those areas. That, of course, is one of the reasons that I want to try to fix this governance structure and its ballooning debt and cost to the provincial taxpayer, because no matter how you cut it, the province, almost regardless of our fiscal situation -- not regardless, but almost regardless -- is going to have to provide some major capital expenditures in transit.

Everybody who lives in the lower mainland knows that. It's absolutely required for future economic development, for sanity, for environmental reasons and all of those reasons. We want to get the governance and funding structure right in order that we embark upon those adventures with the cooperation of local communities -- where possible, of course -- and also in a way that we pay, obviously, some money; but we share that responsibility with other decision-makers.

[E. Barnes in the chair.]

F. Gingell: Could we just talk for a moment about SeaBus? Is the ridership continuing to rise the way that it's been reported in the past? What are the constraints on the growth of ridership on SeaBus, if any?

[ Page 2505 ]

Hon. G. Clark: If I can, I just have the SeaBus ridership. Let me distinguish again between boarded passengers and revenue passengers. Boarded passengers: if you take out Expo '86, in 1987 there were 3.7 million. In 1988 it was 3.8 million; in 1989, 4.1 million; in 1990, 4.3 million. Those are the statistics I have. We have a rough guess for 1992-93. It's rising at 2 to 4 percent a year. So you can see steady growth on the SeaBus ridership.

On the paying passengers, revenue passengers, people who just take the SeaBus, it is almost uniformly consistent throughout the years: about two million passengers. That comes out of that four million. So that is flat; people taking the trip across, I guess, just paying for that trip. There is a significant increase in ridership.

I think we do lose money on it, do we not? But again, that becomes more complicated as well, and I've asked B.C. Transit to try to do some of this work on disaggregating routes, which hasn't really been done. But part of the problem is: how do you define if they're losing money? The paying passengers for that route are relatively small, but it's part of a broader system. In an ideal sense, you'd like to sort of disaggregate routes and pieces to see which ones are making money and which ones are losing money, and I think a lot of that work can be done and is starting to be done; but it's not that simple.

R. Kasper: I served on the Victoria Regional Transit Commission for three years, and I'm glad to hear that the minister is looking at some possible restructuring options as far as the local autonomy of the commissions, and to end this procedure of running cap in hand to receive additional revenues. It's my understanding that the minister has not been willing to approve a gas tax option for the Victoria region. I wonder if the minister could perhaps outline what options he has looked at in replacement of a gas tax.

Hon. G. Clark: Well, first of all, there's no funding crisis in Victoria as there was in Vancouver, because their surplus account is enough to continue for another year. There's no need to move directly. When we deal with this governance question, I think, we'd like to try to deal with the broad problems of Victoria and Vancouver at the same time. The options that I have discussed here for Vancouver will also be available to the Victoria transit commission. There is a better argument for a gas tax in Victoria, because it's not subject to the same cross-border shopping pressures that exist in Surrey and Cloverdale, for example. There is no gas tax now for transit. It's 3 cents in the lower mainland. To be candid, my view is that the gas tax is a provincial tax, not a local tax. I might be prepared to raise the gas tax in Vancouver for transit if it were to pay for the provincial share of transit.

R. Kasper: Perhaps a compromise could be sought. If there were approval for a gas tax in the greater Victoria region, that should be tied to additional service in outlying areas affected by a gas tax. It's well understood that communities outside the urban core pay the highest cost, because their areas usually have lower service and less frequent service. Those are the communities where people are more inclined to use the automobile. But if there is to be an introduction of a gas tax, it should be tied to service. Perhaps there should be a compromise sought with the Victoria Regional Transit Commission and your ministry to look at that option.

You mentioned the surplus of approximately $4 million in the Victoria Regional Transit commission. I'd like to point out to the House that because of the prudent and wise approach in delivering transit service in the Victoria region, that surplus was built up over a number of years. I hope the minister will take into account that the surplus is not depleted. It has afforded the Victoria region the ability to bring in services on an as-needed basis when the previous government was unwilling to fulfil.... I hope the minister can give some type of commitment here that he will recognize that surplus. When the gas tax or other funding options are addressed, if that surplus account is drawn down, it could be reduced to its previous level.

Hon. G. Clark: We're entering into a phase where we're reviewing the whole question of governance and funding. I'm reluctant to give a specific commitment now, because we want to work with the local communities. I know that the member articulates very aggressively and thoughtfully the views of his constituents, and I appreciate that. He represents them well in this House, and I take that very seriously. But we do have to go through a negotiating process with the local community.

I might just remind members that at the end of 1992-93, there will still be $2.5 million in that fund's balance, so doing nothing will not liquidate the fund. Considering that it's $4.5 million at the end of this year, it will still be there. We do have some flexibility there. I am sympathetic to the notion that the surplus can be used for transit purposes.

The idea of tying the gas tax to improve service is one which I'll certainly take under advisement. Of course, the service plan is designed by the regional transit commission and not by the provincial government.

[3:45]

R. Kasper: Perhaps another area your ministry could review is the percentage of provincial funding allocated to different regional transit services. Over the years it has been a pressing concern of the greater Victoria region that they have received the smallest percentage of provincial funds, compared to smaller community services in British Columbia and the Vancouver regional service. In this review and reassessment of local control and autonomy over the delivery of transit services, I hope that there would be a little more equity brought into the system for those users within the greater Victoria area. Our particular region, because it has not been capital-intensive and because it's a conventional service, has not always gone to the ministry and to the government for additional funds, as has been the case in the Vancouver region and the smaller communities that are starting up.

[ Page 2506 ]

My last comment is that I would hope the ministry would take that into account and try to bring some equity and fairness into the system, so that when the provincial share is doled out, it's on an equal percentage basis for all transit services within British Columbia.

Hon. G. Clark: I'd just like to thank the member for his comments, and we will certainly take them under advisement. I know the member has a keen interest in service to his community, and I know that many members obviously do advocate the interests of their community. We will take that very seriously.

W. Hurd: I have a line of questioning regarding resource revenues in the province, particularly the forest revenues that accrue to the Crown. Does the minister have available a percentage figure of revenues from stumpage and the forest industry? Does he have it broken down according to the individual resource sectors, or can he provide us with a percentage or an overall figure?

Hon. G. Clark: A very good question. I wonder if I could ask the House's indulgence as to whether or not we completed the B.C. Transit component of my estimates. If that appears to be the case.... I don't know where the opposition spokesperson is in that area. I can certainly speak, as all members know, for an hour or two while we review this question, but I would appreciate knowing, because my staff here have to get back to Vancouver.

Perhaps I will excuse B.C. Transit staff in this regard, and they may.... Do you have some transit questions? Okay.

R. Chisholm: What negotiations or consultations does B.C. Transit do with private organizations like Cascade? I've recently received complaints that they have a loss of ridership and a loss of areas to be responsible for, and at the present time they're going out of business due to this. I'm just wondering how much consultation has gone into talking to these organizations.

Hon. G. Clark: I don't mean to be flippant, but there's lots of consultation with the private bus companies. That's a tricky area, to be candid. There are many communities in British Columbia that have private carriers servicing their communities under contract to the municipality, or they're simply in a private market. B.C. Transit is gradually expanding into communities in a subsidized way, and when they do, it often displaces that private operator. What happens is that communities who have private bus services approach B.C. Transit and they say: "Please, please, provide us your quality service." And they usually say that they'll raise their property taxes, and the provincial government provides a certain subsidy to the community so that they can get improved public transit in their communities. The consequences, unfortunately, can be devastating for the private operator of the bus company.

Sometimes we have a choice to make between improved public service to constituents at the local government's request and the private interests of the operator -- the bus company or, indeed, the workers of those bus companies. That's not an easy question to deal with. We try as much as possible to work with private contractors. In some cases the private contractors end up being the B.C. Transit contractor, so their jobs are protected and so, in some respects, are their incomes. We simply allow the local community to have some more input into that, and we use those private contractors. But that's not always possible.

[R. Kasper in the chair.]

At the margins, if I can say that, there are often disputes. I am in receipt of several right now from private bus operators who are quite concerned about the future of their businesses if a subsidized service like B.C. Transit were to compete with them. So we're sensitive to that, and we try to work with them as much as possible. But, at the end of the day, we have to improve public transit to British Columbians. That's our mandate, and that's what we want to do.

R. Chisholm: My second question is with reference to the possible use of rail lines for B.C. Transit, to augment the light rail system that we have in place now. Has this department thought along the lines of utilizing the rail lines or doing a study? There have been studies in the past. I'm wondering if they foresee that in the future.

Hon. G. Clark: Yes, there is a joint project funded by the provincial government and the Greater Vancouver Regional District. Project 2021 is the transportation planning initiative. Certainly the rail options will be reviewed in that context. I certainly think that there's great potential for that option down the road. It's probably a bit premature, but clearly, if you're looking ahead at transportation planning, it's something to take very seriously. We have provided funding to the GVRD, including this fiscal year in a tough financial environment, and they've provided some funding. That study is ongoing.

R. Chisholm: Hon. minister, how far does that 2021 plan go?

Hon. G. Clark: Till 2021.

R. Chisholm: Out as far as Chilliwack, or is it...? How far does that plan go, geographically speaking?

Hon. G. Clark: I think that it's essentially within the catchment area of the GVRD. It includes Chilliwack and Mission. It does go out a fair distance, but I think Chilliwack's probably the edge of it, because then we get into the Dewdney Alouette Regional District.

F. Gingell: I'm going back to the regional subsidies and the fund balances very briefly. I'm not wanting 

[ Page 2507 ]

to get into a big discussion. We discussed Vancouver's pretty thoroughly. How about Victoria's status?

Hon. G. Clark: The number is $4.4 million, and that was in the fund at the end of the '91 fiscal year. At the end of this fiscal year it's expected that the fund will be $2.5 million. There is a problem in the Victoria transit region. It is not a problem right now, because there is a surplus in the fund, but we want to address it. They have asked for the gas tax increase. To date I have not agreed to that for a variety of concerns, one of which is that it's a provincial tax.

I did sort of address this a minute ago, but if I can, just in a general sense.... We are looking at governance and funding not just in Vancouver but obviously in Victoria as well. I'd rather fix the problem in a more fundamental way than try to provide some band-aids with the provincial funding or provincial funding sources. So we really want to work with the local communities to improve the governance and funding of transit.

F. Gingell: If I may, Mr. Minister, I'd like just to slip back to the SeaBus discussion that we were having when I sat because I thought an hon. member was going to make an introduction. It turned out not to be. Are there any constraints on the system that you see as a problem for further growth in ridership? There were discussions in your earlier annual reports of the possibility of a third vessel. There was also some discussion about a SeaBus to Port Moody. I wondered about those three items.

Hon. G. Clark: I didn't catch all of your questions. We have a current ship that carries roughly 400 passengers. We can do a refit that would allow it to carry 540 passengers. The refit is significantly less costly. Rather than build a third SeaBus, it may be more prudent to refit the existing ones to carry more passengers. We are reviewing all of those options in the capital plans of all of the Crowns and B.C. Transit as we speak. We will do a rational analysis as to what makes the most sense.

F. Gingell: As to my question of whether you had any constraints in the system, your system can be expanded with a refit, and you believe that that will probably be a better alternative than a third vessel. The other question I asked was whether there is still any consideration being given to a Port Moody run.

Hon. G. Clark: There are a couple of things. I don't want to say that I've automatically made the decision that a refit is better than a third SeaBus. I just said that that is an option, and it may well be the best option. We're going to review it as we do the capital planning. There may be other reasons for a third SeaBus -- frequency of service or the like. Obviously in terms of cost, refitting probably makes the most sense. I just don't want to give you a definitive answer on that, because we're going to review it.

On the question of ferries to Port Moody, that's one that intrigues me. We are going to be reviewing that whole northeast quadrant, because I think we need to get moving on planning for rapid transit to that quadrant very quickly. There are obviously serious concerns about relatively high-speed ferries in that harbour. There are all kinds of restrictions on it. My gut feeling is that it's not likely an option, but I don't want to foreclose on it. It has a certain appeal to me. We should review it, and we will review it as part of overall transportation planning in that region.

D. Jarvis: Going back to the refit aspect of it, without getting into too much detail -- I appreciate your concerns with it -- does your staff have any idea as to what the downtime would be to do a refit?

Hon. G. Clark: I'm advised that it's a very modest refit that would accommodate more people. It's a matter of a reconfiguration of the seats by taking out some seats to allow more standing room and the like. The estimate is for just a few weeks to do that if we were to reach that threshold. That's the kind of work we're doing as we review these capital questions.

D. Jarvis: No ropes in the water, I guess.

What would they do for the situation during the three or four weeks of downtime? Where would they get the equipment to relieve the transit problem at that point? How can you take out a set of chairs some night and then put them back the next morning?

Hon. G. Clark: You're right. If we did a refit, we would have to lease or rent a replacement boat. We may have to rent two of them. There are lots of boats around; it's not a real problem. It's not quite as convenient as the current system, because the boats are designed, obviously, for that terminal. Our staff advice is that it's a very simple project, and it's a matter of a few weeks of renting a different boat.

[4:00]

C. Tanner: The minister spoke about the subsidy in Victoria for the bus system, and I believe he said he wasn't very keen on imposing further gas taxes. Do you have some idea of what alternatives you have? Are you hoping, for example, to get rid of the Hydro fee? What does the minister have in mind? We've thought about it greatly in Victoria, and we haven't come up with another solution. Has he got something up his sleeve?

Hon. G. Clark: No, I didn't say we weren't prepared to raise the gas tax. I said that if we were to raise the gas tax, my view is that it should be for the provincial contribution -- not for the local contribution, because it's a provincial tax. It's not a local municipal tax.

There are potential big expenditures in this region, which I think the provincial government is going to review. There may be requirements for significantly enhanced provincial infrastructure spending.

It's my view that the gas tax might more appropriately be to fund those kinds of expenditures: capital expenditures on major infrastructure developments. I don't want to close the door on it, but what I said earlier 

[ Page 2508 ]

I've said several times now. I don't mean this as a criticism, because you may not have been here. We really want to fix the governance and funding of transit and not have a band-aid solution.

I may come a year from now with a band-aid, because it's a very difficult one to work through with the local communities. There is a funding crisis, so to speak, in Vancouver, which is driving certain initiatives on my part. We want to work to change it. Once we deal with that, the tools that we provide -- if we do -- to Vancouver will also be available to Victoria. We hope we can develop a model that can be consistent.

I said earlier that I'm sympathetic to a parking lot tax. I'm sympathetic to some kind of benefiter tax or at least enabling the local community to do that. I'm sympathetic to applying the non-residential tax to vacant land, which doesn't happen now and in Vancouver's case would be a couple of million dollars. Those are genuinely local taxes. I would like to devolve authority to those local communities, and they would then be required to tax their tax base and have more authority and therefore be more accountable to the taxpayers generally for their actions.

Currently all the pressure is on the provincial government. They say: "You raise your taxes, and by the way, you're not giving us enough money." The local taxpayer is not sure who's paying for what. It's a convoluted government structure, and it's not a sound fiscal structure. So I'm going to try, in consultation with the various municipal people and the transit commissions, to work through a broader solution to this question. We're being driven by a crisis in Vancouver, in the funding sense. I know there's pressure from Mr. Chairman here, privately and publicly, that we need to get on with dealing with this problem in Victoria as well. We're conscious of that. But I'm hopeful that we can provide a model which provides more local control, more local accountability and more local sources of revenue for improved transportation services.

We have to deal with the Victoria question. The pressure is not there.... There is no problem. We have a surplus in the fund, and even at the end of this year there will still be a $2.5 million surplus. So we want to work to resolve it in a much broader way, rather than just giving the gas tax to Victoria and not dealing with more fundamental problems. I don't want to take a hard line on this, because again I think there is a better argument for a gas tax in Vancouver than there is in Victoria.

F. Gingell: I was wondering, Mr. Minister, if we could now move to the environment and the use of more environmentally friendly vehicles and fuels. I notice from your annual reports that there has been quite a bit of consideration given to that subject. I would appreciate hearing what the current status is.

Hon. G. Clark: On environmental questions: we are actively reviewing natural gas as a fuel for buses. We have a few pilot projects now on natural gas. They are, I'm advised, about $50,000 more expensive, so we're looking at the calculations to see if it makes sense. Obviously it makes environmental sense, but we want to make sure that we mitigate the economic consequences.

I'm quite excited about this, and I guess the previous Minister of Energy can take credit for this, and perhaps the member for North Vancouver is familiar with this -- the Ballard fuel cell, the use of electric energy from hydrogen. You probably know that the by-product of hydrogen burning is oxygen, and in fact, in many cases.... It's water, I'm told. Well, H2O -- there's oxygen in it. It is obviously, you know, a benign fuel. I'm sure there's a long way to go, but there is the pilot project which we are continuing to fund this year, as I recall. That experiment is with B.C. Transit.

In addition, we've done a variety of other programs on environment, which you may be familiar with. One is the Go Green program, which I think is a very innovative public relations campaign, together with promoting the use of transit, ride-sharing, carpooling, biking and the like. We are looking at some travel demand management to try to deal with that, so that we can get into the business of setting up programs that reduce single-occupancy vehicles, trips at peak hours and the like. Other Canadian transit properties are using our system and looking at travel demand management.

We have now engaged in the park-and-ride lots, bike lockers, preferential parking in park-and-ride lots for car-or van-poolers, the trolley bus and the SkyTrain. The SkyTrain is 20 times more fuel-efficient than the diesel bus, and ten times more efficient in terms of moving people. So on the environmental side, B.C. Transit has sort of picked up the ball. It's obviously a natural ally, because public transit is important to the environment, but they are taking it a step further, and obviously the government of B.C. is encouraging them to do that. There is, no doubt, more to be done, and more will be done. There are some interesting innovations.

F. Gingell: I don't know what travel demand management is, and I don't have a clue what it is you're speaking of. I wonder if you could let me know what that is.

Hon. G. Clark: We've actually trained one of our employees to go into the company and work with them on carpooling and, essentially, how to get people out of their cars and onto buses. It has been modestly successful. Other transit properties are using it. We actually have staff going out and working with the larger businesses to try to encourage the use of carpooling. Carpooling sounds simple, and I guess it can be in many respects, but you get better at it. There are systems and expertise that we can provide. We're certainly doing that.

F. Gingell: I had noted the discussion about natural gas buses from your 1989-90 annual report. I was under the impression that there is a demonstration project: you actually have five buses on the road. I thought from your earlier discussion that that wasn't happening.

[ Page 2509 ]

In the bus area, B.C. Transit had a couple of embarrassing accidents this past year. I was wondering if you could advise this committee on the status of the investigations into those accidents.

Hon. G. Clark: Members will no doubt agree that it's important I put on the record that B.C. Transit has an outstanding safety record. It really does. As I recall, it has won awards nationally and internationally on traffic safety. I think we should be careful: it's not something that is prevalent in our system. The accidents were very unfortunate. I'm the minister responsible for B.C. Ferries, and they coincided with some accidents there as well.

B.C. Transit has initiated a joint Ministry of Transportation and Highways, RCMP and motor vehicle branch assessment of Highway 99 -- probably in the member's constituency -- that looks at the operation of exclusive and high-occupancy vehicle lanes on highways, because that's where the accident took place. An external consultant has also been retained to review our operation policies and training programs from a safety perspective for both incidents. We have an external consultant reviewing all our safety procedures. Even though we have one of the best safety records, these accidents have given us pause to review them all. In addition, we have this joint assessment of high-occupancy vehicles, particularly on Highway 99, to make sure that this was indeed an accident and not something that is systemic or as a result of policies on our part.

F. Gingell: Am I to take it from what you've said that the investigations into all of the accidents have not required B.C. Transit to change any of their practices and operating procedures?

Hon. G. Clark: The preliminary investigations basically did not cause us to make any shifts other than to tighten up some of our safety procedures, but the accident at Denman caused B.C. Transit immediately to reinstitute the wheel blocks on all buses when they're stopped. That was a direct result of an internal response to deal with it. We are still doing two major investigations. We have the consultant and another investigation to review operating procedures to see if there are changes to be made, but in a preliminary sense there is nothing at all significant. That, in fact, is the most significant change we've made.

A. Cowie: I have just a few questions on rail transit only. I will limit it to that. If for whatever reason -- I was at the ombudsman meeting -- I'm duplicating anything, please just nod your head appropriately, and I will read Hansard. Up and down, not sideways.

I think we would all agree that transit planning has to be properly integrated with land use planning. I think we would get total agreement on that. In greater Vancouver and greater Victoria, where we're going to see the highest growth in the next 20 years, it's very important to set a long-term direction.

I think we would also agree that there's a short-term lack of funding. It's very important to make a decision on the lines, so that the municipalities of Burnaby, Surrey, Coquitlam and Richmond can make some long-term decisions. Vancouver, right now, is in the midst of doing a long-range community plan, and the GVRD is into a series of discussions on long-term planning for growth, including highway transportation. But I think it's very fundamental to have the decisions on the rail transit decided well in advance. I don't think we would have any disagreement on that. When are we going to have a decision on the Richmond-Vancouver line?

Hon. G. Clark: The Richmond transit advisory committee has advised that they believe they can report to the government and the board of B.C. Transit in the fall of this coming year on routes and technology on the Richmond side.

On the Coquitlam side, no announcement has been made, but obviously we're keenly interested in moving aggressively on the northeast quadrant of the lower mainland. That area is in chaos in a transportation sense. So we are going to be making some announcements fairly soon, I think, on a process to get that moving.

[4:15]

Beyond that -- the member is probably aware of this from his previous life -- the GVRD has a study called Transport 2021. We have agreed this year to continue funding. I think it's $180,000 provincially, and I did meet with the GVRD recently and discussed this question.

