1993 Legislative Session: 2nd Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, APRIL 27, 1993
Volume 9, Number 9
Afternoon Sitting
[ Page 5509 ]
The House met at 2:03 p.m.
Prayers.
E. Barnes: I just noticed a very good friend of mine in the galleries: a former caucus staff person, political activist, businessman, musician, etc., etc., Mr. Robert Mingay. Would the House please join with me in making him welcome.
S. Hammell: In the precincts today are several grade 10 students and their teacher from Johnston Heights Secondary School in Surrey. This school has been recently redesigned to respond to the future, and the result is unique and very beautiful. The students have also participated in a unique schedule called the two-by-ten timetable. They take two courses for ten weeks, allowing intensive study of a subject before moving on to others. Would the House please join me in making them welcome.
J. Weisgerber presented a bill intituled Fiscal Restraint Act.
Interjections.
J. Weisgerber: One thing about it, we don't have to wait from 1972 to....
Interjections.
The Speaker: Order, please.
J. Weisgerber: This bill requires that overall government spending be limited to 1 percent below the previous year's growth in the economy if growth has occurred, as determined through the gross provincial product, or to the previous year's budget where no growth has occurred in the province's economy.
Government spending is broadly defined. Municipal spending is not included, but transfers to municipalities are. Off-budget spending by Crown corporations and other public sector bodies is included in this restraint bill unless they are self-financing. Finally, the provisions of this bill can be modified only with the unanimous consent of the House.
The purpose of this bill is to provide long-term protection to taxpayers by ensuring that the size of government will not grow, relative to the economy as a whole. While it does not limit the absolute size of government, it provides for zero growth or in fact a shrinking of the relative size of government, gradually extracting the government's hand from the taxpayers' pockets.
Bill M215 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.
R. Chisholm presented a bill intituled Family Day Act.
R. Chisholm: This bill is designed to ameliorate the lives of all British Columbians at a time when juvenile delinquency is on the rise, the family unit has metamorphosed and financial obligations often detract from the quality time spent together as a family. It is imperative that we acknowledge the importance of family life. A day spent in celebration of the family can only increase our awareness and quality of life. I know that the values that our pioneers built this province on had to do with the home and family. As we get into the speed of modern society, I think we forget about the foundations that helped us to build such a magnificent province.
I'm looking forward to seeing communities across British Columbia make Family Day an important part of our tradition in the future. It should be noted that Alberta has passed a similar act, which has proven to have a positive impact on the quality of living in Alberta. I urge members to support this legislation.
Bill M216 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. B. Barlee tabled the report of the Agricultural Land Commission for the year ended March 31, 1992.
Hon. T. Perry: I move the introduction of a bill standing in my name intituled the Advanced Education, Training and Technology Statutes Amendment Act, 1993, and that it be now given first reading.
Interjection.
The Speaker: Order, please. Hon. minister.
Hon. T. Perry: I regret that I've neglected to bring with me the message from His Honour the Lieutenant-Governor, and by your leave I shall return at a later date with the appropriate message.
The Speaker: Thank you, hon. minister.
HEALTH CARE ACCORD
L. Reid: My question is for the Minister of Health. Health care in British Columbia is heading into a long, hot summer. This government has placed workers and hospitals in a state of brinkmanship. Nurses are discussing job action, hospital budgets are in chaos and doctors are out of the talks. Will the minister table today a full cost accounting for this accord and reveal why
[ Page 5510 ]
this is going forward before the uncertainty has been resolved in this province?
Hon. E. Cull: The member has the full cost accounting that was prepared by the Hospital Labour Relations Association, which examines in considerable detail what it will cost the hospitals with the accord and without the accord. I know she has that document. She also knows that the parties are meeting today to discuss what happens now with the agreement and how we can move forward. Those discussions are ongoing. As we are in the middle of the Health estimates, she will be advised during that debate as to the progress of those discussions.
L. Reid: I'll pose my supplemental question to the Minister of Finance. He stood in this House and said that the cost of the agreement is $50 million. The HLRA has said $529 million, which is the cost accounting that the minister refers to. What is the difference, and where are British Columbians going to find an extra $450 million?
Hon. G. Clark: Last time I looked, it's the Legislature that approves the budgets for the Ministry of Health and the acute care sector. The Minister of Finance, of course, has some role in it. We can predict with a fair degree of accuracy how much money will be given to hospitals in any given year. The number we gave for the wage bill in the acute care sector, $50 million over three years, still stands.
L. Reid: The unions have announced that they are not prepared to give up a single cent in this deal. What will this government have to add to the agreement to ensure that the minister's reputation is salvaged before this deal proceeds?
ABORIGINAL GAMING
J. Weisgerber: My question is to the Attorney General. Over the weekend it was reported that the Beecher Bay band are contemplating a $250 million casino resort complex. We know that the Nanaimo band are actively planning a $40 million Las Vegas style casino. Is it the position of this government that the province has exclusive jurisdiction over gaming in British Columbia?
Hon. C. Gabelmann: Yes.
J. Weisgerber: Has the Attorney General then conveyed to the tribal councils around this province that it is the position of his government that the province has jurisdiction and control over gaming on Indian reserves?
Hon. C. Gabelmann: I think the Leader of the Third Party knows that there is an aboriginal gaming committee which has been meeting and continues to meet. I think the member knows -- other members also know -- that there have been discussions at the staff level between native people and ministry people on these issues. These discussions and consultations continue.
[2:15]
J. Weisgerber: It is the position then of the province that they have jurisdiction and control, but the province is unwilling to convey that to the tribal councils. Will the province make its position on this most critical issue clear for all British Columbians, aboriginal and non-aboriginal alike?
Hon. C. Gabelmann: Yes, we will.
B.C. HYDRO CHAIRMAN'S CONTRACT
A. Warnke: My question is for the Deputy Premier, in the absence of the Premier, concerning the contract of Marc Eliesen. In addition to the $50,000 moving expenses, the lucrative executive benefit packages and the $195,000 per year salary, the package also includes a 30 percent, or $58,500, bonus. Will the Deputy Premier take the appropriate action to table the bonus provisions? Why was this government less than forthright about discussing Mr. Eliesen's contract more fully?
Hon. A. Hagen: On behalf of the minister responsible for B.C. Hydro, I will take the hon. member's question on notice for a response when he returns.
APPOINTMENT TO THE LABOUR RELATIONS BOARD
G. FarrellCollins: My question is to the Deputy Premier. Perhaps the real Premier may choose to answer it, I don't know. Perhaps she can explain to this House why Hans Brown, the campaign manager for the NDP in the last election, has been given a job with the Labour Relations Board? Why is it that despite assurances given to the business community in this province, his duties are to transfer the appeals division of the Employment Standards Acts to the Labour Relations Board?
Hon. A. Hagen: The question by the member is related to the responsibilities of the Minister of Labour, and announcements will be made either by the minister or by government. I will take the question on notice on behalf of that minister.
The Speaker: Hon. minister, I regret that with the preamble, we cannot formally take that on notice.
A supplemental, hon. member.
G. Farrell-Collins: It's becoming evident time after time that the government is taking these questions on notice -- or attempting to -- so that they don't need to answer them. Hon. Speaker, they must be accountable to the people of this province. Somebody on that bench must know that Hans Brown has a nice big payoff job with the NDP, and we want to know why.
[ Page 5511 ]
B.C. TRANSIT STAFF TRIP TO EUROPE
A. Cowie: My question is to the minister responsible for B.C. Transit. Can the minister confirm that senior transit officials and staff are on a jaunt to Europe?
Hon. G. Clark: No, that's not correct. The chair of B.C. Transit also is heading up the KAON negotiations, along with Stan Hagen, who used to be the Minister of Advanced Education in the previous administration and is now the federal government's KAON representative, as well as Erich Vogt, the scientist involved in KAON. They are in Europe, I think in Rome particularly, meeting with Italian officials. We're very optimistic that the federal government did not choose to cut the KAON project. We in British Columbia don't get our fair share of federal funding for science and technology, and we're delighted that we are continuing to keep this alive, working internationally to see if we can bring a world-class facility to British Columbia.
A. Cowie: We understand that Mr. Ken Georgetti is also on the trip, and we wonder what qualifications he has for that trip -- or is it just compensation because he missed the Vienna trip earlier?
Hon. G. Clark: Under the previous administration a group was formed called Friends of KAON, co-chaired by Ken Georgetti. I'm very surprised at the members opposite. It shows their ignorance of the work that has been done in this province by thousands of British Columbians to support the KAON project. The Friends of KAON, which has several thousand members, is co-chaired by Jim Matkin and Ken Georgetti. Both of those individuals have played leading advocacy roles to procure this world-class facility on behalf of the people of B.C.
The Speaker: A final supplemental, hon. member.
A. Cowie: A very quick one, thank you. Would the minister table the costs of this trip?
Hon. G. Clark: Certainly. As always, it's a cost-shared arrangement. The federal government is paying their share, and the province is paying some of ours. I would be delighted, of course, to debate with the opposition the question of KAON. There is a line item in the budget for debate, and I look forward to that debate.
I hope members opposite will reconsider their reckless remarks today about this vital project. We're attempting, as we move forward, to negotiate our fair share with the federal government. This project is number one on the priority list of the previous administration and of this government in order to get our fair share of federal science and technology funding, and I would expect the opposition to support this pan-British Columbian initiative.
PUBLIC SERVICE SALARIES
C. Serwa: My question is to the Minister of Finance. You and your government, Mr. Minister, are having a field day picking on a small number of dedicated, competent senior administrators employed in school districts throughout the province. If you were so concerned about the high public sector wages, why did you lift the freeze that we had put on all public servants making over $70,000 a year?
Hon. G. Clark: As the member knows, in the budget we've just introduced we have imposed a freeze on senior civil servant wages above $100,000 in the public sector proper, and we have called upon school boards, hospital boards and the broader public sector to follow the British Columbia government's lead of freezing salaries of the senior-most civil servants. We are engaging in a review -- through the auspices of the Korbin commission -- which I'm sure the member opposite is familiar with and has been briefed upon. This is a broad review involving all parties in British Columbia to establish a rational form of compensation for excluded managerial staff -- something which is sorely needed in this province -- so there's some equity across the public sector for senior management salaries.
C. Serwa: British Columbians are becoming very confused with your type of policies, Mr. Minister. You define anyone in the province making over $60,000 as wealthy and have imposed an income surtax on them. You removed the wage freezes we'd put in place, you allowed major increases, and now you place a new cap on public servants of $100,000. Will you stop this on-again, off-again, gone-again Hannigan mixed bag of policy, and simply restore the $70,000 wage freeze that we'd imposed on all public sector wages?
Hon. G. Clark: What we need in this province is a rational way to end the leap-frogging from school board to school board, from hospital board to hospital board, hospital administrators, and across the sector. We had no rational way of managing broad public sector wage negotiations for the unionized sector or compensation practices for the management sector under the administration which that member was a part of. We're attempting to bring some order, rationality and equity to public sector management compensation. We've established a commission of inquiry into that. It has involved broad consultation in the sector, including consultation with a Social Credit caucus. And we're embarking upon a review, which means that from now on, government will have a say, there will be some fairness across the public sector, and we'll have a mechanism for controlling costs which were out of control in the previous government.
The Speaker: Final supplemental, hon. member.
C. Serwa: Will the minister commit to table for this Legislature the cost to the British Columbia taxpayer of lifting the $70,000 cap on all public sector wages?
[ Page 5512 ]
The Speaker: The minister, for a brief reply.
Hon. G. Clark: Hon. Speaker, in the last three years before we took office, the spending growth under that administration was 12 percent, 12 percent and 12 percent. We have brought the rate of spending growth down to half of that. It's the lowest spending growth of any British Columbia government since 1987. We have made more progress in reducing the deficit through spending controls, and we continue to make that progress.
BOUNDARY BAY WILDLIFE MANAGEMENT AREA
F. Gingell: The member for Delta North has tabled private member's bill M202, an Act to Establish the Boundary Bay Wildlife Management Area. The Delta Farmers' Institute are incensed that this will be done without consultation and are concerned that it will....
Interjections.
The Speaker: Order, please. The Chair hesitates to interrupt the hon. member. I hope you'll address the question to a minister and not anticipate a bill that is on the order paper.
F. Gingell: The Delta Farmers' Institute are concerned that it will endanger the Boundary Bay area planning process. Recognizing that a private member's bill has not passed in many years, can the Minister of Environment, who is the minister responsible, echo the words of General Petain at Verdun in 1916, "Ils ne passeront pas," which in rough translation means, "This shall not pass"?
Hon. J. Cashore: Hon. Speaker, I will defend to the core of my being the right of any member of the government back bench to bring in a private member's bill -- a perfect right. Certainly it's a right that I have exercised many times in bringing forward very positive bills to the House, and I will continue to do so. The fact is that the Boundary Bay planning process is carrying on. There will be a wildlife management area. The consultations are going very well. We welcome this hon. member's input, and I urge him to continue to cooperate with that process. I know that by his question he is really indicating that it is going very well.
D. Mitchell: I'd like to raise a point of order with the Chair about the management of the order paper, and in particular with respect to written questions on the order paper. Standing order 47(1) clearly allows members of this assembly to seek information from the government of the day -- a government that claims to be an open government, has passed freedom of information legislation and says it practises the government in that spirit. Written questions on the order paper -- questions 2 to 33 -- standing in my name have been on there for up to six weeks now. They relate to the issue of public opinion research that is funded by taxpayers' dollars. The government has refused to answer these questions. I wonder if, pursuant to standing order 47(1), the Chair could give some direction to the government with respect to providing the information that is requested here under the standing orders.
The Speaker: Order, please. On the point of order.
Hon. G. Clark: This is clearly an abuse of House time for a frivolous point of order on this question. If the member wants to ask a question in question period, he can; if he wants to refer to written questions on notice, he can ask them during question period. The member knows full well that the record of this administration is better than any previous administration in this province in terms of answering written questions. It's an abuse of House time for him to make a frivolous point of order at this time -- in the Orders of the Day.
The Speaker: I thank both hon. members for their comments on the point of order. While it may be a point of concern to members, it is not the role of the Chair to advise or guide any members of the House in terms of the written questions. Therefore I will have to leave it to the House to deal with those written questions as it wishes.
[2:30]
Before proceeding to Orders of the Day, I wish to comment on a matter that was raised yesterday at the afternoon sitting. The hon. member for Richmond East applied under standing order 35 to move adjournment of the House to discuss a definite matter of urgent and public importance. The hon. member raised the matter of the health care accord and the fact that the Health Labour Relations Association has rejected the accord in a recent vote. The Government House Leader submitted that the issue does not come within the scope of urgency as defined in the standing orders and that the House would be moving immediately into the Ministry of Health estimates, affording an early opportunity to discuss the matters raised by the hon. member for Richmond East.
Firstly, I wish to thank the members for their submissions, and the member for Richmond East for complying with practice recommendation No. 8 in giving the Speaker notice in writing before raising the matter in the House.
The prerequisites for a motion under this standing order were outlined to this House in a decision given by the Chair yesterday, at which time it was noted that an application under standing order 35 will fail when an ordinary parliamentary opportunity will occur shortly, or in time to discuss the subject matter. As anticipated during submissions on this application, the Ministry of Health estimates were proceeded with during the same sitting in which the standing order 35 matter was raised, thereby providing an opportunity to discuss the matter in question. Under these circumstances the hon. member's application cannot succeed.
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Hon. G. Clark: Section A will be debating the estimates of the Ministry of Forests. In the main House, I call second reading debate on Bill 3.
BUILD BC ACT
(continued)
On the amendment.
J. Tyabji: I rise to conclude my comments, and I'm happy to see the Minister of Finance here, because that's who all the comments will be directed to. Earlier today I was pointing out that in my mind Bill 3 represents proof positive that this government doesn't have the courage or the vision to make the kind of necessary spending cuts the people of the province have been calling on the Minister of Finance to make in order to meet the obligations of government and to reduce government spending.
Before he tabled the budget, the Minister of Finance visited a number of communities in the province and had a number of public meetings at which he was trying to garner public opinion as to what the taxpayers felt about government spending. It is clear from this legislation, and from the budget that was tabled that not only did he not listen to the people of the province, but also that he's gone in the other direction. The opposition is insisting on an amendment for a six-month hoist motion because it is very necessary for the people of the province to realize that we're going to have a fundamental change in the financial structures of government through Bill 3. Not only will we have continued deficit spending -- which this government claims to have under control, but we would argue they don't -- we will have a continued increase in the size of the debt. Furthermore, under Bill 3, we will now have amortization of our capital projects. That's not acceptable, hon. Speaker; and the Minister of Finance should be participating in this debate.
This government, who have brought this bill forward, who are not participating in the debate, should at least be trying to justify why it is that they've not only brought this heinous piece of legislation forward, but why it should not be hoisted for six months. If this government has found -- contrary to what the opposition has found -- that the people of the province would like to amortize capital projects, that they would like to incur further debt, that they are lining up and lobbying the government to increase the size of the debt, then this opposition will be the first to endorse this bill.
If we could have a six-month hoist of this bill and have a series of public meetings, where people could actually be informed about the fact that this government is quietly changing the structure of financing for the province.... If the people of the province would realize that not only is the structure of the financing changing, but that, as the leader of the Liberal Party pointed out earlier, this bill will now make the government a real estate agent, a banking institution with the ability not only to expropriate capital and private property from the people of this province and sell, lease or give it away but will be participating in, one could argue, a form of theft, just as the corporate capital tax is a form of theft of private assets....
The Minister of Finance during question period was making reference to reckless comments. As the leader of the party and many of the members of the opposition have mentioned, including the hon. member for Richmond East, this government has had a record of reckless spending. This government is trying to brag about the fact that they have brought the growth in government spending down to just below 6 percent. Well, hon. Speaker, that's nothing to brag about. Not only that, it's a false image that's being brought forward, because even though a $1.5 billion deficit was tabled, just as the Social Credit government before them hid a lot of the government debt in the Crown corporations, so now we see in Bill 3 a new Crown corporation to do exactly what the Social Credit government used to do, and what this government used to criticize them for: that is, to take government debt and hide it in a Crown corporation. This Minister of Finance, more than any other, should be the last to be pulling this financing gimmick. This Minister of Finance should, if nothing else, be participating in the debate on the amendment and trying to justify why this bill must come forward so quickly. Is it, as the leader of the party mentioned earlier...? We have information to suggest that there are a number of megaprojects in the interior that this government is waiting to bring on board. The Minister of Finance is nodding and saying that's true. Well, I hope the Minister of Finance will come forward and tell us why there is a sense of urgency.
Interjection.
J. Tyabji: The Minister of Finance is asking if I'm opposed to that. What I'm opposed to is the sleight of hand. This Minister of Finance, under the pretense of having public meetings before the budget, had a nice little tour of the province and chatted with people who were very irate and angry. Without exception, they said to him: "Cut government spending."
Hon. G. Clark: We did.
J. Tyabji: I disagree.
Interjection.
J. Tyabji: We take great exception to the borrowing. We believe that even if government spending occurs through borrowing, it's still government spending. Even if we're going to have government spending through legislation, without public debate, it's still spending. Whether we do it through the estimates debate, which has now been shuffled off to a back room of the Legislature; whether we do it here, which is where we'd like to see it happen, with full and open debate and participation; or whether we do it through amortization, which is through this bill, it's still public spending.
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I think it's really unfortunate that the Minister of Finance tries to brag about a reduction in the growth of government spending when it's still almost 6 percent. That's significant. If this minister was in opposition to a Social Credit government that had repeated increases in the growth of government spending, he would be the first to say that a 6 percent growth in government spending is a shameful record, particularly when you take into account that the Social Credit administration approached almost a 12 percent growth in government spending for three years in a row. That's 12 percent on 12 percent on 12 percent. Then this government came in last year with a 10 percent increase, and now it's 6 percent. That's unbelievable. That's unheard of. It definitely lends credence to the quotes from the Taxpayer about British Columbia having the fastest-growing debt in Canada and the fact that government spending is out of control. The last thing the Minister of Finance should be doing is bragging about a 6 percent growth in government spending.
I would like to see this Minister of Finance on his feet in the House to tell us why he didn't have the courage to cut government spending. Why is there an urgency in getting this bill passed so quickly? Why can we not have some public debate on this -- as he sees it -- essential change? This is an essential part of how we govern the province: that is, the financial structuring, the financial administration and the public debate on it.
When the people of the province realize the implications of this bill, they are going to be knocking down the doors of the Legislature, not because of environmental legislation or tax revolts but because they will not stand to have their children's future mortgaged without having any public input. That's what we're seeing here. This is why we're trying to argue some sense into the government, to let them see the wisdom of at least having some kind of public input. Go for the six-month hoist. If not, for goodness' sake, let's have some debate from the government side. If this is a defensible position and if it's defensible to rush it through, please tell us why. The silence from the government side is deafening.
F. Gingell: I tried to be slow in getting to my feet -- I'm getting pretty slow these days. I was hoping that perhaps the speech from my colleague would have encouraged the Minister of Finance to stand up in this House and tell us what the rush is. This is a very important bill, and we are faced with the problem of trying to get some form of response from this government to tell us what the hurry is. Why do they wish to push this through? They have this bill on the order paper. We have three or four other very small bills in dealing with the issues of putting some of the budget changes through. We haven't had any other government bills tabled. The Minister of Advanced Education made a valiant attempt earlier today to table a bill, but it wasn't with success, and we certainly wish him luck and good fortune when he tries to table it in the near future.
Why do we think that this bill is important, and why are we now in the midst of a protracted debate on a hoist amendment? We are concerned and we believe that this bill is important because we see it as a route by which government expenditures that in the past have been included in the general revenue expenditure estimates can now be determined, approved and made without coming to this Legislature, without going through the proper process of being included in the estimates and of being debated for all to see and all to discuss through the Legislature.
This government speaks of a deficit this year of only $1.5 billion. But we really don't know what the true deficit is going to be, because at the time they bring the $1.5 billion estimate forward they also bring in a bill that will allow them to make expenditures that are normally included in that calculation -- the construction of roads and bridges, work done in the field of silviculture, work done in the field of advanced education, training and technology -- and instead of putting them on the table, dealing with them in a forthright and open manner, they're going to slide them in through the back door. And where do they slide them into? They slide them into exactly the same package of debt that our children will have to pay in the future. So we don't know if this government really does intend to try and keep their deficit to $1.5 billion, or if it's going to be $3 billion, because of an additional $1.5 billion -- or whatever their plans are -- that is going to be spent through the Build BC Act.
[2:45]
They haven't told us. They have not told the people of British Columbia how much money they intend to spend. We know there is an initial funding of $100 million; we know there is an amount of $78 million, I think, that's a transfer to the fund from the Highways budget. There is discussion about silviculture; there is discussion about Crown corporation expenditures. But nowhere is there a complete, concise and understandable list of expenditures that we can expect them to be making. This government was the first to complain when the previous administration brought in things like the BS fund, which they considered a means of pushing deficits and surpluses forward and back to suit their own purposes.
The BS fund was a very open and patent.... I mean, everyone was well aware exactly what was being done, and nobody was being fooled. But in this case, the government is giving itself the authority to order-in-council, to make major expenditures and to do work normally done through the ministries. They are going to set up a complete new bureaucracy. There is going to be another CEO. There's a place for a board of directors who will be appointed from outside. You can be assured that those directors will be appointed from their friends and insiders, because the bill also contains the ability to pay them, of course, their just, reasonable expenses and some indemnity for their time.
We spend a lot of time in this Legislature talking about the size of government. We spend a lot of time talking about the need for government to be shrunk. We spend a lot of time talking about the need of government to be responsive to the concerns of British Columbia taxpayers. But this bill, as it presently exists, flies in the face of all the concerns that people have. It creates a new bureaucracy. It has a means by which the
[ Page 5515 ]
government can go out and borrow substantial sums of money, without it coming through this Legislature and without it being voted on -- to do those things which in the past have come through the processes here.
The budget estimates of the 1-cent-a-litre tax and the $1.50-per-day tax that are going to be the revenue sources for the B.C. Transportation Financing Authority, amount to an intended annual income of $52 million a year. The B.C. savings bonds, issued by the Minister of Finance in late 1991, were renewed earlier this month -- although we haven't been told how many people cashed them in -- at an interest rate of 53/4 percent, I think.
If this government can continue to borrow money from British Columbians at 53/4 percent, and they go on a 20-year amortization basis, that allows them at this moment in time to go out and borrow over $600 million. In fact, the amount of money that payments of $52 million a year, with interest at 53/4 percent over 20 years, will buy is $604 million. Added to that $604 million is the possibility that there will be an additional $100 million, because that is the original funding. It looks to us poor mushrooms, who are kept in the dark about much of these matters, that at the very least there's an expenditure plan of some $700 million, in addition to the $18 billion-plus that the government plans on spending this year.
