1993 Legislative Session: 2nd Session, 35th Parliament 
HANSARD

The following electronic version is for informational purposes only. 
The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY 

(Hansard)

TUESDAY, MARCH 30, 1993

Afternoon Sitting

Volume 8, Number 10

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The House met at 2:05 p.m.

The Speaker: I call the House to order and ask the indulgence of the House while I say a few words before I invite Marjorie and George Thomas of the Esquimalt Indian band to offer the prayers today. This is the second occasion in as many weeks that Mr. and Mrs. Thomas have agreed to pray with us. The first was on opening day. In the confusion of events that we remember all too well, access to the building was denied to some people. I regret to say that our distinguished guests, Mr. and Mrs. Thomas, were among those who were turned away. On behalf of the House, I'd like to take this opportunity to extend to the elders our most sincere apologies for that mistake and to thank them most warmly for agreeing to give us a second chance today. Thank you.

Prayers.

Oral Questions

SHAUGHNESSY HOSPITAL CLOSURE

L. Reid: My question is to the Minister of Health. You've just spent $850,000 on an emergency department at Shaughnessy Hospital that will not open. On budget day in British Columbia, can you justify this decision for the taxpayers in this province?

Hon. E. Cull: It's a very sound decision for the taxpayers of this province. By closing the old Shaughnessy Hospital building, we're able to save $40 million, which we will then be able to reinvest in hospitals throughout the high-growth areas of this province. In addition, it stops us from having to pour millions of dollars into keeping an old building going, which even now can't meet basic safety standards and basic modern hospital standards. I think it's a very sound decision.

L. Reid: My supplementary question is also to the Minister of Health, who told us that Shaughnessy Hospital would be closed so that we might move acute care beds into the Fraser Valley. Out of a possible 306 acute care beds, this minister will move only 83 out of the city. Why is this justification for the first-ever closure of a major teaching hospital in Canada?

Hon. E. Cull: As the member knows full well, there was a commitment made, when we announced the closure of the old building, to ensure that certain services remain intact -- the spinal cord services, the services that are provided to Grace and Children's hospitals and the services that have to be provided in a teaching hospital. In making the decisions about the allocation of beds, those kinds of things have been taken into consideration. But as I said, 81 beds are being eliminated from the system, and the money that is saved from eliminating those beds will be reinvested in the high-growth areas, in programs throughout the province.

Interjections.

Hon. E. Cull: The members opposite ask: "Where?" Well, in about an hour they'll know.

L. Reid: Final supplemental to the Minister of Health. We have a recent agreement which affects the HLRA, and the Minister of Finance first stated that $50 million would be the cost. The employers have recently estimated a conservative $300 million for the cost of this agreement, and as much as $500 million. Is the closure of Shaughnessy Hospital needed to fund this new agreement?

B.C. HYDRO DIVIDEND POLICY

R. Neufeld: My question is to the minister responsible for B.C. Hydro. Last week the minister responsible for B.C. Hydro was unable or unwilling to advise the House what rate of return on equity the government is planning to extract from Hydro in dividends. I'll try to refresh his memory. On March 2, 1993, the Minister of Energy, Mines and Petroleum Resources wrote the president of Highland Valley Copper and told him that the government expects a rate of return of 18.89 percent from B.C. Hydro within two years. Can the minister tell us how much that amounts to in dollars, based on Hydro's current equity?

[2:15]

Hon. M. Sihota: It's a pleasure for me to refresh the memory of the member opposite by telling him the following. Since 1985, inflation in British Columbia has gone up by about 40 percent. Over that same period, hydro rates have gone up by about 14 percent. This government indicated in 1992 that it wanted to make sure hydro rates were capped. We introduced a provision, through regulation, which insisted that hydro rates could not increase more than 2 percent above inflation. The reason for that provision was to protect consumers and make sure they enjoy the benefits of cheap electricity and to make sure that industrial and commercial users in B.C. continue to benefit from cheap electricity, which gives us a competitive advantage over other jurisdictions.

R. Neufeld: Much the same as the increases in labour negotiations that have taken place in the past.

A supplemental. The new dividend policy will in fact require hydro rate increases equal to $400 million. In dividends, that's three times what the government is currently collecting from Hydro. Does the minister understand the effect that this new policy will have on residential users, particularly seniors and those on fixed incomes? Doesn't he understand how this policy threatens the viability of many energy-intensive industries, including the mining industry?

Hon. M. Sihota: First of all, I'm not too sure where the hon. member gets the number of $400 million. Two billion dollars in revenue multiplied by 3.9 percent, or 4 percent, which is what the rate request is for, would realize $80 million potentially, not $400 

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million, and that only if the BCUC approved the request from B.C. Hydro.

Secondly, he asked about mining and other industries. Hon. members should know that industrial users would only cover about $18 million of that $80 million in increased revenue.

ATTITUDE TO TOURISM INDUSTRY OF MINISTER OF FINANCE

C. Tanner: To the Minister of Tourism. Does the minister understand that the Minister of Finance is dismantling her ministry as his comment on her effectiveness and his regard for the tourism industry? If the minister doesn't want to answer that simple question, I'll give her another one: does the minister concur with comments made by the Minister of Finance recently to a tourist association when he called hotel owners a bunch of fat cats?

CHEQUES TO SAFER RECIPIENTS

V. Anderson: My question is to the Minister of Municipal Affairs. In response to a concern from senior citizens, I would ask why the cheques issued by the ministry to SAFER recipients are no longer available for the fourth banking day before the end of the month, as they have been previously. Can the minister explain the change, and what action will be undertaken to rectify this situation?

Hon. R. Blencoe: The cheques to seniors under SAFER will not be altered. We have changed the process in terms of eligibility becoming available during birthdays or anniversary times. This will make more money available to seniors, because what happened in the past was that all applications came in at the same time and it backed up the system. This way we can be more efficient in getting the money to seniors in a more effective way.