I absolutely agree with you that we need to get on with this. I have said here and I'll say again that we do have some short-term funding problems. We have a fiscal crisis in British Columbia and very deep problems, but we cannot let that be an excuse to not deal with these major capital expenditures. I think that would be folly. In both the Coquitlam region and the Richmond region, we pretty clearly need to get some route and hopefully technology decisions made, so that land use decisions can be made rationally. I think there may be a potential to pay for some of the transit decisions, if we look creatively at land use as well.

R. Chisholm: Hon. Chair, I would like to ask leave to make an introduction, please.

Leave granted.

R. Chisholm: Visiting with us today is a group of 20 aboriginal youths from Hull, Quebec, representing Voyageurs '92, along with their leader, Mr. Lewis. They have spent the day visiting the beautiful city of Victoria. Later this afternoon they will take a place in the gallery of our Legislature for our portion of the session. Would the House please join me in acknowledging their visit and making them most welcome.

A. Cowie: I noticed in two of Victoria's local newspapers yesterday, the Star, and a weekly, they were dealing with growth....

An Hon. Member: The Star

[ Page 2510 ]

A. Cowie: That's what it's called. I noticed that they were dealing with B.C. Transit being ready to go on a study of LRT routes. I take it that in greater Victoria we're also getting into transit studies. They also talk about the population squeeze in Victoria. They're dealing with the same subject as the Greater Vancouver Regional District.

An Hon. Member: "Tweeds," they said, not squeeze.

A. Cowie: Tweeds? It says "squeeze" here. Anyway, they go on to say that the greatest growth in Victoria isn't in the centre but in the Saanich and Sooke areas. So you've got a different kind of problem. You've got low density before you get to the greatest growth. I'm wondering if there are any studies going on through the ministry or through B.C. Transit on this particular issue.

Hon. G. Clark: That's actually an interesting planning problem. There is a joint study being done between the CRD and the provincial government, similar to the exercise taking place in Vancouver. The LRT rights-of-way are part of that. We are protecting, I believe, the rights-of-way to those Western Communities. It's an important growth area. You're absolutely correct. It does present some real challenges, in terms of both the economics of the route and where we're going. That study is due to be completed next year. It's different from Vancouver, but it's essentially the same approach. We need to start planning now, even if the routes aren't feasible for some time to come. It makes sense to start planning the rights-of-way so that we can plan the kind of land use development, station sites and all of those questions which have real potential to spur growth and to limit the cost to government, if we can make those purchases in advance.

A. Cowie: Would such a study include an up-Island link? After all, it's only a very short distance to Nanaimo, and there's a great deal of growth going on up the Island. Would such a study include that linkage?

Hon. G. Clark: This one is a joint Ministry of Highways, CRD and B.C. Transit study. Highways are part of the study, but only within the CRD. From B.C. Transit's point of view, we are not looking at transit links between Nanaimo and Victoria, other than through the small communities program and the like, in terms of a bus system. In a vehicular sense, we are looking at it all the time. Bob Lingwood, who's responsible for our small communities projects, is not here. In a rapid transit sense or a rail sense, it's not at the moment part of any study. I don't know if the member's suggesting it should be. He's nodding his head, so I'll take that under advisement, as I haven't thought about it. My staff advise me that no studies are ongoing now. We'll take a look at that.

A. Cowie: Thank you for accepting that idea. After all, it's not that far over the Malahat. There's a lot of resort development as well as retirement development going on up that way. It's possible that a transit line -- a rail line -- could work all day long. You've already got a corridor.

My final question is: why is B.C. Transit under Finance? Why is it not with Transportation and Highways or Municipal Affairs, since it's so neatly linked with land use?

Hon. G. Clark: I've already answered that question, but I'll answer it again. Let me just remind members of the House that when I was given responsibility for ferries and transit, I asked the Ministry of Transportation and Highways for the FTEs, the people and personnel in the Ministry of Transportation and Highways who scrutinized the spending and policy practices of B.C. Transit. The answer was that there was no one. I did the same thing for B.C. Ferries and the answer was that there was no one. Lest you think that because there was one minister responsible for that in the past there was, by necessity, some integration between them, I suggest to you there was not. Now I'm responsible for these, in part because they are highly subsidized Crowns, and in part, I suspect -- you can ask the Premier -- because in Vancouver we had some serious problems develop, and I am a Vancouver MLA. We wanted to move on that in a regional sense.

We're also trying to develop more coordination between the Crowns generally, through the Crown corporations secretariat, which I chair. Clearly, there is integration between the Ministry of Transportation and Highways and B.C. Transit and B.C. Ferries. Can we do better? Yes, and I think we have to. I acknowledge that, but I certainly don't think that it's required that they all be under one minister for that.

D. Symons: I would like to begin by welcoming Mr. O'Connor to the House here today. I've had the pleasure of meeting him on a few occasions and found him most helpful and informative to me on those occasions. I thank you for being here, sir.

I have a few questions. One of them deals with some concerns I had expressed to me by the taxi organizations here in Victoria. There is some concern that there seem to be some new rules they felt were coming in that were going to change the number of cars they would have to have available for transporting the disabled. I'm wondering if there is a move on the part of Transit.... Or is it downloading from the transit authority onto the private industries through this technique?

Hon. G. Clark: I'm frankly lost to know what the question is. We have increased the number of custom transit vehicles as we've improved the custom transit service in the Victoria region. Perhaps, more importantly, we've bought these kneeling buses -- which are an interesting innovation. The bus actually drops down to curb level, so the regular bus system is accessible to disabled people. It is an innovation which I think.... We're going to see how it works, and perhaps it has every potential to mean that all new buses will have that technology, so we can dramatically improve service for people who are disabled. I don't know if you have a specific question.

[ Page 2511 ]

D. Symons: I guess I shouldn't have added the last bit on there in the question. The concerns seemed to be that there were regulations coming in that would require taxi firms throughout the province to have a certain number of vehicles -- depending upon the population of the area, I guess, that would be able to handle the disabled. The concern expressed to me was to the effect that there seemed to have been some cases where more taxis would have to be of that variety than there seemed to be a need for in the community.

Hon. G. Clark: I'm sorry. It has nothing to do with my ministry or B.C. Transit. It sounds like a good idea, though.

D. Symons: The gentleman who phoned me on that issue didn't think it was a good idea. This is somewhat related in a sense. There seems also to be the possibility of a trend toward the use of minibuses and vans, and possibly having these privatized rather than through the transit union, I suppose. I believe this is not just the handyDART system, which is for the disabled, but would be for people in general.

Hon. G. Clark: B.C. Transit has hired Alan Artibise, a director of a planning school, to review the question of the use of minibuses or smaller buses, because there's some controversy around them, particularly with respect to the union. There are some regions in the lower mainland and probably elsewhere which cannot accommodate their full-size bus, such as some of the new subdivisions. In addition to that, a large-bus service is not required in some communities. The question of minibuses or smaller buses is one on which I've asked for some independent review. Intuitively, there's a certain logic to having smaller buses on lighter routes, and a certain requirement to have smaller buses where the subdivisions don't allow the larger ones to move through. But it is a source of contention, and I wanted to make sure that the public policy decision taken by B.C. Transit was the correct one -- which is to increase the use of small buses, using contractors, and not just at the edge of the system, but within it. B.C. Transit has hired Alan Artibise to review that question, and I understand his report will be in in a couple of weeks.

D. Symons: I thank the minister for that answer. I feel that transit is extremely important. We have to do everything we can to move people out of the cars that are harming our environment. Any way that we can get people to double up or triple up in vehicles is to the betterment of the community.

In the same vein, there seem to be some problems in respect to the expansion of B.C. Transit into areas where it hasn't previously been, where there might have been bus services provided by local people or by smaller outfits. Basically, they seem to be pushed out in the process. I'm wondering if there is some way, in various communities where B.C. Transit is moving in at the request of the community, that the local transportation can somehow be incorporated into rather than excluded from the transportation expansion.

Hon. G. Clark: I've already covered this turf, but briefly, we work hard to try to incorporate the private service in with B.C. Transit. The area of some controversy now is Maple Ridge and Pitt Meadows. That new B.C. Transit service with small buses is in fact the same operator and the same bus drivers that were in the private sector for 20 years. Now they've rolled over into a B.C. Transit unit, and it's causing some controversy. In any event, where B.C. Transit expands into areas covered by the private sector, there is a natural tension. We try to work with those private companies. But the local communities demand improved, subsidized service, and it's hard to resist that when many other communities have that kind of service. Sometimes the private operators are not happy when B.C. Transit moves to provide service in new communities, and I certainly understand that. I'm sympathetic to it. I have had many meetings with various bus companies, and we like to try to incorporate them, but it's not always possible.

[4:30]

F. Gingell: Thank you very much, Mr. Minister. I think we have completed the questions on B.C. Transit, unless there are any final words that you would like to say. We were pleased to hear that there is a planning process going on. We're also pleased to hear that this government does have a commitment to public transit, and that you intend to get people out of cars and into buses and other forms of transit. We are, of course, concerned about the manner in which this is going to be financed.

If it's convenient, I would just like to ask one question that sits off by itself somewhat. I was wondering if you would explain to us exactly what program the province has with regard to insurance risk management.

Hon. G. Clark: Not that long ago the government moved to self-insure, as did many other jurisdictions. We currently self-insure for the health sector as well. We are looking at expanding that to other publicly funded agencies. I don't know much about this area, but the staff.... As usual, I'm very impressed by the staff in that division. They have saved the taxpayers millions of dollars, and we think there is potential for even further savings if we look at other publicly funded agencies and perhaps even Crown corporations. To be candid, we are embarked upon a review of that question over time, because the savings have been significant. I think they've been in existence for only a couple of years, having been set up by the previous administration and the previous member for Saanich. That was an innovation that seems to be proving out extremely well.

F. Gingell: You happened to mention the health sector. I wonder if that means that that just covers liability claims. Are we presently self-insuring any buildings for, say, the British Columbia Buildings Corporation, the regional hospital authorities, the universities or the school districts?

[ Page 2512 ]

Hon. G. Clark: I'm just looking at my note here. It's the self-insurance initiative of government, including schools, colleges, hospital programs, the directors' indemnity program and the master insurance program for social providers in the social program ministries. It's pretty broad right now. It is a self-insurance scheme. The funding comes from those agencies. From a narrow Ministry of Finance point of view, it's one of those self-funding special accounts.

F. Gingell: I wonder if the minister could check his briefing notes and tell us whether the British Columbia Buildings Corporation is included.

Hon. G. Clark: I'm not sure. It doesn't say that here. I know, by virtue of some of the hats I wear, that I've instructed a review of Crown corporations generally. I know the Crown corporations don't generally come under this program. BCBC is one of those almost funny kinds of Crowns. They have some expertise and do a superb job, but they are not quite as arm's-length as B.C. Hydro or others, because they are an integral part of government operations. It is possible. I suspect it's not, but I'll provide that information for you.

F. Gingell: In a quick look through Public Accounts, I don't see a provision for claims that may be outstanding. There may be some items under contingent liabilities, but that's not really what I'm asking. I can appreciate that certain claims may have got into the court system, which would be in the contingent liability area. Do you provide for outstanding claims, or do you just treat it all on a cash basis?

Hon. G. Clark: It's in Public Accounts. It's covered through a special account. There is money in and money out. There's no question about it. The special account will tell you what is in the fund. But we do pay out on a regular basis, and that is covered in the public accounts in my view. We use a private underwriting firm, which is managed privately, for those services. That may be part of the confusion -- I'm not sure.

F. Gingell: It's a subject that we can come back to later on.

Hon. G. Clark: To clarify, there's a $50,000 cutoff. So under $50,000 is handled by the private sector; over $50,000 is handled directly by the government.

F. Gingell: Instead of having the normal type of policy that we all have on our automobile or house, where we pay the first $200 or $1,000 of a claim, the province has it backwards; they have the insurance company pay the first $1,000, and it pays everything above that. That's what I thought you said.

Hon. G. Clark: There is a deductible, I believe, and I can get you that information. Claims under $50,000, after the deductible, are handled by the private sector; over $50,000, they're fully paid by the province through this special account.

F. Gingell: I presume -- and would appreciate you confirming -- that the contract for the private sector insurer is put out to public tender. I was wondering how often it is renewed and goes out to tender.

Hon. G. Clark: I'm not sure how often, but I can assure you that it's put out to tender. There is more than one underwriter, I believe. This is a big operation. I can find that information for you. I'm pretty sure that it is only about two or three years old, so there may not have been too many. I can assure you that in the Ministry of Finance in general we have a fairly ruthless and competitive bidding policy, to the point where in many of our operations we disaggregate the business as much as possible so we can have each little piece bid on. I'd be very surprised if that's not the case in the risk management sector as well. It is a fairly new program, so I'm not sure how often segments of the business have been put to tender. I'll certainly find that out for you.

F. Gingell: I'd like to move on to the division of your ministry that deals with the management of public funds and debt. There has been quite a discussion on the borrowing policy of the government. I was wondering if you could start by perhaps giving us a little background on what the practice was in the past, what you're presently doing and what you hope to accomplish in the future.

Hon. G. Clark: There has been no fundamental change in policy. We try to diversify our borrowing portfolio in as many markets as possible. This year we have to borrow $4.5 billion. Some of that is refinancing of the B.C. Hydro debt, some of it is obviously our current account deficit of $1.8 billion, some of it is Crown corporation borrowing generally, and some of it is borrowing for our financing authorities for schools, hospitals and university construction. That's not unusual. It's not bigger than it was last year, but it's bigger than it has been for some time.

The only difference in the borrowing strategy is that the demands.... Two things are happening. First of all, all provincial governments are borrowing extensively -- B.C. certainly less per capita than most other provinces. But when you have Ontario entering the market and having to borrow $10 billion or $12 billion annually, it has a potential to crowd out other borrowers, even though our credit rating is higher, our spreads are higher, and we are strong in that regard. That's something that we have to take into consideration.

Because our borrowing program is bigger than it has been in the past, we want to ensure that we can diversify our borrowing strategy as much as possible. If you're only borrowing a few hundred million dollars or a billion dollars, then it's not obviously as essential that you tap as many markets as possible -- even though my staff has always reviewed where the best place to borrow is.

In recent years we have been borrowing, as I understand it, in the domestic market and also the Euro-Canadian market, using the Swiss Bank as the lead manager in Europe. There have been some funda-

[ Page 2513 ]

mental changes, as I understand it. I didn't know very much about any of this six or eight months ago. There have been some changes in the international marketplace in the sense that there are now global issues; in fact, most issues are global issues.

My staff can kick me if I'm wrong on any of this stuff, but if you do a Euro-Canadian issue then obviously the Japanese and others can purchase it as well. It's not just limited to the European market, although that's where the profile is and the lead manager is. The globalization of this market has been staggering just in the last few years. So many issues are global issues.

We have to be diligent in terms of making sure that our larger borrowing requirements are now managed as prudently as they have been in the past. But our requirements are larger. We have significant competition from other provinces, in particular Ontario, which has huge borrowing requirements that are causing, in some respects, I think, all provincial governments some difficulty.

We're doing extremely well, as you know, in terms of our credit rating, our borrowing ability and the spreads we are receiving, so we borrow at less cost than any other province. That's obviously, in part, a result of our financial position and the staff work that we've done.

We have not borrowed in American dollars or other currencies for, I believe, about eight years; '83 was the last U.S. borrowing. We have just recently borrowed $500 million (U.S.) in the Euro-U.S. market, using the Deutsche Bank as the lead manager. We could have borrowed in the New York U.S. dollar market, but that requires SEC approval and several hoops; the opportunity was there.

Obviously, borrowing in foreign currencies has some dangers, but those dangers are dramatically less than at any time previously in our history, because the markets have had almost revolutionary changes. The markets have gone through changes so that everything is tradeable now. It's easier now to currency-hedge when you borrow, to limit or to eliminate, if you want to, any currency risk associated with borrowing in foreign currencies. I don't believe that has always been the case. It has certainly not always been as easy as it is today.

[4:45]

There are now markets developed for all these financial instruments. We have now borrowed $500 million in United States currency in Europe, and the interest rate is so dramatically less than the current Canadian interest rate that the currency risk is mitigated by that interest rate spread. The Canadian currency would have to drop to roughly 73 cents U.S. as the break-even line. If the Canadian dollar is higher than 73 cents, then we make money. So you can imagine that at the current 83-cent Canadian dollar we are saving the taxpayers millions of dollars in that borrowing. If the Canadian dollar drops, and I hope it does -- there's an interesting conflict of interest -- for economic purposes, then the savings to the taxpayer diminish. However, it's our judgment that 73 cents is so low that we are in a good position. If at any time the Canadian dollar does drop dramatically and precipitously, then we simply move into the market to hedge any currency shift. It costs you some money to hedge, but at any time you can mitigate any impact.

We have to be very prudent, very careful in any foreign currency borrowings. We have not done it for eight years. We have only done $500 million out of $4.5 billion. I certainly think there's probably some room for some further foreign currency borrowing; but on balance the vast majority of our borrowing is in the domestic market and the Canadian market, and that will continue for some time.

F. Gingell: The minister covered a whole series of questions that I had written down in his one response. The $500 million (U.S.) borrowing is for the province, I take it, not for B.C. Hydro. So at the moment you are....

Hon. G. Clark: That $500 million was not for Hydro. If we did it for Hydro, then they would receive a savings, that's correct. I have a note that we saved the taxpayers $8 million a year in interest at the current Canadian dollar exchange rate. That's obviously a staggering number.

I should advise you, because this is an innovation, that this morning -- just a complete coincidence -- we launched our new medium-term note program in Canada. It's the first medium-term note program of any province in Canada. It paid about eight basis points better than the market. That has basically saved us several hundred thousand dollars over three years. This morning we borrowed $50 million in the domestic market in the medium-term note program -- medium-term notes are zero to five years -- and that's been very well received by the market. It's another innovation.

As I say, this field is changing very fast, and new markets are being created all the time. We have superb staff, by the way: Bruce Sampson, who's a director of debt management; Doug Pearce, who's a director of investments. Both sides of the equation are two of the key people in this regard, so we're privileged to have the best treasury staff in the country. That's reinforced every time I speak to someone in that field.

F. Gingell: I take it that you have not hedged the $50 million U.S. that you recently borrowed.

Hon. G. Clark: Canadian -- $50 million (Canadian).

F. Gingell: I'm sorry -- the $500 million (U.S.). You have not hedged that currency exchange. You are presently carrying that risk on the basis that you see the relation to the value of the Canadian dollar. It isn't just my conservatism that makes me concerned about us playing the arbitrage market and believing that we can do better than the market does. I strongly agree with you borrowing in U.S. funds if the interest costs are going to be lowering. I have no problems with that at all, but I really do believe that that action can only be measured if you take in the cost of the options to buy the U.S. funds. I would appreciate your comments on that.

[ Page 2514 ]

Hon. G. Clark: First of all, if we were to fully hedge, there'd be absolutely no advantage. If we fully hedge, then it costs more. That's what the market does. You should remember that the risk is very small, not just because the gap is so large but because in today's market you can always hedge. You can hedge at any time. If we're saving $8 million a year at the current exchange rate difference, then it would be much better for us to hedge a year from now and save that $8 million than to hedge today. We can always move into the market and hedge at any time. It may cost us a little more, but the risk is minimized dramatically.

I also want to emphasize to members of the House that you have to look at this on a portfolio basis. We have $20 billion worth of debt. This is $500 million of that $20 billion, and we have to borrow another couple of billion dollars this year. I agree with you. I am very conservative in this regard. I think you're absolutely right to be questioning me on this in the House. I fully agree with that. I'm very concerned about that. Believe me, the Ministry of Finance staff are very conservative. We have to ensure that we're not putting the taxpayer at risk in this regard.

In a balanced portfolio, there's some room. Given this dramatic interest rate spread, and given the taxpayers' savings of $8 million, there's some room for us to do that. Given the changes in the market that allow us to move in and hedge at any time if there's a problem, the risk is very minimal. We are very confident that we can do that.

I want to assure you again that we have no intention of going out and borrowing billions in American dollars at any time, regardless of the advantages that we may have. But on a balanced portfolio basis, particularly when the competition in the Canadian dollar market from other provinces is like it has never been before.... We are now in there competing against Ontario. There are a lot of Canadian dollar bonds out there that investors are looking at. We have to look at prudently diversifying our borrowing portfolio.

F. Gingell: You mentioned an annual saving of $8 million. I presume that is Canadian?

Hon. G. Clark: Yes.

F. Gingell: So we are actually saving about 130 basis points on our borrowings.

Hon. G. Clark: It was bang on at 134 basis points.

F. Gingell: Do you have any policy about the terms or maturity dates that you are presently borrowing at? Are you borrowing long-term, short-term...?

Hon. G. Clark: The short answer is that we borrow across the whole yield curve. Because interest rates have dropped so dramatically, it's pretty clear that we are trying to borrow longer-term. We do have a borrowing program. As I said this morning, we borrowed $50 million in a medium-term note -- zero to five years -- which was at very good prices. In general we are trying to lock in longer terms at these lower interest rates. We do have a balanced portfolio across the yield curve.

F. Gingell: Do any of these current borrowings require sinking funds? Are we still in the business of borrowing money through instruments which require sinking fund investments?

Hon. G. Clark: Anything over a five-year term and $20 million requires a sinking fund.

F. Gingell: Is that your policy, or is that international bourse practice?

Hon. G. Clark: This is our own policy; this is the government of British Columbia's policy. It's imposed on the Crowns as well. It is the most conservative policy in Canada.