The government comes in and brags, talks about their intention and their hard work to bring down the amount of the deficit, but at the same time they bring in legislation that allows them to do an end run. Hon. Speaker, the proper thing for this government to do is to allow this bill to be hoisted for six months; and for them to think about it again and to have time for responses from the British Columbia community. I'm not suggesting at this moment in time that they should have committees travelling around the province, but I'm sure that if it were known that this bill would be hoisted for a period of six months, British Columbians who have concerns about the amount, rate of growth and compounding of our debt that will be paid for by taxation in the future would take the opportunity to make sensible and thoughtful submissions to this government, encouraging them to think this through again.
I know that we in opposition often say: "Think about this. Don't rush it. Hoist the bill. Give the people of B.C. an opportunity to tell you what they think about it." One of the disappointments for all of us on this side of the House is that they don't take our advice. It surprises me, because it really is given with the very best of intentions.
Hon. C. Gabelmann: That's why you're there and we're here.
F. Gingell: No, that's because of a quirk in the voting patterns in this province -- 40 percent of the vote and 100 percent of the power. What a deal!
We asked them to hoist Bill 84. We talked at great length about our concerns with Bill 84 with respect to whether or not education should be treated as an essential service. They wouldn't listen to us. Although we put forward amendments to hoist the bill and motions to have it go to a committee for consultation, they didn't listen to us. One of the first things that happened in 1992, and one of the first actions taken by this government, was putting into place exactly what we suggested they should do last November. They designated that education -- I think they've now limited it to grade 12 only -- would be an essential service. You would think by now they would begin to recognize that although we in opposition may not have any responsibility or authority, we do have some ideas that are worth listening to. It's unfortunate that the minister isn't here. They're all busy reading. Oh, the Attorney General is listening. Thank you, Mr. Attorney General.
It really is important to get things right the first time, and the way to get this act right the first time is not to proceed with it at this time. Allow the hoist motion to pass. Let's think about it and talk about it for awhile. We need to make sure that we don't go from crisis to crisis. If we can, we should do this right. We have a supposition here that we set up a new organization and add to the bureaucracy, and that we allow this government to borrow more money without going through the budgetary processes. You would think the New Democratic Party, with a name like that, would believe in democracy. The moneys that they borrow through the Build BC Act will be paid by the future taxation of people in this province. One of the basic premises of democracy that was fought for originally in the English-speaking world, is based on: if you pay the taxes, then you have the right to representation in a parliament that has the ability to vote for or against the expenditures that the taxation will fund.
We are just simply going in the wrong direction. It's the old way of the NDP of adding to the bureaucracy. It just goes on day after day. We need a job for a friend, so let's set up the Build BC Act. If this act is going to be in the business of collecting tolls on highways, which it sounds like it may very well do, I'm sure there will be a lot of jobs at toll gates for the Robin Hoods of this province.
I really do sincerely encourage this government to allow this amendment to pass, and if they do that and reconsider all of the consequences of this bill, allow fair and open discussion with all members of the House and take cognizance of the concerns that we have, we would deal with the re-presentation of this bill at a later date in a much more receptive manner.
But we see this bill as a very important piece of legislation. We see this bill as a means by which this government can, on a moment's notice, start spending money, doing public works and doing all kinds of things without coming through the legislative process, without those expenditures being included in the annual budget presented both to this House and to the people of British Columbia.
So why are they doing this? One would hate to think that it was for some crass political opportunity that they might wish to pull at a time when they thought their prospects were good for re-election. But the people of this province will understand clearly what this is all about. When they realize that this government is intent upon expending money that has not been voted on in this House, they will ensure that this government is not
[ Page 5516 ]
re-elected. They promised open, accountable government. This is the exact opposite.
[3:00]
It is a sad day, because this party in opposition did a first-class job of holding the government accountable, of always trying to ensure that things were done in an open and accountable manner. Now that they're in office, one of the first things they are doing is trying to subvert that process and find means around the back door for doing things that they want to do for political reasons, without the expenditure being approved by this Legislature.
I would like to just finish, if I may, with some words that were in the paper, but it puts our concerns in a very concise manner: "But there's nothing in this bill to indicate why the thing is needed or how another government agency will add one iota to genuine economic activity in the province. On the contrary, Bill 3 is a recipe for waste, duplication of effort, patronage, debt and evasion of the duly elected Legislature." There you have it, folks: Mike Harcourt and this government's vision for the future of British Columbia.
L. Krog: I ask leave of the House to make an introduction.
Leave granted.
L. Krog: Today in the gallery, visiting from my constituency, are approximately 55 grade 6 students from Rutherford Community School, accompanied by their teacher, Glenda Ryall. They are a most enthusiastic bunch of young Canadians, and I'm very pleased to have them here today.
F. Gingell: I also seek leave to make an introduction.
Leave granted.
F. Gingell: It's a great pleasure for me to introduce my long time friend, Mr. Bill Pattison, the original founder of the Delta Hotel chain -- one British Columbia business that spread its way across the country from the west. Mr. Pattison is visiting here from Toronto, and I ask the House to make him welcome.
L. Stephens: It's a pleasure for me to rise today and support the hoist motion before this House. As other opposition members have stated, the purpose of this enabling legislation is to create, in effect, a Crown corporation designed to circumvent the scrutiny of the Legislature. On that basis alone, I would like to see this bill defeated.
During the election the now Premier went around the province, saying: "We will not spend what we cannot afford." This government has added $5 billion to the direct debt of the province in two short years. It has doubled the debt in two years. This government now wants to create a vehicle to hide a further mountain of debt, with no accountability to the people of B.C.
Bill 3 sets up the B.C. Transportation Financing Authority with a board of directors and the Minister of Transportation as the chair. On closer examination of this bill, there are no functions that cannot be handled by the existing ministries. Will the ministries of Transportation, Economic Development, Advanced Education and Social Services have their budgets reduced proportionately by the moneys being spent by this new authority? If not, we are moving into a pattern of double financing.
One of the powers and capacities of the authority is to create subsidiary corporations to carry out the purposes of the act -- more spending, more bureaucracy. The spending rate of this government is twice the rate of inflation, and it doesn't matter if we have the second-lowest level of combined taxes in the country. This government is sending the worst possible message to the international business and financial community and to ordinary taxpayers. What happened to the now Premier's promise of "we will not spend what the people cannot afford"?
In this bill Crown corporations will spend more than $900 million this year in every region of the province, including $500 million in new projects -- an accelerated government spending program for social capital facilities in health care, education and justice. These projects will cost $1.42 billion this year. That's an increase of 30 percent over 1992-93. A new B.C. Transportation Financing Authority is authorized to borrow $80 million to finance and construct new highways and other high priority transportation projects, plus an additional $100 million in new expenditures in 1993-94 to develop innovative approaches to investment and job creation.
This Build B.C. -- or Bilk B.C., as the member for North Vancouver-Seymour has accurately dubbed it -- is even more of a scam that BCRIC was. Frankly, I didn't think that was possible, but here it is. Bill 3 is the most outrageous and ruinous piece of legislation to come down the pike in a very long time. I find it absolutely astounding that this government shows no recognition of the level of public concern over the enormous debt burden this province will face as a result of Bill 3. I support this motion because it took B.C. 125 years to accumulate an operating deficit of nearly $5 billion, and over the last two years the Harcourt government has almost doubled that. Bill 3 establishes a new Crown corporation with unlimited spending and borrowing authority. It also means new administration costs, a new burden on the taxpayer and -- more importantly for this NDP government -- more patronage appointments for its friends and insiders. Hon. Speaker, our very serious concern is that this new authority can take on long-term debt with no public accountability. Because we already have in place ministries and the annual budgetary process to handle the functions outlined in this bill, I very strongly support this amendment to hoist this bill for six months.
I have here a publication from the Vancouver Board of Trade in which they call for a public hearing into Bill 3, the B.C. 21 initiative introduced in the March 30 budget. Says David McLean, the chairman of the Vancouver Board of Trade: "'The Harcourt government's rush of Bill 3 is irresponsible and unnecessary. Why are they in such a rush to spend our money'?"
[ Page 5517 ]
The Speaker: A point of order has been raised by the Minister of Finance.
Hon. G. Clark: A rather minor point, but the member repeatedly refers to another member of the House by his last name. I'd appreciate it if we could just try to bring it to the member's attention.
The Speaker: I am sure the hon. member will be reminded of that.
L. Stephens: I do apologize, hon. Speaker, and thank you. "Bill 3 is represented as being 'self-supporting,' but the money ultimately comes from the taxpayer....' What's more worrisome is that there are no safeguards for spending limits or accountability. It's an open invitation for fiscal mischief." The implications of Bill 3 are too far-reaching to be rushed through this Legislature, and the board is therefore calling for a legislative committee to study, review and give full opportunity for public input into Bill 3.
Hon. Speaker, I reiterate that I strongly support the amendment to hoist this bill for six months, and I encourage all members of the House to vote for that amendment.
C. Tanner: Madam Speaker, I don't think this side of the House is making any secret as to why they're so concerned about this particular bill. There are some very pressing questions as to what's motivating the government to introduce a bill of this sort at this time in their mandate. The questions that we ask on this side of the House are: Why are they introducing the bill? Why are they burying it in a Crown corporation? Why are they not using the bureaucracy that's in place? Why is there a special funding system and a contradiction of the normal financial processes?
It isn't only members of this side of the House that are questioning the methods of the government. One of the reporters and commentators in the gallery wrote a strong article on April 16. Members must know that the people who work in that part of this House are not my favourite friends, but in this case the article is so much to the point that I must bring it to the attention of all members. I quote from Vaughn Palmer's column of the April 16:
"Premier Mike Harcourt says his government's 'long-term economic strategy for the twenty-first century' is to be found in initiatives like Build B.C., a proposed law now being debated in the provincial Legislature. If he meant what he said -- and the words are taken from a government press release -- then the New Democrats are in more trouble than I thought. For the Build BC Act, Bill 3 on the legislative agenda, is as obvious a piece of tomfoolery as anything cooked up in the last desperate years of the Socreds. Liberal Dan Jarvis dubbed it 'Bilk B.C.,' and from my reading, he was right on the money.
"Ostensibly, Bill 3 ushers in the NDP plan to borrow more than $1 billion to build roads, hospitals, schools and other public works. A plan, I should add, which is so confused it has gone through three names in six weeks.
"When presented to cabinet February 23 it was known as the jobs and investments fund. Then it was Build B.C., and after that name was leaked to the press the New Democrats added their third moniker, B.C. 21, under which Premier Harcourt introduced it to the public three weeks ago."
Vaughn Palmer goes on to say....
Interjection.
C. Tanner: The members must remember that I'm quoting directly from an article in the newspaper in which all the names there were mentioned. Why would speakers now object to the fact that we mentioned names? However, Madam Speaker, you can be sure that I will try not to mention names again.
"Bill 3 preserves this state of confusion nicely, and not just because it continues to go under the former name of Build B.C. The entire thing is muddled, all 15 pages and 38 clauses of it, though by the end one gets a glimpse of the Premier's vision, and it is not anything that one would care to boast about on a public platform.
"First we get a statement of purpose. The bill will establish agencies to facilitate 'economic development, job creation, investment, training and regional diversification.' Never mind that there are already four government ministries, three cabinet committees, four legislative committees, a half-dozen Crown corporations and two multimillion-dollar cabinet secretariats, all dedicated to the identical purposes.
"Next the bill establishes a committee -- it's the NDP; there has to be a committee -- 'on building B.C.'s future.' And since the first obligation of any government committee is to look out for its own interests, the members will be paid 'reasonable travelling and incidental expenses necessarily incurred in carrying out the business of the committee.'
"Third, there is to be a start-up fund consisting of $100 million derived, through the miracle of government bookkeeping, from the provincial treasury."
The article goes on:
"The New Democrats insist this account does not add to the long-term debt of the province, but since they are currently borrowing at the rate of $250 million a month, the claim has approximately the same worth as the Premier's famous: 'If we don't have the money, we won't spend it.'
"Fourth, the bill establishes yet another Crown corporation, the B.C. Transportation Financing Authority, to 'plan, acquire, construct or improve transportation infrastructure throughout B.C.' And yes, that statement completely overlaps the mandate of the existing Ministry of Transportation and Highways, which has a budget of $762 million and has 2,572 employees."
Quoting further from this fine article:
"But for all the superfluousness of the new entity, it will not lack for all the trappings of other NDP creations. The bill provides for a board of directors -- four new patronage jobs, appointed by cabinet and paid the usual 'expenses and remuneration.' The company will also have a chief executive officer, who presumably will be paid the going rate -- in excess of $125,000 a year -- plus an unspecified number of other employees, all of whom will be made eligible for government benefits and pensions, according to Bill 3.
"Nor will this patronage vehicle lack for power. The bill gives it the authority to borrow money, spend money and impose tolls on provincial roads and
[ Page 5518 ]
bridges, apparently without further recourse to the provincial Legislature.
[3:15]
"The only practical limit on this sweeping authority is the cabinet itself, which contrived the whole scheme in the first place.
"But there is nothing to indicate why the thing is needed or how another government agency will add one iota to genuine economic activity in the province. On the contrary, Bill 3 is a recipe for waste, duplication of effort, patronage, debt and evasion of the duly elected Legislature.
"And there you have it, folks, the Premier's vision for the future."
Let's just see how the members of this government understand what the bill is. The member for Cariboo North said that Build B.C. is going to kick-start the economy of British Columbia, which begs the question: what do you think the government has been trying to do for the last year and a half? The Finance minister has been bragging that B.C. has the best economy in the land; if he is right, why does he need to kick-start it?
The member for Cariboo North went on to say that the opposition cannot criticize the lack of scrutiny opportunities for this bill, because it is their job to scrutinize every piece of legislation. The spending provisions under this legislation will be made by cabinet, and unless the NDP is planning to have a lot of leaks, which would be pleasant, the opposition and the public will not know about the spending decisions until after they are made. Every member on the other side of the House, when they were speaking -- they've given up on that now, because they want to rush this bill through -- promised solutions to all of our problems: money from nowhere to build schools, hospitals and roads, and not one of them accounted for in this Legislature. This is a horrendous bill that all of us should be very wary of.
Why are the government backbenchers continually accusing members on this side of the House of not caring? Of course we care. We have a different way of solving the problems, but to say that we don't care is absolutely ridiculous. How does this bill create money? Where does the money appear for this Crown corporation that wasn't there in the first place? If you couldn't do it last year, how does the government create money to make this bill work this year? It's a myth. If the money wasn't there last year, it isn't there this year. In fact, I suspect there is even less this year, because at the rate this government has been borrowing, they've got nowhere to get the money unless they borrow it. And if they're going to borrow it, it should be in this House that they have to stand and account for it, not in a Crown corporation.
Why is the government so protective of this legislation? Why are not only cabinet members but members on the opposite side of the bench so protective of this legislation? Why did they make it Bill 3? Why are they pushing it through now? Why are we sitting tonight? So they can push this bill through. What's the hidden agenda here? What is it they're trying to hide? Members on the other side of the House have been standing up and telling us that it's going to solve the problem. We don't think so. And because we question them, they say we don't care. We do care. We're elected to care. We care for our constituents; we even care for some of your constituents. But we certainly do not care for the attitude whereby the government is trying to make us the bad people in this procedure. We are not. We have a different way of raising money honestly in this Legislature, not hidden in a Crown corporation.
Why did they come up with this fatuous name, this B.C. 21? To me, twenty-one is the name of a famous French card game -- vingt-et-un -- where you gamble, and I think that's what they're asking us to do. We used to call it pontoon in Britain; some members will recognize that name. The name in Canada is blackjack, scoop, hit-and-twist, and that's what we've got here. We've got a gamble by the government to find some more money out of nowhere. The trouble is, they're using our tax money to gamble with, and they're gambling on odds that are poor. If they lose, it's our money gone; and if they win, we don't know about it, because they keep the money to build a bunch of fictitious schools, hospitals and roads that aren't going to appear.
They are telling us it's simple. "We make the rules. We'll play your cards. We'll play our cards too, but don't worry about it. But you must not look; don't look at the cards. Trust us. We'll let you know if you win." We in this province are rapidly finding ourselves in the same situation as New Zealand. A letter from the publisher of British Columbia Report, March 29, has the most astute comment that I've heard:
"The way who wins the Stanley Cup matters, or which Hollywood star gets the Academy Award, but such concerns instantly lose their importance when something really serious happens -- a grave illness in your immediate family, for example, or an accident or a death. Then you will discover that these are the things that are really important. The same is true in politics. When W5 took its crew to New Zealand last month, where nine years ago a country seemingly secure, prosperous, stable and resource-rich as Canada is today suddenly found out what really matters in politics, and it's called debt. It's debt that is accountable in this House, not in the pale imitation of the Socreds many years ago, that master of financial manipulation, Mr. Bennett, when he used to hide all his debt in what he called contingent liabilities. They improved on that in the last government when they called it the BS fund. But this government has outdone anything that the Socreds have ever tried to do in hiding their debt. If you didn't happen to see the W5 program about New Zealand, on February 28, there were things you should know, and you aren't likely to find them in the Southam newspapers or on CBC.
"Up until 1984 New Zealand was something of a socialist paradise, almost on a par with Sweden. Its medicare system covered even drugs, and had been instituted 30 years before Canada's. It had led the world in feminist legislation. Women got the vote there a hundred years ago. It was a haven for Greenpeace, and it had divorced itself from the international fight against communism, denying bases to the U.S. Navy. It had broken off relations with South Africa. And it had the third-highest standard of living in the world. Like Canada, it was financing itself by borrowing.
"The politicians of all parties deplored it, just as they do in Canada -- or as they pay lip service to in Canada -- and solemnly vowed to make this economy and the
[ Page 5519 ]
deficit their number one priority. But just as in Canada, nothing seemed to work. Then one day in 1984, shortly after the new socialist administration took office, the finance minister delivered the news to the thunderstruck cabinet. Without warning, New Zealand's credit had been cut off. Its latest bond issue would just not sell. The money was needed to retire an old bond issue, upon which the country must now default. So New Zealand could no longer borrow. This didn't mean trouble down the road; it meant trouble that very day. Meeting the civil service payroll would be a problem, and money for unemployment insurance, pensions and farm subsidies simply wasn't there.
"The cause of this crisis is no mystery. New Zealand, like Canada, had been heavily borrowing foreign money. Its foreign debt had reached 47 percent of its gross national product; Canada's now stands at 44. Its total government debt stood at 62 percent of the gross national product, and Canada's now stands at 88. So our situation is in fact worse than it was in New Zealand in 1984. Like Canada, New Zealand hoped to grow its way out of debt, expecting that the economic expansion would spare the necessity of cutting spending. It didn't. Taxes were raised but the deficit kept getting worse, just like in Canada."
The letter from the publisher of that goes on to describe the details. But we're seeing in this House with this bill a repetition of exactly the same thing that this minister won't accept is happening in British Columbia. We are getting to the point when the decisions made in this House will not be made by these members; it will be made by the international bankers. When that minister next goes to New York, Montreal or wherever to borrow money, particularly if he goes for international money, they're going to say, "Mr. Finance Minister, we're glad to see you again; here's the money; the rate is." -- and it's going to be a horrendous rate of 6 or 7 percent above the going rate.
And the minister will rightly say: "We can't afford that money; it's too much; it's way higher than anybody else."
The bankers will say: "Well, that's fine. There are lots of other people who want to borrow it, at lower rates, but they're more secure. So if you don't want to borrow it, we'll give it to somebody else. You better go home again, young man. Go home and tell the people back there, whom you've been conning for the last year and half. You've been not giving them the truth, and then you're trying to hide the way you're financing. When you go back to your Legislature and tell them...."
The Speaker: Order, please. Just to clarify for the House. The comments that the member is making: I would like to clarify that he's not addressing those comments to any other individual member in the House. If the member could please confirm that, then I would invite him to continue with his debate.
C. Tanner: Not to any particular member. I assume that the members on the government side are a group. I assume that the members on the other side make decisions in concert. I assume that those decisions are leading to a bill like we've got in front of us today.
The Speaker: Thank you, hon. member.
C. Tanner: What concerns this side of the House, Madam Speaker, is the fact that even if the government doesn't buy our premise that they shouldn't be borrowing any more and that they should be cutting costs, they should be.... There are only three things you've got to do when you're in debt and going in debt further. You can cut programs, you can cut staff, or you can sell assets. We're not doing any of those things in this province. We're not saying: "this program, I'm afraid, has got to go because we can't afford it." We're not reducing the people who work for us, who implement those programs. I haven't heard of us selling any assets. So what is the government going to do?
Apparently they're going to continue to borrow money. Maybe the rate of borrowing is a little lower, but it's our contention that because of the liabilities they have in their Crown corporations, they're borrowing more money. That's what worries us about this legislation. They want to set it up so it's not in the purview of this Legislature so that these members can't easily see it until some president or chairman of a Crown corporation chooses to make their annual report. In their discretion this then can happen six or eight months after their financial year-end. It could be a year and a half down the road before we find out what's happening. The power that's given to this corporation is far greater than many others.
Our question to the Minister of Finance and the government is why you need to go this route. We haven't had any explanation as to why they have to use this particular vehicle to finance government projects nor have we had any explanation from the back benches, who apparently have been sold a bill of goods saying: "All your problems are solved. We'll have roads, hospitals and schools for you in your constituencies. Trust us. We've got it all set up in Bill 21; I mean B.C. 21." It's such a confusing name, it's even hard to keep track of it.
The members on this side of House don't like it. We're suspicious of it. We think the government should at the very least give it a six months' hoist as we're suggesting in this bill so that there can be more time to consider it. You get feature columnists like the two I've quoted, plus the members of the Vancouver Board of Trade and other organizations -- like the ones I'm interested in, the tourism organizations -- all saying: "Why are you going this route? Why don't you lay your cards on the table instead of playing blackjack with our money? Why don't you follow the normal route? Why do you have to change the course of things?"
The only other time we've ever seen this happen in British Columbia is when the Socreds had charge of the government many years ago and they called them "contingent liabilities." They had nonsense like going up to Kelowna and shooting burning arrows into barges full of bonds, and the debt disappeared. That sort of nonsense is coming back again with these people after all their years in opposition when they sat and criticized the Socred government about the things they did wrong -- particularly in their financing attitudes -- and now they're coming back with this nonsense. The province doesn't deserve this. It deserves a straight answer to a straight question: are you going to raise more debt, and
[ Page 5520 ]
how are you going to spend it? Not with bills like this. I urge every member of the House -- but particularly the backbenchers from the other side of the House -- to think very carefully before they commit this province to this sort of nonsense.
R. Neufeld: I rise to support the amendment to hoist Bill 3 for up to six months. In fact, if I had my way, I'd just like to deep-six Bill 3. I think probably most people in British Columbia feel the same way. This government is not listening to the people of British Columbia. We are all aware that we need more money for roads. There's no doubt about that. You could borrow all the money in the world, and there would still be a need for more roads someplace else, because somebody would not be satisfied with what's being spent. You have to take your priorities, put them into place and decide where you're going to spend that money for the betterment of all British Columbia and the future taxpayers of British Columbia.
[3:30]
This bill allows the government to take debt, deficits and operating money. Previously, highways were built out of the operating budget. I'll admit that there were years, of course, when the operating budget did not match the revenue, but there were also years when the revenue was higher than what was expended. Contrary to what my friend for Saanich North and the Islands said.... I believe he talks about shooting arrows into burning hulks and those kinds of things. I wonder at times. In fact, I'm convinced more and more every day when I hear members opposite -- the government -- take potshots at the Social Credit Party, who are the third party, and continually harass us, that you'd think we were in government. Obviously the official opposition is under that same impression today. That's basically what I heard from quite a number of their members this morning. They weren't taking issue with what the government was doing; they were taking issue with the Social Credit Party. I guess it's obvious that there are things that are biting them a little -- the same as it bites the government every once in a while. I can understand that.
Creating a new Crown corporation to do the same things that we're doing now -- just to hide deficit spending, put it into long-term debt and try to cloud it over and tell the people of British Columbia that we're going to build hospitals, schools, fire halls and infrastructure in communities to encourage economic development, just to cloud the issue and to make people wonder how they did it before -- is untruthful. They're not being honest. I'll use that word because the Premier used it quite often, and so do members of cabinet. They talked about being open and honest. They, along with all of the backbenchers, are being far from open and honest when they get up and talk about all the wonderful things that they're going to build under B.C. 21.
B.C. 21, Bill 3, is there only to build highways that used to be built out of the operating budget. They now want to transfer them into long-term debt so they can get their deficit under control. It doesn't matter how you do it -- when you put it in a long-term debt, somebody is going to have to pay. It's going to be the taxpayer, and the taxpayer is getting tired of paying.
Having said that, we still have to build highways in the province. I realize that. We can do it exactly as we have in the past -- out of the operating budget. It may be a little slim. There will be competing priorities within that operating budget for highway construction. Let's just look a little at this government's preferences in 1991-92 and where they spent more money and which ministries they spent less on. We'll just start with the Premier and the executive council operations. We've heard the cabinet and the Premier talk about the frozen salaries. They took a cut in pay, and they did all these great things for the people in the province. Yet from 1991-92 to 1993-94, they increased the office of the Premier by $6.8 million in two budgets. The government's priority lies with the creation of all the energy councils and everything involved there and with no end of patronage appointments. Hydro is the latest one. It's absolutely amazing that they can stand in the House and justify what took place in the hiring of the CEO for B.C. Hydro.