V. Anderson: Again to the Minister of Municipal Affairs, I'm not sure he understood the question. The concern is that low-income seniors rely on SAFER cheques arriving before the end of the month. When they do not arrive by the fourth banking day, these people are put in grave difficulty. Can you now assure us that in future these low-income seniors will receive their cheques by the fourth banking day before the end of the month?

Hon. R. Blencoe: This government is very concerned about the plight of seniors. This government has always supported seniors. And I can guarantee that member we will ensure that seniors are supported, as this is the priority of this government. It always will be the priority of this government.

AIRCARE LABOUR DISPUTE

A. Cowie: To the Attorney General. Would the Attorney General indicate the alternatives this government has for considering motorists who have to have licences and insurance when the AirCare workers go on strike?

Hon. C. Gabelmann: I'm fully confident that an agreement will be reached, and if one isn't, we'll deal with the issue at that time.

GOVERNMENT CAUCUS LABOUR DISPUTE

A. Cowie: To the Minister of Labour. The labour situation is most intriguing with the pending strike of the government research officers and legislative assistants in this very building we're in today. Would the minister tell us whether he intends to join the picket lines or to walk across them?

The Speaker: Hon. member, the Chair does not see how that comes within the minister's jurisdiction.

GAMING REVIEW AND ABORIGINAL GAMING

C. Serwa: It's clear that today is question period and not answer period. My question is to the hon. Attorney General, and he always answers questions. Last fall the government initiated a review of gaming in British Columbia. Can the Attorney General advise the House when that review will be released, and can he also advise the House why aboriginal gaming issues were not included in that review?

Hon. C. Gabelmann: Last fall I asked two members of this House to do a fact-finding review of gaming issues; their report has been forwarded to me and to the Minister of Government Services. We are considering information that was gleaned from that report. With respect to aboriginal issues, I think the member knows there is an existing committee, which includes aboriginal people, that is looking at the question of aboriginal gaming.

C. Serwa: As the Attorney General is aware, the Nanaimo Indian band has been planning a $40 million casino-hotel complex on reserve land for some time, and it's apparently expected to open within a year. Chief Thomas was cited in a recent article as saying that the provincial government has not only tacitly approved the project, but has promised to deal with the matter on a nation-to-nation basis. Is that an accurate reflection of the government's position at the moment?

Hon. C. Gabelmann: I have met with Chief Thomas, and more recently with other members of the band. We've indicated to them that there are a lot of very difficult issues to sort through, including Criminal Code provisions which apply. The band and our ministry have had very cordial discussions. I have indeed discussed dealing with them on a nation-to-nation basis with the band, but no commitments of any kind have been made. As far as I'm aware, no decisions have been made by the band with respect to any securing of capital or any development of such a proposal, and certainly no dates have been set by them 

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as to when something like this would be up and running. There is a lot to do between our ministry and the native community in British Columbia in respect of aboriginal gaming. We are taking the issue very carefully and very slowly, and we are doing that in full consultation with the native community.

C. Serwa: Will the minister commit today that he will continue to regulate all gaming on a province-wide basis that treats all British Columbians equally -- native and non-native alike? Will he commit that there will be no special status based on race, creed or colour for gaming activities?

Hon. C. Gabelmann: I will commit that at some point we will bring legislation to this House to deal with gaming matters. I will commit to ensuring that gaming in British Columbia operates within the Criminal Code, and I will commit to making sure that gaming in this province suits the needs and aspirations of all British Columbians.

B.C. RAIL PURCHASE OF VANCOUVER WHARVES LTD.

D. Symons: My question is to the Minister of Transportation and Highways. B.C. Rail, a Crown corporation currently in debt to this government for $47 million, has just spent an additional $15.5 million to purchase Vancouver Wharves. Why is this government loaning money to Crown corporations so that those corporations can turn around and buy out independent private enterprise?

Hon. A. Charbonneau: B.C. Rail is making a very wise investment in the transportation future of British Columbia. As the member opposite should know, transportation costs constitute a fairly high percentage of the total cost of selling our commodities to the world. If we're going to remain competitive, we've got to have an efficient and seamless transportation system, and B.C. Rail is one of the best at doing that.

D. Symons: This government is giving Crown corporations access to capital that no private business could ever hope to match and is then allowing them to engage in head-to-head competition. Is it now government policy to take over independent businesses and run them under bureaucratic, inefficient Crown corporations?

Hon. A. Charbonneau: The member opposite should be aware that B.C. Rail made more money last year than CN and CP combined. So the hon. member should be aware that B.C. Rail does not need to come to the taxpayer to raise these funds; it does so independently, and will pay them down independently.

Orders of the Day

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

Motion approved.

Hon. G. Clark tabled the comptroller general's report of interim financial statements for the ten-month period ending January 31, 1993.

ESTIMATES OF SUMS REQUIRED FOR THE SERVICE OF THE PROVINCE

Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: Estimates of Sums Required for the Service of the Province for the fiscal year ending March 31, 1994, and a supplement to the estimates for the fiscal year ending March 31, 1994, recommending the same to the Legislative Assembly.

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

Motion approved.

Hon. G. Clark: Hon. Speaker, I move, seconded by the hon. Minister of Women's Equality, that the hon. Speaker do now leave the chair for the House to go into Committee of Supply.

Budget Address

Hon. G. Clark: Hon. Speaker, I am pleased to present the second budget of this New Democrat administration.

When we took office we set out new priorities and a change of direction for British Columbia. In our first budget we faced the challenge of implementing these priorities, given the unfavourable fiscal position we inherited. We have met this challenge. We have brought British Columbia's growing budget deficit under control in a planned and balanced way, avoiding the drastic measures which undermined the province's economy in the early 1980s. By cutting waste and improving efficiency we were able to cut the growth of government spending almost in half: from 12 percent to under 7 percent. We were able to protect vital services for British Columbians in the face of federal government cutbacks, and we began making important changes in areas like equality for women, improved labour relations, health care reform, freedom of information, and resolving natural resource and land use conflicts.