F. Gingell: I take it, then, Mr. Minister, that because this is your policy -- or a policy of the government -- the sinking funds are administered by the government instead of by an independent trustee.

Hon. G. Clark: Absolutely correct. I am the trustee for those, and they're managed by the ministry.

F. Gingell: I think that kind of covers the borrowing side.

In dealing with the investment side, I would be most appreciative of your defending, if I may use that word, the policy that you need to have sinking funds. Because in the normal course of events, it's more expensive to borrow; the interest rates of borrowing are greater than the interest rates you receive from investing.

Hon. G. Clark: There's some validity to that argument, actually, but it depends on the yield curve. Also, I think it's seen to be a very conservative policy. So in spite of the fact that I think you've got a very good point, we've tried to.... Essentially I've just maintained the existing policy, which is a very conservative one. I tend to think that it gives people some sense of comfort at least, anyway, in the government. Some provinces, I'm advised -- I didn't know this, actually -- don't attach sinking funds to all of their bonds. We could re-examine that. But I prefer at this point, unless I'm really attacked by the opposition, to remain conservative in this regard.

F. Gingell: I don't think it's a question of conservatism. I would like to suggest to you the truth of the matter: when you went out to borrow $50 million this morning in your short-term market, part of that was for you to put in the sinking fund. I defy anybody to say that that is not true, because it is. You may very well say that this particular $50 million went to B.C. Ferries or to B.C. Hydro. But in the total scheme of things, when you operate at a deficit, as you will this year -- $1.8 million, assuming bank balances and accounts and everything are the same at the end of the year -- the amount of money you have to borrow this year will be the amount of your deficit, plus the amount of capital expenditures 

[ Page 2515 ]

required for the various Crown agencies and money agencies, plus the amount of money you put into your sinking funds.

Hon. G. Clark: That's absolutely correct, except that the medium-term note program is less than five years, so no sinking fund is required. The term is five years.

[5:00]

F. Gingell: That wasn't what I was saying. I was saying that every time you have to make a payment into a sinking fund, you in effect borrow that money. Whether you borrow it in the euro-dollar market, on the Canadian medium-term market or wherever, every time you put a dollar into a sinking fund, you have to borrow the money to put into the sinking fund.

Hon. G. Clark: That's correct. We have a $5 billion sinking fund right now. That allows us to do debt management in the marketplace as well. It provides a stable market for our bonds, because we can use that to buy and sell British Columbia bonds. It provides comfort to investors. I might also say that the rating agencies are enamoured with it as well.

I agree with you, but on balance it provides us with more flexibility in terms of debt management. It's great comfort to investors and the rating agencies, and it's very conservative and prudent policy.

F. Gingell: But if we've got $5 billion in our sinking funds, we have just borrowed an extra $5 billion to put it there. It sounds to me like a Socred BS fund. The money's there, I know, but it really isn't there.

Moving on from that question, I think....

Hon. G. Clark: There's real money in it.

F. Gingell: It's got real money in it, yes.

Perhaps I could ask the most telling question, which is: have we invested any of our sinking funds into debt instruments of the province of British Columbia?

Hon. G. Clark: It's about 16 percent of our total holdings. We have other Canadian provinces that hold their debt in the sinking funds.

F. Gingell: In fact, part of these assets we have we owe to ourselves. We really could just take a pencil and strike them out.

Hon. G. Clark: To be clear here: it's all netted out in terms of our net debt. There is no phony accounting there. When you see the net debt for the province of British Columbia, that is factored out. There is no attempt to hide anything.

F. Gingell: From the matter of policy, if any of your sinking funds do purchase British Columbia debt instruments for their investment portfolio, do they hold those with the ability to move them and sell them off again at a later date rather than put them in for cancellation?

Hon. G. Clark: Some of them are bond issues that you would buy back and retire, but current practice is not to do that. It's a balanced portfolio. They're marketable securities, and they're traded.

F. Gingell: Perhaps we could talk briefly about your policies on your investment practices for sinking funds, pension funds and other trust funds that the province holds: some $24 billion.

Hon. G. Clark: Sinking funds are money market and bonds investments, and as you know, up until the previous administration all pension funds were solely in the money market and bond instruments. The changes in the last couple of years had a diversification option. In this House, in fact, I requested and the government agreed that no diversification would take place without the support of the pension fund advisory committees.

To date, four pension funds have begun to diversify. They've only started. The B.C. Hydro portfolio is starting to be diversified, B.C. Rail, B.C. Teachers, and I believe one other -- the college instructors. In those four pension funds we have begun to diversify the portfolio, but certainly they're not fully diversified yet.

Obviously the normal rules of pension fund investment apply in terms of any diversification, and the percentage that can be held in certain asset classes is under exactly the same rules that we are applying in this regard, in spite of the fact that a Pension Benefits Standards Act doesn't exist in British Columbia, or at least hasn't been proclaimed yet.

So I just say that we are only now moving to diversify. I don't know how much you would like to know about that portfolio. Obviously these are privately managed, competitively managed. My staff are not engaging in.... Obviously they do the due diligence, and there are some investments, and obviously those take place, but a large part of the diversified portfolio is privately managed on a competitive basis.

F. Gingell: I've something in the back of my mind that tells me that a portion of the diversified funds are in market-indexed securities, and some are in specific investments that have been selected. Perhaps you could advise us on your policy of, first of all, the amount of the funds that might be put into equities, whether there are any ratios or relationships that you want to use on market-indexed units versus outside investments.

Hon. G. Clark: Yes, we do have some policies in that regard. Of the equity portion, it's one-third active and two-thirds passive -- indexed, in other words. Of the one-third active, it is privately managed on a competitive basis. We manage the passive directly.

F. Gingell: Do you have any limits on the portion of the fund that can go into the market?

Hon. G. Clark: There are pension fund advisory committees composed of representatives of the fund. They have agreements with my ministry on those proportions. In the teachers' case, I believe the target is 

[ Page 2516 ]

between 25 and 30 percent in the equity market. That target has not been reached yet, but we are working towards it.

F. Gingell: Could you advise us on the results of the past two years of the active versus the indexed units, the kind of results you've been getting?

Hon. G. Clark: This is the year ending March 31, 1992. We used as a benchmark, obviously, CPI plus 3 percent, which was 4.7 percent.

F. Gingell: Including the 3 percent, or was that 7.7?

Hon. G. Clark: No, it's 4.7 percent. As of March 31, 1992, the CPI was 1.7 percent. The T-Bill, which is something we also look at: 91-day T-bill is 9 percent, as of that date; the private sector pension fund average was 8.7 percent; and my ministry's combined pension fund, 9.4 percent. The money market returns -- I'll give you the entire portfolio, combined pension total earnings versus our benchmarks -- again, it's 4.7 percent for the CPI plus 3 percent; the Russell balanced median, which is, I think, the T-bill account, was 8.7 percent. Sorry, that was the external manager average in Canada, which is 8.7 percent; the composite index was 10.8 percent; and our combined pension total return was 11.4 percent.

As you can see, the Ministry of Finance treasury branch -- all of whose staff have worked here for some time, and certainly predate my arrival on the scene -- seems to have very impressive returns, and has developed a certain expertise, which we're drawing on, and I'm drawing on increasingly for a variety of tasks. As I say, on the debt management side, and on the investment side, we have the best team anywhere in the country in terms of performance. Obviously there are years, if you go back, where before they went into diversification, and were constrained dramatically in terms of what they could invest in, the rates of return were lower than the private sector, which was fully diversified. So now that there is more diversification, we anticipate certainly matching the private sector, and at the moment we're exceeding them.

F. Gingell: Could you give me the rates of return on your active equity investments -- which was the question that I asked, actually -- and your indexed market equity investments?

Hon. G. Clark: I'm not sure how good they are, but if you'll just ask another question, we'll dig that answer up for you.

F. Gingell: Well, the question I was going to ask was actually going to follow from that question. I have been waiting anxiously to hear you come out with the words "14.5 percent," because I have, since you used that number the other day when we were discussing the BS fund, which were just units of the same investment portfolio....

Hon. G. Clark: The endowment fund.

F. Gingell: Yes, the old one. I had presumed that because those funds were invested in units of your trust fund investments these funds would have earned somewhat the same rate of return.

Hon. G. Clark: To clarify a couple of things, the 14.5 percent rate of return was as of December 31. We don't have the March numbers. Obviously the rates of return are dropping dramatically with interest rates. On the Teachers' Pension Fund, asset class returns last year, as we started to move in this field, were not great. On the passive Canadian equity the return was 0.3 percent. The TSE 300 Toronto index was a little over 1 percent. The active Canadian equity, which the index for would be TSE 300 plus 200 basis points, was 3.3 percent. The active Canadian equity, which is privately managed for us, was 2 percent. In terms of the '92 year we did not, in those two areas, beat the private sector composites.

[5:15]

F. Gingell: No, Mr. Minister, you didn't. You also didn't beat what the results would have been if you'd left the money in the bond market.

I must admit that I really haven't had any great involvement in pension funds except to be the trustee of a private corporate one. It always seemed to me that the first promise that you were making in a pension fund was to make a monthly payment. The most important thing to do is to ensure that you have the funds available to make that payment. Poor, private, industrial corporations, of course, can't afford to have inflation adjusted or best five-year earnings or any of those kind of things, because they are almost unfundable. Only governments can produce those kinds of pensions safely. One was more interested in making the rates of return and ensuring that the funds would become available. Have the results of these equity investments from that particular measure, which I think you said was to December 31 in this year...?

Hon. G. Clark: March 31.

F. Gingell: This amount of 14.5 percent that we heard the other night was to the end of December. For the last three months all these funds had a negative income of 4 percentage points or 3 percentage points to bring it down from 14.5 percent to 11.4.

Hon. G. Clark: I think it's important that this aggregate between the Endowment Fund and other funds.... I realize that this is, in some respects, a managed subset. But the TSE was down 2.1 percent in that last quarter. We haven't got the numbers for the endowment fund, but obviously the rates of return are coming down, and it will be significantly less than 14 percent. But our borrowing cost is coming down as well.

First of all, I want to make a general statement. I think it would be a big mistake to say that because the rates of return are dropping precipitously in the equity market, therefore we should never be in the equity 

[ Page 2517 ]

market. You have to look at it over an historic period. The equity markets, as you know, have had dramatic and absolutely phenomenal rates of return. The fact that we or the previous government finally decided to move into the equity market at the bottom of the cycle is clearly unfortunate, but it's not reason to panic or to rush at all in any way. It's pretty clear that over time the equity markets have a great return.

I want to make one further point, which is that in my view it is imprudent -- not conservative -- to just put money into the bond market. In fact, it's conservative to diversify your investment portfolio into the bond market, money markets and into equities, foreign and domestic, passive and active. That's in fact the conservative approach. It's a more conservative approach, because you have diversified your investments, and it has historically generated significantly higher rates of return.

But it is true -- and I don't have any hesitation in saying it -- that in the last quarter, and even in the last year, the equity component has done much poorer than the bond market, and if we had not diversified at this point last year we would have done better. One of the reasons the endowment fund has a higher rate of return is because it was largely in the bond market, and so it had a higher rate of return. You have to look at these things, it seems to me, over time.

F. Gingell: I don't have any problem with that. I was just trying to point out to you beforehand the different philosophies that you might think about in relation to pension fund investments versus an endowment fund investment.

On this 11.4 percent rate of return, or the 9.4 percent that you earned on your money markets: is that the interest portion only, or does that include any capital appreciation caused by interest rates dropping?

Hon. G. Clark: That's the total return, including capital gains and everything. I'll just check that, but I'm pretty sure it is the combined rate of return.

I agree with you that there are different standards for the endowment fund and for the pension fund. I also make the point that each fund has a different asset allocation, and that's in part determined by the advisory groups and by my staff. On the endowment fund, it's pretty clear that we have different standards, because we have already decided that $100 million of the $500 million will be put into merchant banking and venture capital. That's an appropriate place for it as opposed to experimenting, if you will, with pension fund money, and we don't have any intention of doing that. That's why the endowment fund allows us to be more creative and to fill some gaps in the financial markets, and we anticipate getting a market rate of return. There are more risks associated with it, and that's why we're matching it with the private sector.

I am advised that all of our reporting is market-value-based, which includes income and capital gains or losses.

F. Gingell: I must say I'm a little taken aback, because if I think back to what interest rates were in March 1991, surely the bond market appreciated substantially over that period of time. I see that people are opening books. I'd be interested in the bond market index for Canadian bonds year over year.

Hon. G. Clark: I appreciate that this is sometimes hard to follow. It may be my fault. Those were the money market returns, not the bond market returns. I'll give you the bond market returns if you like. Let me give you the last two years, because you know what the interest rates were then. The CPI plus 3 percent, 7.1 percent; the Russell bond median, which are the external fund managers, 16.7 percent; the ScotiaMcLeod bond universe, which is an index, was 16.8 percent; and the combined pension bond return was 17. 5 percent.

C. Tanner: Just a couple of questions for the minister. First of all, is there any comment on the government's investment policies and the fact that the advisory committee for the largest pension fund of all, the government employees' pension fund, apparently does not go along with the same investment policies that you do?

Hon. G. Clark: I think that the previous government moved into diversification without adequate political consideration. There was a fear on the part of some pension fund trustees that the government would be playing with their money and maybe investing it in the Vancouver Stock Exchange. Remember that the previous minister was a great proponent of that. So there was a reticence on the part of advisory committees to allow the government to diversify.

We've been in office for six months. To be candid, I haven't pursued that with those pension fund advisory committees to see whether they want to diversify -- maybe under some different rules to give them a greater level of comfort that there won't be any shenanigans with respect to diversification. I think that was the fear, and certainly when I was in opposition, that was communicated to me.

I'd like to say further that it's not a particularly good time to try to convince people to diversify, given the rates of return on that asset class within the pension funds that are diversifying. In that respect, I think it's a comment on the concern -- rightfully -- that pension fund advisory committees might have that the government is not acting prudently -- or is acting politically, if I could use that term, and not in their interests. I don't think that's well founded at this point. I can tell you that that's not well founded, because I would never countenance that as an individual. That is their prerogative, and I understand their concerns.

It's my hope that over the coming months and years, we can work with those pension fund advisory committees and structure it in such a way as to give them more control over how we might move in the diversification sense, so that they can have a degree of comfort. I think it's pretty clear that it's more conservative to have a diversified portfolio, and also, over time, all of the evidence shows that you can get higher rates of return.

[ Page 2518 ]

C. Tanner: Could the minister tell us whether in his debt-management or investment policies he's made any major -- or even any -- changes to the policy that was there before he took office?

Hon. G. Clark: I have initiated some changes. The medium-term note program I talked about is brand new, and that's an initiative which my staff brought forward. We had a full policy discussion, and we've just now started it.

I think it's fair to say that the U.S. borrowing issue we just did, because it hasn't been done since '83, is different. In other words, the diversification of our borrowing is something that I have pursued more aggressively. I think I went over this. But the main motivation is twofold: one is that our borrowing requirements are larger than they have been, and secondly, the competition from other provinces is so huge now that diversification is more prudent.

Finally, while we did move the endowment fund, of course -- it is in fact the proceeds from the privatization fund -- the fact is that we are providing up to $40 million in merchant banking available and matched with the private sector. We hope to provide $30 million to the B.C. Trade Development Corporation, hopefully matched by the private sector or at least assured. Those are innovations which I have been -- I guess it's fair to say -- driving in the ministry. My staff has had lots of ideas that can save the government money, which the previous administration had some concerns about. I have concerns about it as well, but I am working hard to see if there are other innovations to save taxpayers money. For example, we are looking, as you may know -- I think it's a bill before the House or I may be announcing this -- at the possibility of us borrowing on behalf of social housing agencies. This will dramatically lower the cost of borrowing for those agencies. That hasn't been done before. We're looking at other opportunities to use at the Commonwealth Games: the ability to provide access to our facilities -- which is not really a cost factor -- and provide services to fully funded public agencies.

On this side of my portfolio there have been some innovations, but on balance, the main thrust is similar to what has taken place. In fairness to Mr. Couvelier, the move to diversify was under his administration. I've continued it. Some of the other innovations have taken place under Mike Costello, who was the assistant deputy minister for the last five or six years, and who is now my deputy minister. He obviously has a keen interest and has some ideas in this area. We're pursuing them fairly aggressively.

C. Tanner: Would it be a fair comment if I said that I as a taxpayer in this province -- not as a member of the opposition -- would be more reassured if the new Minister of Finance had come in and sat pat for a year before he started making innovations; that I would feel more secure with a new government that hasn't been in government for 20 years just sitting and holding the fort and not making any moves?

I do appreciate the minister's candour. I'm not knocking him for that. I'm just saying that perhaps this wasn't the year to be making any moves; just hold the fort and see and get a reading of the situation before making any moves like that. Isn't that illustrated by the fact that the largest employee group in this province is not with the minister in his financial investment portfolio?

[5:30]

Hon. G. Clark: Obviously you have a right to your opinion. My view is that each of these decisions stand public scrutiny very clearly, and the ministry, under my instructions, does not in any way act imprudently. In fact, I would say the reverse. The decisions that we've made have not been fundamental decisions which should give anybody pause for concern. Rather they have been incremental decisions, each of which bear public scrutiny -- and I'm certainly delighted to debate them -- and which have saved the taxpayers millions of dollars. If you have any quarrel with anything we've done, I'm quite delighted to debate it. Unless you have any specific quarrels with the things we've done, I don't see how you can say that it would have been better to stand pat.

There are innovations in the marketplace that we're now trying to take advantage of. I don't want to take credit in the sense that there's been some fundamental shift. Things have been under review. American borrowing has been done by the government. It's not a revolutionary idea. We have had prospectuses in place in order to allow the staff to keep that file alive for the last eight or nine years. It's not novel. It's just that the opportunities are there to save millions of taxpayer dollars, and I'm delighted to take advantage of those opportunities. I don't accept the criticism that I should not have done that; simply to sit back for a year and miss the opportunity to save the taxpayers money.

F. Gingell: We have now come to the end of the questions in relation to the investment and borrowing of funds. I really appreciate you having your officials here. If you like, Mr. Minister, we could carry on for a little while. I was thinking that I would deal with a subject that I'm not supposed to deal with, like B.C. Hydro. I appreciate that it's not really in your mandate, but I did have a couple of questions. Perhaps it is proper now that the Crown corporations secretariat reports to your ministry. The Peat Marwick report talked about concerns that maintenance programs had been cut back in earlier years. The suggestion was to enable them to increase their dividend to the provincial government. I was wondering what policy directives you may have sent out with regard to that particular subject.

Hon. G. Clark: That is a superb question. Let me put it this way. There have been extensive discussions among Peat Marwick, B.C. Hydro, my staff and the Ministry of Energy on this subject, and it is not resolved. It's my view that B.C. Hydro can and should pay a return to the Crown for their investment over time. I'm not totally satisfied with the current formula for dividend payments. I don't mind discussing this, but no decision's been made. In fact, I guess I could say that as we speak I'm grappling with this question on the 

[ Page 2519 ]

dividend payments, and have been since day one. I would be interested in the member's comments on that. I think that dividend policy is an important one, and one which has some impact.

Peat Marwick has made some recommendations in that regard with respect to '91-92. I have not yet agreed with the Peat Marwick recommendations; we're still reviewing them.

F. Gingell: As a matter of fact, my question was really focused at this point on the question of ongoing maintenance costs, because we had the impression that there'd been a political directive from the previous government: cut back on maintenance and reduce your expenditures for the purposes of increasing net income and increasing dividends.

Hon. G. Clark: I'm afraid that the member will have to ask the Minister of Labour that specific question. Let me, if I can, just say that Peat Marwick concluded that there was a political directive, essentially, on the question of maintenance. How much is being debated by B.C. Hydro. I think it's fair to say that B.C. Hydro feels that Peat Marwick has overstated the maintenance deficit. They're debating that question very vigorously. I'm only tangentially involved as a result of my concern over the dividend question, because it impacts on us fiscally and because I do chair the Crown corporations committee secretariat. I really think we'd better approach the minister for details like that.

F. Gingell: Coming back to the question of dividends, which I have made a couple of notes on, I had a note that the 1991-92 original estimate has been adjusted in your current budget and that the amount of the dividend for the year just ended, March 31, 1992, will be $60 million, and in your budget for the year 1992-93 you've increased that to $147 million. I was wondering if you could explain that for us.

Hon. G. Clark: I may have to get this question repeated, but Peat Marwick's recommendation was that the dividend should be $60 million in '91-92, and that there is a formula in place which we inherited, which, I believe, is 75 percent of profits. It's 75 percent of net income. There is some debate as to what constitutes net income as a result of some of the BCUC decisions in terms of a rate stabilization fund.

I frankly think that the Crown should receive a return on net income before -- this is my own view -- any rate stabilization account fund is there, because I think it's a pure profit on the basis of this massive investment that the public has in that utility. We are reviewing this question. It may be that we will change the dividend formula so that it's rational, clear, debatable and justifiable.

For example, one area that I think has some merit is to have a rate-of-return target like the private sector. Right now the rate of return for B.C. Gas is 13, 14 percent, which, by the way, is too high. I could comment on that.

Interjection.

Hon. G. Clark: Those are after tax, I think, yes.

Regulated utilities have these cycles, as you know. With inflation they virtually get significant windfalls, and they kind of, as they used to say in economics class, "sticky downwards," but I would be very surprised if the rate of return for B.C. Gas or any regulated utility doesn't come down dramatically as a result of what's happening in inflation.