We go to Aboriginal Affairs, and that's up $7.4 million. I'm not going to go through every ministry, but I'm going to go through a number of them. From '91-92 to '93-94, they increased the expenditure in Advanced Education, Training and Technology by almost $43 million. In the same period of time they reduced expenditures in Agriculture, Fisheries and Food by $22.4 million. In Economic Development, Small Business and Trade -- and this is part of what they talk about, building infrastructure for economic activity and encouraging economic activity in British Columbia -- they've cut the budget by $113.7 million. Education has gone up by $372 million in the same period of time. Energy, Mines and Petroleum Resources, another revenue-generating part of the government, is down $3.8 million.
I agree that Social Services is a difficult ministry. There's no doubt that it would be a hard one to administer. I've talked to a number of previous cabinet ministers who have said that it is hard to administer. There are people out there in need -- there's no doubt about it. But when we have a Minister of Social Services who stands in the House and condemns the Social Credit government for an increase in expenditures of 10 and 12 percent over the last two years of their administration and then in the next breath talks about the fact that we didn't spend enough in Social Services, you wonder where they're coming from. They've increased Social Services by $900 million.
This is all relative to Bill 3, the Build BC Act.
F. Garden: Oh, come on!
R. Neufeld: What I'm trying to do is talk about priorities within your budget and how you spend. But it's typical of that member that he doesn't listen, and when he does, he still doesn't catch on.
Tourism, another revenue-generating ministry, has been cut by $9.8 million over two years. Transportation and Highways was cut by $221 million over two years. That $221 million used to build highways, but it was
[ Page 5521 ]
changed around because of priorities in the budget. Probably all of that $221 million got shuffled into Social Services. One never knows. I'm just trying to relate the thinking of this government. What we're going to end up with is having to borrow money for everything and only being able to afford probably three or four social services. Women's Equality went up $16.1 million in two years.
[E. Barnes in the chair.]
The management of public funds and debt: this is not for the Crown corporations, but this is for deficits -- their own deficits, not anybody else's. No Social Credit or Liberal member had any hand in this. No one had any hand in this but the NDP, and they've increased those costs by $344 million a year. Do we wonder why we can't build highways out of the operating budget? It becomes very obvious why: it's a matter of priorities. Now we see where your priorities are.
The Minister of Economic Development said it very well when he spoke to Bill 3. He said: "We have reduced the operating deficit. They're going to deny investment in this province. We have the ability to pay. If we reduce the operating deficit, we then have the ability to pay off long-term debt." What the Minister of Economic Development is talking about is transferring debt that used to come out of the operating budget into long-term debt for highways so that they can balance their budget. In a couple of years they're probably going to be coming in with a deficit well under $1 billion, and they'll be paving the province of British Columbia. But it's all in long-term debt, and guess who's going to pay. It's the same taxpayer -- there's only one of them. And let me tell you: they're getting scarce; they're getting upset.
C. Serwa: And their pockets are only so deep.
R. Neufeld: Their pockets are only so deep, as my colleague says. And they've only got one left, because all the others have been ripped off either by the federal government, the provincial government or municipalities. Everybody is going after that same pocket, and people only have so much they can pay. Business people and people in the workforce have told me lots of times this last year that they wouldn't mind paying a bit more tax if they could just see where it was going -- not into another Crown corporation; not to hire another 1,600 employees, as they did last year.
F. Garden: You had them hired.
R. Neufeld: It's amazing; the member for Cariboo North woke up again, hon. Speaker, and he says we had them hired before. My goodness, they weren't on the payroll. How in the world did we do that? They hired 1,600 people -- not in the first year they were in government, but the second year. In the first year all they did was spend a little time upping our deficit. This year they are going to put in another 1,200 people, and that is what the people are upset about. Whether that member or that executive chooses to believe it or not, the people of British Columbia are saying "Whoa!" They are saying "Whoa!" all over Canada. Even Mr. Rae in Ontario is catching on, Mr. Romanow is catching on -- all Premiers are catching on. But where are we in B.C.? "No, we're going to spend more. We're going to create another Crown corporation and see if we can't hire a few more people." Obviously there are a few more out there they have to get on the payroll at around a hundred or two hundred or whatever is going to happen.
I talked about the debt charges increasing to $344 million, and he tells me that's a bunch of b.s. Well, I took it right out of his budget manual. Maybe he ought to read it; maybe he should take it right out of there. That's where the numbers come from -- from the Finance minister's own numbers. So I'm using government numbers -- not mine, not the Liberals'. I'm using the government numbers.
Interjection.
R. Neufeld: I can understand why the member for Cariboo North would be confused about that. I think there are a lot of people, and a lot of people in the back bench, who are confused about where this government is going.
[3:45]
Also last week the Minister of Economic Development talked about the way that schools and hospitals were financed before. I'd like to remind the Liberals that this is the second time I've had the opportunity to speak to this bill. Some of their members spoke a little earlier about no one from the third party being in the House to speak to the bill. I think I'm the last one, out of the six members, to speak twice.
Interjections.
R. Neufeld: We've got some funnies coming out of the Liberals now.
It's no wonder the government is confused. The Minister of Advanced Education tried to introduce a bill right after question period and couldn't get the words right -- and he's in government. The Liberals are over here in one corner telling them to tax and in the other corner telling them to spend, so it's no wonder that government's confused. They can't operate themselves and are being coached by an inept opposition.
The Minister of Economic Development spoke last week about how schools and hospitals were financed. I think I said last time that Shaughnessy Hospital was built a long time ago and it was financed publicly. Every member of the government back bench or the executive council who speaks in support of Bill 3 talks about building all the hospitals and schools -- "We're going to replace all the portables" -- as though that never happened before; as though there was nothing in place to do it. There's one member of the executive council -- but maybe he's not forceful enough to get his viewpoint across -- that does know how it happened before.
There's a long history in this province about capitalizing major investments. I quote the Minister of Economic Development from Hansard: "For example, the
[ Page 5522 ]
B.C. School Districts Capital Financing Authority, the B.C. Educational Institutions Capital Financing Authority and the B.C. Regional Hospital Districts Financing Authority were all established by Social Credit in the sixties and seventies." So those facilities for financing that type of construction are all in place, and always have been.
So why do the government members continually talk about this? Why don't they just deal with the very truth of the matter, be truthful with the people in British Columbia, and say they want to shuffle some money out of the operating budgets? "We can put it in long-term debt for building highways. We need a place for a few more people. We have to create a Crown corporation." Running a Crown corporation is not cheap. When all systems are in place and the public is saying "enough is enough," what do we have? We have an executive council that still wants to spend more and create another Crown corporation to hide a little bit of debt.
I'm just going to go back a few years. I didn't want to use the 1991-92 budget, because somebody would have said it was the wrong numbers; I'm going to use the '93 budget. These are the government's numbers, going back to 1990. The Educational Institutions Capital Financing Authority has been in place for a long time for building schools and such, and getting rid of portables. It's probably the same thing with portables as it is with roads. It would be nice to have paved highway everywhere in the province we could imagine, and it would be nice to have brand new schools for all our children. But there comes a time when you can only afford so much, and that's exactly how each one of those members, I would hope, runs their household. We should be seriously thinking of that in government too. It would be nice to have a beautiful school, but maybe we have to just go a little bit longer with the old school or the portable.
In 1990, $425 million was spent on capital in educational institutions; in 1991, $481 million; in 1992, $607 million -- rounding it off; in 1993, $762 million; and in 1994, $928 million. Obviously the government of the day is using that financing authority to build schools. So when they really talk about Build B.C., B.C. 21 and Bill 3 for building schools, they're telling an untruth, or else these numbers are wrong. Something's not right.
In 1990, $789 million was spent in British Columbia Regional Hospital Districts; in 1991, $916 million; in 1992, $978 million; '93, $1.49 billion; and '94, $1.14 billion. Those financing authorities are being used at the present time for building schools and hospitals, obviously. Why do we have members opposite standing up and trying to tell the public of British Columbia that they're going to do it through Build B.C., B.C. 21 or Bill 3? It's the B.C. Transportation Financing Authority. It's all about removing debt from the operating budget into long-term debt. It's just a matter of reallocation. When we stand here and continually oppose what the government is doing and how it's doing it, we should have something to give them -- some ideas of how they could do it. I say: go back a few years. See how highways were built at that time and where the money came from, and do it much the same way. It's just a reallocation from within the budget.
[F. Garden in the chair.]
R. Neufeld: Why the rush? It's interesting. All of a sudden, we have four bills in front of us. We've been in the House for five weeks. We finished the Ministry of Education's estimates. We're on the Ministry of Forests, we just started the Ministry of Health and now we want to go until 10 o'clock at night for a couple of nights, until Thursday, to get this bill pushed through second reading. For what reason? Is it, hon. Speaker, because they don't have their homework done?
An Hon. Member: Is the reason honourable? That's the question. Is the reason honourable?
R. Neufeld: That is exactly right. Is the reason honourable, hon. Speaker? Is it because this government does not have any more legislation to bring forward? Is the Minister of Health maybe not ready for her estimates? What is it? Are there commitments made somewhere? We know that the Minister of Finance just returned from New York. He has made some promises, obviously. It doesn't take a rocket scientist to figure out what's going on here. We have to push this through. We can't bring any more legislation in, but we have to push this bill through so that we can get on with some megaprojects. I wonder where those megaprojects are going to be. This government says it doesn't believe in megaprojects. I find it interesting that all the person who they hired to run B.C. Hydro knows is megaprojects.
An Hon. Member: Megasalaries.
R. Neufeld: Megasalaries. It leaves the opposition wondering: why the rush? We feel that the official opposition is right in what they say: this bill should be hoisted for six months; it should be put out to the people for six months. In fact, that isn't even where it should be. It should be deep-sixed, as I said to start with. You go back to square one; back to the basics. Look at the budget and decide where you can maybe cut some spending within the budget and spend some money on highways, as has always been done in the past.
The member for Nanaimo said the other day that we should be happy to support Build B.C. and Bill 3. He went through a long story about how he supported the Freedom to Move proposal put forth by the last Social Credit government. There are two fundamental differences. Freedom to Move was not a package that incorporated a Crown corporation to borrow the money; it was a priority of where money should be spent on highways, such as the Island Highway, in the province. Some of the Island Highway was built. This government -- I forget the number of days, but I heard it earlier -- could have probably two years left in their mandate, something like that. Would that be correct?
C. Serwa: If they're lucky.
[ Page 5523 ]
R. Neufeld: If they're lucky? If they're not tarred and feathered by then?
They have maybe two years left in their mandate, and they want to finish the Island Highway. They don't have the bill in place yet. They don't have the financing in place yet. They'll have some of the engineering in place but not all of it. It's a government that doesn't believe in megaprojects, yet they're telling their people that they're going to build the Island Highway. I've heard members in the government talk about how we'll have the Island Highway built. I wonder how they're going to do that without megaprojects. It's all a bit of a fallacy.
I will say that it's not easy to make those decisions about where you're going to spend the money you have, which you tax the people for. The people have said they've had enough taxes. You cannot spend all that money in the social part of the budget -- all of those increases there -- and disregard the rest of the budget. Economic development is a very important part of this province. We can't continue to cut its budget. Energy, Mines and Petroleum Resources is another one. When we left office, we left the second-lowest income taxes and sales taxes in Canada. We left the lowest per-capita debt in Canada. We left the strongest economy in Canada and the highest rate of capital investment. Nearly half of all the new jobs in Canada were created in B.C. That's what we left for the NDP. We left them a fine infrastructure of highways through the whole province. Not all of them were up to snuff, but I will guarantee that your government could stay there for as many years as they want and all of the highways wouldn't be perfect. But we left a good infrastructure.
In fact, when I talk to members of the NDP outside of the House, they tell me they're really happy. Members over there say that they're really happy with what W.A.C. and Bill Bennett did. They weren't happy with Bill Bennett's restraint program, because they don't believe in that, but they were happy with the other parts of what happened...
An Hon. Member: Happy with the results.
R. Neufeld: ...and happy with the results. Obviously they paid off, because it left the Finance minister room to move in increasing taxation and spending in the social part of the budget, and cutting back in the parts of the budget that really count -- the infrastructure of the province of B.C. When you cut back $200 million in highway construction in two years, it's certainly going to show up. There is no way that I can support a Crown corporation for building highways. I can support building highways; I can support reallocation of funds within the existing budget to build highways; but I cannot support further debt on the people of British Columbia. I accept capitalization of debt for schools and hospitals, and for Crown corporations such as B.C. Hydro and B.C. Rail, because they have a way of generating funds to pay off those debts. I have no problem there.
[4:00]
It will be interesting to hear from the Liberals at some point on how they would expect to run the province. I listened to one of their members talk about how we shouldn't be capitalizing any debt; we should just pay for everything out of the operating budget. It would be interesting to hear how they feel it should be done. Some members and the leader have said that it was all done wrong in the past, and no, we shouldn't borrow any more. Then the Highways critic stands up and says that they believe in tolls and we should be capitalizing highways. It's no wonder that the government opposite, the NDP, is doing whatever they feel they should be doing.
K. Jones: It's a pleasure to rise on the continuation of the debate on Bill 3 and the hoist motion put forward by the Liberal Party to put this bill over for six months. This has really been done for the purpose of allowing the government to reconsider the serious implications of this bill and to withdraw it. That is the whole intention. We want the government to recognize that it is not in the best interests of the people of B.C. and that it is a means of trying to hide a very large additional debt to the people of B.C. They are doing it surreptitiously and not out in the open like they claimed they would when they were hoodwinking the public during the election process.
They're now coming forward and showing their true colors: their desire to have a secretive government and to have a dictatorship run by the Minister of Finance, with a bunch of puppets that he pulls strings on, including the Premier and other members who he has to stand up and bail out. He's got a bunch of wimpy dogs down at the far end saying "Yes" whenever he wants to get a bill passed. That's all this government's about. It's a power trip for this government and for the Minister of Finance: the NDP's power broker, master of mime and surreptitious actions, who tries to control everything. He won't let any of his people make mistakes, because he will have to get in there and bail them out. He's got to treat them as though they're just there to run according to his agenda.
This bill is really about a power grab by this government. It's a real opportunity to change the whole process of democratic government in B.C. We have such fine examples of how they're getting the people of British Columbia more and more into debt. We just can't see a bottom to the process. They're making no attempt to stop this outflow of money from the taxpayers' pockets. They are literally vacuuming it out of people's pockets in order to get their agenda and power trip accomplished.
When we look at the statements in the budget presented by the Minister of Finance, he talks about the government debt being only $10 billion. But in his own report, the total direct and guaranteed debt of the province is listed as $26.379 billion. I submit that that is only a portion of the debt that this government already has. There is an additional portion, which the auditor general has brought to the attention of the public and members of this House, of close to an additional $4 billion in unfunded pension liabilities. This government is taking no action to resolve that. They are not admitting that it is part of their debt. They're not doing
[ Page 5524 ]
something to resolve the indebtedness that every British Columbian has.
They want to take on more debt for which they won't be publicly accountable. The general public won't know what that debt is going to be, because it isn't put forward in the budget and isn't put forward available to the public accounts. Only is that brought forward to the public if the Minister of Finance so chooses. In section 18 it says that the Minister of Finance may direct the comptroller general to examine the operations of the authority that's set up to administer these funds. It doesn't even give him the authority which he would normally have to inspect the books of the government and the ministries to make sure that they are operated in the best interests of the people of British Columbia. It gives him the arbitrary control even as to whether there could be a watchdog checking into the way that he is operating and that this government is operating. It says: "The books are to be made available at all times, open for inspection." By the public? By the people of British Columbia? No, definitely not.
Interjection.
K. Jones: To the hon. member who said, "There's nothing wrong that," he's absolutely right, if it was going to be open to the public. But it's not open to the public; it's open to the minister or a person designated by the Minister of Finance. The public does not have a right to have access to the books of this authority that's generated under this bill. It's absolutely shameful.
The Minister of Education just finished stating that her ministry will be taking some money out of this bill. She reported in estimates that there may be multiministerial money coming from this. It's not accounted for in this bill; it's not accounted anywhere. She wouldn't relate to it, but she said there would be additional money coming outside of the money that's in her budget.
That's the kind of surreptitious government that we're getting with this bill. That's why this official opposition has taken such a strong position with regard to this bill. This is the crux of the whole direction of the New Democratic Party in British Columbia, and this is why they are rushing this bill through, because it's going to be the linchpin to all of the rest of the legislation they're going to be bringing through. It's the linchpin to the open purse, to the pockets of the people of British Columbia, that access that they're going to be using through this vehicle.
There are a couple of committees established under this bill. There's the Committee on Building British Columbia's Future. It states that the chairman of that would be the Minister of Finance. The interesting part about it is that the bill is very permissive. It states that the minister and no more than four other members appointed by the Lieutenant-Governor-in-Council -- that's our cabinet; that's the government on the opposite side of this House -- are going to be controlling the B.C. Transportation Financing Authority. I'm sorry, that's the Minister of Highways, not the Minister of Finance. The Minister of Finance is in charge of the additional body that's overseeing the funding for this, and that's the Committee on Building British Columbia's Future. The setup of this structure is such that the minister in both cases, both these committees, can be the sole person. There is no requirement. It's at the pleasure of the cabinet that additional people are appointed. Who runs the cabinet? The Minister of Finance runs the cabinet. Let's face facts. It's at his pleasure that he can choose to have a sole person running the whole operation or he can bring some of his buddies in to be a very small board -- all in the control of the cabinet.
There are continuous problems with the way this is set up. We have a situation that this government has said in the past is a problem that previous governments exercised. It's one that they've also practised this past year and a half since they've taken over as government, and that's the question of providing capital for buildings and structures, but no operating money to go with it. Where is the complementary operating money that is supposed to go with the proposals in this capital investment debt program? Nothing in the ministry's funding complements the proposed expenditures coming from this.
I would like to extend forgiveness to the member for Peace River North for his attack upon this caucus. I think he has been misguided, will soon see the error of his ways and will learn....
Deputy Speaker: Through the Chair please, member.
K. Jones: I was just trying to verify the member's presence to the Chair. I wish to say to the member that regardless of how he spoke to us, we will always keep an olive branch open to the Social Credit to come and join us in the near future. The opportunity is there. We know they're hurting a little bit. The public slapped them pretty hard back on October 17, 1991. They made a decision then to hit this corrupt Social Credit government that was the government of the day. They wanted to have a change, and that change came about on October 17, 1991.
Unfortunately, the rump of six has its up- and down-days. Some days it wants to work as members of the opposition, which is what its role is. It's no longer government; therefore it shouldn't be getting in bed with the government of the day. It seems to have a tendency to do that, but it should carry on its role as opposition. I know they are trying to survive as an entity, and therefore they're feeling that it's important for them to attack the very effective Liberal opposition -- the true official opposition in this government; the only opposition that is continually attacking and finding the faults and errors of this government; the only opposition that is bringing this government to accountability. We in this caucus have been doing an excellent job as the official opposition, and we will continue to keep this government accountable.
[4:15]
We invite the members of the third party, members of the Social Credit, to join us. We invite the members of the back bench of the NDP to come and join us. They're certainly welcome. If they want to join the Liberal Party,
[ Page 5525 ]
we're only too happy to give them a chance to have more voice in this government. We recognize that they feel frustrated on the back bench, and they feel like puppets on a string, being told when to yelp and when to keep their mouth shut. That's part of the problem of being on the back bench. It's very difficult to feel like you really belong in this parliamentary process when you have to spend all your time at the behest of the Minister of Finance whenever he pulls his chain.
We have with this bill an opportunity for the government to move into funding an awful lot of programs. These programs could be such things as put forward by the Victoria accord: maybe some nice trolleys going through town and some new buildings in Victoria. Perhaps these are intended to bail out the failing fortunes of the NDP mayor of Victoria and to buy their friends back into office, with the elections coming up this fall. Maybe that's why they're rushing this bill through, to get the funding out there.
I haven't heard any comments as to whether there will be additional costs for the Commonwealth Games. Perhaps some of the structural costs for that will come from this bill, bilk B.C. or Bill 21, the gambling game this Bill 3 legislation provides for. Are we going to get an Island Highway built with this? How many billions of dollars is that Island Highway going to cost?
N. Lortie: Are you opposed to the Island Highway?
K. Jones: I think that the Island Highway needs to be built within the limits of the taxpayers ability to pay for it. Maybe we can't get it all built in one fell swoop, and create a boom-and-bust economy like this government is proposing. Maybe this is an opportunity for them to rebuild the interior highways, so that the promises made by the NDP members in their ridings can be fulfilled. They've been out there ever since this bill was coming forward, making promises that there would be new roads, new hospitals -- you name it -- new capital structures, with lots of money available.
Maybe we're going to get the transit built in Vancouver, or the transit in all of the communities paid for out of this funding. Is that where the capital cost for new SkyTrain cars is going to come from? Is that where the new extension to Richmond, or the new extension to the Coquitlam area, is going to be funded out of? Are we going to have a massive major projects program going, much like the W.A.C. Bennett days, when big dams were built and big buildings were put up, all for the sake of government? I think the people of British Columbia want to see their government a little bit less intrusive into their pockets, a little bit less into their lives. They would like to see necessary things built -- not just frivolous things or whatever wish-list the members of the government and their back bench can put together, but some realistic looking at what we need. When I talk to the people of British Columbia at these meetings, people are complaining about more taxes that this government is putting upon them. They feel that the economy is weakening because of this overburden of taxation. The people who were previously encouraged to come to this country on an investment basis are now wondering whether it's worth their while. Are these the vehicles that we want to discourage these people? Do we want to provide the disincentives? That's what this bill and this government are doing.
Let's look at some of the other things that we might be able to build with this money. Who can come up with the wildest dream that this government might come forward with? I'd like to encourage the public to use their opportunity to write to this Legislature and come forward with "Guess what the next project of the government is going to be under Bill 3: Build B.C. -- Bilk B.C." Confuse the people, bury the facts. Maybe we're going to have a site C on the Peace River Dam and destroy the lowlands of Alberta. Maybe that's what their next agenda is -- B.C. Hydro making a whole bunch more money -- because this government is desperate.
It's desperate for money, because it's spending the money faster than it's coming in. It claws the money away from the charities under the Lottery Corporation and it takes it into its purse. And where does it go? It goes into a sinking black hole that has no bottom. But the money just keeps flowing in; they keep clawing it in. That's a typical NDP socialist government: no accountability to the public; just take the money and put it into programs that they think are helpful to people. They haven't even assessed the value of the programs as to whether they're helping. Have they got any accountability for those programs? They just hand it out, like grain being tossed out. It's just a wide-open disbursement of funds like they're going out of style. To this government, it's not going out of style. There's more and more money that keeps coming in, because they can find another place to grab some more money. They can even tax our children. That's what they're doing with this bill: they're putting a tax on our children, our children's children and their children. It's going to keep on going through future centuries for the people of British Columbia and for their little play-game this year and next year so that they can get re-elected. That's really what we're after; that's what this bill is all about. It's a buy-the-vote bill -- one that this government doesn't even question anymore. They know that what we're saying is the truth. They know that the people of British Columbia are going to pay whatever they can put through in this bill, because with this bill, the people don't have any way of keeping this government accountable. This government is sleazy.
Interjections.
K. Jones: And here's the Minister of Finance....
Deputy Speaker: Hon. member, I've listened to your.... Take your seat, please. I've listened to your words with care. Some of them border on the unparliamentary, and I would suggest you choose your words from parliamentary language, please.
K. Jones: I fully accept your suggestion, and I must assure you that I have been choosing my words with great care and accuracy. I'm afraid that's probably one
[ Page 5526 ]
of the problems: the words are exactly the truth and the proper description of this government. It is sleazy, and I'll repeat that again. It tries to bring forward legislation that....
Deputy Speaker: Hon. member, would you take your seat.
On a point of order.
Hon. D. Zirnhelt: I think the language is clearly unparliamentary, and he should withdraw.
Deputy Speaker: The point is well taken. I would remind the House to use proper parliamentary language, and I would urge all of us to be careful in how we couch our language. At this time I'll just ask the member for Surrey-Cloverdale to keep that in mind in his remaining remarks.
An Hon. Member: "Scandalous" is allowed.
K. Jones: Hon. Speaker, I appreciate your comments, and I will continue. I will make a notation that this government is definitely scandalous in its administration of the people's money. It is totally without control. It is trying, through very manipulative legislation, to take control of this Legislature away from the people of British Columbia and give it to a dictatorship of a very small number of people, if not one person, that is really running this province. It will dictate to the people of British Columbia everything that they will spend their money on and will determine from birth to death that the government knows best. The government will provide everything for you if you don't want to work; and if you want to work, it will take everything from you that you do gain through your hard work. That's a typical socialist government, a typical NDP government. We have that situation over and over in previous legislation as well.