[2:30]

Continuing to provide the services demanded by British Columbians while getting our financial house in order requires a strong economy, and a strong economy can only be achieved by business, labour and government working together in partnership. British Columbia had the best-performing economy in Canada in 1992, and we will continue to lead in 1993.

The challenge we face in this, our second budget, is to lay the foundation for economic renewal. That means taking action to help create new long-term jobs, particularly in those regions hardest hit by the economic 

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downturn; making the key investments in people and physical assets necessary to create a healthy economy; preserving essential health and education services for people -- services which are critical to both renewed economic growth and social well-being; and reducing the deficit in a planned and balanced manner. This budget provides a framework for achieving these important goals.

The global economic slowdown which began in 1991 has lasted longer than originally anticipated. Forecasts of economic growth for major industrial economies were repeatedly revised downward during 1992. The Canadian economy as a whole grew by only 1 percent last year, well below the 3 percent growth predicted by most economists. British Columbia did much better, growing at an estimated rate of 2.4 percent in 1992. While the Canadian economy lost 100,000 jobs, our provincial economy created 28,000 new jobs.

British Columbia's economy is expected to continue improving this year. Growth in B.C.'s exports and higher consumer spending in 1993 are expected to boost overall economic growth to 3.2 percent, resulting in 35,000 new jobs next year in British Columbia.

However, federal monetary policies pose a significant threat to our economic recovery. The federal government and the Bank of Canada have deliberately maintained a large gap between Canadian and U.S. interest rates since 1989. This action made Canada's recession worse than that of our major trading partners. A recent study by one of the country's largest independent economic consulting firms found that the federal interest rate policies cost British Columbia 52,000 jobs and $3.2 billion in lost production between 1988 and 1991. That represents $1,000 lost for every man, woman and child in the province. And while interest rates have come down over the last year, they are still high compared to U.S. rates.

When this government took office 16 months ago it inherited a record deficit of $2.4 billion. Shortly after we took office, an independent review of the province's finances was commissioned which found that the deficit would top $2.8 billion in 1992-93 if no action was taken. Our 1992 budget began to bring spending under control and reduce this deficit. However, a slower than expected economic recovery put new pressures on both expenditure and revenue during the year. A mid-year reduction of the federal government's revenue forecasts cost British Columbia close to $400 million in lower revenues, and slower economic growth resulted in increased expenditures in areas such as income assistance. We reacted to these pressures by taking tough action to control spending during the second half of the 1992-93 fiscal year. We cut expenses like advertising, unnecessary bureaucracy, consultants and travel, and achieved savings of over $300 million mid-year.

Despite serious expenditure pressures in 1992-93, we have brought spending in on budget. As a result, we have been able to reduce the 1992-93 deficit from the $2.8 billion forecast in independent financial reviews to $1.95 billion. We have done this while maintaining basic health and education programs for British Columbians. This year, British Columbia will have the lowest deficit as a percentage of gross domestic product of any province in Canada.

However, British Columbians must be aware that we face serious fiscal constraints over the next few years. Federal off-loading is a major problem faced by all provinces. Ottawa has attempted to deal with its persistent high deficits by off-loading its financial responsibilities for essential health, education and income assistance programs onto the provinces. A recent study by the national accounting firm of Ernst and Young shows that during the current fiscal year alone, the cost of this off-loading to British Columbia is over $1.6 billion. That accounts for over 80 percent of the 1992-93 budget deficit. Ernst and Young forecast that the cost to British Columbia will get higher each year.

In 1989-90 the federal government contributed over 40 percent of health care and post-secondary education costs in British Columbia; by the year 2000 it will be contributing only 23 percent. Prior to 1990 the federal government contributed one-half of provincial social assistance costs; by the year 2000 it will be contributing only one-third. A recent study by the C.D. Howe Institute concludes that federal off-loading is responsible for a substantial reduction in the social programs and services necessary for a sound economy.

In preparing this budget, my cabinet colleagues and I have consulted widely across the province. We met with municipalities, labour groups in both the private and public sectors, community groups, service organizations and business groups ranging from forestry to banking to local chambers of commerce. Most importantly, we met directly with the people of the province in 11 public forums around British Columbia. We found many differing opinions on the specific policies we should pursue over the coming months. However, we found a high level of agreement about the fundamental directions we must pursue. There was agreement that creating jobs should be one of our highest priorities, particularly in those regions hit hardest by the economic downturn. There was agreement that permanent, high-quality jobs can only be created by a vibrant and growing economy and not by make-work schemes. There was agreement that new investment in both the public and private sectors is required today to build a strong economy tomorrow. There was agreement that we must ensure investment in people as well as in physical assets.

The challenge that we as the provincial government face in this budget is to lay the groundwork for a strong economy in the twenty-first century. Building our future means maintaining our investment in people through key services like health and education, protecting our economic future by bringing British Columbia's deficit under control in a fair and balanced way and achieving our economic potential by creating long-term jobs through new, productive investments.

British Columbians place a high priority on maintaining and improving our basic health, education and social services. They realize that these services represent a vital investment in our future. A healthy and educated population enhances both our quality of life and our long-term economic performance. Most of 

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these services are delivered by independent public bodies like school boards, hospitals, colleges and universities -- and are funded by grants from the provincial government.

In his January prebudget address the Premier announced provincial grant levels early, to give these important public bodies time to plan effectively. The serious fiscal situation we face means that this year's grant increases are lower than last year's increases. However, with careful planning, the funding levels are sufficient to maintain high-quality health and education services.