In any event, it may be that B.C. Hydro should be on a rate-of-return formula. One of the things I've said repeatedly, publicly and privately, is that for these Crowns, if they want to be treated like private sector corporations and we want to drive some efficiency gains in those Crowns, putting them to some kind of test like that and making them subject to the Utilities Commission like the private sector has some real appeal, and in fact would increase the return to the government if you had some target like that -- which would have some appeal to me. The problem with it, of course, is that you don't want to drive rates up dramatically or precipitously in so doing. I think it's a very fruitful area for public discussion.

I'm not particularly satisfied with the current formula. The Peat Marwick report sort of raised some of those questions for me as we looked at some of the manipulation of the dividend, and I'd rather move it to a more rational basis. I also think the public deserves a return on its investment in that corporation.

F. Gingell: I'd like to suggest to you, before you finalize any thoughts on this, that the amount transferred into the rate stabilization account is really the only account where B.C. Hydro has overbilled its customers. It is really the amount that B.C. Hydro has overbilled your home, my home and all the other people's homes. Because the amount that goes in there is the amount over and above the anticipated results.

Hon. G. Clark: Well, yes and no. This year, as I understand it, there are tremendous export earnings. That's where the windfall is. So the question is -- and this is interesting -- if B.C. Hydro is making tens of millions of dollars on export earnings, why should that go into a rate stabilization fund to subsidize rates? We have the second-lowest hydro rates in North America. While there are some benefits to that for economic development -- I am not going to enter into that debate -- at the same time, if there's a windfall profit as a result of export earnings, maybe that should go to the owner of the utility rather than to subsidizing rates.

F. Gingell: I appreciate that we really are getting off the subject, but it does make for an interesting discussion. I appreciated that you used the word "utility." It is a utility, so after all, if there any earnings from all the facilities, dams and hydroelectric generating units that were built for the people of British Columbia -- and they have been paying for all these through their rates -- by selling excess electricity to the States, surely that is recovery against those costs first 

[ Page 2520 ]

and would therefore, as a utility, allow residential rates to come down first.

Anyway, that is really a side issue. The real issue here at the moment is that under the previous administration the estimates for 1991-92 showed the dividend from B.C. Hydro to be $145 million. The Peat Marwick Mitchell report said that they were cutting back on their maintenance costs; they were not living up to their commitments to safety and the normal replenishment and maintenance of their system; therefore you should reduce the dividend to $60 million. There will be an amount of $85 million or so, depending upon all the various factors. But in this year's budget you have put the estimated dividend back up to $147 million. The reason for my questions was a concern that you would perhaps be pushing B.C. Hydro to be cheap on their maintenance or any other choice expenditures in order to increase dividends.

Hon. G. Clark: That's a reasonable question, but I don't think it's accurate. The $85 million is a one-shot backlog of maintenance; that's what Peat Marwick said. I don't know how much is public information -- I'll be a little careful here -- but I can assure you that B.C. Hydro is making significant profits.

This happens in more than one area of the budgeting process: you put an estimate in and the estimate changes over the course of the year. As I understand it, in B.C. Hydro's case they put an estimate in previously, and Hydro said they may not be able to pay it. These kinds of things went around. That's why, in fact, Peat Marwick came to the conclusion that they basically said they would have to pay it regardless. I think I can assure you that I don't anticipate any problems with receiving at least the amount that's in the estimates, given the fiscal situation of B.C. Hydro. Again, these things can change. But there doesn't seem to be any problem there at the moment.

[5:45]

F. Gingell: If you want to know Hydro's current account results, phone me afterwards. I'd be pleased to let you know what they are.

I did want to ask some questions about Power Smart. I'm wondering whether that's appropriate here or if I should leave it for the Minister of Labour.

Mr. Minister, you are perhaps aware that there has been an ongoing discussion between the comptroller general, the auditor general and B.C. Hydro about an item called "preferred funding." It arises from the sale of the Hydro gas division to what was Inland Natural Gas, now B.C. Gas. The provincial government wanted a portion of the proceeds after the repayment of debt to go into that privatization fund. They did not have any money, so the province loaned them the money to pay the money back. This has been handled in a manner such that the provincial government is treating it as an amount receivable from B.C. Hydro, although there is no sinking fund requirement. B.C. Hydro is treating it as capital. I'm not sure how the Utilities Commission treats it for rate-setting purposes. I think they also treat it as capital. But clearly the matter should be sorted out. We should stop playing games with accounting matters of this nature. I was wondering if I could get a commitment from you this evening that this will get sorted out.

Hon. G. Clark: Yes, this is something we inherited from the previous government, and it's weird. We'll be sorting it out; I give you that commitment. It's important also to know that there's no cost to us. This is not a cost item or anything else. Just in the last few weeks, actually, we've been reviewing it, and I anticipate we'll be able to fix that.

F. Gingell: I appreciate that commitment.

When one looks at B.C. Hydro statements for the year ending March 31, 1991, there was a substantial increase in the water rate rentals in that year.

Interjection.

F. Gingell: No, this is prior to. I'm wondering if there is any further increase in the year 1992. There have been so many orders-in-council changing those kinds of things.

Hon. G. Clark: I may have missed it, but just for the member's clarification, there is a water rental, which is indexed, and the previous administration froze the water rental rates by order-in-council. When we came to office, early on -- I guess it was November or December, just having taken office -- there was a request that I pass another order-in-council freezing water rentals, and I chose not to do that. In other words, it's automatically indexed, and I just chose, given the deteriorating fiscal situation.... I thought the opposition would attack me for artificially inflating the Socred deficit. So I let the water rentals rise as they would have otherwise, and in fact, the Socred deficit in '91-92 was reduced by several million dollars as a result of that change.

So the fact is that there is an index formula, and it's going to continue this year as well. At this point I don't anticipate bringing in a freeze again on water rentals. You should know that it will be very modest this year, I suspect, and it's part of our forecast revenue, so any change would be required....

I also want to make the point very clearly that the Minister of Energy, Mines and Petroleum Resources is really the minister dealing with this question, so I shouldn't be so cavalier about it; it's really something that's driven by them. But it has some fiscal implications, so I try to involve myself.

F. Gingell: It really does hurt me to advise you that B.C. Hydro is going to suffer one substantial increase in costs for the year 1992-93: it's called the corporate capital tax. That's going to cost them quite a bit of money. Do you intend to have B.C. Hydro apply for a rate increase based on that increase in costs?

Hon. G. Clark: As a Crown corporation, it's completely their decision on that question. Any rate increase would be, I think, less than 1 percent to pay the corporation capital tax. That is certainly a possibility. It 

[ Page 2521 ]

certainly wouldn't surprise me if they did that, but to do otherwise, to exclude Crowns, is not good public policy when you're dealing with these tax questions.

F. Gingell: I'm sorry, I didn't hear.

Hon. G. Clark: I just said that to exclude Crown corporations from a tax I don't think is generally good public policy. So while I'm not happy with that, it may result in a half a percent increase in Hydro rates required. I'm not sure.

F. Gingell: I, in fact, have come to the end of the questions that I had on B.C. Hydro, and unless anybody else has any on Hydro, I'd be happy to second the motion that is perhaps appropriate at this time of the day.

Hon. G. Clark: I ask the House's indulgence. We've been going through that list, and I've enjoyed the debate. Is it fair to say that the Crown corporations secretariat is the only area left for discussion? If that's the case, member opposite, we could continue. I would really prefer, with the House's indulgence, if we can complete all the estimates with respect to Finance with the exception of that, which I understand is an area that the Leader of the Opposition and the leader of the Social Credit Party would like to canvass with me. We could do that on Monday. I'm prepared to do that and adjourn this debate until Monday, but I would like to clean everything up except for that if that's possible. If you have hours and hours, that might change my thinking. Could you give me some guidance on that?

F. Gingell: The other subjects that I would like to canvass with you are some pension questions that won't take particularly long.

Interjection.

F. Gingell: I thought we had canvassed that.

I did wish to canvass a few questions on pensions. I wish to canvass a few questions on the B.C. Securities Commission. They're both relatively short. The Financial Institutions Commission, again relatively short; the Credit Union Deposit Insurance Corporation, again relatively short.

Hon. G. Clark: This is not really the subject of the debate, but I am, in some respects, in your hands. We could do those Monday, and I could fly people over from the Securities Commission and the Financial Institutions Commission, or I have my policy staff in those areas here, and we could canvass them now. I'm prepared to have staff come over from Vancouver if you have substantive questions in that regard. That's certainly no problem. But if that's okay, we could canvass them for half an hour now. I feel comfortable that we have staff here who could answer any questions you might have.

F. Gingell: I take it then that you weren't planning on us carrying on tomorrow. I was hoping that you were not planning that.

Hon. G. Clark: We're sort of debating this as we go. I don't have the power to.... The House Leaders haven't discussed this question. We have some options. We could do some bills tomorrow if we've completed Finance with the exception of the Crown corporations secretariat, and if we have the agreement of all parties. I'm fairly flexible in this regard. I don't mind debating my estimates again tomorrow or Monday. It just seems to me if we've come this far -- and we've had quite a few hours on this subject -- that if we could do another half an hour and complete it today, it might be desirable for all members. I know what it's like being on the other side. It's easier on this side, in fact, because we do have staff. So in some respects I'm prepared to be flexible to meet any agenda you have. I gather there are a couple of questions from other members. If it's convenient, and if there are any questions which cannot be answered by my staff here, we could pick them up tomorrow, Monday or whenever is convenient.

F. Gingell: I would suggest that we do carry on now, and if there is any particular subject.... I have some relatively short ones. I know that my friend from Surrey-White Rock has some questions. Would you like to canvass them now?

Hon. G. Clark: For technical reasons, as you know -- for the House to extend sittings -- I'm going to move the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

Committee of Supply B, having reported progress, was granted leave to sit again.

Hon. G. Clark: I move the House recess for five minutes.

Motion approved.

The House recessed at 5:55 p.m.

The House resumed at 6:07 p.m.

The House in Committee of Supply B; R. Kasper in the chair.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

On vote 35: minister's office, $325,213 (continued).

Hon. G. Clark: I have with me Neil Muth, who is acting director of the policy and legislation branch, where the policy is generated in regard to the work done by the Securities Commission and Financial 

[ Page 2522 ]

Institutions Commission. You should know that the original acts, which are massive bills, were driven by Neil and the staff in that division, so they are intimately aware of the details. If there are any current or contemporary questions regarding the Securities Commission's ongoing or current activities that we can't answer, we'll bring Securities Commission staff over on Monday and answer them then.

F. Gingell: It has been interesting to read some of the things in Hansard that the minister said about the Vancouver Stock Exchange when he was in opposition as the second member for Vancouver East. In fact, it makes fascinating reading. I was wondering whether times have changed, whether you see these things differently now and whether there has been any change in policy. Perhaps you would start with a statement with respect to that matter.

Hon. G. Clark: I think if you did read Hansard from the last five years -- and I wouldn't wish that on anybody -- and my remarks, you'd see that the tone of the comments of both me and the now Minister of Labour changed quite significantly. The advent of the Securities Commission took place early in the mandate of the Vander Zalm administration, and I and my colleagues -- particularly myself, I guess -- were very critical about the enforcement of regulations governing the Vancouver Stock Exchange. But you may have noticed that in the last year of the Vander Zalm mandate it was quite clear that the Securities Commission had made great strides in cleaning up the Vancouver Stock Exchange. In that respect, I'm delighted with the work of Mr. Hyndman and his staff at the Securities Commission. I have made one recent appointment to the Securities Commission: Ravi Hira, who is a superb addition. There may be a few more to come. They have done a good job.

The Securities Commission has been aided by the fact that the market had a downturn. Tough enforcement, combined with a poor market, moved many of the less savoury people out of the Vancouver Stock Exchange. The great challenge facing the Securities Commission is that as the market turns around, some people who have left the market may try to come back in and take advantage of a hot market.

My efforts, as government, have been to support the activities of the Securities Commission as aggressively as I can. There are amendments to the act, but I know we're not supposed to speak about those in committee. My colleague across the way has been briefed on those amendments, which are designed to toughen up the Securities Act. I can tell you that I spoke to staff there, and they are acutely aware of my concerns about activities on the margins of the Vancouver Stock Exchange. They realize the enormity of the challenge facing them if the market really picks up and many of the speculators and less savoury elements re-enter it. That is something which we're watching very carefully.

It's my view that great strides have been made in cleaning up the Vancouver Stock Exchange by the exchange and the commission, and there has been steady and significant progress over time. Obviously more work can always be done in this regard and will always be necessary. It will become more acutely important to be vigilant if the market really starts to heat up. That's when we'll have to be very careful. Again, I'm very supportive.

I think you'll find that while I was obviously critical in the past, our remarks were generally supportive of the commission, at least in the last couple of years. I'm delighted now, as the minister responsible, to encourage them to continue their good work and to support them with legislative amendments and changes required to make sure that we can continue the tougher enforcement of regulations at the Vancouver Stock Exchange.

F. Gingell: I have also, in my short term here, got a sense that the Securities Commission is very responsible. I'm really interested in the ways that you see the government assisting them and ensuring that they have the resources to do the job that is so important.

We recognize that the Securities Commission is self-funding. One presumes that if they do bring on more staff, the amount of work that can be handled will just be done a little faster. Have you given any instructions about the size? I believe this year's budget is basically the same as the previous year. I wonder if the Securities Commission has received everything they require.

Hon. G. Clark: As I understand it, it's a 3.5 percent increase. This is a discussion that we've had for some time. I don't want to revisit it, but this is a special account problem. They're fully cost-recovered. The money they charge goes into the special account. But in order to spend money out of the special account, they need Treasury Board's approval. Any spending out of that account increases our deficit. So while they're fully cost-recovered, they have some difficulty having the flexibility to perform the job.

[6:15]

If you recall this discussion, what would be ideal is for the Securities Commission to be able to hire more staff as the workload picks up -- which happens when the market gets hot -- and then lay off staff if the market is slower. To be more creative, the Securities Commission may want to charge more money to expedite someone's application. The rules that we have inherited are not flexible enough right now to really put these operations on a kind of profit motive -- a way to have the flexibility to improve service. You have the situation now where if they want to raise rates to the industry and improve service, in many cases the industry might like that. If they come to me and ask me to raise the rates, I'll say yes. But when they want to spend a whole bunch more money, I'll say: "Wait a minute here, you've got to compete with Health and Education and everybody else." This is this whole question of special accounts. We are reviewing that as part of the Peat Marwick thing, and I'd like to be able to give the Securities Commission the flexibility to do a good job regulating but also to service their clientele. If we're going to charge the industry for that service, then they should be able to get service. If they want to 

[ Page 2523 ]

improve service and the industry wants to pay more to improve it, then they should have that flexibility, in my view. If they want to charge more to have an expedited service, then we should be able to do that in a market sense. Currently that's not quite possible. However, what was possible is that we did provide an increase of about 4 percent, which is about twice the rate of inflation. That does allow the Securities Commission to improve their service somewhat.

I'm a bit worried -- I don't mind being candid -- that if the market gets very hot, they're going to require more resources to do the job. There is a mechanism, a special account, that allows them to do that, and I'm going to try and make sure it happens. But it's not as clean as it might otherwise be.

F. Gingell: I think the way the accounting system works is that the revenues the securities exchange earns finishes up in the revenue stream. In the end the deficit is not increased.

I did have a series of questions with respect to interjurisdictional problems that became particularly apparent to the people of British Columbia in the Doman stock question. We'll describe it in that fashion. I understand and I appreciate that the bill is coming through. Now that it has been tabled, that will allow interjurisdictional disputes to be more appropriately moved along. Has this minister given any instructions to the Securities Commission with respect to the pursuit of any particular cases that are presently under their investigation?

Hon. G. Clark: I remember being annoyed when Mel Couvelier used to answer this way, but I'm going to do the same thing. I have to be very careful in this regard. The Securities Commission is a quasi-judicial body. The Bennett-Doman case is currently before both the courts and the commission. It would be totally inappropriate for me to comment, as much as I would love to comment on that question or other questions. In a general sense, the commission keeps me informed of their activities. They seek my direction in a confidential way if there's a policy decision to be made. But they are and have to be essentially a quasi-judicial body. I appoint the members to the commission. I have made one appointment since we've come to office, and there may be others. In that respect it's not totally arm's-length, I suppose. I just have to be very careful here because that particular case is a subject of enormous litigation. I really can't comment on any instructions or discussions I've had with the commission on that matter -- or on any matter, for that matter.

F. Gingell: I understand the situation there. Would you also, Mr. Minister, please make a non-comment on the Pezim case and whether that will be proceeding to higher courts?

Hon. G. Clark: Just to be very, very safe, I'll read to you: "As steps are being taken to seek leave to appeal to the Supreme Court, comment would be inappropriate." It's my remarks from the Securities Commission, and I take them very seriously. I just can't comment, much as I would love to.

F. Gingell: I'm really pleased that I did ask the question, because I would hate to think of all the trouble that they've gone through to type up the response, and then not have the opportunity to use it -- that would be terrible.

F. Gingell: I understand that certain senior staff people on contract are on contracts that expire shortly. Do you have any news for us in that area?

Hon. G. Clark: I'm terribly sorry, I didn't quite hear the question. The Minister of Government Services is here, so if you have questions on the registrar.... We may try to seek him out, I guess, before we adjourn this debate, if it's possible.

Could you repeat the question?

F. Gingell: Senior staff members at the B.C. Securities Commission are hired on a contract. I understand that those contracts expire shortly. I wonder if you have any news for us in that regard.

Hon. G. Clark: No, and I must say that I'm very disappointed that we're losing Wade Nesmith, the superintendent of brokers. I did talk to him and expressed my disappointment. He has done a first-class job on the Securities Commission. In some cases in this regard, you improve in this regulatory quagmire the more you do it. But I don't have any announcements to make. I think it's premature, anyway, because Mr. Nesmith has not indicated that he's leaving. In fact, I think the press misinterpreted his remarks. I believe the contract does not expire for some time, so we have ample time to recruit another person or try to convince him to renew.

F. Gingell: You did say just now that there has only been one new appointment to the commission. I recognize that appointment to something like the B.C. Securities Commission shouldn't necessarily come under gender equality, minorities and all those things, in that there is particular knowledge, experience and skill required.

Interjection.

F. Gingell: I'm trying to get me into trouble.

Could you give us the assurance that the appointments that will be made in this particular commission will be made by you and your office -- perhaps without reference to any organization that may be set up to deal with recommendations for appointments to other boards that are filed as technical and specialized?

Hon. G. Clark: Let me put it this way. The board and commission appointments made by the government.... It is not one that foists appointments on ministers. That is an appointment that cabinet makes on my recommendation.

[ Page 2524 ]

What is important to realize is that in the Ministry of Government Services office is a repository of people who are requesting to sit on various boards and commissions. Hundreds -- maybe thousands -- of British Columbians have written in and said: "Gee, I'd like to be on the ferry board." In fact, the member for Saanich has recommended someone, or suggested a region that's not represented, and I have that on file. If there's a vacancy on the ferry board, for example, I'll go to the Ministry of Government Services and say, "Do you have names of people who have asked to be on it," so we can review it. Likewise in the Securities Commission.

I agree it's a technical area. I don't think there are thousands of people applying or asking to be on the job. I don't think it's likely that this agency in government is going to assist in recruiting people in this area. I cannot give you a commitment that we won't review that, because my preference would be that if there is a vacancy on the Securities Commission, I will seek the Ministry of Government Services' help by saying: "Are there people who have asked to be on it, and what are their qualifications?" I might seek their guidance or assistance to search for people. It's not a political exercise in a big-P sense. It's trying to find people who are qualified.

This is more challenging than I thought before I got elected, because they don't pay very well relative to the private sector, and it's hard to get practising lawyers or the like to take the job because they give up enormous income. In fact, the one appointment I have made, Ravi Hira -- just a superb appointment -- is giving up thousands of dollars of his own income to take the job because he feels he can accomplish something and the experience and all the other reasons. But that becomes challenging.

So what ends up happening, and this is true in the Financial Institutions Commission as well for a variety of reasons, is that you tend to look for sort of retired people or semi-retired people who may have expertise and a wealth of experience they can apply to the job. But it's a little more challenging than I thought, and I have no hesitation telling you that I take it very seriously. It's an appointment that I recommend. Obviously it's a critical one to ensure the integrity of the operation and the government generally in terms of credibility. We want qualified people. I'm not going to tell you that I won't look at all the options available. If people have written to the government and asked to be appointed to that, that doesn't come to me, that now comes to the Ministry of Government Services for review. I may get a copy, but there's a repository there, and I think that's helpful to make sure we get qualified candidates.

F. Gingell: I must admit I am a little more comfortable about the situation than I was.

I'm not really sure if this particular question is relative to the B.C. Securities Commission or the Vancouver Stock Exchange. I have become concerned on various occasions over the years when funds that have been raised by private and public placements on the Vancouver Stock Exchange and approved by the Securities Commission.... You really don't have the feeling that the money is being spent in a sensible fashion. There's an understatement for you. Are you in your responsibility for the Securities Commission, or the Vancouver Stock Exchange, or both, planning on any policy directives that may tighten this particular area up or setting a set of guidelines for what is not acceptable in the way of expenditures for entertainment and those kind of things, which on occasions can be carried to ridiculous lengths?

[6:30]

Hon. G. Clark: First of all, let's be clear that the Vancouver Stock Exchange doesn't have to heed any directives that I give them. There's nothing active in that respect, although I have met with them several times, and they understand my concerns.