I'd like to look at aspects of this bill that look after the interests of those people working on this authority more than they take into consideration the interests of the public. They've made sure that there is board remuneration and benefits for the officers. They've made sure that the officers and employees of this authority are covered by all the benefits of the Public Service Act, the Public Service Labour Relations Act, the Public Service Benefit Plan Act and the Pension (Public Service) Act. All of those are provided, making sure that these very private appointments are going to be well looked after.
[4:30]
It's interesting to look at some of the powers given to this authority. It has the ability to act as an agent of the Crown. All properties are excluded from taxation. There isn't even a provision of taxes in lieu, as there are with other Crown corporations; it's totally exempt from taxation. It has the ability "to plan, acquire, construct, improve or cause to be constructed or improved transportation infrastructure...." Now that's a very broad thing. It's not just a highway or a transit line; it's any type of transportation facility that you can think of. They could even be in the airline business. They could use it for building airports. It can be used to "acquire property by expropriation or otherwise." I don't know what the otherwise to expropriation is. I guess it's theft. But that's provisioned in this.
Deputy Speaker: Hon. member, your time has expired.
R. Chisholm: This bill is atrocious. There's no other word for it. It's a super BS fund. It has the capability of bilking British Columbia taxpayers of up to billions of dollars. This Bilk B.C. or Build B.C. allows the government to transfer hundreds of millions of dollars in debt to Crown corporations, and when the debt goes to Crown corporations, it is not accounted for in the deficit.
At the same time, this sneaky policy allows the government to skirt the normal legislative process by funnelling money into political blacktop projects. How it works is that B.C. 21 and the newly created B.C. Transportation Financing Authority will artificially reduce the 1993-94 deficit. Only $100 million in B.C. 21 spending will actually appear on the books this year as an appropriation to the Build B.C. special account. Another $80 million in borrowing power for the Transportation Financing Authority will show up as part of the province's accumulated debt, which will be reported apart from the annual deficit. Another $166 million for the education institutions building authority, $93 million for the Regional Hospital Districts Financing Authority and $281 million for the School Districts Capital Financing Authority will be borrowed this year but not included in the deficit.
The fact is, the total accumulated debt of our government, Crown corporations and agencies will increase this year from $23.2 billion to $26.3 billion -- a 32 percent increase since 1991 when this government took office. This is the largest debt increase in the entire history of the province, and this is a scam. Only half of this year's $3.1 billion in new debt will actually be credited to the minister's so-called $1.5 billion deficit. Not quite offsetting the burden of the new B.C. 21 debt will be $33 million in revenues to the Transportation Authority from taxes on fuel and vehicle rentals. The minister claims that much of this accumulated debt is secured, an argument, like I said in my budget speech, that is nonsense too. When was the last time the provincial government sold off a stretch of highway to cover a loan?
The plain truth is that the NDP is running up debt at a historically fast pace, and no amount of creative accounting can hide that fact. Our debt is not being reduced or even held in check. This government believes in higher taxes, bigger spending and more debt -- just the opposite of their election platform, I might add. This bill will give the minister sweeping powers. There will be no debate and no scrutiny of the moneys that are being spent. They have borrowing authority, and technically they have taxation authority, too. They could put tolls on your road; it's just another form of tax. Whichever way you spell it, you're paying taxes.
All of these facilities are being duplicated. Each and every ministry involved in this is already doing the job.
[ Page 5527 ]
Why are we duplicating the same work? Why are we putting up these umbrellas? It's very similar to the Ministry of Agriculture, where they have different committees and commissions, and all they are is an umbrella to protect the minister at a time of trouble. They end up firing the board, the committee or the commission. We do not need a super Crown corporation to do the minister's job; we already have line ministries to do that.
I'd like to quote a couple of statements that were given to us earlier, and I'd like to respond to them in a like way. I'd like to quote the member for Cariboo North when he said: "Build B.C. is going to kick-start the economy of British Columbia." The Finance minister has been bragging about British Columbia having the best economy in the land. If he is right, why does he need to kick-start the economy?
Interjections.
R. Chisholm: I'll speak to the Speaker and the member for Vancouver-Hastings. Her statement was: "The future of our kids is actually at stake in this province." My response to her is that this is not so much a defence of Bill 3 as an admission that the NDP have already mortgaged the future of the next generation, and it's time it stopped. The same member said: "The opposition focuses on money; that's all they can see." The millions of taxpayers in British Columbia also focus on money, and do not want schemes such as Build B.C., which will spend money they can't see. They've had enough, and it's time that this was all straightened out.
The member for Burnaby-Edmonds also wanted to get in on the debate and stated: "I don't see anything wrong with borrowing money, providing that there is a provision to generate the cash to amortize those loans." My response to them is that the provision to generate cash -- to which the member refers -- will take the form of legislated tolls, which are really taxes to be imposed on the people of the province. There is nothing wrong with borrowing money if the borrower makes the payments. In this case, the borrowing will be done behind closed doors by the NDP cabinet and the taxpayer will be stuck with double taxation to pay the bill. It's time that stopped too.
The member for Skeena stated that the opposition is suggesting that they will be unable to hold the government accountable for another Crown corporation or for what happens in B.C. Hydro. The response I have for him is that the NDP government in Ontario is now paying the price for ignoring Crown corporation debt. Just ask the Premier of Ontario. The Hydro monster created in Ontario by Marc Eliesen has driven the industry out of the province, and now the NDP is forced to have a fire sale of assets and sack thousands of employees. Not only has this government in British Columbia refused to learn the lessons of their sister government in Ontario, but they have hired Marc Eliesen to preside over B.C. Hydro. That's not exactly a very wise move, considering his track record.
I'd like to quote what the Taxpayer newspaper states about it and what StatsCan states about British Columbia and our debt; and they are not very impressed with it either: "British Columbia has the fastest growing debt in Canada, according to a recent report published by Statistics Canada."
Interjections.
R. Chisholm: This government has got to realize that they are the government and they are responsible. The former government may have made mistakes -- and undoubtedly so -- but now you are in the driver's seat and it's time you took responsibility for it and did something to correct the problems.
"The study revealed that between 1981 and 1991, British Columbia's per capita gross debt -- which includes liabilities -- increased by a shocking 569 percent, rising from $1,144 to $7,657 for every man, woman and child. In 1981, B.C.'s per capita debt was 43 percent of the average of all the provinces, but by 1991 it had increased to 98 percent. With the exception of the Yukon, the fastest growing per capita debts are found in western Canada, with British Columbia leading the pack at 569 percent, Saskatchewan 354 percent, Alberta 301 percent and Manitoba 278 percent."
There are solutions for this. The member on the other side said: "What's the solution?" I gave a couple of solutions in my budget speech, but they are failing to listen. One thing we must learn is that we have to invest in this province, at the same time as cutting government expenditure; and of course, we'll have to tax to a degree, but not to the degree this government has. I can guarantee you we won't have a Bilk B.C. fund.
[E. Barnes in the chair.]
From the same newspaper, it states that over an 11-year period from 1981 to 1991, the British Columbia government's balance sheet has shown the worst deterioration of any Canadian province or territory. Like I said: 569 percent. I say this to the hon. minister: I have a note from the taxpayer; he's speaking to you; you should read it.
Interjection.
R. Chisholm: I'm sure that the minister's words weren't meant in truth, because these are the taxpayers talking to him. It states here: "B.C. government revenue this year will be $16.191 billion of which you will be paying $19,228, and that's $1,603...equivalent cost of a family for four months."
The British Columbia government expenditures are somewhat higher than that, unfortunately, which means we are going to owe money. They state from their figures that we will spend $17.98 billion, which means to the individual family of four, the cost will be $21,355 per family, and that comes down to $1,778 per person per month.
They've broken these figures down: health, for instance, is going to cost us $5,935,800,000; equivalent costs for that same family is going to be $7,050 per year, or $587 per month. For education the family will pay $4,263, and that will be $355 per person per month. Social Services will be $2,808, which will cost each
[ Page 5528 ]
member $234 per month. That adds up to roughly about $12 billion of our $17 billion expenditure.
Another amazing figure is the debt servicing. This year it's going to cost $795 million, just to pay for the interest on our debt. When you take a look at this piece of paper you see a couple of obvious problems. These ministries I'm talking about do not generate very much in the way of wealth. The wealth-generating ministries are going to have budgets such as $93 million for Agriculture, Fisheries and Foods; $93 million for Economic Development, Small Business and Trade; Tourism will have $60 million; and Energy, Mines and Petroleum Resources will have $42 million.
There's an obvious inequity here. You break those numbers down into the family unit, and all of a sudden you find out that we're investing in our wealth-generators, for instance in agriculture, $111 a year, to the grand tune of $9 per month. It's no wonder we're in trouble. We are not investing where we can generate funds to pay for all of these bigger debts. Look at Economic Development; it's exactly the same numbers: $111 per family, $9 per month. Again, we all know that small business, economic trade and development is what generates jobs, and we have 73,000 single males on unemployment and on social welfare. It's time this stopped.
[4:45]
Tourism costs every family $72, to the tune of $6 per family per month. In Energy, Mines and Petroleum Resources, $51, and $4 a month. It is no wonder that our industries are not generating any taxes to pay for the social services we wish to have. It's time this government realized that before we are going to solve our problem, we have to invest in our own province. Once we invest in it, we will be able to pay for all of the services we want.
As I said at the beginning, this bill is unconscionable. I don't know how they came up with it. It's a super BS fund. Unfortunately, the taxpayer is not going to have any control over what happens to it. Like I said, it will not be accounted for in the debt for the year.
If we take a look at the actual bill and start going through a few of the clauses, clause 21 allows for tolls or charges to be paid for the use of any property or authority. What they're talking about is taxes. Clause 20 says that the authority will collect the net revenue from tax revenue collected under section 2.5 of the Social Service Tax Act. This is the $1.50 car rental tax. So we have a Crown corporation collecting and levying taxes. Clause 19 refers to authority revenue from the gasoline tax. This will allow, at the most, for a 1-cent-per-litre gasoline levy to be directed to the authority. This section will also allow for an additional levy to be directed to the authority in any area of British Columbia and will prescribe the amount of tax to be collected under section 11.1 of the Motor Fuel Tax Act. In other words, it has the right to tax the individual citizen. Since when do Crown corporations have the right to tax citizens of British Columbia?
Clause 22 is another interesting clause. The authority, with approval of the Minister of Finance, may invest or loan money of the authority which isn't required for the immediate purposes of the authority. If we take a look at the Mac-Blo situation, we could call it insider trading if we really wanted to get technical.
Clause 23 sets out the borrowing powers of the authority. It allows for any sum of money it considers necessary or advisable, and it may issue securities. In other words, they control themselves, and they're allowed to borrow any amount of money they so wish.
If you take a look at clause 12 regarding the powers and capacity of the authority, it has the capacity to plan, build and improve transportation infrastructure. I thought that was a responsibility of the Minister of Highways, not of a Crown corporation. It has the right to acquire property through expropriation or otherwise. I'm sure the citizens of British Columbia will be really appreciative when a Crown corporation expropriates their property. It can provide financial assistance by way of a grant, loan or guarantee -- I hope patronage doesn't come into this one. It can create subsidiary corporations to carry out the purposes of the act. In other words, this monster can become bigger again; it can give birth to more corporations.
Clause 14 defines the powers of the board of directors. These people are not supposed to be government employees. But clause 16 defines the officers and employees who may be hired by the chief executive officer, whose office is established under this section.
These employees will also come under the Public Service Plan Act, and the Pension (Public Service) Act is also applicable. In other words, they are public employees. I might add another little point to that one. Every 1 percent increase in public service compensation is equal to $108 million on our deficit. It's something for the members on the opposite side to think about when they give BCGEU 6 percent. They're not giving them 6 percent; they're giving them $648 million, roughly.
We have a few other problems here. We look to clauses 6 to 8. It says the opening balance will be $100 million, which can be increased by a vote under the Financial Administration Act. It will be used, supposedly, for community-level capital projects, employment and job-training initiatives, resource-enhancement initiatives, infrastructure initiatives and costs associated with the administration of the special account. That leaves an awful lot of room for this government to plan for the next election.
We'll bounce around a bit to keep life interesting here. Clause 24 allows for the creation of sinking fund accounts or other arrangements for the repayment of the outstanding authorities. Sinking funds are sums of money which are set aside out of earnings each year to provide for the repayment of all or part of the debt issue by maturity. The sinking fund is a convenience to the issuer, as some of the issue can be paid off prior to maturation, thus lessening the cash drain when the eventual maturity is reached. This is beginning to sound like a real monster, isn't it?
Clause 25 sets out the limitations of outstanding debt able to be carried by the authority. It sets out that the outstanding debt may not exceed the limits set by the L-G-in-C; however, it does not specify exactly what the limit will be. So in other words, they have no restraints. This limit will not be set in stone, as subsection (d) specifies that the limit can be changed by
[ Page 5529 ]
adding or subtracting other amounts as prescribed by the L-G-in-C. In other words, they can change whatever limit they want; they can go up and down; they can manoeuvre it around. This monster can become overpowering in this province. This debt of ours is going to be hidden, and how many billions are we going to have that we don't know about come the next deficit?
This Bilk B.C. or Build B.C. fund is a giant re-election slush fund, and it's time it stopped. Fuel taxes and tolls, for instance, are supposed to be spent on the roads against the cost of construction and maintenance of our highway system. By taking the construction component out of the Highway ministry, the government is ensuring that our fuel taxes go into the black hole, or general revenues of this government, instead of the construction of our highway system and improving the infrastructure.
In addition, this fund will have the ability to make recommendations to Treasury Board on specific funding proposals. In other words, they will be telling Treasury Board what they're going to do. A Crown corporation! Now who controls what over there? The Crown corporation can control this government? That's the way it's going to end up at this rate. It's very obvious when you read this bill. These authorities have the ability to raise capital outside of the purview of the Legislature. We're on pretty dangerous ground at this point, because what does the public of B.C. know at that point? They don't know, because their Legislature won't be able to tell them. This is in large part the determining factor of the creation of this new body. Because what will this do for this government? It's going to give them unlimited resources to do whichever they want and not answer to anybody. We had a former government that tried the same thing; it didn't work. We now have this government doing exactly the same thing, except they've now got a super BS fund.
Interjection.
R. Chisholm: If anybody is corrupt, I wouldn't be the kettle calling...you know the story.
This government has got to realize they are no better -- if anything, they are far worse -- than the former government, because at least with that government it was common knowledge. With this government they're trying to slide it through the back door.
Another hon. member mentioned the word "scandalous" or "sleazy"; I'm not too sure which it was, but that's exactly what it is. We, the public of British Columbia, are not going to know what is happening to our tax funds. It's time this government was open and honest, as they like to preach. It's time for them to have the books there and have it part of the deficit. Why did they write the bill so that it wasn't accounted for in the deficit? Why did they write it so that it's accounted for under a Crown corporation that doesn't report to the Legislature? These are very interesting questions, but I don't hear very many intelligent answers coming from the opposite side.
I've just gone through a few of the problems of this Build B.C. -- or Bilk B.C. -- fund. Unfortunately, I don't see where this government is listening. I certainly hope they do start listening, because if they don't, the people of British Columbia are going to send them a very direct message. That direct message will be to ship up or shape out. I might add that right now you aren't shipping up much.
I hope the people of British Columbia start to say their opinion too. There's a bit of a tax revolt going on. All that the people of British Columbia know right now is the taxation part. When they start paying attention to what's happening to them in the Bilk B.C. fund, they might get downright violent and ornery, and I don't blame them one bit. It is time the people got involved in their government, and it's time they told their government what they do and do not want. I can guarantee you this is one thing they would not want. They do not want the government to have its own funds. They do not want the government to be out of control. They want control to be there; that's why government is in that position. But unfortunately, this government is failing in that department, and it's high time they took an inward look at themselves and straightened up their act.
On that note, hon. Speaker, I will sit down. I hope this government will dwell on some of the words I have stated to them.
Deputy Speaker: There being no further speakers....
Interjections.
Deputy Speaker: Order, please. I recognize the hon. member for Richmond Centre.
D. Symons: Thank you, hon. Speaker. I was just a little confused what directions I was receiving from our party Whip here at this point.
But the thing that amazes me -- and this is why I'm sorry the hon. member I'm going to refer to is not here.... But the Minister of Finance frequently gets up in the House. And when he has no valid rebuttal to the Liberal opposition's reasoned arguments against the NDP's flawed legislation, he will try to divert attention from their legislation by launching into an attack on the opposition. He fantasizes about the opposition's policies. He claims we want to spend, spend, spend, and yet it's the NDP government that has its hand in the till. Unfortunately, his rantings are 99.44 percent -- 100 percent -- creatures of his imagination and not based in fact. It's pure theatre only, and I must admit that he is a good actor. It's pure hokum.
[5:00]
The opposition, however, stands for controlled and responsible spending within the resources of the government and the ability and willingness of the taxpayer to pay. Unfortunately, I misplaced my.... For instance, I was just looking for a newspaper article here from the March 5th Alaska Highway News, of all places. I thought this rather stated things well. It's from a member of the chamber of commerce up there, about a meeting they had. This gentleman said in effect -- it's not a direct quote; it's just the newspaper's interpretation -- that the business community and taxpayers could accept tax
[ Page 5530 ]
increases if they were accompanied by a balanced budget and deficit reduction. We do not see that in the way that Bill 3 is being presented by this government.
We believe that government borrowing and spending should be done upfront and subjected to the scrutiny of the Legislative Assembly. This government has it backwards. It sets its spending first and then raises taxes to pay for it. This bill takes that fallacy one step further. It creates a new bureaucracy and gives it a blank cheque to borrow unlimited amounts without adequate scrutiny by the Legislature. It's nothing more than a shell game to hide a grossly inflated deficit. It takes money out of the government estimates so that the NDP can claim they are reducing the deficit. This money and spending will now be hidden in a newly created Crown corporation invented for no other reason than to deceive the people of B.C. on the true state of the province's finances.
This bill is so flawed in the manner in which it handles the financing of highways and transportation financing that I do not believe it is possible to redeem it by trying to paste over its faults with amendments. While I agree with the principle of long-term financing for major capital projects and the use of tolls on a very limited number of specific projects, this financing authority is not the way to go. That's why I believe the government should go away and look at it again. Modify it, revise it, correct it -- whatever -- but bring it back to this House so that it's more financially accountable. This bill is not. Bring back something we can support. We cannot support this bill. It allows for irresponsible borrowing, and it could lend itself to the use of large sums of borrowed money as a slush fund to attempt to buy itself back into office in the next election. The people of this province will no longer stand for that type of politics. Avoid the possibility of that charge by significantly revising those portions of this bill that vest borrowing powers in a select group beholden only to the cabinet. Legislative scrutiny for such borrowing is required.
This is just another plank in the NDP government's socialist agenda to restructure society. They want to level all British Columbians to some lowest common denominator. They don't want to raise us up; they want to level us down. They talk in a we-versus-them ideology, an exclusive "we" and not an inclusive "us." In doing so, they are discouraging investment and economic growth in the province.
Interjections.
Deputy Speaker: Order, hon. member. With the interjections taking place from members in their seats, the Chair is having great difficulty hearing the hon. member who has his place. All members are familiar with standing orders and know that in order to enter into the debate, they should take their place and be recognized. I would ask all members to at least temper their interjections to allow the Chair and the rest of the members to hear what the hon. member has to say.
D. Symons: Thank you, hon. Speaker, but I was rather enjoying the howls of the jackals over there. When they can't think of anything constructive to say, they simply blurt out nonsense, which they are quite good at doing. It doesn't bother me at all, because I think it speaks volumes for what's going on across the House.
The problem is that this is discouraging investment and economic growth in the province, and we're all going to be the poorer as a consequence. The corporate capital tax and the NDP's assault on homeowners are just two examples of their ideology. The Premier's long-term economic strategy was announced in his press release of March 29 on B.C. 21, where he says: "Building our future. The key to building a more prosperous future is making the right productive investments today -- in people, their skills and the tools our economy needs like highways, schools and healthy forests." Nobody would find fault with that statement. Indeed it is a rather motherhood statement, but it doesn't relate to what the rest of the announcement is about: B.C. 21. B.C. 21 doesn't address those issues. The ministries already exist. The mechanism already exists to do what's said there, and it would be remiss of any government member on the opposite side -- in the various duties they have as cabinet ministers -- if they were not already doing that. Why they have to put out a news release saying that this is what they intend to do -- when they should have been doing it for the last 18 months -- is beyond me.
In B.C. 21 we do not have the fancy words that come out there. The Premier describes B.C. 21 as an investment, but it is nothing more than a new provincial debt. When the Premier claims that this will be a selffinancing authority, he doesn't explain where the financing is going to come from. A 1-cent-per-litre toll or excise tax -- or whatever you care to call it -- in gasoline will not fund the magnitude of highways, let alone other things they plan on spending out of B.C. 21. So they are not explaining that. It sounds wonderful, but where are the economic realities of it? It's not in this bill. The Premier does not understand that you cannot increase spending without adding to the debt of this province, and that is precisely what bill 21 is going to do.
Earlier in this session, last week, the member for Cariboo North talk about how Build B.C. will kick-start the economy of British Columbia, yet we have our Minister of Finance standing up in this House on many occasions and holding forth on how wonderful the economy of British Columbia is and what a marvelous job this particular government is doing. The member for Cariboo North obviously doesn't agree, because he says we have to kick-start the economy here.
We have discovered that in the last eleven years -- 1981 to 1991 -- the B.C. government's balance sheet has shown the worst deterioration of any Canadian province or territory. The per capita government liabilities in British Columbia have increased by 669 percent over that period of time. To make matters worse, this deterioration has not only continued but over the last two years even appears to have accelerated, contrary to what our Finance minister has been telling us.
B.C. 21's plan is to borrow -- and it seems it's going to be $1 billion-plus -- to build roads, hospitals, schools
[ Page 5531 ]
and other public works. I can see hospitals, schools, and projects of that sort that have been financed in the past through the sale of bonds and the raising of money by borrowing as legitimate sources of income for those particular projects. B.C. 21 facilitates this, allows it to continue, more or less, in the way it has. But the problem is that in the past those particular types of capital projects have been publicly approved and funded through borrowing. The school boards have been aware of what moneys they're asking for, and the whole process has been public and open.
In this bill, there is no such public process for the highways, bridges and transportation input -- no opportunity for public scrutiny of either proposed projects or cost to be incurred. The costs will be borne by future generations to pay back those moneys borrowed -- this from a government that said: "If we do not have the money, we will not spend it." Where have I heard those words before? What they did not say was that with a financial open-ended scheme like B.C. 21, they can continue to borrow ad nauseam, and therefore they will have it at the expense of future taxpayers. This is not a recipe for financial responsibility. It's a recipe for financial disaster.
I quote from Hansard of July 17, 1990, when the member for Nanaimo spoke in relation to highways construction and the MacKay report dealing with the spending and overspending on the Coquihalla Highway: "MacKay recommended on page xxi: 'That in approval of expenditures for major capital works, votes and subvotes in the estimates be structured so as to adequately describe the work to be done and that later financial reports describe fully what has happened on a project basis.'" That's the quote from MacKay. The member for Nanaimo goes on to say:
"It seems to me that the problem with this account" -- he was referring to the Freedom to Move account -- "is that in midstream we can change from the statement of account that we start with without having to tell anybody. That's the issue. I'm suggesting that that is not consonant with MacKay's recommendation."
What the member said three years ago in this Legislature is precisely what is wrong with Bill 3. The problem here is that the sort of responsibility that MacKay and the member for Nanaimo were referring to is totally absent from Bill 3. My difficulty is that the method for paying for the highway and transportation component is through the British Columbia Transportation Financing Authority.
I refer for a moment to some Freedom to Move estimates from the years 1991-92. Under that particular account are expenditures on air transport assistance, capital contribution to British Columbia Railway, major highway construction, Fraser River crossing connectors, Okanagan connector, Vancouver Island Highway, Cassiar connector and Sea to Sky. They're all detailed here, and the amount of money that is going to be used in that year is spelled out. Nowhere do I find in Bill 3 the same requirement for notification of the moneys that are going to be estimated for expenditures in that year. I find no requirement to report back to this House, or to report to anyone other than cabinet or the finance committee, how much money is going to be borrowed. It's all open-ended. That's not the sort of thing we need to go into if we're trying to show fiscal responsibility. That's my problem with this particular part of the bill.
We have some other problems with it as well. Going again to Hansard, on July 16, 1990, the member for Nanaimo said:
"We have not injected the kind of capital we need to maintain the system" -- referring to the highways system -- "at the level it ought to be. The Delcan study...effectively told us that the transportation infrastructure was something like a basket case and would cost us literally billions of dollars to bring it up to the level it ought to be at."
I would agree 100 percent with that member's assessment of the situation, but what do I find when we look at the estimates for the Highways ministry? If you'll bear with me, hon. Speaker, this will relate to the bill before the House.
Under administrative and support services, we find that this government seems to have cut that particular part of their estimates considerably from 1991 to the current estimates. But when we skip down to take a look at something previous to that, like municipal contributions, we find that the figure has progressively decreased. They're cutting back on their contributions and assistance to municipalities; they're downloading onto municipalities. We also find that the Highways operations budget in estimates has constantly gone down over the last three or four years -- slightly, mind you, but it has nevertheless decreased. Highway maintenance has gone up slightly, as it should, because there are more and more roads that have to be looked after. There's the cost of living and all of the other things. This fits in as just maintaining its own level.