This government is committed to maintaining a first-rate, universally accessible health care system. In order to maintain these services, we have provided total health care funding of just under $6.2 billion for 1993-94. This represents an increase of $243 million or 4 percent over last year. Provincial grants to hospitals will increase by $76 million or 3 percent. This increase is significantly above the 2 percent increase in Ontario, no increase in Alberta and the 3 percent decrease in Saskatchewan. Combined with greater efficiency, this increased grant will cover the costs associated with a growing population and will guarantee continuing high levels of patient care.

However, maintaining the quality and accessibility of our health care services over the longer term will require changes in the way these services are delivered. In every province in Canada and in most other countries, rising health care costs are running up against the ability of taxpayers to finance them. In British Columbia, health care costs have risen by an average of 10 percent per year over the past five years -- a trend that simply cannot be sustained. At the same time, individuals and communities are looking for a greater say in how health care is provided.

The Seaton Royal Commission on Health Care and Costs concluded that redirecting health care dollars toward community-based and preventive programs is essential for the very survival of universal medicare. Last month this government announced a new and positive direction for British Columbia's health system to ensure that medicare keeps up with our changing needs. Our new directions in health care include: a new emphasis on health promotion and public awareness; new community health centres in all regions; greater public participation and responsibility in the delivery of health care; more effective management to improve the efficiency and effectiveness of the health care system; and the involvement of all care providers in long-term changes to health care delivery.

In this budget we are providing an additional $100 million to continue implementing new directions in health care. And, as an initial step to control costs in the Pharmacare program, the deductible for everyone except seniors will immediately be increased to $500 from $400.

The hallmark of every successful economy is cooperation between labour and management. This month we concluded a landmark accord allowing important health care changes to be made in a cooperative and constructive manner. This agreement will become a model for North America. It creates a new partnership to ensure the preservation of high-quality, universal health care into the twenty-first century.

Finally, to help ensure that health care remains universally accessible, we are eliminating Medical Services Plan premiums for 430,000 lower-income British Columbians and reducing premiums for another 135,000 British Columbians. These reductions for lower-income earners will be financed by a 3 percent increase in basic premiums, effective October 1, 1993.

Education represents an essential investment in the collective talents of British Columbians. Over the long term our success in creating new jobs depends on the quality of our educational institutions. During the coming fiscal year we will spend $3.3 billion on grants to elementary and secondary schools. This represents an increase of approximately $100 million, or 3 percent, over the previous year.

This increase provides full funding for a growing population and higher student enrolment. It includes an additional $12 million to help fund the special requirements of school districts, particularly those experiencing rapid growth. It provides an additional $11 million for expanded English-as-a-second-language programs, special support for inner city schools and other improvements to the education system.

[2:45]

Operating grants to universities and colleges will be $1.03 billion for the coming fiscal year, and that represents an increase of $34 million over the previous year. This funding level provides for 2,800 new full-time post-secondary spaces to help keep pace with population growth and increasing demand. It provides start-up funds for the new University of Northern British Columbia, as well as for the opening of a new college campus to serve Langley, Surrey and Richmond -- just to prove we're not partisan.

Hon. Speaker, maintaining British Columbia's social safety net to protect the victims of recession and unemployment is becoming an increasingly difficult task. While British Columbia has been successful in creating jobs at a much higher rate than any other province, many Canadians have moved here in search of new opportunities.

At the same time, the federal government has been off-loading its responsibilities to unemployed Canadians in two ways. First, it has made it more and more difficult for workers to collect unemployment insurance benefits. The most recent changes alone will disqualify many British Columbians from benefits and cost the province an estimated $31 million per year in new income assistance payments. Second, the federal government has reneged on its commitment to fund the costs of income assistance with the province on a fifty-fifty basis. As a result, British Columbia now bears virtually the entire burden of increases in the income assistance caseload.

Clearly, changes are required to the traditional approaches of providing income assistance. This does not mean penalizing the victims by reducing benefits or arbitrarily cutting off benefits to those in need. It does mean a concerted national approach to eliminating poverty in Canada, with sustainable cost-sharing by both the federal and provincial levels of government. 

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We are calling on other provinces and the federal government to work cooperatively to develop a future framework for Canada's social safety net.

A new approach also means creating new jobs, more jobs, and targeting them to those in greatest need and providing new education and training opportunities. Since taking office we have expanded job creation and training programs and removed barriers to employment for income assistance recipients. This coming year we will be allocating more than $80 million to move people off income assistance and into the workforce. Initiatives will include: a major expansion and improvement of on-the-job training programs in areas like forestry and tourism, increased funding for community-initiated projects which enhance the employability of income assistance recipients, training positions for income assistance recipients with private employers and non-profit organizations, and a government-wide initiative to target job creation programs to British Columbians currently receiving income assistance. Our investment in these initiatives now will generate major benefits by increasing personal economic independence and reducing the income assistance caseload.

Hon. Speaker, all British Columbians are now aware that Canada faces a serious fiscal situation. We are certainly not unique in this regard. Most other jurisdictions in the Western World are experiencing difficulties in matching the demands of their citizens for public services with a reluctance to pay more in taxes.

During the extensive prebudget consultations we held across the province, there was a basic difference of opinion regarding the approach we should take. Some people said: "Eliminate the deficit as quickly as possible by slashing government spending." But British Columbians should be aware that eliminating the deficit next year would mean shutting down over half the hospitals in the province. Making the cuts necessary to balance the budget overnight would make us less healthy, less well-educated and less well-off by putting thousands out of work and destroying economic opportunities. This government will not repeat the mistakes of the radical restraint program of the early 1980s.

Hon. Speaker, some would like us to increase spending significantly and allow the deficit to rise. But allowing the deficit to rise unchecked during an upturn in the business cycle is not sound economic policy. More and more of British Columbians' tax dollars would go to banks to pay interest on debt instead of to provide services to people. As the Premier announced in his January prebudget address, this government is committed to a balanced approach to deficit reduction. That means continuing to reduce the deficit, while maintaining our commitment to basic services and laying the foundation for economic recovery. However, a balanced approach cannot avoid some tough decisions. Maintaining our investment in people and infrastructure means cutting spending growth in lower-priority areas and improving efficiency in government. And it means raising additional revenue to ensure that important investments in our future are made today.