Secondly, you're not going to protect people, nor should government try to protect people, from a stock exchange that people go into with their eyes open, investing in a venture capital exchange like the Vancouver Stock Exchange. It's a high-risk venture. People lose money, and shenanigans and skulduggery take place. That always happens, especially in a venture exchange. Philosophically, what you want to do is have tough rules that are enforced and open disclosure of the facts. Rather than say, "We're going to police it and then tell you can't invest in this company, because we don't think the directors are spending your money wisely," we simply try to have a policy, a government regime which has full disclosure so that people can go in with their eyes open. That's the best you can do. You're never going to perfectly regulate a venture capital exchange. By its nature, it is high-risk. By its nature, you have people who are trying to raise money for obscure and weird and wonderful things. I think if you're going to have that exchange -- and we are committed to maintaining the exchange and cleaning it up as best we can -- then you're really constrained in your ability to protect people from greed, I guess -- for want of another word.

We are actively monitoring it. A lot of the worst elements have left the exchange. We want to keep an open-door policy with the exchange. We keep them informed, and we make sure that the commission has the resources to police the exchange and to clamp down on nefarious dealers. But at the end of the day in a venture exchange, you're going to have people who are trying to exploit the situation. All you can do is try to make sure the rules are clear and that people know the risks associated with their investment.

F. Gingell: In your report, which you appreciate is a year old, there was a discussion on page 39 -- if you have it there -- with respect to the commission committing some resources to a communications education program, so that the investing public will better know of their rights and responsibilities. I was wondering whether that program has moved forward at all, and what is planned for the future.

Hon. G. Clark: Yes, it has. This is again in keeping with what I have just said in terms of trying to make sure the information is available. Also, they have 

[ Page 2525 ]

published a major sort of book on what the Securities Commission is, what it does and what the rules are. In fact, it's a little scary when you see the book, but that's a result of trying to regulate this exchange.

I don't know exactly what they are doing now, but I could find out for you. There is an active education program underway with the commission. It's doing a couple of things. One of them is educating the brokerage community and others -- especially those who have been in it for a while and are having difficulty with the rules, as they have changed dramatically -- and also the community at large. That is an initiative which I believe started last year. I don't know exactly how much resources apply to it. When I met with them, probably a couple of months ago now, I had a briefing on it and was reasonably impressed that they were moving in this area. It's something that predates me, but I'm encouraging them to continue with it. I think that's the most important way in which we can communicate -- the fact that we're regulating this exchange and the rules.

F. Gingell: I'm going through my list here, and after my briefing this morning, a whole bunch of things that you said you were going to do in here with respect to prospectuses and simplifying the exemptions process are, I believe, going to be dealt with in the bill. So you've kind of cut me down. I'm wondering if any other members have any questions they wish to ask on the question of the Securities Commission or the Vancouver Stock Exchange.

Interjection.

F. Gingell: Someone's asking for some quotes over here.

If I may, I would just like to slip back to a question that I asked yesterday with respect to severances of deputy ministers and others, and whether all these met with the requirements or the policy set out by the government in the Nemetz report. After that, when I went to the Nemetz report dealing with the questions of pensions and pension payments for past services, there was clearly no recommendation from His Honour about contributions for employment that someone had prior to coming to work for government, other than that if there is a cost-sharing arrangement between the previous employer and the employee, then obviously that should be lived up to. Coming into this position and seeing this, I find it really difficult to appreciate or understand why employment with a previous employer, before one becomes an employee of government, would at any time be considered to be service that should be funded in any way by the provincial government. Please correct me if I'm wrong, but my understanding of this is that what is happening is that the pension pool is being increased so that the benefit can be increased. A portion of that is going to be paid by the previous employer, perhaps out of a pension fund that already exists there, by transfer; a matching sum is going to be paid by the employee; and then an additional amount is going to be paid by the provincial government. I presume that it was those additional amounts that produced this particular headline in the paper back in March, I think. I was wondering if you could explain to me how these past service things work and whether you really believe they are within the Nemetz report.

Hon. G. Clark: I don't think it's for private sector service that you can purchase. Is that what it says? In a general sense, you'd probably be best to ask the Premier these questions, or I could certainly find the information.

Let me be clear again. The terms of employment which deputy ministers receive -- I think they just receive terms of employment -- had certain provisions in them which some people would argue are lucrative. The terms of employment that have been issued for the new deputies appointed by our administration -- including Mr. Costello, to my right -- say that these previous terms are under review, and so some changes will be made. I guess it's fair to say that all we did with deputy ministers -- that article you referred to; I thought it was the Nemetz report -- to be candid, was pay what was agreed to have been paid at the time they took their position. We felt that it's fair enough, when we're hiring a new deputy minister, to tell them we're reviewing these questions, and they may or may not be too generous. We will be making a policy in that regard, but for people who have been here for some time, who had expectations and had either signed contracts or terms of employment, we just fulfilled those commitments. As painful -- believe me -- as it was in some respects for me to see public money spent for past service in this regard, it would be completely unfair and, frankly, I think all the courts would clearly have ruled against us in any discussion about this. We felt we had to live up to the conditions entered into by the previous administration. Any new appointees.... We have no intention of being cheap in this regard; I say this to give my deputy some comfort. Obviously we try and attract very good people, but at the same time we think there's some reason for some review of those benefits.

F. Gingell: I take it that the Nemetz report really wasn't relevant in any case, because what guided the situation was the contract that had been signed. But if any deputy minister had become a deputy minister after the Nemetz report had been brought in, was what was in his contract in line with the report?

Hon. G. Clark: I just want to be clear. Some deputies may be under contract, but they are not all under contract. I think they get letters of employment, terms of conditions. I'm not sure whether or not they're legal contracts. I don't know. I can't really speak for the past, to be honest. All I know is that we reviewed the situation. It's consistent across the board, and we said: "Well, we have to do that for all existing deputies who are moved." Again, if you want to ask specific questions on this, I think it would probably be best to deal with the Premier. Those are decisions for him to make, not for me.

[ Page 2526 ]

F. Gingell: I only have a couple of very quick questions on the Financial Institutions Commission. I was wondering if perhaps you'd like to start by just speaking about the commission, and the role that it plays in your government.

Hon. G. Clark: It's kind of an open-ended question; earlier today I would have given a long open-ended answer, but I'll try not to.

I think it's an innovation that I supported in the House. It's a large bill. It puts us on the leading edge in Canada in regulating financial institutions. In fact, it's a model that other provinces are looking at.

The Financial Institutions Commission regulates all the financial services sector. The credit unions are subsumed by that. There is no more CUDIC, with a separate and distinct board of directors; it's a subset of the Financial Institutions Commission. By and large we have a quality staff. Dale Parker -- many of you know he used to be CEO of the Bank of British Columbia -- is the CEO of the Financial Institutions Commission. I think they are working with the stakeholders, or the individuals, to ensure smooth regulation. As you know, this is an area of concern of many members, with respect to Principal Trust and other failed institutions. What we have in British Columbia is legislation which still retains what's called the "home jurisdiction rule." Where the head office of the trust company is, that is the regulatory regime that it's governed by, or at least predominantly governed by. That's what caused some problems with respect to Principal Trust, a multitude of regulations across the provinces.

I'd like to inform the members of the House -- and again this is something Mr. Couvelier can take some credit for -- that there is a great deal of effort to harmonize financial institutions legislation across the country. Mr. Couvelier, at the time -- I have not devoted the time and effort to the subject that he has, to be candid -- basically chaired at one point the federal-provincial committee of ministers on financial institutions. Federally, I think it's the Minister of State for Finance, Mr. Gilles Loiselle, and his counterparts across the country. Our legislation is, in many respects, a model that's being adopted across the country. That would go a long way towards easing concerns about jurisdictions, as was the case in Principal Trust, where Alberta had some rules and we had other rules, and it caused some problems in jurisdiction.

F. Gingell: Are there any trust company problems at this moment in time that the province has any concern about?

Hon. G. Clark: Gee whiz, I can't comment on that. If I commented on that, there would be some kind of a run on an institution. Obviously I wouldn't dare say even a word publicly on any concerns we have about any institutions.

I can say that in a general sense, our institutions, our credit unions, are in the best financial shape they have ever been in, with record profits almost uniformly. Now that there is a government guarantee for credit unions, our financial services sector is in the strongest shape in many years and stronger than almost any other part of the country. Specific credit unions or trust companies I certainly can't comment on.

[6:45]

F. Gingell: My question was actually focused to the trust company question. You did mention credit unions. In 1989 there were 16 credit unions under the supervision of the Credit Union Deposit Insurance Corporation of British Columbia as part of the Financial Institutions Commission. At December 1990 that had been reduced to four, with four being dealt with by the Stabilization Central, which I don't understand and will come back to. Can you please tell me how many credit unions are under the supervision of the Credit Union Deposit Insurance Corporation at this time?

Hon. G. Clark: I'm sorry, I don't know the number, but we'll certainly provide that information.

I wonder if, while I'm on my feet, I could ask maybe the member from Saanich or another member.... I know the member for Surrey-White Rock had some questions. The minister responsible for registries is here, and so is the staff, Mr. Powell, so that we can handle that as well.

F. Gingell: Perhaps you could enlighten me on one of the mysteries of the world and explain to me what the Stabilization Central Credit Union of B.C. is.

Hon. G. Clark: It's essentially a self-insured body. The Central Credit Union exercises supervision powers for those credit unions which they've had delegated by FICOM. The Stabilization Central assesses its member credit unions to fund its operating costs and to build a fund to provide financial assistance to credit unions in difficulty. The assessment was set in 1991 at a rate of 0.13 percent of total deposits of each credit union. It used to be a self-financing fund. When the province moved to provide a guarantee, it also moved to bring the CUDIC in-house and to exercise stronger regulatory powers. Obviously if the government was giving a guarantee, it then wanted to have more influence over regulations. But it's still hybrid, because the stabilization fund is still provided by the credit union movement itself.

F. Gingell: Does the stabilization fund play any part in the $100,000-per-account guarantee that also comes in through the Credit Union Deposit Insurance Corporation?

Hon. G. Clark: Yes, the CUDIC is the $100,000 guarantee. The Stabilization Central Credit Union is almost -- I think it's fair to say -- the predecessor in a sense. It's the credit union-funded body that helps to exercise supervision powers and the like. At the end of the day, if there's a serious problem.... Obviously the Stabilization Central tries to work with credit unions through any problems and get on top of it in advance, but ultimately if there is a problem it is CUDIC, which is an arm of the provincial government, which has to pay the guarantee.

[ Page 2527 ]

F. Gingell: Basically, the Stabilization Central Credit Union of British Columbia will come in and move into a supervisory role before it gets into the hands of the Financial Institutions Commission. Or do they act on the Financial Institution Commission's behalf?

Hon. G. Clark: I'm not absolutely sure. I think they work together. I actually think it's FICOM that has the investigators. I think it's probably FICOM who is the lead, and they delegate it to the Stabilization Central. I'll check that out for you. They do work very closely together on these questions.

F. Gingell: Perhaps when the minister advises me of the number of credit unions that are under supervision, he would let me know how many are under FICOM and how many are under the Stabilization Central Credit Union.

Hon. G. Clark: It's the same thing.

W. Hurd: I have a brief series of questions relating to the Society Act. I note a number of reporting requirements of societies in the province, specifically section 68(1): "A society shall within 30 days after each annual general meeting file with the registrar a copy of financial statements placed before the meeting." I wonder if the minister can advise the committee whether the Ministry of Government Services keeps careful watch on how many societies in the province actually comply with this requirement.

Hon. L. Boone: Yes, we do. If they do not comply, we send them a notice indicating that they must comply to the act.

W. Hurd: Is the ministry able to provide the approximate numbers of societies in the province that fail to meet this requirement under the act? Are those figures available?

Hon. L. Boone: There are 15,000 societies registered. We don't have those numbers with us, but I'm sure we can get them and make them available to you later.

W. Hurd: Does the ministry make any differentiation between the reporting requirements of non-profit societies and those of charitable societies under the act? Is that differentiation made or are they all expected to report as they would normally? Is there any recognition by the ministry of the different status between these two societies and how they should be reported?

Hon. L. Boone: No, all societies must report in exactly the same manner that you indicated for that part of the act.

W. Hurd: Is there a reporting requirement from the ministry as it pertains to the actual financial statements and what they have to contain? Is there a set of guidelines under the act concerning the types of financial reporting that is done?

Hon. L. Boone: Yes, there is.

W. Hurd: Perhaps the minister can describe for the committee some of the highlights of these reporting statements in terms of what they have to report.

Hon. L. Boone: Section 65(4) of the act states that:

"The financial statements shall consist of

(a) a statement of income and expenditure for each period;

(b) a statement of surplus for each period;

(c) a statement of source and application of funds for each period; and

(d) a balance sheet as of the end of each period."

W. Hurd: If the particular society fails to meet any of those requirements, is it the practice of the ministry to issue a letter to the society advising them of their failure to comply?

Hon. L. Boone: Yes, after two years a letter is sent to them.

W. Hurd: My next question relates to the requirements for registered offices of societies in the province. Is it possible under the act for a society to also hold a revenue-producing subsidiary organization that is a limited company according to the province's statutes or the corporation relations act?

Hon. L. Boone: Yes, that is allowed under the act.

W. Hurd: I would just like to clarify section 34(2) of the act, which indicates: "Where a society acquires or causes to be incorporated a subsidiary, the society shall promptly file with the registrar a notice in Form 8" of the act. Perhaps the minister can just describe this particular requirement. Can the minister explain why there is a reporting requirement for a subsidiary that incorporated?

Hon. L. Boone: Those societies are scrutinized a little more closely. They do have to provide audited statements.

W. Hurd: My next question relates to the bylaws of a registered society. I note this bylaw with respect to lending money and officers and members of the society with which they might have dealings. Is it a requirement under the Society Act for a society to report the relationship of its members and their rights to borrow and invest in the society?

Hon. L. Boone: It depends on the bylaws of each society as they are set up.

W. Hurd: With respect to the difference between charitable societies and regular societies, is there any difference in the act in terms of borrowing powers available to these types of societies, or is the require-

[ Page 2528 ]

ment the same in terms of relationship to individual members and the powers to loan money or to acquire debt in the name of the society?

Hon. L. Boone: This government does not get involved in determining who's a charity or who is not a charity. That is determined by the Income Tax Act. There's no differentiation as to how they are treated.

W. Hurd: In the case where Revenue Canada might bring a situation to the attention of the ministry where a society might be in violation of its charitable tax number, is that the type of information that her ministry receives on a regular basis, and is action taken when that matter is pointed out to the ministry?

Hon. L. Boone: The income tax department will not confirm or deny anything and will not contact us at any point in time. If there was a problem with the tax status, the federal government would be investigating and they would not be contacting us at all.

[7:00]

W. Hurd: Just a question under part 1 section 2 of the act, and I'll just read the quote into the record before I ask my question. It notes: "...but a society shall not distribute any gain, profit or dividend or otherwise dispose of its assets without receiving full and valuable consideration, to a member or members of the society...." In the event that a society does undertake that action during the course of a fiscal year, is that required to be in the financial reporting statement filed at the end of each year?

Hon. L. Boone: Yes, any actions would be contained in the financial statement that would be filed at the end of the year.

W. Hurd: Can the minister confirm that under the Society Act a society has a right to receive and make gifts, but may not be able to make political donations without issuing proper receipts, or are they, as a society, entitled under the act to make political donations?

Hon. L. Boone: I don't think the act says anything about this issue. It would be under the federal tax act.

W. Hurd: Just a question with respect to offences that may be committed under the Society Act. Just to quote from the following section of the act: "...a society that contravenes an order under subsection (4) commits an offence and a director, manager, officer or agent of the society who knowingly participates or acquiesces in the contravention commits an offence...." Is it the responsibility of the Minister of Government Services to report such actions to the Attorney General for his action? What responsibilities does the ministry have in this area?

Hon. L. Boone: Members could report it to the Attorney General, or I could report it to the Attorney General if it was deemed that it was breaking the act.

W. Hurd: Perhaps the minister can amplify for the committee what types of offences under the Society Act might be brought to the attention of her ministry in the course of a normal fiscal year. Perhaps she can amplify what constitutes an offence under the act.

Hon. L. Boone: Mismanagement of funds; some other areas in that regard. I'd like to draw to the member's attention that you are getting beyond the Supply Act here. I'd be happy to meet with you and with some of the staff to go over the nitty-gritty of the act if you wanted. But I would appreciate it if you would ask questions with regard to supply, which we are debating at this time.

W. Hurd: Just to clarify that last point, would it not be fair to say that funds are expended by the ministry for the receipt of annual reports, the cataloguing of information under the Society Act, and the determination as to whether societies are in fact meeting the obligations of the act? Would that not be a routine and general expenditure of the ministry?

Hon. L. Boone: Well, yes, some funds are spent. This is not a regulatory body; this is generally a self-regulating body. It's an enabling body, actually. It enables societies to register so that people can have an opportunity and a place to find the registration.

If the member has some specific questions.... As I said, if you want an explanation of the act, I would urge you to come and spend some time with the staff and me. We can go over the act with you. But at this particular time, I'd urge you to ask some questions with regard to supply.

C. Tanner: I've got one question in the area we've just been talking about. I think it probably does come under the estimates. If the minister or the minister's staff found that there was something.... For example, if a society gave you a financial statement which radically changed a previous financial statement, would the minister or her staff comment on such a thing?

Hon. L. Boone: No. They are filed for public information only. The staff make sure that they are filed and that they comply with the act to have them filed. But they don't review all the statements or audit them or any such thing.

Hon. G. Clark: We've agreed to move to a bill. We'll come back to this in just a few minutes if we can get this bill through. I move that the committee rise, report progress and ask leave to sit again.

The House resumed; E. Barnes in the chair.

Committee of Supply B, having reported progress, was granted leave to sit again.

Hon. G. Clark: Committee on Bill 36, hon. Speaker.

[ Page 2529 ]

EMPLOYEE INVESTMENT
AMENDMENT ACT, 1992

The House in committee on Bill 36; R. Kasper in the chair.

On section 1.

L. Stephens: I don't think we're going to have any difficulty with this bill at all; we'll go right through it. I did want to say that not having had the opportunity to speak to this in second reading, had I been here I would have reiterated much of what was already said. I just want the record to show that this is a bill that I do support entirely -- and congratulate.

Sections 1 to 13 inclusive approved.

On the title.

F. Gingell: On the question of the title. Is the commitment that this administration has to the concept of employee-share ownership real, deep and understood? Is it just on the surface, as a little skim of oil might float, or is it all the way down to the bottom? I'd appreciate a response to that.

Hon. D. Zirnhelt: I was going to say something about what oil does to the root of a problem, but I won't.

I can't pretend to have the experience in the operation of these plans that the member has. However, with me is Murray Munro, who works for my ministry. He and his staff are extremely dedicated, and I'm impressed by their dedication. There's absolutely no problem philosophically or practically with this government's commitment to an employee-ownership share program of any kind. In fact, we will encourage it wherever we can. Hardly a day goes by that we don't talk about the possibility of involving working people in the future of industry in British Columbia.

We were so committed to this that one of the first announcements of any consequence that I made as minister was the establishment of the Working Opportunity Fund. The money was raised in very short order. I think you'll continue to see us providing for sufficient room in loan guaranties and so on, and the legislative commitments to see that carry on.

F. Gingell: Thank you, hon. minister. I really am pleased to hear that your government is committed because, really, employee share-ownership is capitalistic socialism, if you want to look at it in that fashion.

An Hon. Member: Or socialistic capitalism.

F. Gingell: Or socialistic capitalism, yes. I'm all for the capitalism part. I know where you stand. I just wanted to ensure that when we join them, we can also join in an area that we can both strongly support.

Hon. D. Zirnhelt: I have to reply and say that it's probably more accurately described as collective capitalism, which is really what social democracy is all about.

Title approved.

Hon. D. Zirnhelt: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; E. Barnes in the chair.

Bill 36, Employee Investment Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. G. Clark: For just a couple of minutes, I hope, I call Committee of Supply.

The House in Committee of Supply B; R. Kasper in the chair.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

On vote 35: minister's office, $325,213 (continued).

W. Hurd: I just have a couple more additional questions with respect to the Society Act. I would like clarification from the minister as to whether, under the terms of the act, it's possible for a charitable society to have the same directors, registered office and records office as a profit-making venture and still comply with the requirements or provisions of the Society Act.

Hon. L. Boone: Yes, it is.

W. Hurd: On a point of clarification -- even if that company is in fact a profit-making enterprise?

[7:15]

Hon. L. Boone: Yes.

W. Hurd: I'm somewhat confused that, in fact, this is allowed under the act, and yet there appears to be another subsection which clearly indicates that a charity is not entitled to have a subsidiary which is a profit-making enterprise. Would it not be reasonable for the committee to assume that a company with the same directors, registered office and records office is an organization attached in some way to the society?

Hon. L. Boone: I don't think you can assume any of those things. Would the member like to quote to me the section of act where it says you can't do that? If you can, I'd appreciate it if you'd give me that section, because it's not our understanding that that's against the act.

W. Hurd: Just so I have that clarification, is it the minister's considered opinion that a charitable society can own a limited company that carries on business and is a revenue-producing subsidiary?

[ Page 2530 ]

Hon. L. Boone: Yes.

Hon. G. Clark: I can inform the House that there are six credit unions under supervision; three are under supervision by FICOM, and three are under supervision by Stabilization Central. So the member is correct; I was wrong. There is a distinction. I'm not quite sure what that is, but I think it is a degree of concern.

The process regarding supervision is twofold. First, the voluntary supervisions, which are requested by the credit union, go to Stabilization Central. The credit unions placed under supervision by the commission are shared between FICOM and Stabilization Central, depending on the workload. Stabilization Central is essentially self-financed by the credit unions, and people may ask to be under supervision; that's who handles that. FICOM may, for regulatory purposes, decide that a credit union should go under supervision, and either they or Stabilization Central will handle the supervision, depending on the workload. That's just to make that clear.