[5:15]
Finally, we come to highway rehabilitation. A moment ago, I referred to a portion where the member for Nanaimo commented from the Delcan study that said it was a "basket case." What has happened there? We find that in 1990, they spent approximately $163 million on that one. In the 1993-94 estimates for this coming fiscal year, $173 million is estimated for that. In other words, they have not dealt with the "basket case" thing. They've simply maintained the status quo -- the status quo that the member for Nanaimo felt was most inadequate. We find in the spendings of the ministry that they have not kept up in those aspects of it. What we will also find is that.... I was heartened last week to hear three members from the government side get up and quote me. That's rather flattering, I must say, when three government members quote what I said a year ago in this House regarding highways and the importance of highways.
Interjection.
D. Symons: You can look in Hansard, hon. member, and find that I'm correct. There were three members who read portions from Hansard. Two of the three are sitting in the House today. Hon. member, I was flattered, because I still stand by those words. The infrastructure -- the highways -- of this province are extremely important to the economic welfare of the province.
[ Page 5532 ]
Deputy Speaker: The hon. member for North Vancouver-Seymour rises on a point of order.
D. Jarvis: On a point of order, Mr. Speaker. I was going to mention that the member for Kamloops-North Thompson was making rude, crude and socially unattractive remarks, but I see he's now left. He was sitting in the wrong seat at the time. I just wanted to bring it to your attention.
Deputy Speaker: Thank you, hon. member. In any case, that is a questionable point of order. The hon. member for Richmond Centre proceeds.
D. Symons: Thank you, hon. Speaker. A little rest there for a second.
Where was I? I was being quoted by the members in government, and I was appreciative of that, because I stand by those statements. But unfortunately, what the government -- and these three members who stood up and quoted me -- didn't realize is that over the last 18 months, if the government members who got up and read back my words to me believed what they were saying, the government should have been doing something about highways. But what have they been doing? They froze capital expenditures; they held back on constructions; they delayed constructions. They now suddenly realize the error of their ways, and they're bringing in Bill 3, Build B.C., in order to try and make up for those past errors. I'm glad that they have finally harkened to my words and understood the wisdom of them and that they're going to address the problem. But unfortunately, Build B.C. does not address it in the proper economic, viable and proper way or handle this in a responsible manner for the people of B.C.
Bilge B.C., as we've dubbed it, is simply going to be a government spending that doesn't equal economic growth. It's going to be hidden debt, but it's still debt. Build B.C. is in contempt of the notion of public scrutiny of spending. All of these things are wrong with Build B.C., or Bill 3.
Finally, the Attorney General has expressed serious reservations in the past about the use of special accounts, which have reduced the Legislature's control over spending. This bill is a contrivance to make the deficit appear smaller. Immediate political accountability for spending is lost. Yearly operating costs are replaced by the fixed costs of servicing debt incurred from past spending. All of these things are not for the good of the province, meaning that under B.C. 21, constraint on current spending will be minimized because of the debt from previous years. This shifts today's costs to tomorrow's taxpayer. It exacerbates the duplication of capability which is already in place.
With respect to the B.C. Transportation Financing Authority, why should it have a board of directors that is another plum for supporters of this particular government when other financing authorities are paper entities with no extra people? Existing officials are designated and in place for signing purposes in these other authorities, but they are setting up a new bureaucracy under B.C. 21.
This bill should go to public hearings prior to passage in this House. We should postpone further readings of this bill, bring it back six months hence and correct all of the faults in it so that it will be a much better bill. I could support it at that time. The public should also be involved in the discussion which would set up another spending authority. The public should have some say in whether they want that. Cabinet authority over these new spending powers without any legislative scrutiny is ill-advised. There is no need for another spending authority to be created when current ministries can handle the function outlined in the bill.
Hon. M. Sihota: Hon. Speaker, I've been listening to this debate for some time now.
Interjections.
Hon. M. Sihota: Settle down. The members opposite just can't control themselves. Not only is this the most inept, ineffective opposition in the history of this province, it is one of the most negative oppositions ever to take their place in this chamber. Hon. Speaker, they don't believe in B.C.; they don't have any confidence in this province. They don't want to build roads; they don't want to make sure that our forests are restocked.
Deputy Speaker: Order, hon. minister. The hon. member for Okanagan West rises on a point of order.
C. Serwa: Yes, hon. Speaker. The point of order is that if the minister is speaking, he must speak to the philosophy and principles relating to the amendment; and if he is not, if he is rising to speak on a point of order, I'd appreciate him doing so. But the House Leader has no right to stand up there and simply harangue the opposition.
Deputy Speaker: Order, please. The hon. member is quite correct in his point of order, and I would ask that the minister, in making his contribution to the debate, be reminded that we are on Bill 3. With that, I would ask the minister to proceed.
Hon. M. Sihota: As I was about to say, there's no reason in the world for us to delay for six months the implementation of this remarkable piece of legislation. People in British Columbia want ships built now. They want the work started now to get on with building the roads and the infrastructure that's necessary in this province. They want hydro and transmission lines built now; they don't want to wait six months. They want forests restocked now. They want to make sure that people can make the transition from welfare to work in a productive way right now; they don't want six months of delay. And this naysaying opposition that we see on the other side of the House doesn't want to give this province the opportunity to achieve its economic potential right now.
And I say to you, hon. Speaker, as I say to all other members in this House, when I go through my riding and walk down the streets of Esquimalt, people say to
[ Page 5533 ]
me that they want another superferry. They want to see more ships built in the harbour in Esquimalt down on Yarrows. They don't want to remain unemployed for six months. They don't want to see an absence of opportunities for six months.
When I talk to my constituents from one end of my riding to another, there are....
Some Hon. Members: Recall.
Hon. M. Sihota: You're right. They want to recall this negative opposition. They want to get rid of some of the negativity around here. People in British Columbia....
Interjections.
Hon. M. Sihota: I do read the polls, hon. member, and person after person in poll after poll says that economic development -- job creation, economic stimulation -- is the number one priority in this province. And it is the opposition that wants to stand in the way of progress. It's the opposition that wants to deny British Columbians the opportunity to work. They want to deny this government the opportunity to build this province.
Interjections.
Hon. M. Sihota: Now that they've settled down, hon. Speaker....
When I go through my constituency, people shake their heads when I tell them that the Liberals don't want the Colwood crawl solved. They shake their heads in amazement when they hear that the Liberals want to prevent legislation from passing which would allow the Island Highway to finally be built from one end of the Island to the other end.
They encourage me to stand up in this House over and over again and make the point that these kinds of developments have got to occur, and they've got to occur now -- and they will, because those of us on this side of the House see the promise of British Columbia. We see the potential. And yes, we also see the problem, and the problem I'm looking at right now is the members of the Liberal Party sitting right across from me.
So they see the problem, they see the potential, and they don't want to wait six months. I want all members of this House to know that the New Democrat government will not support this hoist motion, because we want to get on with the job of building British Columbia right now.
There are people in this province who have been out of work for some time, people who find themselves facing social assistance and the limitations that that places on the quality of life that they enjoy and the opportunity that's available to them. People want to make the transition from welfare to work, to productive and meaningful lives, where they can enjoy the benefits that ought to accrue to all citizens of this province.
We in this House have an obligation to make sure that we create, first of all, the climate that's necessary and, secondly, make the investment in our infrastructure and our province that is necessary to make sure that those people have the opportunity to engage in meaningful and productive employment. The Liberal opposition wants to say no to us as a government providing people with the opportunity to gain productive employment. Not only is this one of the most ineffective and inept oppositions in the history of the province but it is one of the most negative and mean-spirited oppositions that we've seen in this province.
Deputy Speaker: Order, please. If the minister would concentrate on the bill, it would be of great assistance. Would the minister please proceed.
[5:30]
Hon. M. Sihota: Thank you, hon. Speaker. In terms....
Interjections.
Deputy Speaker: Order, hon. members. The Chair has shown considerable leniency up to this point, but I am finding it to become a bit difficult to hear the member who has his place, and I think that most members realize....
Interjections.
Deputy Speaker: Order, please! Hon. members, one of the difficulties we have is trying to make a decision on what extent we want to impede good, healthy and sometimes humorous exchanges between members in the House. I certainly can appreciate the need for relaxing at times, but we are getting very close to becoming unruly at this point. I would suggest to all hon. members that standing orders provide that members be asked to leave the chamber if they cannot contain themselves within reasonable limits. I would ask the hon. Minister of Labour and Consumer Services to please continue.
K. Jones: On a point of order, I'd like to bring to your attention the fact that the Minister of Finance is sitting in the House reading comic books.
Deputy Speaker: Hon. member, that is not a valid point of order. The Minister of Labour and Consumer Services has the floor.
Hon. M. Sihota: If you take a look at this province, it has remarkable economic potential. After all, we sit on the west coast of Canada adjacent to the Pacific Rim. We have seen over the past decade a remarkable amount of investment coming to this province from the Asia-Pacific markets, because they have confidence in British Columbia and see the potential that British Columbia offers. They see what we can achieve with the natural resources we have and the remarkable geography that works to our advantage. We have people coming to this province from other parts of Canada as well, migrating in from Ontario, Alberta,
[ Page 5534 ]
Saskatchewan or New Brunswick. They come here because, again, they see the remarkable potential this province has, the natural attributes this province offers, the benefit of geography that's available to all Canadians who wish to come here and live in British Columbia.
Consequently, British Columbia is one of the only provinces in Canada that is seeing remarkable economic growth. All of the indicators -- investment, immigration in, retail sales, housing starts -- every possible economic indicator is testimony to the remarkable economic activity in this province right now. If I may say so, under the strong guidance of the Minister of Economic Development this government is trying to take advantage of that potential. Given that potential, this government has a duty to make sure, through its legislative and fiscal policy, that the framework is established so that we can build B.C., as the hon. Social Credit member says.
[The Speaker in the chair.]
Hon. M. Sihota: It behooves me to understand why it is that the opposition would want to frustrate that growth, deny that potential and risk the future of this province when we have legislation before the House that would allow us to meet that potential. I don't understand why the Liberal opposition and the Social Credit opposition don't believe in British Columbia. I want all hon. members to understand that we on this side of the House believe in British Columbia, and that's why we're going to make sure that this legislation passes.
F. Jackson: I beg leave to make an introduction, hon. Speaker.
Leave granted.
F. Jackson: In the gallery at this moment is the person who helps me keep the affairs of British Columbia in order: my constituency assistant, Janet Surline. I would ask the House to help me make her welcome.
G. Farrell-Collins: I have to rise in response to the comments made by the Minister of Labour and Consumer Services.
The Speaker: Unfortunately, hon. member, we are still on the amendment to the bill, and my records indicate that the member has already spoken on the amendment.
Hon. G. Clark: I'm not going to make a long speech right now; I'll make a short speech. But I'd like to reserve the right to speak on second reading, of course, in a fuller explanation of the bill.
I've been listening today to some of the speeches from members of the opposition on the hoist motion. It has become quite apparent that members of the opposition don't really understand what's in the bill. So I want to go through and explain very briefly what is in the bill, for anybody who wants to pay attention, and the reason that a hoist motion is not appropriate. Hopefully the members opposite will reconsider their support for delaying the passage of this bill for six months.
There are essentially four elements to the Build B.C. program. The first element is accelerated social capital, and that's about $1.4 billion for schools, hospitals, justice institutes, law courts and the like. That is exactly the same procedure that has been in this province since 1967. In other words, we capitalize our spending on schools and hospitals and the like. That's appropriate philosophically, because you're borrowing money -- like a mortgage on a house: you pay for it over time -- for an asset which lasts for 20 to 40 years and in fact is paid off. I want members to know this. There are sinking funds attached to all of those borrowings, so the principal and interest is paid off over a period of time, just like any mortgage on any house.
There is nothing different in this. Last year it was a billion dollars. The year prior to that, in the previous administration, it was a billion dollars. The year prior to that it was a little less. There's a bit of a ramp up for two reasons. One is the lack of capital spending in the early 1980s, so as a result of that there's a bit of a delay, a catch-up, in terms of pressure on the system. That will come down in terms of capital spending over time. There's no intention of maintaining a $1.4 billion annual approval rate, but nevertheless, this is a good time to build, as prices are low.
Secondly, for the first time we want to try to incorporate some regional economic development criteria, some employment training criteria and some other factors in our capital planning and capital spending when it comes to schools and hospitals. This is not a revolutionary idea. We are moving up and accelerating somewhat the capital spending this year in terms of approvals, and in fact there are now other criteria applied to them. It's important we get on with the job, and that's why in this case a hoist motion doesn't make sense.
We are now for the first time -- and this bill does it -- allowing the government, through a cabinet committee or through a committee, to review the capital spending of the Crown corporations. There is always capital spending by Crown corporations -- B.C. Hydro being the largest -- and some of it is replacement.... There's been very little scrutiny of capital spending by Crowns prior to this administration, and now we're trying to apply some rigorous standards -- cost-benefit analysis and capital evaluation guidelines -- to all of our spending.
On top of that, we want to coordinate the capital spending of the Crowns to make sure they take into consideration regional economic development goals as well as employment equity, training and other facilities. So for the first time in this bill -- we'll deal with it in committee stage -- the Minister of Finance or the committee designate can request all capital spending and business plans by the Crown corporations. So they will now be reviewed. That's the second major component of Build B.C. All Crown corporations, upon the request of the cabinet committee or the Minister of Finance, can request the capital spending plans and the
[ Page 5535 ]
business plans of the Crown corporations. So we're trying to coordinate for regional development. That's the second major initiative in this bill.
Thirdly -- and this is new -- it is capitalizing some of the highway construction. That is new, and it's a legitimate source of debate. Members opposite oppose that, and we know that that means that the capital construction for highways would be less than it would be otherwise. We have, however, dedicated resources, dedicated tax revenue, to the Transportation Financing Authority, and by law the Transportation Financing Authority cannot spend more money than is generated by the dedicated taxes. So there is no increase; there's no off-loading of the debt on anything I have mentioned today.
We now have a vehicle -- excuse the pun -- for funding transportation initiatives, and there are dedicated resources. When I travelled the province, people said repeatedly: "We will pay 1 cent a litre more in gas tax, provided that you, the Minister of Finance, don't suck it into that black hole of Victoria and use it for other purposes." So now it goes directly to the Transportation Financing Authority, and every penny raised from that 1 cent a litre must go into transportation facilities. By law, it has to go into the construction of roads in this province. I think that's good user-pay philosophy, and it means that we now have the ability to finance major capital spending, particularly on highway development.
In addition to that, unlike other Crown corporations, this one has a borrowing authority that also has to be approved every year by Treasury Board. This year, in the budget document, it's $80 million -- the maximum the Transportation Financing Authority can borrow and spend this year -- and it's fully financed from tax revenues. So there's no increase in the deficit as a result of this.
Finally, the fourth component of Build B.C. is a $100 million special fund. That does increase the deficit by $100 million, hon. members. It's not off-book; it's right in the budget. It's pay-as-you-go -- $100 million in new incremental spending which is scrutinized by the House every year. You, hon. members opposite, can question the government every year on the spending out of that special account. You have full public scrutiny, contrary to what you have said repeatedly about this program over the last few weeks. You, the Legislature, approve the special account.
Why is a hoist motion inappropriate? Because one of the initiatives to get people off welfare and into work that we want to pursue is a major silviculture initiative targeted to welfare recipients, which is a win-win situation investing in our primary industry, which creates jobs in the long run for British Columbia, taking people off welfare, training them and putting them to work in a key industry in B.C. There is some pressure because the planting season is nearly upon us and we have to order seedlings. The members opposite can deride this all they want but it's true. We have some pressure to get the plan in place to hire contractors, get the training facilities up and running and get the people in the field working. We must have this bill because we are conscious of the Legislative prerogative, and of the ability of this legislature to approve spending. We have in this bill requested spending of $100 million. We want that approval so we can get on with the job of training people -- largely welfare recipients -- to get out into the workforce and work.
The one component which we need very quickly is a silviculture component. It's a major initiative and I think it should be supported. I'm disappointed...
The Speaker: Order, please. I hesitate to interrupt the minister, but the Chair is having great difficulty hearing the debate. I would ask the House to come to order so that we can hear the hon. minister's comments.
Hon. G. Clark: I simply want to reinforce the point with members opposite to read the bill. There are four components. It does not increase our deficit. There is no off-loading of the deficit under Crown corporations. This is practical and real coordination of spending plans of the government to create economic development. There is a brand new initiative of $100 million targeted for welfare recipients and getting people trained and working; that is debated in this House every year and debated now. I'm disappointed that members opposite would oppose the Transportation Financing Authority which allows us to spend money on road construction fully financed from tax revenue. I'm disappointed they would oppose increased capital spending on schools and hospitals. I'm disappointed that they would oppose the coordination of Crown corporation capital, and I'm disappointed that they would oppose a new initiative of $100 million targeted to job stimulus and job creation around the province and getting people off welfare and to work.
[5:45]
That's why I'm opposed to the hoist motion. We want to get on with this very worthwhile initiative. We want to get on with some initiatives -- particularly in our primary sector -- for job creation in the forest industry. I ask members opposite to read the bill, and at least -- if they want to oppose it -- know exactly what they are opposing and not fabricate some kind of straw man which they are attempting to try to debate.
Hon. G. Clark: The reality here is this is a practical and pragmatic process. It's all above board; it's all here; it's all good government; and it's all subject to legislative scrutiny. I ask members to oppose the hoist motion.
D. Mitchell: The Minister of Finance, who is the sponsor of this bill, has just provided an excellent rationale for why this six-month hoist motion should be approved by this assembly. The minister claims that he is misunderstood and that members of this Legislative Assembly don't really understand. I don't think the public understands what this Minister of Finance is really doing with the discredited budget that was brought in earlier in this session, and now with this legislation that emanates and flows from that discredited budget of this discredited Minister of Finance. There is no reason to just give in to his justification that
[ Page 5536 ]
he is misunderstood, and therefore we should simply agree.
The six-month hoist motion moved by members of the official opposition should be approved. We should not be confused about what a hoist motion really implies. It is a dilatory motion. It is brought in when the government brings in an initiative that is not well thought out, not well considered and not in the interests of the people of B.C. because it's confused right from the start. Therefore we should reserve the right to put it on the shelf for six months until the government can think it through more clearly and come back to the House with an initiative in substantially amended fashion that will meet with the approval of the elected representatives of the people of our province.
Bill 3 is called the Build BC Act. I think it was the hon. member for North Vancouver-Seymour who suggested that perhaps it should be called the Bilk B.C. Act, and I think he's right. Build B.C. was supposedly the great creative initiative within the budget brought in by the hon. Minister of Finance, a budget that was totally devoid of new ideas. Its only idea was to tax and borrow and spend more money. What were they going to do? They were going to bring in Build B.C., B.C. 21, an initiative that is going to bring us into the twenty-first century.
What does this element of vision really do for British Columbia? The Minister of Finance has pointed out, as did the Minister of Labour, who preceded him with his very sad imitation of former Premier Dave Barrett when they both spoke to this bill.... A very sad imitation. I was watching him very carefully. He was trying to imitate the member who represented his riding before him, and I can tell you, he doesn't hold a candle to the former Premier of the province, and he never will. The Minister of Finance is also the prot�g� of a former member of this House, a man by the name of Bob Williams, but he can't hold a candle to Bob Williams. We know how that works, hon. Speaker; we know who is actually the Charlie McCarthy and who is the ventriloquist in that act. But neither of them have really thought through the implications of this legislation. Bill 3 really doesn't represent any innovative vision for British Columbia, hon. Speaker. Bill 3, the Build B.C. Act, talks about a way to pave a few roads and have future generations pay for them, rather than to have people pay for them today.
Bill 3 talks about, perhaps as the Minister of Finance suggests, planting a few trees. We all applaud silviculture initiatives, but for the Minister of Finance to stand in this House and say that we have to approve this today and the government is ramming this through now because we have to plant trees and the planting season is coming on is the ultimate farcical statement made by this discredited Minister of Finance. The Ministry of Forests has funds in its ongoing programs to plant trees; we don't have to steamroll through Bill 3. The Minister of Forests undoubtedly would agree that we don't have to push this bill through the Legislature in an attempt to suggest that we're not going to have a planting season in British Columbia if we don't pass this terrible piece of legislation that is not well thought out, hon. Speaker.
Members should not be intimidated by the Minister of Finance and his ridiculous assertions with respect to Bill 3. The only element of Bill 3 that really talks about the vision that this government proposes is that this government is building another Crown corporation. A previous administration once brought in a fund called the budget stabilization fund, and inevitably it came to be known as the BS fund. This government is bringing in a new Crown corporation slush fund, and it's the BW fund, the Bob Williams fund. That's what Bill 3 is; Bill 3 is an element in the BW fund. It's going to create another Crown corporation, one that is unaccountable to the people of the province.
There have been initiatives in this session. Members of this House have proposed that Crown corporations should be more accountable. The member for Okanagan West, for one, has brought in an initiative which would, hopefully, bring some more accountability to the people of British Columbia. Others, including myself, have suggested that we need to have greater accountability of Crown corporations. What does this government do, hon. Speaker? It brings in Bill 3 and suggests that because there's a committee that can be established under Bill 3, made up of cabinet ministers such as the discredited Minister of Finance and his colleague, who does the poor impersonations of a former Premier, we're supposed to trust it and that because they are going to be on a committee administering this fund, we should somehow be comfortable that Bill 3, the $100 million slush fund that's put in there and extra revenues that are going to be generated from tolls and extra taxation are going to be administered fairly.
That's not accountability. That's not true accountability. Legislative accountability is when each and every member of this assembly can ask questions about the expenditures of Crown corporations prior to them being made, not afterwards; and after they are made, they can be scrutinized in a post-audit fashion. That doesn't happen in this Legislature today. That reason alone is enough to persuade me to vote in favour of this amendment. Until this government can bring in an initiative that allows Crown corporations to be truly accountable to this House, I think this should be hoisted, and it should be put on the shelf for six months.
Hon. Speaker, Crown corporations are the secret government within this government. They're the secret government ruled by Bob Williams, and now we're going to create yet another one. We're going to create yet another Crown corporation, and it's going to be Build B.C. You know the NDP tries to invoke the spirit of W.A.C. Bennett, and I think it's a horrible prospect. They try to invoke the spirit of W.A.C. Bennett, who developed Crown corporations, in some cases, as aggressive agents of provincial development. But this administration is building Crown corporations to the point where we don't even know how many we have anymore in British Columbia. We can't enumerate them. There are Crown corporations within Crown corporations within Crown corporations. We're now creating another one, and it's part of the secret incestuous world of Crown corporations with no accoun-
[ Page 5537 ]
tability to this House. The government is trying to provide some rationale for why this bill needs to be rammed through now. What's the hurry, hon. Speaker? Why not put it on the shelf for six months? Why not let the government think through this initiative a little more carefully?
This government has brought in a budget that does nothing more than tax and borrow and spend. This is it, hon. Speaker. This is the hallmark of this government's legislative agenda, Bill 3. They've called the bill first. They're trying to ram it through the House. They're threatening all-night sittings. They're trying to divide the opposition by forcing the opposition to consider spending estimates for other ministries while this bill is being debated in principle in this House, and that's wrong, hon. Speaker. It's wrong for us to be debating this bill in principle in this House while the government is trying to force us to approve spending estimates for other ministries at the same time. It's a divide-and-conquer proposition on the part of this government.
The Speaker: Order, please. Point of order, hon. member for Nanaimo.
D. Lovick: The member has just criticized an earlier ruling of yours from this morning in his last comment, and that is certainly not in order of this House. The Chair's rulings are not to be criticized or challenged, and you just did so.
The Speaker: Order, please. Thank you for your submission, hon. member. If indeed the member did do that, I'm sure he'll take your comments under consideration. To be perfectly honest, the Chair is having such difficulty hearing the debate that the Chair is missing some of the words. Please continue, hon. member.
D. Mitchell: I'm sure the member for Nanaimo couldn't hear either, so I'm sure he was confused by what I was suggesting.
But what I am suggesting -- and I want to be very clear about this -- is that it's inappropriate for this government to be trying to ram through this legislation in the House. And that's why the six-month hoist motion should be supported by members of this assembly. We need to think this through a little bit more carefully, and the government needs to think this through a lot more carefully.
Build B.C. is supposed to be the hallmark of the legislative agenda of the NDP government for this session, and the Minister of Finance has not explained sufficiently why this should be supported. He has tried to explain why the six-month hoist motion is inappropriate, but that doesn't explain the faults in the underlying premise of this bill. It creates another Crown corporation that is not accountable. His discussion of accountability in the House is something that I would ask him to review in terms of previous statements he made when he was in opposition, when he criticized the previous administration for not permitting enough accountability of Crown corporations. The same issue exists today, only more so, because this government is much more reliant on Crown corporations than the previous administration was.