The initiatives we took last year to control costs and improve efficiency are being continued this year. In last year's budget we reduced the rate of growth in our program spending -- net of payments for debt service and income assistance -- from over 11 percent to under 5 percent. In this budget the growth in these program costs has been reduced further to 3.3 percent. Six ministries will spend less in the coming year than they spent this year. For example, across government, the budget for advertising and publications has been cut by $3 million. The budget for furniture and equipment has been cut by another $3 million. The budget for consulting, supplies, materials, utilities and vehicles has been cut by almost $30 million.

In our first budget we eliminated five redundant agencies of government. As part of an ongoing review, we are eliminating seven more this year: the Plain Language Institute of British Columbia, the B.C. Youth Council, the Justice Development Commission, the B.C. Housing and Employment Development Financing Authority, the Cemetery and Funeral Services Advisory Council, the Medical Manpower Advisory Board and the Special Medical Review Board.

This year we also undertook a comprehensive review of senior management structures in government. The review included the most senior management levels: assistant deputy ministers, directors and managers. As a result of this review, 5 percent of all senior management positions are being eliminated, for a savings of approximately $4 million.

In our first budget we took action to ensure that elected officials lead by example in reducing the costs of government. We froze the salaries of all MLAs and cabinet ministers and are establishing an independent mechanism to review MLAs' salaries and benefits. In January the Premier announced a 5 percent cut in cabinet pay for himself and all B.C. cabinet ministers. For the coming fiscal year, we are taking additional measures. The freeze on MLAs' salaries will be continued for another year. The salaries of deputy ministers and senior administrators of all Crown corporations and provincial government agencies who are making more than $100,000 per year will be frozen.

However, spending public tax dollars in the most efficient way goes beyond the provincial government itself. Over one-third of provincial spending on programs goes to grants to public bodies like school boards and hospitals. But major decisions on how these tax dollars are spent are made by the governing boards of these bodies, not by the provincial government. Therefore we established the Korbin commission to look at ways to achieve greater efficiency and better accountability to the taxpayer through the broader public sector. The commission will report later this spring, and its findings will form the basis for new initiatives to control costs and to improve efficiency across all agencies of government. In the meantime, we are asking senior administrators of all public bodies who are making over $100,000 per year to follow the provincial government's lead and to accept a salary freeze.

Even after all the measures we have taken to control spending, we must face the reality of tax increases. The only alternative is to make severe cuts to essential programs like health and education. We are aware that our tax rates must remain competitive with other jurisdictions. We know that tax increases are unpopular, 

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but we are determined to ensure that our children have good schools, our families have quality health care and our economy keeps growing. We firmly believe that failing to make strategic, long-term investments in our future for the sake of short-term popularity is irresponsible. Letting the deficit run out of control is equally irresponsible. Therefore we are asking British Columbians to contribute more today so we can all do better tomorrow.

While all British Columbians are being asked to pay a little more, the measures we are proposing are fair. There are still British Columbians earning over $250,000 a year who did not pay one cent of income tax in 1990. That is unacceptable. This government is committed to ensuring that lower- and middle-income British Columbians do not bear the brunt of the province's revenue requirements. We are looking first to those who are most able to shoulder the heaviest burden and last to those working families who cannot afford to pay more. Therefore a number of revenue measures we're putting forward in this budget are designed to ensure that higher-income earners in large corporations pay their fair share.

First, the personal income tax surcharge on higher-income earners will be increased, effective January 1, 1994. For taxpayers paying the first tier of the surtax, the increase represents an additional 11/2 cents on each dollar earned above the tax threshold. For taxpayers paying the second tier, the increase represents an additional 3 cents on each dollar earned above the tax threshold. This increase applies only to the wealthiest 8 percent of taxpayers. There will be no increase in income tax rates for 92 percent of British Columbia taxpayers. Additional revenue from this measure is forecast to be $105 million in a full year.

Second, the income tax rate on large corporations will be increased by 0.5 percent to 16.5 percent, effective July 1, 1993. This measure is forecast to generate an additional $17 million in a full year. However, the income tax rate for small businesses will not rise.

Third, a surtax of up to 3 percent will be applied on luxury vehicles selling for $30,000 or more, and the sales tax allowance on automobile trade-ins is eliminated. These measures are forecast to generate an additional $56 million in 1993-94.

Fourth, we are progressively reducing the homeowner grant for the wealthiest 5 percent of homeowners. Effective this year, the homeowner grant will be reduced at a rate of $10 for every $1,000 of home value above $400,000. This change will allow us to increase the basic homeowner grant for people with average- and lower-priced homes by over 4 percent -- to $470 from $450. For seniors the grant will increase to $745 from $720. It will allow us to cap school property tax rates and moderately reduce school taxes in approximately 15 smaller school districts in B.C.

Fifth, a new graduated school property surtax will be applied to high-value homes assessed at over $500,000. This measure is forecast to generate an additional revenue of $37 million in 1993-94 and will be paid by only by the wealthiest 2.5 percent of homeowners.

These revenue measures ensure that the wealthiest British Columbians will pay their fair share to support education and health services. However, in order to raise the revenue we require to maintain these services, we are also asking middle-income British Columbians to pay a little more. Effective immediately, the general sales tax rate will increase to 7 percent from 6 percent. Even with this increase, we will have the second-lowest sales tax rate in Canada. In addition, effective October 1, 1993, the sales tax will be applied to the cost of specified labour services. Labour to maintain residences and other real property will remain exempt. These two measures are forecast to generate an additional $385 million in 1993-94.