W. Hurd: Mr. Chairman, I have a series of questions in the area of Treasury Board and resource revenues. I don't know whether it's appropriate to address those questions at this time.

I have a question regarding the recommendations of the Peat Marwick report and the impact of the alienation of resource revenues on government costs and revenues. The report indicated particularly that the ministry may be looking at significant compensation costs based on the compensation to such companies as Doman Industries and Casamiro Resources. I'm wondering whether the minister has factored any compensation costs into revenues, as it's suggested in the Peat Marwick report he should be doing.

Hon. G. Clark: First of all, on the policy question. That's a policy consideration for the line ministries, not for the Minister of Finance, although obviously I have a keen interest in it.

Secondly, with respect to whether there is budgeted money for appropriations, there is in several areas in the estimates, but not in anything for which I'm responsible. I don't mind answering a little bit. There is the South Moresby account, which has some funds in it to deal with that. There is a statutory appropriations amount under the Attorney General's ministry, which deals with some litigation costs. There are other areas where there are some budgeted funds for expected appropriations.

If you're asking me whether there are hundreds of millions of dollars, you never know in any given year what the litigation costs will be. We may have overestimated or underestimated. We've probably, given the lawyers, underestimated the costs. I'm not doing this to duck the question, but it's not my responsibility. You have to really stretch it to say that, in terms of my responsibility.

W. Hurd: I have a question regarding the reduction of forest revenues in the province of British Columbia from reductions of the annual cut in the province. It's my understanding that the industry has provided some fairly alarming figures to the minister regarding the effect of a reduction in the annual allowable cut of between 15 and 20 percent. The figures they came up with were revenue losses in the nature of $2 billion to the provincial treasury, not to mention considerable job losses.

It's also my understanding that the ministry itself has conducted a study on the effect of reductions in the annual allowable cut on resource revenues. Can he confirm to the committee whether the figures provided by the ministry are in fact reasonably accurate? Or can he confirm that his ministry is in fact looking at this important area?

Hon. G. Clark: Are you talking about the Ministry of Forests or Finance? The Ministry of Forests deals with that information. Obviously we have to factor in revenue forecasts and the like, and we work with the line ministry on that. Obviously I've got lots of concerns about the risks to our forecast, not the least of which are some of the problems in the forest industry. We make an attempt to estimate forest revenues. It hasn't been adjusted to this point. There is a quarterly report coming out, so you'll be able to see the actual revenue that's generated to date on forestry. But those kinds of questions, I think, are better placed to the Minister of Forests than the Minister of Finance.

W. Hurd: I'm assuming the Minister of Forests provides Treasury Board or this minister some explanation or forecast for revenue projection. Would it not be fair to assume that in terms of financial planning for the government that type of information would be received by his ministry, and that studies would then be conducted to determine whether we were facing rather serious revenue shortfalls in the province?

Hon. G. Clark: That's correct. We take forecasts, and we plug them in for the purposes of our budget. The work is not done in my ministry. It's hard to hold me to account.... The detailed questions you're asking are quite legitimate; I don't mean to say they aren't. But they are not my area of responsibility.

We have revenue forecasts; we do work with the ministries to provide them. They're in the budget. I have no reason to believe at this point that they are overestimated or underestimated. Through the course of the year, as the quarterly reports come out, you can track and see how we're doing with our forecasts. When a quarterly report comes out, you can be sure that I will be asked by the press and probably by the opposition to comment with respect to what's happening with our forecasts.

It wouldn't surprise me if we are down on sales tax revenue or the like, given the sluggish situation. But I can't answer detailed questions regarding forecasting in the Forests ministry.

W. Hurd: Perhaps I can ask a question regarding direct revenues to the B.C. government and its agencies from the forest industry. The opposition has been provided with statistics that would indicate that the 

[ Page 2531 ]

B.C. government and its agencies received some $733 million in 1991 compared to $880 million in 1990. If we can assume that the industry is facing many hundreds of millions in losses this year, would it not be reasonable that the ministry would be taking into account this rather dramatic drop in revenues from 1990 to 1991? Would the ministry not be interested during the year of forecasting to try and accurately determine whether we were facing such a similar loss of revenues during fiscal year 1992-93?

Hon. G. Clark: This is not a unique year. Every year we forecast; every year there are crises or booms in various sectors of the economy that affect our forecasts. I am relatively new, but if you look at it historically, the Ministry of Finance has a fairly good track record -- a better track record, by and large, than the majority of the private sector forecasts. That's what we're working from.

I haven't got any knowledge of the facts that you're suggesting. As the quarterly report comes out, then you can argue the Ministry of Forests or the Ministry of Finance has not done a good job of forecasting. We try to factor all those factors as best we can, whether it's the capital tax revenue or anything. These are not unsophisticated tools that we use. We don't just extrapolate. We look at economic growth; we have econometric models; and we plug in the very latest data. I don't have any knowledge of an evaporation of revenue from the resource sector. I wouldn't be surprised if it's down somewhat, but at this point we don't have any information that would suggest that our forecast is at risk to the extent that you're indicating.

W. Hurd: I must say, I'm somewhat baffled, because in the minister's budget address he indicated he could expect a 3 percent growth rate in the provincial economy during the coming year, and it was front and centre in the estimates debate. I can't quite fathom why he would advise the committee that a rather rapid and steep decline in resource revenues wouldn't have some impact on his prediction of a 3 percent growth rate. If he doesn't receive those kinds of forecasts on revenue projections from the forest industry, mining industry, etc., how does he forecast a 3 percent growth rate in the provincial economy?

Hon. G. Clark: Nothing has happened in the last ten weeks to change our forecast to this date. We adjust them over the course of the year, and I remain very optimistic about the B.C. economy.

W. Hurd: In light of the fact that the ministry doesn't appear to receive reports on rapid revenue declines in the resource sector, does his ministry try to hold regular meetings with the resource sector in the province to find out whether they anticipate rather steep reductions in revenue? And does that have any impact on the policy direction of his ministry?

Hon. G. Clark: Yes, we meet regularly. We have senior economists that meet with the forest industry, and it's only been ten weeks since the budget. After some time, if there's a revenue change, I'll be advised. I haven't been advised at this time.

W. Hurd: Perhaps the minister would be willing to share with the committee some of the predictions from the resource sector as to what type of year they expect, and whether this figure of some $733 million paid to various government agencies during 1991 on behalf of the forest industry, for example, can be expected to decline. Have they provided that type of information to his ministry? Perhaps he could advise the committee what he does from a policy standpoint once he learns about the predictions of the people in the industry as to rapid revenue declines. What directions does he provide to his ministry to account for those predictions, or does he simply decide that because there's no mechanism to receive the information it's best ignored?

Hon. G. Clark: I have no knowledge of any information. If there's a revenue decline, then we usually go through and cut spending accordingly.

W. Hurd: The opposition notes that there's a possibility for a wide-scale disruption in the pulp industry in this province. Would it be the intention of his ministry to find out what impact that particular situation might have on the revenues of the province?

I'm a little bit confused on the general area of receipt of information from resource-based companies in the province which, as the minister may know, account for -- between the mining and forest industries -- some $15 billion in exports in the province. Surely the predictions from those two areas of economic activity should have some impact on his estimates for the coming year from a policy perspective.

Hon. G. Clark: When we do a revised estimate, we'll take into account any feedback from the industry.

W. Hurd: Just a quick question about the minister's 3 percent prediction. As far as the growth rate in the provincial economy is concerned, given the rather serious reports that the opposition has received from the mining and forest sectors in this province and accepting the fact that the $15 billion export figure is indeed accurate, I'm a little bit confused as to how the remaining $7 billion in exports in this province are going to somehow make up a 3 percent rate of growth in the provincial economy.

Hon. G. Clark: We're very optimistic on this side of the House.

W. Hurd: Given the fact that the minister holds regular meetings with the representatives of resource-based companies in this province and given the rapidly growing number of labour disruptions, I'm just a little bit confused. I know he's very optimistic, and I commend that, but I can't fathom how, when companies are in a loss position and we have evidence that the revenues payable to every level of government and every ministry are in a period of decline from 1990 to 1991.... I still can't understand where this 3 percent 

[ Page 2532 ]

growth rate is going to come from, when the two industries that provide the bulk of our exports in this province would surely have indicated to this minister the serious difficulty they're in -- particularly mining companies like Westar and the major forest products companies in this province. The economic situation in 1991 for these companies was one of rapid deterioration, and I can't fathom on what basis he assumes that the situation is going to improve in the province in the fiscal year 1992-93. Perhaps he could share with the committee some of the arguments or suggestions that have been put forward to his ministry from the resource-based industries in this province as to how they can pay higher levels of taxes and in fact enjoy this buoyant 3 percent recovery.

[7:30]

Hon. G. Clark: Our forecast is exactly the average of the private sector forecasts. Members might be interested to know that the International Monetary Fund predicts a 5.5 percent growth rate in Canada next year, of which British Columbia is the strongest component. Obviously they're just forecasts, but we're on the conservative side of the forecast.

W. Hurd: Just a quick question on income taxes paid by the resource sector in this province. I don't know if the deputy ministers are entitled to stand and answer a question in the House or not, Mr. Chairman, but I'll ask the question anyway -- just a quick question about the losses that have occurred in the small business forest enterprise program. Does the Ministry of Forests report those types of delinquent accounts to the Minister of Finance, and does he bill those uncollected stumpage payments and uncollected taxes into his ministry's financial accounting?

Hon. G. Clark: Yes, we do.

W. Hurd: In connection with the small business enterprise account, can he confide to the committee how much of a revenue loss the province has experienced from this program in the last fiscal year?

Hon. G. Clark: No. You could ask the Minister of Forests; we're not responsible for that. I can tell you that this year, which we are now debating, there has been no revised forecast to date.

W. Hurd: Perhaps I can ask a series of questions on some operations of government ministries for which members of the opposition were referred to Treasury Board during debate on those estimates. I'm particularly interested in how individual ministries in this government dispose of assets. Referring again to the Peat Marwick report, which identified a serious problem in the way in which ministries dispose of assets, because the money does not accrue to the individual ministries during the fiscal year, can the minister advise us whether he intends to be a catalyst for changing the policies by which individual ministries dispose of assets during the fiscal year?

Hon. G. Clark: Yes, we're reviewing all the recommendations from the Peat Marwick report.

W. Hurd: Is the ministry intending to take any specific action on the recommendations of the Peat Marwick report, particularly as they relate to resource revenue collection in the province and how that should be accounted for?

Hon. G. Clark: No change at this time. We're just reviewing it.

W. Hurd: A question regarding the B.C. Buildings Corporation, from which the Ministry of Finance leases space, we understand. Can the minister describe for the committee how space is paid for in his ministry, particularly that space which is rented by his ministry from the B.C. Buildings Corporation?

The Chair: Shall the vote pass? The hon. member continues.

W. Hurd: Just a further question regarding BCBC and the role of Treasury Board. The Peat Marwick report notes that Treasury Board has no clear strategic framework to optimize or mitigate overall space use and cost. So while BCBC may be reasonably efficient at responding to ministry space leasing requirements in a cost-effective manner, neither it nor Treasury Board has been analyzing and managing overall space utilization in a way that fully supports the new deficit reduction objectives. Perhaps the minister can describe to the committee the way in which his ministry has attacked this problem, or identified particular situations where there's an overlap of buildings in various areas of the province. It would appear from the Peat Marwick report that Treasury Board has an important role to play in streamlining and in ensuring that the B.C. Buildings Corporation functions on a more effective level.

Hon. G. Clark: We're working very hard on that problem, and space plans are being developed, which are coming before Treasury Board.

W. Hurd: Further on the Peat Marwick report, it identified a problem where ministries are in fact a captive market of one particular Crown corporation. Is it the responsibility of this minister, the Treasury Board, to review whether or not the private sector could provide space requirements for various ministries more efficiently than the situation we currently have?

The Chair: The Chair recognizes the hon. member for Delta South.

F. Gingell: Just to return for one moment to the response which you kindly brought to me, I wonder if -- and if you don't have it at the moment, I could get the numbers from you later -- the number of credit unions that are under supervision.... It's good for me to be able to compare that to the past, and I thank you for that. I was wondering if you could let me know what 

[ Page 2533 ]

the value of the assets of those credit unions is. I appreciate that you probably don't....

Hon. G. Clark: I'll get it.

F. Gingell: Would you also give it to me for March 31, 1991, and March 31, 1990, so that one can see whether it's going up or coming down?

The second matter that I'd like to quickly deal with is a question I would like to ask the Minister of Finance: whether he has read the article in yesterday's Globe and Mail, "Deposit Insurance System Needs Reform." I would suggest to you that it makes good bedtime reading, and something that I'll pass over to you.

Coming to the question of various loans that the province has made, I would like to deal with the question of Fibreco, if I may. The Peat Marwick report, and your own statements, indicated that the $70 million loan that the province made was a bad debt. Perhaps you'd like to comment on that in light of your current knowledge.

Hon. G. Clark: I don't believe I've ever said that Fibreco, specifically, was a bad debt, and I don't believe that I would have been quoted that way.

I'll tell you what we have done. We made a fairly large provision for loans. We have not written them off, as some reporters have said; we just provide for them. We're looking very carefully to ensure that we fully provide for bad loans so that we can have a true statement of the accounts of the province at any given time. In some cases we overestimate liabilities; in other cases we underestimate them.

Fibreco is a unique operation owned by small sawmillers in British Columbia. It's one of the few domestically controlled pulp mills. It's environmentally clean, and it has lots of opportunity. It has had some difficulties, I am sure, because of current market conditions. But I remain optimistic, as I think other do, about the future of that mill.

F. Gingell: Considering that the government made a further $10 million loan after all this happened, do you not think that it would perhaps have been more appropriate for you not to provide for any questionable amount in the 1991-92 financial statements, because you might, by mistake -- and I know you wouldn't want to do this -- overstate the amount of the deficit in '91-92 and understate it in '92-93 when you make the correction?

Hon. G. Clark: As you probably know, I've discussed in the House before that the job protection commissioner and Minister of Economic Development are responsible for giving away money, and I'm responsible for trying to collect it. Obviously decisions are made on the basis of advice we receive from the job protection commissioner, and we try to make the appropriate allowances.

F. Gingell: If I may, I would just like to turn to pension funds. I appreciate that the superintendent of pensions doesn't report to you, but the funding of pension funds comes through your budget. You appreciate that there has been quite a lot of discussion about whether our pension funds are underfunded or not, and that if they are underfunded -- and I don't think there's any question about that -- it is the result of contributions not being made in sufficient amounts in earlier years. Could you advise me as to what the policy of this government is with respect to current contributions being made to the fund?

Hon. G. Clark: The policy with respect to funding levels is with the Ministry of Government Services, I am advised.

F. Gingell: The amount of funding that is being made goes through vote number -- whatever. But surely your ministry is involved in the question of how much money is to be paid. It's on the how much that I'm interested in having a discussion.

Hon. G. Clark: I'm not trying to dodge the question at all. It is a division of responsibilities. Pensions, benefit levels and contribution levels are in the Ministry of Government Services. We in the Ministry of Finance manage the portfolio. Also, we pay what the policy determined by Government Services is. Questions around the unfunded liability and others.... I mean, I don't mind discussing some of those, but there is a division of responsibility. The Superannuation Commission is the individual; the minister is the Minister of Government Services.

[7:45]

F. Gingell: I did go into the estimates debate with the Minister of Government Services and kind of got the message that I should be here. I'm a little lost. Perhaps the key point I'd like to make here is the whole question of pensions in the province and the four different funds: the government superannuation fund, the Teachers' Pension Fund, the college fund.... There's a fourth one.

Interjection.

F. Gingell: Municipal.

Some of them you're liable for and some of them you're not liable for. With all of them you are responsible for setting the contribution rates. There is a series of questions. I really do believe that it would be wise to get this under control and to ensure that we go in the right direction. If the majority of trust investments were in bonds, which I think a lot of them were, and they earned 17.4 percent.... You may have helped it somewhat in the meantime. The question of pensions is very close to the heart of everybody who is a future beneficiary. They do have concerns. The kind of media attention that the unfunded liability receives causes concerns in their minds and is something that I do urge this government to take in a very serious manner.

With that, I don't have further questions. I will entertain any motion you may wish to make.

Hon. G. Clark: I take those comments seriously, because you're quite correct that we want to assure our 

[ Page 2534 ]

public employees and the public that they're well managed. I'd just make one final point -- that the actuaries take such a long-run time horizon when they review these questions that they are assuming a rate of return of 6 percent. In fact, the unfunded liability disappears if the rate of return is not very much higher than that. One of the problems we have, of course, is that any rate of return higher than 6 percent moves into an inflation account and doesn't deal with the unfunded liability.

I agree with you that this is in some respects a challenging area for government to deal with. There is certainly no crisis, though, to deal with. The unfunded liability is not growing as a percentage of the payroll. Unless you think the state is going to wither away, there is certainly no reason for alarm. Clearly there is a reason for.... For all members, I think it is an area of important public policy, and I take that under advisement.

We've had some agreement. In order to accommodate the leader of the third party, we're going to pass the votes, except for the vote on the Crown corporations secretariat. We can have that debate on Monday, when the third-party leader is in attendance.

R. Neufeld: I might have misunderstood, but I understood our leader wanted to ask questions about pensions also. I might be mistaken, but I don't think so.

Hon. G. Clark: I'm sorry, but my understanding was it was on the Crown corporations secretariat. To be candid, I think we've been fairly generous. I'm not really prepared to entertain more than that on Monday unless members opposite want to talk for another couple of hours. I think that at this stage of the session we really have limited opportunity to move things around. We've tried to accommodate. I'm sure the leader would understand that.

Vote 35 approved.

Vote 36: ministry operations, $81,294,697 -- approved.

Vote 38: pensions and employee benefits contributions, $10 -- approved.

Vote 39: contributions to B.C. Ferry Corporation, $49,690,000 -- approved.

Vote 40: contributions to B.C. Transit, $235,663,000 -- approved.

Vote 64: other appropriations, management of public funds and debt, $795,000,000 -- approved.

Vote 65: other appropriations, contingencies (all ministries) and new programs, $105,000,000 -- approved.

Vote 66: other appropriations, government accounting systems strategic plan, $5,950,000 -- approved.

Hon. G. Clark: I move the committee rise, report resolutions and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

Committee of Supply B, having reported resolutions, was granted leave to sit again.

Hon. G. Clark: I call second reading of Bill 10, hon. Speaker.

HEALTH SPECIAL ACCOUNT ACT

Hon. G. Clark: Bill 10 establishes a new health special account in the general fund of the consolidated revenue fund. The new special account will allow the Ministry of Health to spend one-half of the province's income from the Lottery Corporation for health-related services.

I know that all members are probably aware that everywhere you go in British Columbia over the last.... When I was an opposition member for the last five years, I constantly heard the refrain: "Why don't you apply the revenue received from lotteries to health care?"

This is the fulfilment of the commitment we made during the election campaign where 50 cents on every dollar earned in lottery funds is applied to health care. The argument has been made for 100 percent, but obviously there are other areas of funding that have been provided other than health care, like sports and culture and other major funding commitments. We felt that at the very least, 50 cents on every dollar could be applied for health care, particularly to fund some new and innovative initiatives. By and large, I think it's a positive move. It's a funding mechanism that was committed to during the election campaign. I think it's good public policy.

This is not without its controversy, in the sense that some people feel that ongoing programs like health care should not be funded by this kind of a tax, if I can call it that. In order to deal with that question, this does not fund medical services, hospitals or ongoing program commitments in the mental health field or elsewhere. We have provided a special account, so it's accountable. The public and the opposition can see exactly where the lottery funds are being spent. This year we have provided some specific commitments to the Health Research Foundation, the at-home program equipment and some specific programs to fund innovations in the health care field.

This is, in my view, a good-news bill. The bill allows authority for spending on some programs, like health promotion and health education. The special account provides the vehicle. The bill is also subject to a vote and will be subject to this year's estimates. There is a specific vote description in the Ministry of Health. That's where it can be debated every year. People will not only know that when they buy a lottery ticket 50 cents on every dollar goes to health care, but they'll also know, by virtue of a debate in this House, exactly where 

[ Page 2535 ]

that money is applied. The Minister of Health is accountable for the spending of that money, and there is at least some restriction on how it's spent.

I think it's good news. British Columbians have been calling for it. We've had thousands of names on petitions calling for it. We made the commitment in the election campaign. I ask all members to vote in favour of Bill 10.

L. Reid: I hope that a lady by the name of Brenda Parkes of Nanaimo is listening to the debate this evening, for it is very much due to her efforts in obtaining 72,000 signatures on a petition that this legislation is before us this evening.

The official opposition supports this bill in principle. Interestingly enough, our leader was present in Victoria last August when over 300 citizens demonstrated on the front lawns of the Legislature in support of spending funds earned through lotteries on special health care. Our Liberal candidates supported the concept during last fall's election. A number of them signed the petition in support of this proposal.

The leader of the official opposition also stated last August that his party's policy would not only be to tie lottery profits into funding health care, but he would also make changes to see that no discretionary funding for politicians would be available to buy their way into office in any way.

Not everyone supported the concept, though. I read from a letter to the editor from Brenda Parkes.

"When Premier Johnston was in Nanaimo recently, I told her on a radio talk show that we had 30,000 signatures" -- at that time -- "on the petition, and hundreds of people have written letters of support. In spite of this, she was quoted in the local newspaper the very next day as saying: 'Don't expect to see lottery proceeds allocated to hospital funding as some local residents have suggested.' How dare she? Without even waiting for the petition to be presented."

Brenda Parkes also reported that the Premier said: "You can't have the health care system depend on the gambling habits of the people."