More and more, this administration is shuffling the day-to-day administration of government into the Crown corporation sector. We have to ask why that would be. Why are we putting more and more of the administration, the debt, the borrowing power and the spending authority into the Crown corporation sector? Why would that be? Could it be because the corporate form of organization is more convenient for this government? Could it be that that's where their high-priced talent is -- CEOs such as Marc Eliesen in B.C. Hydro and CEOs of other Crown corporations? Could it be because they trust them to actually administer the assets that are owned by the taxpayers of British Columbia more than they do elected cabinet ministers who are accountable to the people of the province through this assembly on a daily basis? Why is it that more and more of the day-to-day drudgery of public administration is being transferred from line ministries to Crown corporations? It seems extremely inappropriate that this government should be doing that.
Crown corporations are really not an area that is within the purview of members of this assembly, and this government is increasingly shifting the day-to-day operations of government -- the borrowing authorities, the spending powers and the ability to tax and charge levies on the taxpayers -- into Crown corporations. Now we're being asked to support with Bill 3 a new Crown corporation, the B.C. Transportation Financing Authority. This may be an initiative that under different circumstances could be supported. We all support the construction of highways and the notion that highways are vital transportation links in our province. We recognize that there is a funding crunch. There is difficulty in terms of public administration challenges in our province today. But part 4 of this act doesn't really tell us how specific projects are going to be funded. The government has told us that they may levy tolls on bridges or highways, but they haven't told us how those tolls are going to pay for specific projects. Of course, these are issues which we would have to address in committee stage, if this bill ever gets to committee, and question very specifically. But before we even address the question of it getting to committee stage, this bill has to be approved in principle in this Legislature. Before it can be approved in principle, the government needs to think it through a little more carefully.
Hon. Speaker, I notice that we're getting close our regular adjournment time of 6 o'clock, so I would move that we adjourn this debate.
The Speaker: The motion before you is to adjourn the debate until later today.
Perhaps the member could clarify the motion before the House.
D. Mitchell: I move that we adjourn the debate until the next sitting of the House.
Motion negatived on the following division:
[ Page 5538 ]
|
YEAS -- 20 | ||
|
Chisholm |
Cowie |
Gingell |
|
Farrell-Collins |
Wilson |
Stephens |
|
Hanson |
Serwa |
Dueck |
|
Mitchell |
Tyabji |
K. Jones |
|
Jarvis |
Warnke |
Hurd |
|
Tanner |
Symons |
Fox |
|
Neufeld |
De Jong | |
|
NAYS -- 31 | ||
|
Petter |
Boone |
Priddy |
|
Edwards |
Cashore |
Barlee |
|
Jackson |
Schreck |
Lortie |
|
Lali |
Giesbrecht |
Miller |
|
Gabelmann |
Sihota |
Clark |
|
Cull |
Zirnhelt |
Barnes |
|
B. Jones |
Lovick |
Pullinger |
|
Farnworth |
Evans |
Doyle |
|
Streifel |
Krog |
Randall |
|
Garden |
Kasper |
Brewin |
| Janssen | ||
The Speaker: I regret, if the hon. member for West Vancouver-Garibaldi is rising...? Government House Leader.
Hon. M. Sihota: Hon. Speaker, I call the question on the hoist motion.
D. Mitchell: My motion to adjourn the debate was defeated; therefore I'd like to carry on with the....
The Speaker: Unfortunately, hon. member, having moved a motion that was defeated, a motion of adjournment, the member no longer has his place in debate.
D. Mitchell: In that case, noticing that it's close to our regular hour of adjournment, I move that this House do now adjourn.
Interjections.
The Speaker: Order, please. As the chair has mentioned, the hon. member who had the floor before the motion of adjournment of the debate cannot now continue with the debate. Moreover, the member cannot rise on a point of order and move adjournment. So we are now back....
From the Government House Leader, we have a call for the question on the amendment before you. I will now call that question.
Is this a point of order, hon. member?
K. Jones: Yes, hon. Speaker. The question that you claim has been called by the minister has not been called, because there was a question of that procedure. Therefore it was in the House still, and the minister has to bring it forward again.
The Speaker: Thank you, hon. member.
Interjections.
The Speaker: Order, please. Seeing no other members rising on the amendment motion, I will now read the amendment motion: "that the motion for second reading of Bill 3 be amended by deleting the word 'now' and substituting therefor the words 'six months hence.'"
[6:15]
Motion negatived on the following division:
|
YEAS -- 20 | ||
|
Chisholm |
Cowie |
Gingell |
|
Farrell-Collins |
Wilson |
Stephens |
|
Hanson |
Serwa |
Dueck |
|
Mitchell |
Tyabji |
K. Jones |
|
Jarvis |
Warnke |
Hurd |
|
Tanner |
Symons |
Fox |
|
Neufeld |
De Jong | |
|
NAYS -- 36 | ||
|
Petter |
Priddy |
Edwards |
|
Cashore |
Barlee |
Jackson |
|
Beattie |
Schreck |
Lortie |
|
Hammell |
Lali |
Giesbrecht |
|
Miller |
Gabelmann |
Sihota |
|
Clark |
Cull |
Zirnhelt |
|
Barnes |
MacPhail |
B. Jones |
|
Lovick |
Ramsey |
Pullinger |
|
Farnworth |
Evans |
O'Neill |
|
Doyle |
Streifel |
Krog |
|
Randall |
Garden |
Kasper |
|
Brewin |
Hagen |
Janssen |
The Speaker: Is the hon. member for Richmond Centre rising on a point of order?
D. Symons: No, hon. Speaker, I am merely....
The Speaker: I cannot take anything but a point of order.
I will recognize the Government House Leader.
Hon. M. Sihota: Hon. Speaker, I move that the House stand recessed for five minutes.
Interjection.
Hon. M. Sihota: Sorry, I move adjournment of the debate until later today.
The Speaker: We are on the main motion, which is second reading of Bill 3, and a motion has been moved to adjourn the debate until later today.
Interjections.
The Speaker: The Chair is hesitating because the Chair is in the middle of a division on....
Interjection.
[ Page 5539 ]
The Speaker: I have not recognized the hon. member. The Chair is in the middle of taking a vote, so I just ask the member to be patient for a moment here.
I thank the members for their patience. The motion put before the floor to adjourn the debate is not, in itself, debatable, and the Chair has begun to take the vote on that. The Chair must complete that vote, and then I will recognize a point of order.
Interjection.
The Speaker: The member has asked that I repeat the question. The motion before you is adjournment of the debate of second reading of Bill 3 until later today.
Motion approved on the following division:
|
YEAS -- 44 | ||
|
Petter |
Marzari |
Boone |
|
Priddy |
Edwards |
Cashore |
|
Barlee |
Jackson |
Beattie |
|
Schreck |
Lortie |
Hammell |
|
Lali |
Giesbrecht |
Evans |
|
Farnworth |
Pullinger |
Ramsey |
|
Lovick |
B. Jones |
MacPhail |
|
Barnes |
Zirnhelt |
Cull |
|
Clark |
Sihota |
Gabelmann |
|
Hagen |
Miller |
O'Neill |
|
Doyle |
Streifel |
Lord |
|
Mitchell |
Dueck |
Serwa |
|
Weisgerber |
Hanson |
Krog |
|
Randall |
Garden |
Brewin |
|
Janssen |
Neufeld | |
|
NAYS -- 12 | ||
|
Chisholm |
Cowie |
Gingell |
|
Farrell-Collins |
Stephens |
Symons |
|
Tanner |
Hurd |
Warnke |
|
Jarvis |
K. Jones |
Tyabji |
The Speaker: A point of order raised by the hon. member for Fort Langley-Aldergrove.
G. Farrell-Collins: Some time ago this House passed some regulations -- on March 31, and then they were amended on April 21 -- that dealt with the splitting of this House into sections A and B. If I can read No. 5 of those to the Speaker, it says: "At thirty minutes prior to the ordinary time fixed for adjournment of the House" -- I assume today that would have been at 5:30 -- "the Chair of Committee A will report to the House. In the event such report includes the last vote in a particular ministerial estimate," etc. Clearly the House wasn't adjourned, and time was not made to provide for that report half an hour prior to 6 o'clock. I don't know if that was an omission by the Government House Leader in his difficulty with it, but clearly that was not done.
The Speaker: The point of order has been raised. In the Chair's view, the member who has raised the point of order may have a valid point of discussion, but perhaps it is anticipating something that has not happened yet. At this point, I think it would be in order for the Chair to report from the committee, and then the House can decide, in its wisdom, where it wishes to go from there. I would call on the Chair from Committee A.
The member for North Saanich and the Islands on a point of order.
C. Tanner: The point of order that was taken prior was exactly that: that this committee did not report by the agreed time of 6 o'clock, so how can it report at 6:30, Madam Chair?
The Speaker: I think all members can appreciate the delicacy with which the Chair is attempting to deal with the points of order and the business before us. The words of the motion passed by the House regarding Committee A notwithstanding, I appreciate the points of orders that have been raised. But the House not having adjourned yet, it is the practice to complete the daily order of business, notwithstanding that. And that is why the Chair has said that the Chair of Committee A may report to the House in the normal fashion of daily business, despite the time, because we have not actually dispensed with this afternoon's sitting. That is the interpretation of the Chair. I repeat that we will hear the report of the Chair in the normal manner, after which time the House then may decide where it wishes to go from there related to this motion.
[6:30]
Committee of Supply A, having reported resolutions, and was granted leave to sit again.
The Speaker: When shall the committee sit again?
The Chair: Later today, hon. Speaker.
The Speaker: Point of order, hon. member for Saanich North and the Islands.
C. Tanner: This is the very point that I was making on my original point of order: that the committee did not report to the House in the specified time, so how can we sit again, if it wasn't reported by 6 o'clock, Madam Speaker?
The Speaker: I regret, hon. member, the Chair has already dealt with that point of order.
Hon. M. Sihota: First of all, let me remind all members that the House will be sitting tomorrow, and secondly, I move that the House at its rising now stand recessed for five minutes.
G. Farrell-Collins: I understand this is a debatable motion, and I'm sure that we can go on at this for some time. When we dealt with the amendments to the standing orders, as concerned the committee sitting in A and B, it appears we had some misunderstanding from the intent of the government at that time and the
[ Page 5540 ]
intent of the opposition with regard to that. Quite clearly, the opposition opposed the motion initially, and once the motion passed, it then became clear that the government wanted to extend the interpretation of that motion even further, to the point today where you were called upon to make a ruling which caused the House to sit in estimates in Committee A while Committee B....
The Speaker: A point of order has been raised by the Government House Leader.
Hon. M. Sihota: There is a narrow scope for the debate of this motion. The hon. member is now well beyond that scope in terms of his discussion as to the timing of the presentation under the rule that he raised previously. Accordingly, hon. Speaker, on a point of order, the member can only speak as to the advisability of standing in recess for five minutes.
The Speaker: Thank you, hon. member, for your point of order. I ask the hon. member to continue on debate on the motion before you.
G. Farrell-Collins: I've been trying to lay out the reasons why the House should not recess for a period of five minutes, and I'm merely trying to make that clear.
The intent of the motion of the change of rules was to try and speed up the House and try to facilitate the orderly business of this House. Clearly, what it's allowing the government to determine, whenever they like and however they like, is what debate will take place in this House. For them to adjourn this House and have it meet again five minutes hence is clearly contrary to the intent of the rules that we ascribe to. If the government had chosen to do this type of thing -- to have this House sit later to deal with the bill -- I think that would be appropriate. But to have the other House sit at the same time is not in agreement with what we've discussed.
The Speaker: Order, please. The Chair has allowed the hon. member considerable latitude on this, but I must ask the hon. member to debate the motion before the House at this time, which is not to consider what business has already been dispensed with or what business will be called at some future time. The motion before us at this point is to recess for five minutes.
I will try not to interrupt the hon. member again, because I know that he is trying to make his point, but I must urge the hon. member to stick to the debate of the motion before him.
G. Farrell-Collins: Quite clearly, what we're trying to do is discuss the advisability of the House sitting late this evening. If the government wishes to have this chamber sit and deal with second reading of a bill that they seem to be in a rush to get through -- I don't know why -- then certainly we can accommodate that. That's certainly what has been discussed. But to have the House sit in another five minutes and then imply that Committee A, which is in estimates, is also going to sit is clearly dealing in a whole new realm, because there is no clear order of business for that House. That's been agreed to by both the opposition and the government members. There's been no discussion of any substance to that, other than about two minutes. Clearly, it's not in the best interests of this House to launch into another whole series of estimates five minutes after the government becomes aware of it. Clearly there is no benefit....
Interjections.
G. Farrell-Collins: Government members seem to be getting a little upset. Perhaps they should talk to their House Leader about this.
Sitting late has traditionally been when we come down to the crunch and there is a need to sit late in order to finish up business in a timely manner. Clearly we're not at that stage yet. This House has only been sitting for some four and a half weeks. We anticipate several months or perhaps more. It's at the discretion of the House Leader as to how long this House may sit. We're not in any crunch. We're not down to the wire on any of these things, so to have the House sit in five minutes is, I think, perhaps beyond necessity -- the way this House is going.
But we're ready to accommodate the government, which seems to have some political need to pass this one piece of legislation, Bill 3. We're clearly ready to accommodate that, but I don't think it's to the benefit of this House to have the estimates at the same time this early in the session.
A. Warnke: Since I have a hoarse voice, I hope that the House will to some extent bear with that.
When I take a look at the motion before us to recess for five minutes, one aspect, of course, is to consider the extent to which we are ready to resume beyond the five minutes. I think it's extremely important to take that into consideration. It is not even very clear at this stage just exactly what estimates are to be debated in Committee A. It appears that the government is just as confused over this matter as anyone. A recess for five minutes seems to me a rather ridiculously short time for a government that really doesn't understand where it's going or what it's going to do after the five minutes.
The best we could do, I suppose, is talk for a considerable amount of time so that the government has some rough idea as to what it wants to do later. But this government clearly doesn't have an idea of what it wants to do later on. Since this government is not ready, I find it very difficult to support a motion that asks for a recess for five minutes.
D. Lovick: We're thinking of doing a video on the Legislature's greatest moments, and you're the star player.
A. Warnke: One of my interesting colleagues -- a sparring partner from the other side -- would obviously like to get involved in this debate. I would look forward to the member for Nanaimo and to others who want to participate in this debate as well. Indeed, I will be waiting with bated breath to hear why government
[ Page 5541 ]
members would want to embark on supporting this motion that calls for a recess of five minutes. I'm sure it's not very clear in the minds of the members opposite. I know that the member for Nanaimo certainly is not very clear as to what will be conducted in Committee A; I'm sure he has not got a very clear idea of why he'd want to recess for five minutes. Nonetheless, I will be waiting for quite some time to see what sort of retort members opposite will put forward in asking for their recess of five minutes. Along with asking for the recess of five minutes, perhaps members opposite can also explore why they did not seek adjournment. If they're not very clear and not ready to pursue the business of government -- clearly they are not -- then I think it would be best for them to put forward the reasons why they did not seek adjournment of the day. Perhaps members opposite have an unclear definition as to what adjournment is. It's not very clear in their minds exactly what a recess is.
It is really important for members on all sides of the House to reconsider just what it is that they are about to embark on this evening and to reflect on whether they should support this motion for a recess of five minutes. Reconsider it, because as I have reviewed the activities of the day, it is extremely important to account that the activities of the day are perhaps contributing to something that we have not seen in this parliament as yet. Some of the actions taken by the government have obviously created an acerbic atmosphere and environment, which I'm sure you would not like to see, hon. Speaker, and which I'm sure all members in good conscience do not want to see as well.
It's clear that the motion to recess for five minutes has been put with an unclear agenda before it, with no idea as to what they're going to do later on. Clearly, the government is not ready to conduct business later on. Therefore, the recess may even be mean-spirited. Government members really feel it is extremely important to play a game of chicken with the opposition by calling for a five-minute recess. It might be best if government members, especially the Government House Leader and others, would calm down, rethink their position and ask themselves what they really want to accomplish. What do they want to accomplish this evening? If they explore that question, they will find that they will not accomplish a lot but only contribute to the acerbic atmosphere and environment that's already here.
[6:45]
I can guarantee that if the government does not rethink its position on the recess, they will contribute to an increasingly acerbic atmosphere, which none of us really want to see in this House. Is the government serious in wanting the business of government to be conducted in a sober manner with sober thought? I would therefore argue that what would be best is for everything to calm down, and calm down in such a manner that government members would reconsider the recess. Some of my friends on the opposite side may perhaps want to get into the definition of recess.
Interjection.
A. Warnke: There we go again. I think it is extremely important for all members to pause and reconsider what has occurred during this day.
Interjection.
A. Warnke: I see that the member opposite is rather innovative. He wants to introduce a hoist motion on the recess for five minutes. If that hon. member wants to introduce such a hoist motion, let him go right ahead. That is quite fine: a six-month hoist on a recess for five minutes. If that's the response of that member, welcome to it. I would remind that hon. member that there is quite a difference between five minutes and six months. Maybe six months is necessary for that hon. member to have some strong, sober thought. As a matter of fact, that sudden discharge from the bowels of government over there.... Maybe it would be best to very seriously reconsider whether we need six months to reflect on whether we need a recess for five minutes. Sometimes some members are...in ordinary language we would call them pretty thick. In other words, it takes about six months for ideas to enter and penetrate the empty cranium. From time to time, that happens; I hope that's not the case here.
I would emphasize very strongly that it would be best for all members of all sides of the House to just calm down, think about what they are doing and whether they really want to contribute to an acerbic atmosphere. If so, then vote against the motion. But if they really want to contribute in a manner whereby we can resume the business of this Legislature on behalf of the people of British Columbia, in their best interest, I would suggest that those members reconsider whether they want a recess for five minutes.
Motion approved.
The House recessed at 6:49 p.m.
The House resumed at 6:56 p.m.
Hon. G. Clark: If it's the pleasure of the House, I'd prefer to have the wrap-up on the mini-debate we had on the Forests estimates.
The Speaker: In accordance with the motion that has been passed by this House, I would now call on the hon. member for Peace River North for a five-minute wrap-up on the forestry debates.
R. Neufeld: During the time that the forestry debates were on, I apologize, I was not able to attend all of the debate. But I did take part in some of it, and I read some of the Hansard items. We talked about the forest practices code, and according to the minister, legislation on that will be introduced in the House in 1994. Our party is pleased about that.
I noticed that the Minister of Finance entered the committee meeting today to ask questions about the small business program, which was instituted by the Social Credit government. That program is very successful, and the minister assures us that he's going to
[ Page 5542 ]
enhance it. In fact, when our committee reports back to the minister, we'll have some recommendations that we feel should be implemented to enhance the small business program.
We talked a bit about timber inventory, and I was pleased to hear the minister feels that the inventory is relatively accurate. For many years, when he was in opposition, he talked about not having a proper inventory. He realizes now that some of that was for naught. Although it is important and we need it, there are other very serious matters, having to do with forestry, that we have to deal with.
We talked briefly about enhanced silviculture programs. That's something that's near and dear to my heart, with the reduction in the annual allowable cuts.
Hon. Speaker, I don't want to call the members to order. But if there's a meeting over there, then let's get the meeting over with.
The Speaker: The point is well taken, hon. member. I would appreciate it -- and I'm sure all hon. members would -- if the House would come to order so that we can hear the member for Peace River North.
[7:00]
R. Neufeld: Thank you, hon. Speaker. I know that we were all a little bit excited here earlier about five-minute recesses and everything else.
The minister talked briefly -- actually not briefly, but to me it was briefly -- through the estimates about enhanced silviculture programs. He talked about the reduced annual allowable cuts that are taking place for whatever reasons -- whether it is government ideology or just the fact that we don't have as much timber as we thought we had. He feels much the same -- that we should be thinking about thinning processes and enhanced silviculture processes. I hope that he will see his way clear to get to the point of bringing those items forward.
I'd like to thank the minister and his staff for all the time they put in while in estimates. It was very enlightening.
W. Hurd: It's a pleasure for me to rise in my place today and report on what I feel are a useful set of estimates for the current fiscal year. I hark back to a meeting that I attended with the Minister of Forests on Saturday in Chilliwack in which 1,200 to 1,300 forestry workers and their families were gathered to express about the direction of forest management in the province and concern about that particular timber supply area. I think it's illustrative of the depth of the issues and the concern that exists out there in the forest industry and the forest resource. Some 200 communities in the province rely on the forest industry and the forest resource for more than 50 percent of their total economy. As the minister indicated during his estimates, these issues are complex; the opposition certainly appreciates that. But they are also issues that reflect on the lives of more British Columbians than perhaps any other ministry of government.
I think the discussion focused on how to make investments in the land base to increase the level of intensive silviculture and the amount of harvest. Also, accepting the fact that in the forests of British Columbia we need to practise multiple use and deal with a number of competing demands in the land base.... Clearly the need for integrated planning of that resource was dealt with during the estimates discussion.
I certainly can say that I appreciate the candour of the minister in addressing some of the questions that don't have simple answers. I consider it to have been a useful discussion, highlighting some of the areas of difference between the government and the opposition. Obviously, the questions that we were dealing with are questions that are in the minds of many British Columbians. It's unfortunately a fact of life with two committees that some members of the opposition were not able to participate to the extent that they might have been able to otherwise. I think the discussion was useful. I think the estimates -- as they were debated, as they will be reflected in Hansard -- will make interesting reading for those involved in the industry. It was certainly enlightening for me as a critic to be involved in that discussion.
Hon. D. Miller: I'd just like to add my own brief comments. First of all, I would like to thank both the Liberal critic and the critic for the third party for their useful participation and for the questions that they posed to me during the debate. It wasn't always a love-in; I can assure you that we did have our occasional fractious moments. Nonetheless, I commend the members for the tenor of the discussion during the estimates.
I want to cover a couple of issues fairly briefly, because I think some of the issues that we discussed in the committee stage are worth repeating here in the House. In my view, we are going through probably the most traumatic period of change that we will ever go through in the forest sector in this province. Issues have culminated and have presented a challenge to all members -- whether they're on the government side or the opposition side or, indeed, whether they are simply citizens of this province. We have reached the point where many issues have culminated. We need to look at how we can change direction and at the same time deal with the very real issues for people in this province who have relied and continue to rely on the forest sector as their means of livelihood -- and indeed the reliance the province has on the maintenance of a dynamic forest industry.
[E. Barnes in the chair.]
Having come through a period where we essentially developed an industry based on a resource that nature had provided and that did not require a significant investment of capital to maintain, we have come to a period of time where we can now see limits. We are trying to deal with the very difficult issue of overcapacity on the industrial side as well as issues on the land side. It requires a couple of things. It requires a fair degree of patience and tolerance on the part of citizens and on the part of those involved in the forest sector,
[ Page 5543 ]
whether they be people representing the industries, the workers, communities or environmental or other interests. It really does require a fair amount of patience and commitment on the part of those people to help resolve these very difficult issues.
I think that we are in an era that requires candour, that requires people, to the degree that they can, to set aside their fixed positions and realize that we will only achieve our goals of having a well-managed and sustainable land base and a dynamic industry that will continue to employ British Columbians.... In my view, more British Columbians will be employed in the forest sector overall in the future. As we go through some of these difficult issues, it is not always easy.
I was personally disappointed when the government, having taken a very difficult decision with respect to Clayoquot Sound, having weighed all of the issues at stake in that decision and having thoroughly considered and consulted with all of the various interests in an exhaustive process, finally did what governments really have an obligation to do, and that is to make a decision.
I suppose some people wish that life did not have those moments when decisions were required, but that's not the case. Decisions must be made, and governments have an obligation to make decisions that are fair and balanced, and which consider the very serious needs on the environmental side as well as the very serious needs on the economic side. These are not simple matters; they are not easy decisions. I don't say that to complain, because I think we have an obligation, and we're prepared to meet it.
This is not to chastise, but I must say that I was somewhat disappointed in the Liberal critic for not having registered his position with respect to that decision. I think it's fundamental. I don't think we can avoid stating our positions, and I don't think we serve anybody's interests by not doing that. Perhaps that's a matter that may be clarified in the future. I certainly hope it will be.
We also had some useful discussions about our systems here in the province -- how we price timber, how we collect resource rents and whether we do a good job of that. I was pleased with questions that I received from both the opposition and members of my own party. On that point, I was able to clarify the position of the province absolutely and advise all members that we have examined that issue very carefully, and that we have presented irrefutable evidence to all of the processes within the United States, those who allege that we do not collect the appropriate rent.... I was pleased that the questions asked allowed me the opportunity to say that publicly in estimates. Certainly all of us hope that that impenetrable defence -- a defence that's impossible to contradict -- is accepted by our American friends, that we can get past what I consider to be a rather silly and vexatious issue and get on to exploring what opportunities might exist between our two countries. I think there are many.
So we are going through a period of change. We are looking at issues that have caused some uncertainty with respect to annual allowable harvest rates. We're looking at the issues of trying to determine an appropriate land base, and of how we maintain an industrial structure that will employ more people in this province. I personally remain very optimistic that these problems are all capable of resolution; and I want to repeat before I close that we will really only resolve the issues on the land side if our citizens are prepared to take part in the processes that have been constructed to help and assist in resolving these issues.