To help maintain quality education, residential and non-residential school taxes will rise by an average of 4 percent in 1993, as will rural area property taxes. These increases are expected to be below the average increases levied by municipalities this year. In spite of fiscal pressures, unconditional grants to municipalities are being maintained this year. As recommended by the Provincial Commission on Housing Options, the renter's tax reduction is being eliminated and will be replaced by a new affordable housing program.

[3:00]

Changes to liquor prices and tobacco tax rates will generate an additional $53 million in 1993-94.

By targeting revenue measures to those who can afford to pay more, we are able to provide tax relief for those most in need. During our prebudget consultations, many community groups and individuals expressed concern over the impact of a sales tax increase on those with moderate incomes. Therefore, to offset the impact on middle- and lower-income British Columbians, we are introducing a new sales tax credit of $50 per person, or $200 for a family of four. The credit will be reduced gradually as incomes rise. Thirty percent of British Columbia residents will receive the sales tax credit; that means a $50 million tax cut for 600,000 households in British Columbia.

During prebudget consultations, the business community strongly urged us to provide tax relief for small business. In response to these concerns, we are increasing the threshold for the corporation capital tax to exempt approximately 2,000 small businesses and to reduce taxes for another 1,500 small businesses in B.C. We are also implementing the recommendations of a joint business-government committee established to review the corporation capital tax. In response to the concerns of the tourism industry, we are reducing certain health inspection fees paid by restaurants. These measures will improve tax fairness for British Columbia business.

We are introducing measures to assist our mining industry. In my meetings around the province, representatives of the mining industry raised concerns about increased fees. In response to these concerns, we are eliminating the notice-of-work fees and exempting mining access roads on Crown lands from property taxation. In response to suggestions from the business community, we are also exempting international air freighters from the jet fuel tax.

[ Page 4888 ]

I am well aware that nobody likes to pay higher taxes, but we must support the basic education, health and services necessary for a healthy economy while reducing the deficit. These revenue measures show our commitment to a fairer tax system. They place the burden largely on the wealthiest British Columbians who are most able to pay, and they show our commitment to maintaining a competitive tax system. Even with the new revenue measures proposed above, B.C. will have on average the second-lowest tax rates in Canada. This government will ensure that we remain among the lowest-taxed jurisdictions in Canada and that our tax dollars are spent wisely and efficiently.

Let me now summarize the budget's fiscal plan. As I indicated, this government inherited a deficit of $2.4 billion. In our first budget year we were able to bring the deficit below $2 billion and to bring expenditures in below budget, despite strong spending pressures. This budget continues the process of deficit reduction. Expenditures for fiscal 1993-94 will total $19 billion, an increase of 5.7 percent. This is below last year's growth rate of 6.5 percent and is the lowest rate of spending growth since 1987-88. Revenues for 1993-94 will total $17.5 billion, an increase of 9 percent. The resulting deficit for 1993-94 is $1.5 billion. This represents a significant reduction from the $2.4 billion deficit we inherited.

In summary, we have been successful in shifting the government's spending priorities, in bringing the rate of spending growth under control and in continuing to reduce the deficit. If the federal government had lived up to its cost-sharing commitments to the provinces, British Columbia would now have a budget surplus of $783 million.

This government's highest priority is to build British Columbia's future and to make the long-term investments today that will be the foundation for prosperity in the twenty-first century. Without economic growth, a secure and prosperous future for British Columbians is simply not attainable. Without renewal, many regions and communities across the province face a future of dislocation and unemployment. Without more people working and more businesses investing, we will never be able to eliminate the deficit.

British Columbia has performed well compared to other provinces during the last several years, and we can do even better. We must lay the groundwork for renewed economic growth now, by making investments which are critical for a productive and sustainable economy, in our natural resources, in improving and building new facilities like schools and hospitals, in transportation, and in education and training to ensure a skilled and competitive workforce for the twenty-first century.

I am pleased to announce details of B.C. 21 -- Building Our Future. It's a major commitment: a plan to lay the groundwork for longer-term economic growth. Its overall purpose is to bring key investment activities together to develop a new, more effective approach to economic development in all regions. Its focus is on productive investments which generate economic and social benefits today and over the longer term. It is regionally targeted to identify key strategic investments which enhance the economic base and the quality of life of British Columbia communities, and it encompasses investment in much-needed physical infrastructure -- from highways to health centres, as well as investment in people. This action plan to build our future will break new ground by ensuring that the jobs generated by this investment are targeted to those who need them most. It will ensure that enhanced job training forms a key component of public and private sector investment activities.

B.C. 21 -- Building Our Future has four major components. First, B.C. 21 will accelerate the government's investment program to support vital public services like health care, education and justice. For fiscal 1993-94 we are increasing project authorization for social capital facilities to $1.42 billion. This represents an increase of $350 million, more than 30 percent over the previous year. Because these investments must be made in any event, this year's increase will not increase the province's deficit in the long term. Projects will be completed over the next three years and the cost amortized over the useful life of the assets. This enhanced funding level will allow increased investment throughout the province. For example, projects will be undertaken to expand community colleges, to initiate a major program to replace portable classrooms with permanent facilities, to build new community health centres, and to improve and to build new courthouses. I hope the members opposite vote against these initiatives. We will also initiate a new program to increase the number of child care spaces, both in the community and in schools, universities and health care centres.

Second, B.C. 21 breaks new ground with a more businesslike approach to transportation investments -- investments that are essential for future economic development now and into the next century. In prebudget public forums, many British Columbians told me they are willing to pay more taxes if they can be assured that the revenue will be dedicated to worthwhile investments. To give this assurance, the B.C. Transportation Financing Authority will be established to finance and construct new highway and other high-priority transportation projects. This authority will be self-financing, with dedicated provincial revenues. These major investments will be amortized over the useful life of the completed projects. We have provided $80 million in new borrowing authority for the entity, and major regional transportation initiatives will be announced over the coming months. Revenue from a 1-cent-per-litre fuel levy effective September 1, 1993, and a levy on vehicle rentals will be dedicated to the new authority. In this way, British Columbians will be guaranteed that new revenues will be invested directly in improved transportation facilities throughout the province.