In the final paragraph of her public letter to the editor, Brenda Parkes wrote:

"This is a deliberate attempt to misrepresent the purpose of the petition. We have never said that lottery funding should replace the normal government funding of the health care system. It should be in addition to regular funding."

The last sentence in the letter to the editor from the founding member of the 72,000-person petition provides the basis for the criticism of this bill. This government takes a good idea from the people and totally waters down the intent. Brenda Parkes and thousands of others who signed that petition had special funding in mind. This bill assigns these lottery funds to a special account under the total signing authority of the minister, and in section 3 allows funding to be used for "operation and administration of hospitals." Our sense in speaking with Brenda Parkes is that she and thousands of others feel betrayed by this wording, and would very much like to see this government state more clearly that these funds are to be used for special health care projects, for special needs, for urgent health care priorities and for surgical wait-lists, and are not part of the annual $5 billion already under the control of this minister.

I quote from the Times-Colonist of Friday, March 22, 1991: "A very good percentage of the ticket purchasers are more than a little hostile at the government's unwillingness to make good use of the profits that flow to them from lotteries." Most correspondents in this regard are very strong in their condemnation of the way these profits are used, and the unanimity in favour of using the bucks for health purposes is quite amazing.

British Columbia's health care system is not the best, in that waiting-lists for surgery are in some instances as long as your arm. Many are going to the U.S. for major surgery, and the government is picking up this very costly tab. All the more reason to take Lotto profits and plow them into the health program.

So Brenda Parkes and thousands of others who took the time to sign the petition are expecting more from this government. That's why our caucus will be submitting an amendment in committee stage to propose the establishment of a health care special account advisory committee, and asking that it be empowered in legislation -- that its makeup be provided for in legislation and that its terms of reference as well be made clear in this legislation.

[8:00]

The Liberal opposition also wants to draw attention to a news article in the Victoria Times-Colonist of August 14, 1991, and a quotation from the former minister responsible for lotteries. He stated last year that about 50 percent of lottery funds were already being used for health care. He said that lottery dollars were already being spent on the construction of health centres, sports arenas and programs for seniors and the disabled. He too found it offensive, in a way, for the health care system to rely on gambling.

The hon. member for Burnaby North, in terms of us setting up an independent advisory committee, said on June 13, 1990:

"Mr. Speaker, we have recently learned that the auditor general's review of lottery grants has found irregularities in some 25 percent of grants examined last year -- one out of four. Has the Provincial Secretary finally decided to establish an arm's-length lottery advisory committee, as provided for in the Lottery Act?

"The public wants assurance of a non-political process in terms of lottery grants. The institution of four unnamed cabinet ministers does not put it at arm's length as the public requires. Has the minister decided to replace that four-member cabinet committee with an arm's-length, non-political advisory committee?

The Minister of Labour in this government also is involved:

"Does the Premier not agree that a far more preferable approach would be the establishment of an independent advisory committee to take a look, on an arm's-length basis, at these applications and pass judgment on them in that way? As a matter of policy, Mr. Premier, why do we not go the open route?"

So this issue has been discussed at length in this House, and it seems that there was support and encouragement of an arm's-length advisory committee.

Our own analysis of the lottery spending for 1990-91 indicates that about $14 million was spent on health-

[ Page 2536 ]

care-related projects. I would like to read some of those into the record. We had the Bowen Island volunteer fire department purchase Jaws of Life; we had the Creston Firefighters' Association purchase a rescue vehicle; we had the Langley Memorial Hospital Foundation establish a lifeline program and purchase emergency response equipment. We had the corporation of the district of Powell River fire department purchase Jaws of Life. Those issues would be considered health care priorities by this opposition, and would be supported as a useful way to expend lottery dollars.

Our question to the government during committee stage of this bill will be to have some assurance that this type of project will qualify in future. Quite frankly, if the government can't tell us now whether they will or they won't, because guidelines aren't in place, then I don't think we should be passing this legislation.

It was the late Ernie Hall who had the pleasure of introducing the Lottery Act in the Legislature on May 1, 1974. Now, some 18 years later, we are tampering with what has been a very successful formula. However, I believe that we are doing so with public support for the principle of those changes.

Going back to the second reading stage of that 1974 introduction to the Lottery Act, the speaker was leader of the Liberal Party when this House was once before blessed with the presence of Liberal members. He pointed out that lotteries were "a voluntary tax to support a charitable purpose or a worthwhile cause." We buy lottery tickets, he said, "to help private, voluntary organizations fulfil their objectives." I think he was quite right about that, so perhaps this new health special account also needs to consider who will be eligible to apply for funding. Should we restrict applications to service clubs, hospital service groups and hospital societies only? Should there be a matching-dollar requirement so that the community stays involved in some of these special projects? I don't advocate these propositions at the moment; I just raise them as things for other members to think about before we rush into full support of this bill just because we agree with the general principle.

I might point out, by the way, that the debate in 1974 and arguments by the NDP members of the House are worth reviewing. The quote from the Provincial Secretary of the day that we want this government to be aware of is from his closing remarks on second reading: "There is no intention for this government to look upon the lottery income as a significant part of its revenue at all. It is very much a minor affair...." Well, it's not minor anymore, hon. Speaker, but I think the spirit of his remarks was that government per se was not going to get its hands directly on these funds for general purposes.

I guess we should also inquire, as one of your members did in September 1977, about a change being made regarding purposes consistent with the objectives of the Western Canada Lottery foundation. We should know if there is any other legislation or relationship that needs to be considered as part of this redirection of proceeds.

In conclusion, although the official opposition has a number of concerns about the manner in which this government has chosen to implement this policy change, we support the overall principle of funding health care with lottery profits for urgent medical priorities, and will therefore support this bill in second reading.

R. Chisholm: I rise in support of this bill, in principle, and after hearing from my colleague, I will not dwell on anything that she's covered. I'm going to go at it from a different slant.

I suggest to this government that the lack of support of British Columbia sports is unduly punishing them, due to the change of priorities and the funnelling towards the medical system. I suggest that the sports facilities and the support of the clubs, teams and recreation help in health care. This bill fails to consider that sports keep children and adults -- approximately 700,000-plus who participate -- in shape. This keeps the older people fit and helps keep them out of the hospital. They live longer and are thus not as expensive on the system due to the terms of health care, and that keeps health care costs down.

I believe that this fund should be administered by a commission or a committee which would instruct the Minister of Health as to how these funds should be utilized to help streamline the system and make it more efficient. I hope that the government in third reading will consider that sports are a very integral part of health care, and if we don't support the sports, we are going to have an unhealthy population in the future, and it will cost more.

L. Stephens: It's my pleasure to rise tonight in second reading of Bill 10, the Health Special Account Act. First of all, I would just like to say that I think we all recognize the importance of health care in the province, and especially the acquisition of new technology, new equipment and the latest procedures to deliver the quality of health care to the best of our ability in this province. The challenges we face to do that are quite formidable indeed, given the rising costs from day to day.

I notice in section 3 that this money is set aside for operation and delivery of health care, health research promotion and education services. When this was initially brought forward, I think most people were hoping that it would go into the acquisition of new technology and new equipment for hospitals. That's something that I could support wholeheartedly. However the historical purpose of the lotteries was to fund cultural and sports initiatives in all the communities of British Columbia. Over the years this fund has been used for a variety of other purposes, with B.C. sports associations and their facilities receiving less and less. Many of the other provinces that use their lottery funds to further their sports programs spend between $8 and $13 per person. British Columbia spends slightly more than $2 per person, and it shows. As anyone who has travelled to some of these other provinces is well aware, the sports facilities in many of them are far, far superior to anything we have in British Columbia. Our sports groups, our children and our youth need more support and more facilities, and I would like to strongly urge 

[ Page 2537 ]

the government to bring forward some initiatives to help communities provide those sporting and cultural facilities that we desperately need in this province.

I would also like to reiterate what our health critic has said, and that is that I would support the arm's-length committee. I think that is an important part of this bill. The fact that the minister has a discretion simply on written authorization is something that I don't really support, but the intent of the bill to further health care in the province is something that I think we can support in principle.

U. Dosanjh: I take pride in standing here and speaking in support of this bill, the Health Special Account Act. This bill does more than simply put money into health care. This bill actually enshrines some of the fundamental principles that our government stands for: openness, integrity and honesty. We promised during the election campaign that one-half of the proceeds from the lotteries would go to health care, and this bill ensures that they will. They will not only simply go to health care in a general way, they will be reflected in the estimates every year of the Ministry of Health. That, in fact, is accountability, which is an important issue in the endeavours of the government all along.

I think it's important to say that when you deal with budgets, when a promise has been made and a budgetary issue has been decided, then it's up to the ministry to decide where to spend those moneys, within the context of this particular legislation, on the issue of an arm's-length committee. With the number of arm's-length committees that are being suggested by the opposition, maybe by the end of this session there will be no arms left for the committees. It's just that I think there are too many of those committees being suggested. Government is elected, ministers are appointed to govern and to deal with the budgets every year, and to deal with them in the best possible way -- with honesty, with openness, with integrity -- and to direct the funds to where they are actually directed to go by the public. The public elected this government to send one-half of the proceeds of the lotteries into health care. That's being done, and I take pride in saying that I support this bill.

M. Farnworth: It's a pleasure to rise on Bill 10, a bill that fulfils an important and major campaign promise during the election held in October.

Time after time on doorsteps throughout the riding and throughout the runup to the election you'd hear: "Why isn't the government spending more money? Why aren't we taking money from lotteries and putting it into health care?" We said that we were going to do that, and in our campaign platform, "A Better Way," we spelled out how we were going to do that -- that half of the lottery money was going to go to health care. We're doing that in Bill 10, and it's a substantial amount of money.

Last year the lotteries in British Columbia netted the province over $200 million. British Columbians spend more money on lottery tickets than any other jurisdiction in North America except the state of Massachusetts, so it's a substantial amount of money.

One of the members previously stated that in the last year some $14 million of lottery funds went to health care related items -- $14 million. We're taking half of over $200 million; that's over $100 million, and this government is putting it into health care. Not only are we putting it into health care, but we are making it accountable so not only members of the public but even the opposition can see where it is going to be spent. That is an important step. It is showing the public of British Columbia that we are keeping our campaign promise.

I just heard the comment "slush fund" bandied by members of the opposition. I'd like to remind them that that's why the debate over lottery funds and the misuse of lottery funds triggered the debate on where lottery money should go, and the public spoke with a very loud and strong voice that lottery funds should be going to health care. That's what we're doing and that's why I'm proud to stand up and speak in favour of this bill, and I know that my constituents will be pleased with what this government is doing.

R. Neufeld: I rise to speak to Bill 10, the Health Special Account Act, and I too, of course, am in favour of spending money on health care. I have some problems with some of the discussions that have gone on up until this point. I think that British Columbia is fortunate in having one of the best health care systems in the world. That was confirmed by the Seaton report, but some other items confirmed by the Seaton report were that the previous budget from 1991-92 was sufficient to continue to supply the health care needs of British Columbians as long as it was changed around a little bit within its own budget.

[8:15]

The NDP government elected to put another $500 million or $600 million into it and then to give half of the lottery funds to it. The problem I have with that $100 million -- as stated by one of the opposition members -- is that a lot of the money went into health care systems already. It went into sports and a lot of recreation around the province. We still have to come back and look at that. That money still has to come out of the government somehow in order to fund those projects around the province. Where's that money going to come from? It's still going to come out of the budget and out of the taxpayers' pockets. It doesn't matter.

There's only one taxpayer. Let's not fool anybody, and let's not think that we're putting something over on people. There was a little bit of fear when this promise was made during the election. The member of the government says that they are living up to one of their promises. Well, obviously they are living up to one of them. I'm glad to see that they're living up to one.

If I remember correctly, during the election, the reason was given that there were 700 people on the waiting-list. This $100 million, although it represents less than 1 percent of the total budget, was going to take care of those 700 people on the waiting-list. I would bet 

[ Page 2538 ]

that today the waiting-list is no shorter -- or it won't be a year from now -- than when we left office.

A hundred million dollars is an awful lot of money; it's a tremendous amount of money. But compared to a budget of $5.9 billion, it's insignificant. If we kept on using that money.... I would have no problem if they had continued to use that lottery funding around the province building health-care-related facilities or going into home health care or more bicycle paths. The doctors tell us that if we all walked or rode a bicycle a little more, we'd all be in a little better shape. Obviously I would be too. I look forward to doing that when we finally get out of the House and I get back to my constituency.

I do have a few reservations about the reason for what the members opposite are trying to tell the public of British Columbia. The $100 million is not going to reduce the 600 or 700 people who are on the waiting-list -- whatever it happens to be now. The other part of it is that they were going to put it into a special fund for research, so that the opposition can find out where all the money went.

It's quite interesting what happens with the health care special account. Money can be withdrawn from the account for administration and operation or delivery of health care, but we have health research, health promotion and health education services as part of it. If we're going to set up the special fund to deal with special health care needs, so that we can keep track of this $100 million, then why do we include administration and all those other items? It's going to be very difficult to look after.

Hon. Speaker, health care is important to every British Columbian. It is certainly important to me also. I just wanted to get up and let the government know that there were some misperceptions of what they were still trying to do out there that weren't quite correct. But I do agree that we can put it into health care and use it well.

J. Doyle: Hon. Speaker, I'm proud to speak in favour of Bill 10. I and the people of this province cannot think -- we found that out last year when we went door to door during the election campaign -- of a better way to spend half of our lottery moneys. It is a big change from the former government, where half of the lottery money -- I don't know what percentage -- went to their friends and insiders for recycling and other uses.

I am also proud of the fact that we are continuing as the CCF did in the past and that the New Democratic Party government, who pioneered medicare, are bringing up this initiative now to help it further so that medicare and health care continue to be affordable for all of us.

I do think it's good that I hear most members speaking in support of health care, but we must remember that our health care, which we take for granted, was threatened greatly by the former government with the threat of user fees. There's nothing more important than affordable health care for all of us. I feel that we must protect our medicare.

If we ever have any doubts about the medicare and health care system that we have in British Columbia, we should look no further than south of the border to see what not having health care for each and every one of us does. You need money before you can see your doctor. I feel that we have something we can be proud of, and with this initiative we will be improving it.

In closing, I would like to say that I'm very proud of Bill 10 and proud of our government for carrying out this initiative, which we had promised during the election.

V. Anderson: I rise to support this bill, but I must say that I support it under protest, because of what it implies. The hon. member who spoke just before me talked about the CCF government that brought medicare into being. I was a part of that process at that time and very much aware of it. I was very much aware that Tommy Douglas would give all the support he could give to health care. But I am also very much aware that Tommy Douglas would also rise in protest that health care had to be supported by the promotion of gambling.

I rise in protest of the source of the funds, because, as I watch the television and read the newspapers, I'm not sure if I'm watching the mafia at work in the gambling dens around the world or watching the man saying to the young people: "Get out there and gamble. Get out there and buy your tickets. Get out there and know that life is a gamble." We're educating people in our schools, in our programs and in the very direction of government. I think we have to philosophically ask ourselves if that is the right thing to do. The biggest promotion of gambling in this province is the government of British Columbia. As a part of the government of British Columbia, I must say that that is not something of which I'm at all proud.

I think it's something that we need to look at. Is the only way that we can have good health care by creating in our young people the understanding and the philosophical approach that life is to be got by gambling, that the one-in-a-million chance is the important thing in life, not the working for it, not the planning for it? We've talked on all sides of the House about supporting those in difficulty and in poverty. All the studies of the world indicate that the money we raise to go into health care does not come from the middle class or the rich. The largest percentage of it, in proportion, comes from those who take their food money and their grocery money and their children's money and their rent money and spend it on lottery tickets, because they hope out of their despair they might be the ones to strike it rich. Is that the kind of thing that this government wants to promote?

If we're really interested in health care, there are other ways. What about the taxes that we earn as a government from liquor sales and liquor profits? The millions that we make there? The millions that cause the sicknesses, the accidents, the family breakups and the family destructions that end up in our hospitals and in our health care system throughout the whole of their lives, and cost us millions of dollars. How about taking the money we earn from the very cause, which costs our health care so much, and putting it back in prevention 

[ Page 2539 ]

and cure, instead of taking it off for the other things that we want to consider are more important than health care, education and social services?

How about taking the money that we earn from the sale of tobacco, which causes the cancer which is one of the leading causes of the expense within our medical system? How about taking the money that we as a government earn promoting it and putting it back into health care and to health research and to health education? There is money there for health care. We have other sources besides gambling to do it. We have other sources.

On the one hand, we say whether we put this money to health care or to sports.... Having grown up in sports, I believe that we should be supporting the young people in sports, because that's their development, their mental and physical well-being. We should not be neglecting the children, as we are doing and have been doing for a long time.

We have all received letter upon letter and phone call upon phone call not only from Sports B.C. but from members in our own Legislature telling us of the devastating effects upon young people, because we have withdrawn from them the opportunity to participate in sports. Perhaps some have never participated in some of these events and don't realize the significance and the importance of them. It isn't only important that winners have a chance, because winners are only one out of hundred or one out of a thousand. It's the other 99 or the other 999 that we need to be supporting. We do not need to be supporting them through gambling -- saying that life is a gamble.

I approved of the support of health and will vote for this bill. Again, I will vote for it under protest. I will challenge this government. If they're willing to take money from gambling to health care and take it away from sports? Why do they not also take the money that comes in from liquor sales and provide it to health care and sports. Why do they not take the money from smoking and give it to the people who are living below the poverty line so that they can have a good, healthy lifestyle? All of the studies.... In fact, I was just reading the ones today from the inner-city schools in Vancouver. I should have brought them in, and then I could have gone on longer and given facts and figures on the number of children in the city of Vancouver and Victoria and other cities who are not able to have a healthy lifestyle and who will grow up using the health care system for the whole of their life, because they were not given the opportunity to have a healthy childhood in our communities.

[8:30]

We look at the Third World, and we usually look at the Third World outside of our jurisdiction, but the Third World is here in our own communities. All the laws about equity will not solve that problem unless we look at these. So I bring under protest to this group.... Let us take the money from lotteries and put it where it's needed as long as we have them. Well, let's find another way to raise that money, so we don't on one hand say to children, "Destroy your lives through gambling," and on the other hand: "Once you've destroyed it, then we'll help you to get back on your feet again maybe, but maybe not."

Let us be consistent. Let us re-examine what we do with our liquor taxes. Let us re-examine what we do with our alcohol taxes and our lotteries. Let us find better ways of building healthy communities.

F. Garden: I rise to support the bill that's before us, and I can't believe what I'm hearing. The previous speaker seemed to think that because we're taking this initiative we're raising a group of criminals in this province. I would suggest that that speaker and the previous speakers go down to some of the lower mainland hotels on any given day, or some of the major airline routes on any given day, and they'll see probably ten busloads of people leaving for Reno or Las Vegas -- fine, upstanding, mostly retired elderly citizens of B.C. They have given their lives for this province, and they feel that they've earned the right to spend their money as they see fit. I counted them one year because the same argument came up at the Union of B.C. Municipalities, and I spoke then passionately about the amount of money that was leaving this province, not by the poor, not by the disfranchised, but by people who had saved their earnings all their lives. They were now enjoying the opportunity to travel because they were in good health because of the system we provide for them, and they were leaving this country to spend their money.

I'm challenging the fact that everybody who buys a lottery ticket is poor and disfranchised. I'm saying that the opposition is out of step with the wishes of a large group of people in this province, a large group of people who said to us during the election campaign: "You're right on." I even had some people say to me: "If you took all the money from lotteries and put it to health care, we'd gladly buy tickets for that." But we're not doing that. We're taking 50 percent. For the rest of the money, the Minister of Government Services is going around this province asking people: "How do you want the GO grant spent? Do you want the situation to cease where hundreds of thousands of dollars were given out of a slush fund to those favoured groups around this province, and do you want it dealt out in a fairer and more humane manner so more people could get advantage of that money?"

Going further, I hear a lot about sports. This government will do what's necessary for the health of this province over the years, but I want to say this. There was a citizens' group which came into my office in Quesnel -- in my riding -- and said: "We want some GO B.C. money. You're spending too much on the sports of this province. We want you to spend some of your money on the old age pensioners so we could have facilities." So don't be misled by the fact that you're saying we're going to kill amateur sports. That's not true. When I was a kid, I got my soccer boots on my own, and I went up there, got my skates, and did what I had to do to get my fitness, in the sports, or on any team. I don't think any sports group should be using the government to prop them up. But I do say this: when we've gone to the people and we've said that this is what we'll do with your lottery money, and they've 

[ Page 2540 ]

said, "Right on," this opposition party should be unanimous in supporting that.

I do not buy the fact that all the money that's spent on gambling in this province has been spent by the disfranchised. There are some very good upstanding citizens contributing to that, and they will continue to do it. If we want to give all our money to medicare, they'd be glad to participate.

It's a great initiative, Mr. Minister, and I propose that the people are batting at windmills. They're giving a slight opposition, but there's not one of them who are going to vote against it.

B. Copping: I too support this bill; however, I think the debate has gone astray. This bill is not about whether or not there should be lotteries; in fact, that's a totally philosophical issue. It's a totally different question, and I might agree with the member for Vancouver-Langara. But this bill is about what do we do with lottery moneys, and I think it should stay on that track.

As for what we should do with lottery moneys, yes, this is a bill that responds to peoples' wishes that half or all go into health care. I agree with the member for Peace River North, who said there should be more bicycle paths, etc. It's no good having all these things unless we can spend money for health education to tell people why they should use them. A lot of us know that, again, it's not just for your coronary artery disease, it's for your peace of mind, etc.