Interjection.
Hon. D. Miller: To that end, I would note for the record that I'm being heckled by a member of the Liberal opposition, who, as I have already stated, apparently have not been able to summon up whatever it takes to announce what their position is with respect to Clayoquot Sound, who prefer to sit in their seats and heckle rather than stand and state what their position is. I will let others be the judge of that kind of activity.
I would say in closing that, despite the events of the last short while with respect to that Clayoquot Sound decision, I have issued and will continue to issue what I've described as a heartfelt plea to all sides to consider the serious issues we have to deal with, to understand that compromise must be reached and that no single group's agenda will be fully realized but that we do have the capacity and the marvellous land base that will allow us to accommodate these interests and move forward in a very progressive way.
Once again, I do thank the members of the opposition and all members who contributed to the debate. I think we had some useful debate, and I hope that we clarified some of the issues for the public and for members of the opposition.
Deputy Speaker: Hon. members, that concludes the report from Committee A, and I now call on the Government House Leader.
Hon. M. Sihota: Hon. Speaker, I call second reading debate of Bill 3.
BUILD BC ACT
(continued)
On the main motion.
K. Jones: I rise to speak on the main motion on second reading of Bill 3. I would like to reiterate that, according to the proposals put forward by the government, Bill 3 is the enabling legislation for the province's B.C. 21 initiative. In the government's words, it is a bill that sets out the government's initiative for economic development and diversification in the province.
It establishes a committee on building B.C.'s future, which will provide spending advice to the cabinet on their priorities. In addition, it will have the ability to make recommendations to the Treasury Board on specific funding proposals. These proposals will be financed out of a new special account called the Build B.C. special account. This account will consist of an original amount of $100 million, of which moneys can be paid out in accordance with provisions of the act.
[7:15]
[ Page 5544 ]
There is another part that creates a new B.C. Transportation Financing Authority. This will operate in a similar way to other capital finance authorities such as the B.C. Regional Hospital Districts Financing Authority and the B.C. Educational Institutions Capital Financing Authority. These authorities have the ability to raise capital outside of the purview of this Legislature and this is determined through the creation of this new body. This body will also be able to create funding out of changes to the Motor Fuel Tax Act by increasing a rate not to exceed 1 cent per litre. In addition, a $1.50 car rental tax and tolls will be levied by the government and used to pay for the operations of this authority. It is claimed that this will be self-supporting and will be responsible to the taxpayers.
In his presentation prior to the break, the Minister of Finance indicated that he felt this was the case, and he was making statements of justification. But I certainly ask the minister to read his own bill. The minister has obviously not read it very well -- or may not have had time to read it at all -- because what he was claiming it was doing is totally contrary to the wording of the sections of the act itself. The bill does not provide for the things that he claimed it was.
The whole structure of this bill is quite questionable. It sets up a structure whereby the minister bringing forward the bill is in an autocratic position. He could be all-powerful. Any appointments to add additional people to the administration or the boards are strictly up to his discretion.
This bill is a dictatorial, non-democratic bill, because it precludes the public from full disclosure of the intentions of this government. This government -- once again taking its sleazy approach to governing this province -- is using subterfuge to bring forward a draconian form of legislation which will tax the people without being accountable to the people, something that we hold very dear. The whole basis of democracy, the whole reason through the British parliamentary system throughout the world that we have such a degree of freedom is because we protect against this kind of dictatorial approach where the government of the day is able to bring forward unaccountable taxation and indebtedness upon the people of British Columbia and upon the people of any other jurisdiction within the British Commonwealth.
We have particular concern in the basic purpose of this bill. The purpose is:
"...to facilitate the expansion and diversification of the British Columbia economy by
(a) coordinating the government's activities to achieve overall economic development and job creation goals,
(b) ensuring that all regions of the province benefit from economic expansion and diversification,
(c) encouraging public and private sector investment and job creation activities in an innovative manner,
(d) promoting training and investment in people as a significant component of public sector investment activity, and
(e) targeting activities under this act toward traditionally disadvantaged individuals and groups."
Fine proposals -- but this bill does not provide the substance to make those possible. This bill that will create megaprojects, this bill bringing major capital expenditures in this province, will force the private sector into competition with the government's spending, force prices up and make utilization of private development funds unprofitable in this province, because the costs will be too high.
This government is not proposing to encourage our greatest job creation sector -- that is, our private business sector, particularly our small business sector -- to grow. It will actually hamper it. It will hamper the availability of capital. It will hamper the availability of talents and services that will be needed to operate, because that sector will be competing against a big chunk of indebtedness to our children created by this government through this bill.
The structure created by this bill is not accountable to this Legislature. It is only accountable to the cabinet -- in other words, it is a tool of the NDP cabinet. It is just another tool for them to spend taxpayers' money without any accountability, without any justification, even without any ability to look into the books. Under the financial administration section of this bill it says: "All books or records of account, documents and other financial records must at all times be open for inspection" -- not by the public, hon. Speaker, but open to inspection only" by the minister or a person designated by the minister."
The bill states that the public has no right of access to even the books of this Crown corporation that is being created -- and this Crown corporation can create other Crown corporations. It is totally unaccountable: totally without any say from the public; totally without any say from this Legislature, which represents, through a democratic process, the voice of the people of British Columbia supposedly. Unfortunately, there is an NDP majority in this House. As a result, their backbenchers and others are not willing to stand up responsibly for their constituents' rights and protect them against the decisions of this cabinet, which is running roughshod over the people of B.C. with this type of legislation.
Another factor of unaccountability in this legislation is the fact that the Minister of Finance may direct -- the emphasis is on "may" -- the comptroller general to examine and report to the Treasury Board on any and all of the financial accounting operations of the authority. That "may" precludes the comptroller general from initiating an audit, which is one of the primary responsibilities of protection, from a financial standpoint, that the people of B.C. have against a runaway government, a government that's powerhungry and money-hungry, grabbing at everybody's purse strings. By this legislation, the Minister of Finance can stop the comptroller general from looking into the books and the operations of the organizations established under this bill. That is a shameful situation, one that should never be allowed to exist. Never in a democratic process should the basic protective trappings of government be apprehended and made useless because of legislation passed by an NDP majority in this House and forced upon the people of B.C.
One of our great concerns was that this would perhaps be a vehicle for funding outside the ministries, and it's perfectly within the guidelines in the legislation
[ Page 5545 ]
presented here for that to happen. We tried to get, from the Minister of Education, an indication of how her capital funding would be allocated. What accountability would she have for funding that would come from B.C. 21, which members of this House on the government side have indicated would provide for school capital funding? She denied that any capital funding would be coming other than through her ministry's authority to borrow, but she did let slip the statement that if they were working cooperatively on a project with another ministry, then their portion would come from some other source than her ministry. Perhaps that other source is B.C. 21 as provided by Bill 3.
[7:30]
This is indeed a very draconian bill. As a result, some action needs to be taken by this House to prevent it from proceeding. In view of that need, I would move the following amendment, seconded by the member for Saanich North and the Islands: that all the words after "that" be deleted and "that" be followed by: "Bill 3, Build BC Act, be not now read a second time, because: (1) all measures for which a separate spending authority is being created can be executed within all current ministry operations; (2) there has been no public consultation with the taxpayers of the province as to their desire to set up a separate spending authority outside of legislative purview; (3) this bill will increase the amount of debt held by the province and will negatively impact on the ability of future generations to control their economic destiny.
Hon. M. Sihota: On a point of order, I have no difficulty with the debate proceeding at this point. I have not seen the amendment, and I want to reserve my right to speak and argue that it is out of order. I'll allow the debate to go on now until I have a chance to review it.
Deputy Speaker: That's possible, hon. Government House Leader.
On the amendment.
K. Jones: Speaking to the amendment and in favour of the amendment, it is very clear that there has been no public consultation with the taxpayers with regard to this legislation. The public wasn't even aware of this up until a month ago. The public deserves the right to be informed prior to such a serious form of legislation that will dig so deeply into their pockets, their children's pockets and their children's children's pockets. The indebtedness that is brought by this government will go on for generations. As the Minister of Education mentioned before, indebtedness created by the NDP government in the 1970s is still being carried by the taxpayers today. The bigger that indebtedness is, the more difficult it will be for our children and for ourselves to be able to address the needs of our families.
The Minister of Finance talks about how this is going to benefit the needy people of British Columbia. By increasing the indebtedness of the people of British Columbia, you increase the indebtedness of those poor people, those people who are disadvantaged as well. You really prevent them from ever recovering and getting on their feet again, with a feeling of dignity and a feeling of accomplishment. They will be indebted continuously through this debt increase. This debt increase will keep them continually bowed before this government. This government will have tied them with every vehicle possible to prevent them from having their freedom. I am deeply concerned with increasing the debt of this province. This vehicle is one of the worst methods of doing that -- a totally unaccountable debt creation.
We already have the vehicles for raising funds for the various ministries that require and can justify capital expenditures. We do not need another vehicle; we do not need another Crown corporation. Perhaps we already have too many Crown corporations; perhaps we have too many means by which the government spends money without accountability or without the people having a say. We have exceptional vehicles, but right now we have very few to reduce debt. We have not only the present vehicles to increase debt but also this new one that is being proposed.
The Minister of Finance takes pride in pointing out that we will only have a $10.5 billion indebtedness by this coming year. That's what his report that he tabled with the budget states. In 1990 the actual figure was $4 billion. In 1991 it went to $4.7 billion. Now, under the NDP government, it has gone up to $6.6 billion. The revised forecast for 1993 shows $8.96 billion, and their projection for next year takes us up to $10.5 billion -- from $4 billion to $10 billion in just four years. But that's not the real debt; that's only the ministry debts. On top of that we have the commercial Crown corporations. They're just small outfits -- B.C. Hydro and the B.C. Railway. Their total indebtedness is another $7.8 billion for this coming year.
Then there are the economic development Crown corporations and agencies. I'm not quite sure how these get classified as economic development agencies and corporations, because they seem to cost more than they create in dollars. They are the B.C. Ferry Corporation, B.C. Transit and now a new one: the B.C. Transportation Financing Authority, as established by Bill 3. Their total for this coming year is $1.9 billion -- almost $2 billion just for them. That's in addition to the other ones.
It keeps adding up. We have social and government services Crown corporations and agencies. We have the B.C. Assessment Authority, the B.C. Buildings Corporation and the B.C. Educational Institutions Capital Financing Authority -- the authority that's supposed to finance the building of schools. Maybe we should consolidate some of these financing authorities and get a better deal. Maybe they could do the job better. Maybe B.C. Buildings Corporation should be building the schools and administering them. They're quite capable of doing it. They have all the experience in business administration and custodial work and all those things. Perhaps we'll just add another one here to those social and government services Crown corporations and agencies. We have the B.C. Regional Hospital Districts Financing Authority, which is for financing the capital structures for hospitals. In addition to the previous B.C. Educational Institutions Capital Financing Authority,
[ Page 5546 ]
we have the B.C. School Districts Capital Financing Authority. We have two separate Crown agencies that are being used to finance schools. It's unbelievable. On top of that we're getting another one called B.C. 21 -- the lottery game. It's totally open-ended; it doesn't even have to report.
In addition, we have the capital project certificate of approval program. We have the British Columbia Systems Corporation. Those social and government services Crown corporations and agencies total up this coming year to $4.8 billion. That's added to all those others -- to the $1.9 billion and the almost $7.9 billion and the $10.5 billion. We're talking about billions of dollars.
We add to that what is called "other fiscal agency loans." That's the Greater Vancouver Sewerage and Drainage District, the Greater Vancouver Water District, the universities and colleges and the local governments. It's more indebtedness operated away from the accountability of the ministries, all putting the people of British Columbia in greater and greater debt but not being accountable.
There we have just about $0.6 billion -- $597 million. With some guarantees of another $0.5 billion, that brings the total for indebtedness to $26.379 billion, as listed by the Minister of Finance in his net debt summary, which is the report that he gave with the budget debate. Let's just look at how that's gone up. The actual figure of total indebtedness in 1990 was $16.2 billion; in 1991 they became $17.2 billion; in 1992 this new NDP government said they were not going to spend anything that we don't have and promised that they'd look after our money, that we could trust them, that they were good investors, good business people. Public, don't believe them. They've gone up to $19.977 billion, as close as you can get to $20 billion. They've gone from up from $16 billion in two years.
From 1990 to 1992 we've gone from $16 billion to roughly $20 billion. This year the '93 figures show us going from $20 billion up to $23.25 billion, and this coming year we'll be up to $26.3 billion. That is not good government. That is making an absolute mockery of their election campaign claims. Their campaign statements are total hypocrisy. They have not done anything to be good administrators of the people's money -- the money the people give, through their hard labour and their brain power, to the government in trust; not to squander, not to fritter away on their friends and insiders, not to waste on advertising that they claim the previous government shouldn't have done; but they're doing it in spades themselves. We don't have a different government. We have the same government and the same practices. In fact, they're even worse. They're going further and further and we're going further and further in debt.
[7:45]
Something we have to keep in mind when we're talking about the size of this debt -- that currently is $23 billion and is going next year to $26 billion -- is that that does not include, as is indicated by the auditor general, nearly $4 billion that the government has failed to report for the unfunded pension liabilities that the people of British Columbia are responsible for. Those unfunded pension liabilities are the pensions for the government workers, the college workers, the teachers and the municipal workers when they retire. Maybe the funds won't be there, because this government has got us so far in debt that they can't even scrounge up another $4 billion or $5 billion. With inflation, by the time a few of these people retire, that unfunded liability will be so great that the government won't even be able to consider it, and they'll just write it off and say, "Goodbye. You thought you were paying into a pension," and you will not have that pension when it comes time to collect.
As we've stated in our amendments, this bill increases the amount of debt held by the province, and will negatively impact on the ability of future generations to control their economic destiny. Of all three reasons that we've put forward in this amendment, I feel that alone is sufficient reason that this amendment should be approved and this bill not be allowed to proceed, because it would be devastating to the people of British Columbia.
W. Hurd: I am pleased to rise in my place and support the reasoned amendment from the hon. member for Surrey-Cloverdale. It's important to revisit the issues raised in the amendment, which I think clearly attempts to demonstrate to the people of the province the concern the opposition has about the wide parameters and wide powers granted under Bill 3.
One of the things we've asked for in our amendment is that the government pursue some sort of public consultation process on this particular bill. The people of the province need to understand exactly what is being proposed in Bill 3. They have to be given the opportunity to look at what this bill means in terms of plunging the province into greater debt.
It's ironic that the government would consult to death on issues that it chooses and that it would send panel after panel around this province. But for a fundamental bill such as Bill 3, which defines the philosophy of the government -- its intention to borrow money outside the parameters of normal ministries to be able to engage in infrastructure on projects throughout this province, without having the proper scrutiny of the Legislature -- it seems almost unbelievable that the government wouldn't take the philosophy that's inherent in this bill on the road and invite some comment from the people of the province on something that the government really believes in and something it obviously feels is in the best interests of the people. They have argued in this assembly that the bill has the capacity to find new money where none existed previously. It is an opportunity to build projects which line ministries couldn't find the financing for otherwise, and it seeks to do that under the guise of increased government debt. That's what it's all about.
Surely the people of the province should be given an opportunity to express their opinion on that beyond the debate in this assembly. Surely any government which claims to be open and consultative would accede to the idea of taking Build B.C. on the road to explain to people exactly what it means in terms of long-term government debt and exactly how the government is
[ Page 5547 ]
going to find money where it previously didn't exist. Give the people an opportunity to express their opinion as to whether they want their government to operate in this way and whether they want their government to be able to raise revenues for projects that are outside the parameters of normal ministerial debate.
Clearly that's something the people of the province should be given the opportunity to render their opinion on, and that's the reason I speak in support of the amendment. The second component of the amendment is the necessity of setting up some consultation process with the taxpayers of the province, who after all will have to finance this gambit, this bold new initiative by the government, to raise public debt without the proper scrutiny of the Legislature.
What we're talking about -- and we've talked about it since the beginning of this debate -- is the fact that we on this side of the House see a real danger of a parallel budget system developing in the province whereby more and more the government will be funding projects through the long-term borrowings of Build B.C. The line ministries in this government will become less and less of a factor in the kind of money they expend and the kinds of projects they undertake.
Given that fundamental change of philosophy -- perhaps as fundamental as we've seen in this assembly in the last 30 years -- surely the government would invite public consultation on Bill 3. Surely they would ask the public to review the terms of reference and the opportunities this monolith has to plunge the province even further into long-term debt. Surely they would seek the opinion of the public as to whether or not they want their government to engage in this sort of fundamental economic and social strategy for B.C. But nowhere has the government made that commitment to the people of the province. They are scheduling late-night sittings to try and ram this bill through. As we well know, the Minister of Finance may be interested in borrowing money in addition to the $100 million that has already been set up to establish the fund. I suspect that that may be one of the reasons as well why the government has proceeded with such haste with this legislation.
Dealing with the amendment, it asks that the bill not be read a second time until some fundamental measures are undertaken, in addition to the consultation I talked about earlier. Item 1 in the amendment talks about the concern over the creation of a separate spending authority that will not be accountable to the line ministries. We talked about that during the original amendment the opposition moved in second reading debate. We talked about the wide parameters that are going to exist for this particular Crown corporation. I have some of those parameters with me in the form of the bill. I think it's important for the people of the province to be aware of exactly what's being proposed and what is being sought in this bill.
We're talking about a Crown corporation which will have the ability to raise revenues for specific projects in the form of direct tax revenues from the people of the province. The suggestion that has been made by members of the government, that in fact this represents a financing opportunity that didn't exist under line ministries, just simply isn't true. There's nothing in Bill 3 that confers a power on the government that it does not have under an existing ministry or budget in this House.
The comparisons that are made to municipal governments and their ability to finance long term just don't stack up, because local governments have to balance the budget on an annual basis by law. Clearly the comparisons do no justice and no service to local governments, which have to live within their means. This is a bill which encourages the government to live beyond its means and which suggests that if you can borrow the money and spread it out over a long period of time, somehow it doesn't represent direct debt to the province, and somehow it doesn't represent a debt that will have to be repaid by future generations.
The odious part of this bill -- the thing that I think frustrates the people of the province who have had a chance to look at it -- is that clearly the ramifications will not be felt for years hence. The increased long-term debt load for the province will be picked up by perhaps even a generation hence. That's the most insidious part of the bill -- that the government is seeking to defer long-term debt, which will have to be repaid, to a point in the future when the members of this assembly and the members of the government side of the House will not be accountable. They will not be accountable for the interest payments on that debt; they will not be in any way accountable for the fact that the spending that is being done may not have been done in the right areas. This Crown corporation will function, as corporations are wont to do, in its own interests and beyond the scrutiny of the people of the province.
I talked about this issue during debate on the original amendment by the opposition. I talked about the fact that corporations, by their very nature, function differently than do the line ministries of government. They are by the very nature of their structure less accountable to the people of the province and less accountable to the scrutiny of ordinary citizens and members of this assembly. The decisions that they make with respect to investment, infrastructure, roads and even public buildings are ones that will be made not necessarily with the scrutiny of the public, and they could be made for reasons that they don't have to explain to the people of the province.
As I indicated during the original debate on this amendment, when you're dealing with corporations, if you consider the people of the province to be shareholders in that corporation -- as they somehow are -- there is a major difference between being a shareholder and being a member of the public that provides tax revenues directly to a line ministry. Clearly there's a huge difference in that type of relationship that you have with the spending authority.
As a shareholder, there's no question that you have less ability to influence the decisions of a Crown corporation. You have less ability to scrutinize how, where and why they spend their money. You have less input into the debt the corporation may take on. When you're talking about a corporate entity, it really doesn't make any difference whether it's a private corporation or a public corporation. The principles of incorporation
[ Page 5548 ]
are the same; the principles of accountability are the same.
I think it's important to emphasize that shareholders in a corporate entity, whether they be the people of the province or individual shareholders who possess a piece of paper in their hands, do not possess the same sort of input into decision-making, the same sort of holding the company accountable, than if the money were spent through a normal vote of a ministry in this assembly.
These types of concerns by the opposition highlight the need for this reasoned amendment. They highlight the need for the government to take this approach to the people of the province, something I talked about earlier and which I think is absolutely critical. As I go through the bill, I see the powers conferred on this Crown corporation: the ability to raise tax revenues for a specific project....
Deputy Speaker: Pardon me, hon. member. The hon. member is debating second reading, which we have had. You are on the reasoned amendment. I would ask the member to remember that the debate is considerably different on this amendment than on second reading of the bill.
[8:00]
W. Hurd: I was trying to address the third element in the amendment, which is: "this bill will increase the amount of debt held by the province and will negatively impact on the ability of future generations to control their economic destiny." Perhaps what I could do, with the direction of the Chair, is speak to the fact that long-term debt is surely one of the most corrosive issues faced by governments today. When we have a Build B.C. Crown corporation with the ability to enter into debt relationships without the scrutiny of this House and outside the normal parameters of borrowing, spending and debate, then it is clear that future generations will lose control of their economic destiny and will spend more money on direct interest costs.
I think it is absolutely vital for us to explore the issue of long-term debt as it is outlined in item 3 of the reasoned amendment from the opposition. As British Columbians and Canadians well know, other governments and other jurisdictions in the world have lost the ability to direct their own destiny, based on the amount of money they spend on interest costs. In the case of the federal government, for example, upwards of 33 to 37 cents of every dollar is spent on direct debt service costs before a dime is spent on program funding. When we look at the avenues that the Crown corporation Build B.C. has for increasing its long-term indebtedness, we realize that the projects it may undertake today will carry a high price tag in the future.
Members opposite have been fond of comparing the spending and taxing authorities of this particular bill to a mortgage: you don't buy a house with cash; you pay it off over 25 years. But the cost of servicing a mortgage over 25 years effectively triples the price tag of the asset or the house that you're buying. Even at a modest interest rate of 9 percent or 10 percent, the cost of financing a $100,000 or $200,000 house soon triples. It's $300,000 by the time it's paid off. We're dealing with what amounts to long-term debt for projects that may, in the company's wisdom, have very short-term benefits. Silvicultural projects and roads are one thing, but in terms of increasing its debt, which we have addressed in the third item of our reasoned amendment, the Crown corporation could do it for rather narrow political reasons. It could enter into arrangements that would create more long-term debt for projects that might have a very short-term political benefit -- if it were close to an election, for example. We've been down that road. We've been down that dead-end road of higher and higher public debt, and it clearly is not an answer for the long-term viability of government spending.
I think, too, given this fundamental change of philosophy, given the fact that the government is going to change the nature of its long-term indebtedness, its spending, it's going to create a Crown corporation which will do some of the functions, some of the projects, that were previously done by line ministries. You would think that this would be the most fundamental bill, the most fundamental change of philosophy that this government would take to the people of the province. It's indeed troubling to the opposition that the government has decided that this bill will be introduced in this assembly, that it will be debated during a time when public attention may not be focused on the intent and the nature of the bill and, as such, that it will proceed through this Legislative Assembly and will be created, in fact, with $100 million of seed capital, and it will then have the power to borrow, to tax, to spend, to create other agencies of government, other Crown corporations. The powers conferred under this particular act are almost limitless, almost incomprehensible, really, when you try and plow through the kind of wide parameters that this particular Build B.C. Crown corporation will have.
I have a great deal of difficulty with the explanations being offered by the government members that this new Crown corporation will be able to fund projects on a revenue-specific basis. What does revenue-specific mean? And how, when you have a flow of capital into a corporation, can you break it out on a project-by-project basis? There are not very many corporations that can necessarily do that kind of accounting, particularly when you're capitalizing assets, capitalizing projects, over a long period of time, and you're depreciating those assets in some cases over a long period of time. It's something that even the Ministry of Finance, a line ministry, has difficulty doing. But the important thing is that because it is a vote under a ministry, we have the ability in estimates debate and during debate in this House to get behind the numbers and make those kinds of determinations in this assembly. It's almost impossible to fathom where in fact that type of accountability would occur under this particular bill.
This particular corporation will have the power to raise revenue from gasoline tax. It will receive revenue from car-rental taxes. It will be able to fund silvicultural projects through some sort of direct taxation. I think, too, that this issue has been dealt with during previous debate on this bill, but I think it's important, in that it
[ Page 5549 ]
reflects on the amendment before us in the House: that when it comes to projects like silviculture in this province, companies that are involved in the forest resource already pay stumpage for the right to harvest Crown timber, and now we have a situation referred to by the Minister of Finance earlier where the Build B.C. Crown corporation will be out there raising revenues for projects that are already provided for under a line ministry, namely the Ministry of Forests. It amounts to what could be construed as a form of double taxation. That's the issue that I think has been barely explored during this debate: the effects of double taxation.