Third, B.C. 21 will focus the investment activities of Crown corporations to meet regional economic goals. B.C.'s Crown corporations expect to invest over $900 million over the coming year. This forecast includes over $400 million in ongoing capital spending and almost $500 million in new projects. We will ensure that these investments are sensitive to regional needs, complement other government and private sector in-

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vestment activities, encourage the use of goods and services supplied by B.C.-based businesses, and make the greatest possible contribution to developing the skills and talents of British Columbians.

[3:15]

Fourth, B.C. 21 will direct an additional $100 million in new expenditures in 1993-94 to develop innovative approaches to investment and job creation. Programs funded by this new expenditure will be aimed at improving the way in which business is done and money is spent in the public sector. The focus will be on projects with an economic return, combining job creation and investment in physical assets with regional economic diversification, employment equity goals and training. Examples of programs and projects funded in 1993-94 are: a new silviculture initiative aimed at combining forest enhancement with a comprehensive training program and greater community participation; a redirection of programs to ensure that people on income assistance receive the opportunities and training they need to participate in other B.C. 21 projects; a new housing pilot project aimed at addressing the problem of homelessness while providing training for young people; a new student summer employment program; new initiatives by the B.C. Trade Development Corporation to help develop markets for regional exports; and a new community initiatives program to provide cost-shared funding for small-scale capital projects initiated at the local level. More details on these and other initiatives will be announced over the coming months.

Today I am tabling comprehensive budget legislation to implement this new strategy. B.C. 21 is a multi-year initiative that will grow over time as other new and innovative projects are developed. It will not by any means be a panacea for all the economic difficulties we must overcome. It will be complemented by other major initiatives to encourage private sector investment, such as a new British Columbia Investment Office to cut government red tape, additional use of the B.C. Endowment Fund to lever new private sector investment in British Columbia businesses, and a new high-tech link between government and its suppliers to ensure faster payment and increased use of local companies.

In summary, I believe that B.C. 21 can play a vital role in building our future, investing in people and creating long-term jobs in all regions of the province. As we move toward the twenty-first century, our biggest challenge is economic renewal. Over the next decade we must make the transition from a specialized, resource-based economy to a diversified, value-added economy. Our ability to eliminate the deficit while providing the services required for British Columbians depends on renewed economic growth. This budget lays the groundwork for that renewed growth.

We have protected our investment in people by giving funding priority to vital services like education and health care, in the face of severe budget constraints. We have continued our commitment to improve the efficiency of government by controlling costs and eliminating unnecessary spending. As a result, the rate of spending growth has been reduced for the second year in a row. We have ensured that new revenues needed to maintain our investment in people are raised fairly, and we have reduced the deficit from $2.4 billion when we took office to under $2 billion in 1992-93, and to $1.5 billion for the coming year.

We have introduced an important new multi-year initiative to build British Columbia and lay the groundwork for longer-term economic renewal. But government alone cannot achieve this renewal. It is a challenge which requires the cooperation of many groups and individuals in the private as well as the public sector. Together we can build a sound base for a healthy and vibrant economy in the twenty-first century.

F. Gingell: I, like most British Columbians, am shocked by the budget introduced today. Through its inability to reduce spending, this government is shackling the next generation in debtors' chains before they can even walk. Spiralling debt is the reason behind our poor financial situation.

The provincial debt -- now over $23 billion and counting -- is going to increase by $3,000 per family as a result of this year's budget. We, as a province, cannot afford an increase in government spending, yet we are being presented with a budget with an almost 6 percent increase in spending. The reason for this is that the Finance minister has already sold out to the big public sector unions. It is a cynical strategy: buy the unions and try to buy the next election. It won't work. Sweetheart deals are unacceptable when the financial health of this province is in critical condition.

Instead of backroom deals with the health unions, the Finance minister should have been in touch with his colleagues in Ontario. Even Bob Rae, master of the budget deficit, is now beginning to realize the severity of the debt crisis. The Ontario government has discovered that not only the debt on the books of the Legislature, but all government debt, affects the borrowing ability of the provinces. Taxpayers are holding the bag for all guaranteed provincial debt. Debt is not an investment. This may come as a shock to the Premier: debt is debt. Perhaps the Minister of Finance could explain that to the Premier.

As we speak, the province of Ontario is preparing to slash jobs and control its debt. In its interim report, the Korbin commission says that in the province there are 300,000 government employees, both direct and indirect, yet in her terms of reference Ms. Korbin, the $1,200-a-day consultant, was not allowed to determine whether this is an appropriate level. The government by its silence has said that it is satisfied this is an appropriate number of provincial employees. In fact, this budget goes further: the government is again increasing the already bloated civil service. The opposition is serving notice today that having 300,000 civil servants in British Columbia is not sustainable. You cannot create an economy by buying government jobs with taxpayers' money.

In the year just ended, the Finance minister increased the debt of this province by $4,000 for each family. During the last fiscal year, the only people able to pay this increase were government employees, as the private sector chopped jobs and reduced salaries. The 

[ Page 4890 ]

private sector recognizes that tough decisions are needed for survival. The Premier spoke through the throne speech about making tough decisions. Where are the tough decisions in this budget?

I once read about the stone crab, and I'm convinced that the government looks at the taxpayers of British Columbia the way that crab trappers look at the stone crab. Each year trappers catch millions of stone crabs and rip one of their legs off. They then throw them back into the sea, where during the next year they grow a brand-new leg, only to be fished out of the sea again the following year to have another leg ripped off. The people of British Columbia can be stone crabs no longer. The province can't afford any more tax ripoffs. We need to reduce the amount of tax revenue required by government, not simply increase it year after year at the whim of the Minister of Finance of the day.