We need more money for health education. As was stated, this money is not going for ongoing care -- it is for extras. Believe me, if there's anywhere we need extras, it's in health education and promotion. If not, we would be seeing every sexually active person using a condom. That is not the case. It's very sad. We have AIDS out there. This is a totally preventable disease.... Now I'm going to go astray here. We all have our little issues where we want to go astray. But we have a totally preventable disease. It's difficult to prove prevention, but this is a chance where some health dollars could be used.

H. De Jong: This debate, as the previous member has said, is becoming quite interesting, given the statements that have been made. I'm certainly not going to go that far out of line, I hope. But you know, hon. Speaker, there's been mentioned here.... The member from the opposite way said that this amounted to about $100 million of lottery funding going towards the Health ministry. You know, really, that can be appreciated. But just during the previous estimates that were discussed, the minister was asked a question as to whether the money that was derived by one ministry, out of whatever ministry.... Where did it go to? Did it go to the ministry, or did it go to the Minister of Finance general revenue? The answer was that it was going to general revenue.

Now this is a deviation from that normal procedure, and I think it's purely for political reasons that this is a deviation. I guess that's what makes it so difficult to deal with this question, because it is purely political and nothing else. You know, hon. Speaker, if the people of British Columbia were asked, "Would you be prepared to pay another $100 million in taxes, because we need it for the health system?" They would not be as upset with that as they are with paying $130,000 to a civil servant who has barely lifted a pen before but has been hired by the provincial government. Those are the things that upset taxpayers -- the unrealistic pay-outs by the government that have occurred from time to time. It's happening with this government, and it probably happened with some previous governments as well. That is the key issue.

I know that this was an election promise. But I would urge the minister that rather than having the Health ministry budget on a teeter-totter, dependent on how much the lottery operation brings in per year.... Perhaps it has been fairly steady, but there could be ups and downs. Is the Ministry of Health of such little importance to this government that the minister would not set a specific amount to come from the Lottery Fund rather than having that ministry on a teeter-totter wondering whether the 50 percent that they're going to get will be $100 million or $50 million? That would mean a shortfall in the budget.

Before the bill goes to third reading, I hope that the minister would consider an amendment to make it a specific amount that comes out of lotteries for health care -- or perhaps for specific purposes such as research and development, or whatever, rather than for a number of beds. If the government wishes to go that way, it's certainly on the wrong track for governing this province. The member for Vancouver-Langara made a lot of excellent points. Surely we do not want to encourage lotteries for the success of our health care budget.

D. Schreck: I rise to speak in favour of Bill 10. There are many arguments as to whether lotteries are good or bad, whether specific sources of revenue should be targeted to specific sources of expenditure and whether special accounts should be set up. We could debate each of those principles all night. One thing is very clear: we are elected to be here to carry out the wishes of our constituents, irrespective of those philosophical discussions.

I have a constituent by the name of Dorothy Butler, who appeared in my office well before the election campaign with a stack of petitions campaigning to have lottery money go to health care. I think most of us in this chamber saw our constituents, particularly senior constituents, collecting signatures in favour of linking lottery proceeds to health care funding. Regardless of the philosophical debate on special accounts, linking revenue sources to expenditure or the merits of lotteries, there is a grass-roots demand to have lottery proceeds go to health care spending. I am glad that my government listens. Therefore I join with the voice of Dorothy Butler in supporting Bill 10.

The Speaker: The minister closes debate.

Hon. G. Clark: I'll be brief. I am, of course, insulted by the remarks of the opposition that this would be somehow a political bill. Can you imagine! 

[ Page 2541 ]

What an insult! Accusing me and the government of being political! Is that some kind of swear word?

Of course it's a political bill. This is a matter of public policy and is something that we campaigned on during the election campaign. Many constituents and members campaigned and lobbied us on this, and we're very proud to bring in this piece of politics, which is to put aside $100 million of lottery funds for health care each and every year.

For those members opposite who are concerned about how it should be spent, they should note that in this bill, as it's contemplated, there will be a vote on this special account every year in the House. The Minister of Health will be accountable for spending half of every dollar that we receive from lotteries on health care. That's accountability; that's open government. That's another thing we campaigned on. People will be able to see where their lottery funds go, instead of them going to recycling schemes in White Rock or to some other places they used to go to.

This is a good-news bill. This fulfils a commitment during the election campaign. This shows our priority for health care. It's not a substitute, hon. members, for health care funding; there's some $400 million in additional health care funding in this province. Unlike the member from the Social Credit Party, we on this side are proud of the fact that we're increasing funding for health care, and we want to do more in the health care field, not less. That requires more resources. We're providing more resources out of general revenue, and we're also providing more resources from the lottery funds. I ask all members to support Bill 10, the Health Special Account Act.

[8:45]

The Speaker: The motion before you is second reading of Bill 10.

Motion approved.

Hon. G. Clark: I move that the bill be referred to a Committee of the Whole House by leave now.

Leave not granted.

Bill 10, Health Special Account Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: I call second reading of Bill 57, hon. Speaker.

PERSONAL PROPERTY SECURITY
AMENDMENT ACT, 1992

Hon. L. Boone: The bill makes a number of technical drafting changes to the Personal Property Security Act. These amendments will make it easier to use the Personal Property Security Act, but do not affect the underlying policy of the statute. Some of the changes made by the bill will clarify how goods or contracts should be characterized under the Personal Property Security Act. The Personal Property Security Act treats different categories of goods and contracts in different ways, and the amendments will clarify how certain types of goods and contracts should be treated.

Other amendments clarify ambiguities in the language of the Personal Property Security Act. These ambiguities have been identified through use of the statute and have resulted in practical difficulties in applying this legislation. Other amendments ensure that parties who register at the personal property registry at different times receive appropriate treatment. For example, a party who registers an interest in goods after the goods have been repossessed and are about to be sold should not be entitled to 20 days' notice of the sale. Other amendments change incorrect cross-references, clarify the definitions of forms and correct other minor drafting errors.

Hon. Speaker, I move second reading.

A. Warnke: The purpose of this bill is to amend the Personal Property Security Act, and as a result I should point out that this is not the first time this subject has been debated in this Legislature. Indeed, as I am sure the minister is most aware, this was debated in 1989. The original purpose of this bill was essentially to expedite borrowing and lending in the province. The purpose also was to regulate these various credit transactions regarding personal property and make them consistent with modern commerce. As well, a purpose was to provide a registration of all security transactions involving personal property in a single, centralized registry.

These are well known, and were outlined by a previous minister. Indeed, it is interesting to reflect on the person who responded for the opposition of the time -- the present Minister of Finance. I suppose it is most appropriate to raise one point that the present Minister of Finance raised then. These kinds of bills -- as the minister, I'm sure, is very well aware -- are difficult for the opposition in some respects, because they are very complex bills that amalgamate a series of existing acts. That was certainly the case in 1989. Fortunately, of course, what we are dealing with here is the amendment to the act that was passed in 1989.

There may be some criticism -- but I will hesitate to call it a criticism -- that this bill was introduced as recently as two days ago and is now in second reading. The reason why one could levy this as a criticism is that it's not altogether clear whether the government has given consideration or an allowance for some sort of critical analysis. A true cynic, as a matter of fact, might even go so far as to say that the speed at which the bill is being introduced -- and it is a complex bill, as the Minister of Labour said three years ago -- could be somewhat suspect. I will not go that far, but I think it is a point to raise before the minister.

I would hope that in her concluding remarks there will perhaps be some sort of elaboration on the rationalization as to why it is so necessary to introduce this bill and process it so quickly, simply because, as the Minister of Finance said two years ago, it is somewhat complex. What is being amended here may prima facie seem like another housekeeping measure. But I think, 

[ Page 2542 ]

certainly out of courtesy for this side of the House, to slow down the process to the point where some members of the opposition could at least examine the bill, see what it has amended and give an appropriate response.... It might well be that once that kind of consideration is given, the bill could proceed very quickly through all three stages.

It's important, therefore, to reflect on something that was said last night. It seems to me that the quickest way to slow down a bill is to initiate a bill in such a context. It arouses suspicion. On this particular bill, given the nature of what is being dealt with, a cynic might well say: "Well, what is the government trying to hide now?" We are dealing with creditors, debtors and so forth. We are dealing with money, after all. I think this kind of subject really needs a special kind of treatment in this chamber.

As the lead critic on this particular bill, I reflect that when we talk about the Personal Property Security Act, I have to keep in mind something that the Minister of Finance himself had to keep in mind three years ago. I'm wondering -- because I have not heard from the minister who's introducing this bill -- whether representatives of the bar association were consulted on this. I never heard anything about whether the representatives of the financial institutions have been solicited for opinions in this matter nor, for that matter, representatives of lenders, borrowers and consumers themselves. After all, this bill does initiate some basic changes in personal property as collateral. For that reason, ever since this bill was introduced and I was named the person to examine this bill, while my staff and I have gone through it in this very short period of time, I see no objection in the short term to supporting this bill in principle. Nonetheless, once again, I think it is very fair to caution this government as to the way they deal with the process of establishing bills.

I had it confirmed earlier that there will be an amendment to this bill because of at least one error I see in the bill. There are other sections. There are a number of sections at committee stage. I think my colleagues will have to raise some questions of clarification and so forth. To a certain extent, the minister should have mentioned some of these basic problems in her introductory remarks. I hope the hon. minister will perhaps deal with these in the summary remarks.

Basically I recognize the purpose of the three sections. At the outset, in more general terms, I cannot really say that I oppose this bill. I'm merely pointing out that the government should, once again, re-examine the process by which they introduce and process the bills. The minister should indicate some of the problems I've pointed out, however minor they may seem. I think the minister should also deal in her summary remarks with how this bill will "reduce legal fees for arranging loans and lower the cost of obtaining credit." I think terms like that deserve some elaboration. Perhaps we could take these up at committee stage as well.

There are a few problems which no doubt deserve some elaboration at the committee stage. Therefore, on these points, I want to essentially support the principle of this bill. For the time being, until we get into committee stage and especially after hearing the minister's remarks, I wish to at least initiate some sort of support for this bill.

Hon. L. Boone: It would be nice if I knew what the problems were, but as you know, second reading is not a time to deal with all of the difficulties or the section-by-section part of the bill. Second reading is for dealing with the principle of the bill. The principle of this bill is to make the bill better, to improve it, to make it easier to work with. There are no changes to the actual policy. Perhaps the member is reading things into this that aren't there or seeing problems that I hope I can clarify when we get into the clause-by-clause stage. Certainly I do not see any difficulties with this bill or any problems that arise from what you talked about.

[9:00]

The member is also chastising us for not bringing this bill in later or for not giving them more time. I'd like to mention to the member that in previous years we have been lucky at times to have bills 24 hours in advance. I think two days is quite adequate for anybody to take a bill such as this one. This is not a lengthy bill. There are technical changes in it; there are no changes in the policy with regard to the bill. I think any good research department should be able to clarify this bill in a very short time. Certainly two days is enough time to do that. I move second reading of the bill at this time.

Motion approved.

Bill 57, Personal Property Security Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: I call second reading of Bill 60.

COOPERATIVE ASSOCIATION
AMENDMENT ACT, 1992

Hon. L. Boone: The Cooperative Association Amendment Act, 1992, amends the Cooperative Association Act to permit provincially incorporated cooperatives other than non-profit cooperatives to continue out of the province into another jurisdiction and become subject to the other jurisdiction's legislation as if they had been incorporated in that other jurisdiction. Similarly, the amending bill will permit cooperatives incorporated in other jurisdictions -- wow, that's a tough word to say that many times, especially at 9 o'clock at night without having eaten supper! -- to continue into the province and become subject to the province's legislation as if they had been incorporated here.

This bill will ensure that the rights of creditors and others having an interest in the continuing cooperative are protected. As well, it provides members of a continuing cooperative the right to dissent to a continuation and obtain repayment of the moneys they invested in the cooperative. This bill will provide cooperatives which have not chosen statutory non-profit status with continuation powers similar to those enjoyed by companies under the Company Act.

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Finally, this bill clarifies the application of membership expulsion provisions for housing cooperatives. We are making this amendment to assist housing cooperatives by removing an ambiguity that has been the subject of several court cases. The amendment clarifies the existing policy that housing cooperatives may adopt special fast-track membership expulsion provisions which can be used under certain specified circumstances, but that general membership expulsion provisions continue to apply under all other circumstances.

I move second reading.

R. Chisholm: I rise today to say a few words on Bill 60, the Cooperative Association Amendment Act, 1992. As a Liberal in British Columbia, I am committed to freer trade with other jurisdictions. I'm a firm believer in honest, open and fair competition. Legislation that deters or resists competition is bad and unwanted legislation. Bill 60 encourages competition. I realize the government had some prodding from the private sector to bring this piece of legislation forward, but nonetheless I wish to congratulate them for listening to the concerns of the agriculture industry. After discussing this bill with companies such as Lucerne and Foremost, and smaller companies such as Island Farms and Avalon, there seemed to be some opposition but much more support for this bill.

Bill 60 will allow cooperatives the right to associate and merge with other cooperatives from other jurisdictions. The current Cooperative Association Act is an anomaly. Other provinces do not have such restrictive measures on their books. Regardless, if the legislation was shortsighted at the time or an honest oversight, the current act needs to be amended. The proposed bill will allow companies such as the Fraser Valley Milk Producers' (Cooperative) Association to amalgamate with cooperatives from other jurisdictions and become one federally chartered cooperative. I might add that this merger does not alter the relationship of the creditors of the amalgamating cooperatives. The union of the various cooperatives appears to be essential for the long-term success of the agricultural industry, and in particular the dairy sector, for technical efficiency and competitiveness.

There have been changes occurring in the marketplace, and we must allow the industries of the province to adapt to those changes. Major retailers throughout western Canada are demanding five things from the dairy industry: a consistent product throughout the west; a consistent distribution system; western Canada sales incentives and promotion packages; one supplier of dairy products; the best possible price based on total volume in the west. The retailers of the dairy products demand these changes to allow them to compete with producers from other areas. The obvious area of competition and major threat to British Columbia producers, of course, lies south of the border. This bill will not solve our cross-border shopping woes, but it will provide the cooperatives a better opportunity to adjust to the competitive market.

If future changes are forced on us, the flexibility this act brings will allow our agriculture industry to survive and thrive in the future. If anyone knows how to compete, hon. Speaker, it is the agriculture industry of this province. We must listen to them and work with them to ensure their long-term survival. We cannot blindly ignore the concerns of those outside Canada. We need only look at today's Globe and Mail article on GATT. It is our duty to ensure that these sectors in the agricultural community can resist the pressures that may very well come to bear on them.

I look forward to more legislation from this government that will encourage competition and make our industry strong and more competent in spite of global pressures.

L. Stephens: It's my pleasure to speak to second reading of Bill 60 this evening. As critic for Small Business and Trade, I would like to say that the Liberal opposition supports freer trade and is very happy to see interprovincial barriers to business disappear. We wholeheartedly support this bill.

Hon. L. Boone: It's a pleasure to bring forth a bill that has such unanimous support from the opposition. With that, I move second reading.

Motion approved.

Bill 60, Cooperative Association Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

COOPERATIVE ASSOCIATION
AMENDMENT ACT, 1992

The House in committee on Bill 60; M. Farnworth in the chair.

Sections 1 to 4 inclusive 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 60, Cooperative Association Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. G. Clark: I call Bill 54.

PENSION STATUTES
(TRANSITIONAL ARRANGEMENT) ACT

Hon. L. Boone: This bill allows for the temporary amendment of the Auditor General Act, the Ombudsman Act, the Pension (College) Act, the Pension (Municipal) Act, the Pension (Public Service) Act, the Pension (Teachers) Act, the Provincial Court Act and the Public Service Act.

[9:15]

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In order to comply with new federal requirements under the Income Tax Act, the amendments required have been brought forth. They are technical in nature and do not represent any change to existing policy. Specific amendments to pension acts are not being introduced at this time, to ensure that the province can take the most appropriate action after administrative and costing arrangements have been clarified with the federal government.

Section 2 of this transitional arrangement act provides the Lieutenant-Governor-in-Council with temporary authority to make amendments to the pension plans. This authority is limited to the extent necessary to ensure that pension plans conform to the federal Income Tax Act regulations. This authority is limited and specific but will allow for appropriate technical amendments to be made with the necessary legal force. This authority is necessary to prevent the province from being placed in a position where the federal government could move to change the status of pension plans under the Income Tax Act.

Section 3 provides for plan members to continue to receive existing benefits. It provides the Lieutenant-Governor-in-Council with temporary authority to make amendments to continue benefits in the event that they were restricted through compliance with federal requirements.

Section 4 will allow for changes to take effect this year. This is not a mandatory provision, but it does provide an opportunity to implement changes for this year.

To ensure that authority is not delegated for longer than absolutely necessary, section 5 provides for the repeal of this act by August 31, 1993. In addition, it ensures that any amendments made under the authority of this act are temporary. Any permanent changes to the pension acts will require the approval of this Legislature before August 1993.

Hon. Speaker, I move second reading of Bill 54.

F. Gingell: It gives me pleasure to rise, state that we support this bill, and sit down again.

Hon. L. Boone: It gives me great pleasure to thank the hon. member and to sit down myself after moving second reading.

Motion approved.

Bill 54, Pension Statutes (Transitional Arrangement) Act, read a second time and referred to a Committee of the Whole House for consideration forthwith.

PENSION STATUTES
(TRANSITIONAL ARRANGEMENT) ACT, 1992

The House in committee on Bill 54; M. Farnworth in the chair.

Sections 1 to 5 inclusive approved.

Title approved.

Hon. G. Clark: I move the committee rise, report remarkable progress, and ask leave to sit again.

The House resumed; the Speaker in the chair.

Bill 54, Pension Statutes (Transitional Arrangement) Act, 1992, reported complete without amendment to be considered at the next sitting of the House after today.

Hon. G. Clark: I call second reading of Bill 59, Hon. Speaker.

SECURITIES AMENDMENT ACT, 1992

Hon. G. Clark: Bill 59, Securities Amendment Act, 1992, will correct deficiencies in the legislation, and respond to recent developments in securities markets and interjurisdictional regulatory arrangements. Many of the amendments are technical and housekeeping in nature. One example of how the bill responds to recent developments in securities markets is the amendment that will authorize the British Columbia Securities Commission to apply to the Supreme Court of British Columbia for a request to a court in another jurisdiction to compel a person outside of British Columbia to give evidence for use in an enforcement proceeding before the B.C. Securities Commission. The amendment also authorizes a court outside of British Columbia to apply to the British Columbia Supreme Court for an order compelling someone in British Columbia to give evidence for use in a hearing before a Securities Commission outside of British Columbia.

Today's securities markets transcend provincial boundaries. Not all the people involved in a British Columbia securities transaction will be found within the province. This amendment responds to a problem shared by all Canadian securities commissions in obtaining evidence from individuals in other provinces or outside of Canada. It was highlighted in a recent case involving the Ontario Securities Commission. The Ontario Securities Commission is seeking a corresponding amendment to the Ontario Securities Act, and it is anticipated that other provinces and territories will follow suit.

The amendment strengthens the commission's powers and contributes to interprovincial cooperation in securities enforcement. This amendment gives British Columbia some of the most advanced securities legislation in Canada. An example of how the bill responds to recent developments in interjurisdictional regulatory arrangements is found in the various sections of the bill providing for a uniform exempting power from certain requirements of the Securities Act and regulations. The need for these amendments became clear on the implementation of the multijurisdictional disclosure system, an arrangement between the United States Securities and Exchange Commission and the securities regulatory authorities in each of the Canadian provinces and territories. Under the MJDS, major U.S. companies can sell securities in Canada in reliance of U.S. disclosure documents, and major Canadian companies can sell securities in the U.S. in reliance of Canadian securities documents. More flexible, and in 

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some cases additional exempting powers are required to allow the B.C. Securities Commission to provide the specific exemptions necessary to fully implement the MJDS. This bill gives the commission the power to make these exemptions.

The balance of the bill contains a series of miscellaneous technical amendments. Some examples of these amendments are: to clarify when certain exemptions from the registration and prospectus provisions of the securities are available; to provide for cost recovery of commission staff time and resources spent on activities carried out pursuant to other enactments and policy statements; to reduce unnecessary costs for issuers by permitting issuers to stop sending records to security holders where records have been returned on three separate occasions; and finally, to correct technical deficiencies.

Generally speaking, this is a continuation of a series of changes to the Securities Act since it was brought in just a few years ago, to improve our ability to enforce the act and in this case to improve our ability to deal with interjurisdictional problems, both between Canada and the United States and between British Columbia and other provinces. By and large, in that respect it has somewhat of a housekeeping nature, although it does give further powers to the Securities Commission to deal with some loopholes, if you will, that exist in the current legislation and, frankly, in all other securities commission legislation across the country. This amendment will no doubt result in amendments -- or at least will be the first one in a series of amendments -- across the country with respect to this kind of legislation.

F. Gingell: I would first like to thank the Minister of Finance for arranging for me and one of our staff members to be briefed on this bill this morning by two of the legal staff of the commission. We appreciated their very kind help. Their work was most useful to us, and we are quite satisfied with all the provisions of the bill. We particularly support the new provisions that will allow interjurisdictional investigations to proceed in an orderly manner. With that, I wish to state that our caucus will support this bill.

The Speaker: The minister closes debate.

Hon. G. Clark: I move second reading.

Motion approved.

Bill 59, Securities Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

SECURITIES AMENDMENT ACT, 1992

The House in committee on Bill 59; M. Farnworth in the chair.

Sections 1 to 34 inclusive approved.

Title approved.

Hon. G. Clark: I'd like to thank members for their cooperation on the bill. It is a good piece of legislation. With that, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 59, Securities 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 9:23 p.m.

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