In this budget the Finance minister has increased taxes to the tune of over $1 billion -- fees, licences, motor fuel taxes, income taxes, social taxes and tolls. The list is too long to mention. However, the damage done to the taxpayer is that they have increased total taxes payable by consumers by over $1 billion, and that homeowner grant changes will hit taxpayers not according to income, but according to the value of one's home -- two different things. This is an assault on seniors, regardless of their income -- on those people who want to continue to live in the communities they've lived in for the last many years.

They've increased sales taxes by $305 million, out of the pockets of British Columbians and out of the cash registers of our retailers. Increased fuel taxes will drive British Columbians across the border -- plain and simple.

Unfortunately this budget is bereft of new ideas and solutions to our existing problems. The government has bought into the idea that there is some tax room in British Columbia. The only tax room in this province is in the accountants' offices, where at this moment many businesses will be planning to move south of the border where business is not regarded as a social evil.

We were looking for some thoughtful budget reduction in this document. Instead what we got was a blatant confirmation that the unions are still running this government. It is obvious why the real premier of this province, Ken Georgetti, couldn't make that B.C. Transit trip to Italy: he was too busy briefing the Minister of Finance on how to sell this budget to the non-unionists.

[3:30]

We expected to see some commitment to cutting the deficit. Instead the government has resorted to the same chicanery of its predecessor.

Interjections.

The Speaker: Order, please, hon. members.

F. Gingell: Well, here's the proof. In the 1992-93 taxation year, this government has received what is described as a substantial sum, a prior-year adjustment, which they have included in this year's revenues. They don't tell us how much.

Interjection.

F. Gingell: Only one? Are you sure it isn't more than that?

They used those funds as revenue in '92-93 to make the year look better than it did, instead of applying them to the previous years. Let's just have a little more openness.

Number two, they have increased total spending by over $1 billion, or nearly 6 percent, which is almost three times the average wage increase in the private sector in British Columbia and about double the rate of economic growth. They have to learn that you have to get the rate of the increase in government spending below the rate of the increase in the economy.

Number three, they have increased social services spending by 17 percent, admitting the defeat of their economic policies as welfare goes further and further out of control.

Four, they've launched a new Crown corporation with the promise that it will grow, adding to the $26 billion debt that this province presently has.

This government is painfully out of touch with the financial realities not only of this province but of this country. Did the government not hear the dire warnings of the Canadian bond rating service, which put all provincial governments on a negative outlook due to both large deficits and to out-of-control government spending? It is absolutely unfathomable that a government, even an NDP government, would choose to exercise such politically motivated punitive tax measures against a province which only 18 months ago elected them to office.

At the end of this fiscal year, this NDP government will have been in power for 21/2 years. To the Premier, who promised that he would balance the budget over a five-year period, I wish you to know that you're almost $5 billion in the red, you're going downhill and you've only got 21/2 years to fulfil your promise. This Premier, who during that election campaign stated that he would not spend a penny that this province doesn't have, has increased the debt of this province during the NDP's term in office by approximately $8 billion.

So much of this budget that we've just heard was slopped out of the bucket during the past few days that I was really surprised to find today how much swill still remained at the bottom of the pail. I will of course have more to say about this tomorrow, and I now move adjournment of the debate.

Motion approved.

Introduction of Bills

Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: bills intituled Build BC Act; Budget Measures Implementation Act, 1993; Income Tax Amendment Act, 1993; Property Taxation Statutes Amendment Act, 1993; Social Service Tax Amendment Act, 1993; Social Service Tax Amendment Act (No. 2), 1993.

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Hon. G. Clark: Hon. Speaker, these six bills implement budget measures I announced earlier today and reintroduce the sales tax on legal services. In moving first reading, I will state the primary purpose of each bill. Bill 3, the Build BC Act, establishes the B.C. Transportation Financing Authority and a special account called the Build B.C. account. In addition, the bill provides the authority to increase gasoline and diesel fuel tax by up to 1 cent per litre and to impose a flat tax on short-term rentals of passenger vehicles. Revenues from these taxes will be dedicated to the B.C. Transportation Financing Authority.

Bill 4, the Budget Measures Implementation Act, 1993, increases the tobacco tax rates and the tax rate on natural gas used in pipeline compressors. The bill also restricts revenues and expenditures associated with the sustainable environment fund to programs administered by the Ministry of Environment, Lands and Parks.

Bill 5, the Income Tax Amendment Act, 1993, increases the personal income surtax rates and the general corporate income tax rate. The bill also eliminates the renter's tax reduction and introduces a refundable sales tax credit.

Bill 6, the Property Taxation Statutes Amendment Act, 1993, provides for an increase to the basic homeowner grant and the phase-out of the grant for owners of higher-valued homes, the introduction of a school tax surtax payable by owners of higher-valued homes and the exemption from property tax for mine access roads.

Bill 7, the Social Service Tax Amendment Act, 1993, increases the provincial sales tax rate, imposes the tax on purchases of certain labour services, extends the tax to parking in prescribed areas, removes the trade-in allowance on purchases of passenger vehicles and imposes a tax rate of up to 10 percent on purchases of luxury passenger vehicles.

Bill 8, the Social Service Tax Amendment Act (No. 2), 1993, imposes the tax on purchases of legal services retroactively to June 1, 1992, and prospectively from April 1, 1993.

I now move first reading of Bills 3 through 8.

The Speaker: Is leave granted to proceed with division with our guests on the floor?

Leave granted.

Motion approved on the following division:

Bills 3 through 8 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Hon. M. Sihota: I wish to advise all members that the House will sit again tomorrow, Wednesday, at 2 o'clock.

Hon. M. Sihota moved adjournment of the House.

Motion approved.

The House adjourned at 3:43 p.m.

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