When you take these types of projects away from a line ministry and put them into a Crown corporation which already collects rents and revenues from the various stakeholders in the province, you create the potential for a form of double taxation. For example -- and the Ministry of Forests is a typical example -- if a company already pays for the right to harvest Crown timber or pays fees to the government, then clearly they expect that revenue to be used for silvicultural projects and forestry projects, the place to which it was meant to be directed. But under this particular bill the Crown corporation can now undertake some of those measures, take them away from the Ministry of Forests. Furthermore, under this act, it has the authority to go out and raise revenues for those specific projects. Where do you draw the line? How do you decide that a function previously belonged to a line ministry and is now part of the Build B.C. program? When do you decide whether the people who are funding the Build B.C. projects have already paid for them and supported them by taxation for a line ministry?
Those are the kinds of hard questions that the public of the province would welcome the opportunity to ask during some sort of public consultation process. I'm sure the accounting and business communities, forest resource users and others who pay taxes and royalties to the Crown would welcome the opportunity to ask those hard questions. They will be denied that opportunity, because the government is obviously determined to vote against the second portion of the opposition's reasonable amendment, which is to take this Build B.C. philosophy and bill on the road and listen to what people have to say about such items as the borrowing authority and whether or not they will have the right to influence the decisions that are made by this Crown corporation. It's very disappointing that a government which pledged openness and consultation and promised that it would listen to the people of the province wouldn't take such a fundamental bill on the road and solicit public input.
This particular Crown corporation will be unlike any other. It really will not be like B.C. Hydro or other types of Crown corporations. It will be a direct taxing authority -- taxing and spending will be its total mandate. It's clearly explained in the bill that it will not have any other sources of revenues -- for example, as the Ministry of Mines, Ministry of Forests or any other type of line ministry do. It will strictly be raising tax revenues and spending that on the basis of corporate decision-making.
It's important to revisit the issue of what it means to make a decision to spend money on a corporate basis. The assumption by the members opposite is that a Crown corporation by its very nature will somehow make better fundamental decisions than a line ministry; that somehow the structure of a Crown corporation is inherently better than what is available under a line ministry. That's the fundamental philosophy. But it's important for us to realize the liabilities that come with incorporation. It's important for us to understand the limitations placed on corporations when they decide to spend money on behalf of the people of the province and the limitations on the public to accessing the decisions and in making representations to that body as opposed to a Minister of the Crown.
There's absolutely no comparison between spending money through a corporate entity and spending money through a line ministry of government. That fact alone should dictate a commitment by the government to explain to people exactly what the difference is: if a decision is made to fund a road, a courthouse or a silviculture project in their community and they have a concern about reasons and rationale for the project being advanced, they really have no recourse through a line minister. They will somehow have to deal with a Crown corporation.
[H. Giesbrecht in the chair.]
I'm certainly glad that the member for Nelson-Creston has joined the debate here today, because he knows the difficulty of dealing with a Crown corporation like B.C. Hydro in his own riding. The people of Nelson-Creston have sought for years to have input into the downstream benefits of the hydro dam. They have made representations on that very important issue and have been frustrated time and time again by the nature of the Crown corporation that they're dealing with. They have made representations to B.C. Hydro that they should pay local tax on the dams they constructed that disrupted the ecology and environment of that particular area, and they have been unsuccessful for almost a generation in influencing the policies of a Crown corporation, namely B.C. Hydro. What assurances can any member of the government offer that the Build B.C. board will be any more accountable to the people of this province for the decisions they make? If the Crown corporation Build B.C. decided -- for whatever reason -- that it wasn't going to build a road in Nelson-Creston or it wasn't going to engage in a highway project, can anyone offer us an assurance that there would be an explanation? Can they offer us assurance that the Build B.C. board would be any more accountable for that decision than is B.C. Hydro in the Kootenays?
[8:15]
Surely the government would take this concept on the road, talk to people in this province who have had experience dealing with Crown corporations and who have had experience with the frustrations of trying to influence a large corporate entity which may be functioning with a philosophy that they don't understand and has now been explained to them. It's obvious that
[ Page 5550 ]
these are the kinds of issues that people -- I'm sure even in Nelson-Creston -- would welcome the opportunity to have representation on. They'll be denied that opportunity unless the recent amendment from the official opposition passes and this Build B.C. bill is taken on the road and the issues carefully examined and explained to the people of the province. I would wager that people who have had experience dealing with Crown corporations would come out and probably relate their experiences on how they have been frustrated in dealing with a Crown corporation and trying to reason with it on its decisions. Obviously it hasn't been easy.
The government is seeking to set up another monolithic corporation. But let's be honest; with $100 million in seed capital, not too much is going to be accomplished in the first few years of this Crown corporation. But its ability to tax and borrow and spend has the long-term effect of creating a Crown corporation every bit as large as B.C. Hydro or any other major Crown corporation. It defies credulity that anyone dealing with these Crown corporations could stand in this assembly and suggest that they have increased the level of accountability, that they have improved public access to government, and that they have enabled people to make representations to the corporate entity and get them to fundamentally change a policy. The only thing that Crown corporations seem to be influenced by are the debates in this assembly. But even then sometimes that isn't enough.
It's important for us to realize what a fundamental change in philosophy this type of spending represents for the people of the province. It's clearly a major move from public to corporate finance, from more accountability to less accountability, and from the controls on public spending that exist within a Legislative Assembly to the lack of controls that exist within a corporate entity. I have experience with corporations, and I understand how they can get themselves into trouble. I understand that they can make unwise decisions that threaten their viability. But this corporation doesn't play by those rules, because if it makes a wrong decision, it has the ability to come back to the taxpayers for more and more money under the guise of it being "revenue specific," whatever that means. The major concern of this bill is that there's less accountability, not more; there's more debt, not less; and in pushing this bill, the government has steadfastly refused to take it on the road.
A. Cowie: It gives me pleasure to support this amendment that's been put forward by the members from Surrey-Cloverdale and Saanich North and the Islands. The amendment deals basically with three issues: the fact that the government is setting up a separate spending authority; the fact that the spending could be put through the normal ministries; and the fact that there's no provision for public consultation. As the member speaking before me stated, it really should go on the road for six months and be given a thorough airing.
The bill will increase the amount of debt; and I think the most important part of the reason for this amendment is to recognize that, so that when it goes on the road, people will be able to deal with that aspect. This is really an ideological bill, and much of it should be fought outside this House by the business community and those that this bill will affect.
We, however, are trying to point out the inadequacies of it, and the problems that will result because of it. One of the main problems is that there will be a corporation set up to administer the funding, and this corporation will be handled primarily through the cabinet. So the cabinet, which is government, can then make changes and add more debt if necessary in order to bail the corporations out. As I said, the key thing here is debt, which is the third item that the members refer to in their motion.
I think the whole of the opposition recognizes that we have to build schools, courthouses, ice rinks and those sorts of facilities. However, there is a mechanism for doing that now. The school boards go out and borrow, and then they pay that debt down over a number of years. So there's really no reason why we have to go through Bill 3 in order to provide this extra funding. The only reason that I can find for doing this is that the government will have a great deal more freedom but less credibility. They'll be able to go out and take on projects, hire people that they want to hire, and so there could be a lot of patronage appointments. That worries me, mainly because this government has a record of this, especially in the last 18 months, when there have been many, many patronage appointments. Each one of these appointments is costing the taxpayer $125,000 for the heads of most of these organizations, and then most of the cost for the administrators is in the $60,000 to $80,000 range.
We see this daily as we see more corporations and more patronage appointments. It seems to be just a part of this government that they're going to make sure that absolutely everybody who supports this government or has for a number of years gets a good, cushy job.
L. Fox: He wants to move out of Ontario.
A. Cowie: Well, there's certainly provision for that, especially with the new manager for B.C. Hydro, Mr. Eliesen, who certainly has a cushy job, when you consider all of the fringe benefits.
The Minister of Finance made an appeal for supporting this bill earlier on today, and many of the aspects that he talked about were in fact reasonable. It's a good time to get out there and build roads. The problem with that is that we're not going to put any new people to work necessarily. The only way I can see that you can put unemployed people to work is that you have to train them first, and if anybody's ever been involved with roadbuilding, they know that it's pretty specialized today. A number of years ago I travelled through India, and they have a good system there that suits that country. In order for people to pay their taxes, the surrounding landowners contribute people who go out and manually work on the roads. That's fair enough, because the roads there are built in such a way that that's possible. That's not possible here. And it's not possible to get people who are now on welfare -- which
[ Page 5551 ]
the Minister of Finance says is another reason for this bill.... They're certainly not going to work on roadbuilding projects; that's too specialized.
However, it will put a number of companies that are pretty lean right now back to work, and I approve of that. We should get on with some of that work. I actually approve of the possibility that we can charge tolls under certain circumstances, and certainly that is possible. But I want to mention that the Island Highway, which has been put forward as the main project that needs to be built, is going to take at least four or five years. By that time, this government probably won't be government. It's very likely that the current opposition will have to take on the debt created by this. I'm not so sure that we're prepared to put on tolls for those people up Island, when other people in the province have had their roads built without tolls. So there are a couple of problems associated with that.
Regarding employment training, I think that's another added benefit that could come out of this special corporation that's being set up. However, we have mechanisms at the present time that can do that. I want to take one example, because the Minister of Finance spelled out very clearly just how you deal with it.
If we're going to train people in silviculture.... Silviculture was mentioned very specifically, and that's a responsibility of our Forest Service. They've been doing that through the companies, and the companies go out and hire people. There are people in this province that spend a good five or six months out there planting trees. Silviculture -- "silvi" meaning forest, and "culture" meaning looking after the forest -- is a very broad topic. It could include many horticultural aspects. First of all, you have to get the seeds and grow the seedlings. I don't know if many of you have been involved with that or not, but it doesn't take an awful lot of training to get people to do that. I would think that's one worthwhile aspect: we could take some people off welfare and train them to do that. So I'll give full marks for that.
Then it comes to the matter of looking after the forest. But in particular here we'll continue with those seeds that have now grown into little seedlings, and they now have to be planted. That becomes fairly strenuous. I don't know if any of you have been out there planting those trees or not -- out there with the black flies, staying overnight in the tents and cooking your own chow -- but that's a tough job. You don't take people right off welfare and put them into that kind of job. That's a job that actually takes a lot of physical strength and a great deal of energy. So I would somewhat doubt that you can take people off welfare and get them planting trees up at the 2,000-foot level with the black flies. I would doubt that very much.
There are, as a matter of fact, many people already employed in that particular industry. It's very competitive. They get out there and enjoy the job. So what would we really be doing? If we even tried it, we'd be taking jobs away from people who already have those jobs. However, what I'm saying is that there are certain aspects of silviculture that one could use this program for, but it could be done also through the existing forest programs. It doesn't have to be a special program.
Since we're talking about the full aspects of silviculture, there are other aspects to forestry that could also -- and I don't what to give a full lecture on silviculture or forestry.... However, one could also thin out plantations. That's a good use. It's still looking after the forests, to look at it in its broadest context. One could do thinnings; one could do prunings; one could do all of those things. We could even, in some aspects, fertilize the forest. So I would think if we're dealing with fairly easy forest areas, and if this government were to look very favourably at community forests -- which I favour very much -- then I think perhaps there is something there we could work on.
However, that also could be done through the normal forest process. So there's nothing really new in this, even though the Minister of Finance made a fine speech on it earlier in the day. I notice he must have heard me speaking about the fine qualities that he put forward earlier.
We were talking about -- for the Minister of Finance who has just arrived -- silviculture and the full aspects of silviculture.
Again, the Minister of Finance in his great appeal earlier today talked about Crown corporations. There again, we have mechanisms through Crown corporations whereby we can now go out and get funding. So what he pointed out is that it really isn't anything different. We're not doing anything different. So why do this? Why do it if we could do it in the normal process?
[8:30]
It's really an ideological bill. Yes, this government is using private enterprise or free enterprise words, in that we go out and borrow, we pay back and then we pay off. Sure, I understand that aspect. But really what it is is a corporate socialist sort of approach. Because it's going to be put in the hands of Crown corporations, where we have very little control. One has to look at where is this whole idea come from. It really -- if one understands a little bit of the history of the last 20 years -- comes out of Simon Fraser University's school of resource management, which Jim Wilson now administers. Mr. Gunton was part of that, Bob Williams was part of that -- a whole group of people who are now being employed in these corporations. So it's their one opportunity to actually carry out their ideological philosophy.
I don't blame them. I think if I were in government and I had a say, I'd try the same thing. But I just have to point out, really, that the main problem with this whole approach is that we in British Columbia, the taxpayers, are going to get caught with a huge increased debt. Already this budget this year, as I understand it, has increased the average family debt by $4,000 -- just this one year. So what we're going to do by borrowing $1 billion through this particular bill is create a great deal more debt. And it's not going to be shown as a deficit. In fact, I suppose the government can keep going out and borrowing more money, put it through this special corporation that can borrow money, and we don't have to call it a deficit anymore. Within three or four years, we won't have any deficit, but we'll have a huge debt that every single citizen in this province will have to
[ Page 5552 ]
pay off and all of our children will have to pay off for many years to come.
I think it's quite obvious that I cannot support this bill, and I have to support this amendment so that at least we can get an airing. We've had a number of calls from businesses in this province. They don't understand the bill yet; they're just beginning to understand the bill. So I would think that the Minister of Finance, if he's proud of the bill as he says he is -- and he makes a very good argument -- would only be too willing to take it out on the road. After all, he took his tax measures out on the road, and he did reasonably well, except for one embarrassing instance regarding the surtax. He had to back down on that. And he had the decency to do that. So maybe if he took it out on the road and listened to the business community, aired it where it should, the government would change their mind on this particular aspect.
Interjection.
A. Cowie: Just for the information of the member for Nanaimo, I am dealing with the amendment and with the three aspects. I'm dealing with number three, which primarily deals with debt. So I am dealing with that.
I want to get back to the prime reason that I personally am for this motion and against the bill, and it has to do with debt. What I fear most is that the government is going to use this borrowing to go out and do pet projects. We've mentioned the Island Highway. That's not a pet project; it was started many years ago. However, what worries me is the implementation and how it's going to be paid off, and why people along that highway should have to pay tolls when other people in the province haven't paid tolls.
I again appeal to the members of the Legislature to support this motion. Get the bill out on the road so that everybody understands what it is. Let's have more talk than 15 minutes. The Minister of Highways only put forward 15 minutes. That's all he gave in introducing this bill. Let's get it out on the road so that everybody can understand it. Then maybe this government will realize why we have to change it, and will do borrowing through the normal mechanisms -- where it comes before this House and we actually show these figures as deficits, not debts.
D. Jarvis: One of the good things about tonight is that if we think back on this government, if they run their full term they have only 918 days left.
I'm speaking to this additional amendment to Bill 3, because in previous remarks on this bill I've tried to relate that it is not a good bill for the taxpayers of this province. It's not that the building up of B.C. is not a good idea, nor that investment in this province is not a good idea. It's the way that this government perceives how economic development and investment in the province should go. The taxpayers of this province, as you are aware, will be the ones funding these programs, and they should be aware of where their tax dollars are going.
This bill precludes the taxpayers from knowing exactly how their dollars are being spent. The bill removes the dollars from the scrutiny of this Legislature. This government, when it was in opposition approximately two years ago, was talking about the previous government's budget stabilization fund -- the BS fund. We have the same process going on here. As I said in an earlier speech, what it is really called is Bilk B.C.
It's unfortunate that the majority of the citizens of this province are not aware at this time of how insidious this bill can really be. This is due to the unbelievably bad budget that was presented to us the other day. The taxpayers have been all too consumed with the excessive tax legislation presented to them, so that they are not really at this time aware that the government is trying to push this bill on top of them, and of how bad it will be.
The argument coming from government members, if there are any in the House -- there's half a dozen -- and especially the backbenchers, is that the opposition is against the building of roads, schools, infrastructure, training and reforestation. Nothing could be further from the truth. We in the opposition have asked time and time again over the past months for an economic development plan or something to get this province moving again, but moving again is not something that this government does of its own accord. We would like to get this province moving again, especially in the private sector, where the resource industries are. We do not need a private slush fund that gives the government the unequivocal right to borrow millions and millions of dollars and not be accountable in this Legislature or to this legislative body. This bill provides no accountability.
Actually, I feel sort of offended that there's no one here to listen to me talk. I'm wondering if there are enough members for a quorum under standing order 6. I count eight people; we need ten in this Legislature for a quorum.
Deputy Speaker: Are you calling for a quorum, hon. member?
D. Jarvis: Yes, under standing order 6.
Deputy Speaker: Proceed, hon. member. A quorum is present.
D. Jarvis: There is no accountability whatsoever in this House or to the taxpayers. It is ostensibly a slush fund to help this government in the election that they're going to have, which I hope is going to be within 918 days.
You don't borrow money to create wealth; you have to go out and earn it. The private sector is aware of this, and this is what the taxpayers want. They want a government that will create a climate to encourage investment and development so that they can go out and build B.C. The private sector should be building B.C., not the government. The government is an encouraging hand. This bill only creates another Crown corporation, or thereof, that will be allowed to go out
[ Page 5553 ]
and indiscriminately borrow money with the right to tax and to put on toll taxes and god knows whatever tax schemes the Minister of Finance may come up with after he converses with Mr. Williams. This bill is actually the start of Guntonizing British Columbia.
An Hon. Member: What was that word?
D. Jarvis: Guntonizing. And if you read the history of Mr. Gunton, the Deputy Minister of the treasury, you'll know very well what I am talking about.
[8:45]
This government believes that you can tax your way to prosperity. It is an arrogant attitude, but they know what is best for the people in this province, and that this shadow Crown corporation created by this bill will be the can-doism attitude of this socialist government -- that they know what is best for the people in this province.
An Hon. Member: We were elected.
D. Jarvis: I hear across the floor a gentleman saying that we were elected. You were elected by default, sir.
An Hon. Member: So were you.
D. Jarvis: You had less than 50 percent of the vote....
Deputy Speaker: Order, please, hon. member. I am reluctant to interrupt, but I would remind the member that we are debating the amendment.
D. Jarvis: Yes, you're darned right we are.
In the creation of this authority under this bill, sweeping powers will be given to the government. It is at the discretion, say, of the chairman of this bill to appoint committee members, which means an untold number more patronage jobs for their friends. This bill does not express how many appointments they will make.
Section 15 of the bill -- board remuneration -- states that an allowance may be paid for reasonable travel and incidental expenses. I suggest that the individual ministries already have a full travel budget and allowance. This is already well financed by the taxpayers of British Columbia. The same aspect holds true for all the other ministries this bill affects or encroaches upon. Therefore, why do we need another government agency to duplicate precisely the same costs?
By having Build B.C. we are going to be able to borrow more money. I shouldn't say we, because I don't really want to be included in it at this point. But the government is going to be able to borrow money outside of what is allocated in the budgets of these respective ministries -- or the line ministries, as they are called. So the government is creating an enormous hidden debt that is not accountable, as I said, to the taxpayers and the future generations of this province. There will be no accountability by this government whatsoever. In this Build B.C. we are giving such a widespread spending authority and discretion to spend that it's going to be very scary to us.
Let's face it -- the Minister of Finance has already borrowed the money. He was away in New York and Montreal for about a week and a half, at which time you will realize.... You remember how the government collapsed on that side because the Minister of Finance, who is really the true Premier of this province, was away trying to borrow funds. And he's come back with the money. He has that money borrowed already, and that's why he's in such a hurry to push this bill before this House. We must have it passed. Why aren't we doing it in a normal situation? No, they must push us, and here we are sitting at 8:50 p.m.
This government is in such trouble with the taxpayers that they have to deflect it, and they are using Bill 3, Build B.C., to say that they have created something new, and that is why they are trying to rush and pass this bill -- because they are starved for money. They are starved for ideas, and Bob Williams and Tom Gunton have come up with this glorious idea of how to essentially bilk B.C.
We have already seen that this government has no concept of how to be economically viable or how to create wealth. They are starved for ideas on how to create wealth in this province. All they know is how to tax and spend, how to give jobs to their friends and how to pay back their supporters with excessive wage settlements. We have seen that with Mr. Eliesen, who was brought in from Ontario to the tune of in excess of $264,000 a year, when you add his bonuses and $50,000 for moving costs. Do you call that a responsible government, when it is spending taxpayers' money in that way? Then they take Mr. Eliesen on a little trip to China, on the Club Med tour of the Far East with the Premier. That's another little bonus.
We are heading for a disaster if we allow Williams and Gunton to continue to tax this province to death. Their beliefs are going to tax us not into prosperity, but into a larger and larger debt. At this time, every man, woman and child in this province owes a mid-sized car. With this cute, little Bill 3 that has been presented to us, by the end of next year we will probably all owe at least a mid-sized one-bedroom condo, as the debt grows and grows. We see the members across the chamber shaking their heads in disbelief. They will find out the real truth in a few months from now.
They say that the infrastructure that is going to be built throughout this province because of Bill 3 will be self-financing. They're going to add a 1-cent-a-litre tax. How will it be self-financing? It's hard to believe that they actually believe this is going to happen.
Bill 3 is purported to be a financing plan to build our resources. Nothing could be further from the truth. It's a sleazy, funny-money setup, if we have ever seen one. It reminds me of the type of legislation that used to come out of Alberta years and years ago. It's transferring this province's debt to another agency, so that they can go to the voters and say that they have reduced the deficit. They might have the audacity to say that they have balanced the budget when, in actual fact, they have increased the debt and hidden it in another agency, where it really cannot be accounted for.
[ Page 5554 ]
We support economic development, and we support a strategy to develop our resources. We support the new infrastructure in our towns and villages throughout this province. However, we have to be honest. Why do we need another agency to administer all these features? A new Build B.C. -- or Bilk B.C. -- agency will, in effect, create a slush fund account, as I said before. It's a patronage agency for this government.
This government is asking its backbenchers to rubber-stamp and endorse this bill. When I say rubber-stamp, I mean that the backbenchers will say yes. Not one of them has got up and questioned one thing that the government has said or purported to lay out in this bill. It's aye, aye, aye; I agree, I agree, I agree.
I've been following the debate quite closely in a lot of cases, and I have been particularly interested in listening to some of the NDP backbenchers, although there are very few here tonight. I'll see if I can point out a few statements that some of them have made. These backbenchers are so obviously in the dark as to what this government is doing and what this new shadow government will do. They will not say what their real intentions are with this bill. The backbenchers will just rubber-stamp absolutely anything, and they'll put up an asinine defence for this bill.
The member for Cariboo North, when he was debating this bill -- or, I should say, rubber-stamping this bill -- began by suggesting that the opposition cannot criticize the lack of scrutiny opportunities in this bill, because it is our job to scrutinize every piece of legislation. It's hard to believe. The member should probably be aware that this is in fact what we are doing today. We are closely examining this bill and trying to expose it for what it is -- a shameful slush fund, as I said before. In fact, the bill is so secretive that the government backbenchers will in all likelihood also learn of spending decisions through their own local newspapers, because I'm quite aware that....
An Hon. Member: If they read them.
D. Jarvis: Well, it's debatable whether they know how to read, too.
The member for Cariboo North should be outraged at this callous attitude of his supposedly open government. The decision to place government spending decisions outside the office of the ministries will not be taken lightly by either the Liberal opposition or the people of this province. In 918 days, maximum, they'll probably voice their opinion when they vote against all these backbenchers out in these small resource towns and areas because they stood up and rubber-stamped this government into a larger and larger debt.
[The Speaker in the chair.]
The member for Cariboo North also said that this bill will bring prosperity to the slump in the resource industries. The resource industries are in a slump because of the muddle-headed policies of this government. The only kick-start they have given to the resource sector is to kick the mining industry, for example, down to Chile. Over $3 billion of Canadian money is now heading into Chile and not into this province, but this bill says that they are going to kick-start the resource industries. After all the companies have been kicked out of this province, that's exactly what will happen to these backbenchers come the next election -- they'll get kicked out.
This gentleman from Cariboo North also said that this bill is a plan to prioritize projects and complete them. Through this slush fund, the priorities will be established -- and we all know it -- on the basis of the NDP constituencies. That is what a slush fund is; that's what Build B.C. will probably end up being.
The member for Cariboo North also stated -- I didn't realize he could talk so much -- that he hoped the Minister of Finance would make sure that the fair wage policy is included in the work that gets done. Well, the response to that would be that the regional development the government intends under this legislation will only occur if small, local contractors agree to pay wage rates that will result in bankruptcy. This is typical of the brilliance of this NDP government, this brilliant NDP economic strategy that they are performing here.
Interjection.
D. Jarvis: The member down there said they'd like equal time, but I fail to see where any of them have gotten up during these last two amendments. They have had all the opportunity they want to get up, but they failed to. They refuse to get up because they're following the rubber stamp of the Premier who is running their finance department.
[9:00]
The member for Saanich South, in his brief comments to this House on the bill, stated that last year this government cut the rate of growth to 7 percent and that this year we've cut the growth to less than 6 percent. The rate of growth in government spending is now less than the rate of growth in the economy once you include inflation. This is sadly typical of the economic illiteracy malaise of the NDP party.
First the minister includes government spending as part of the growth in the economy. Only the NDP actually believe that if you take taxes from people and spend them on frivolous projects you actually have created growth. This is socialist thinking to the nth degree. The minister then compounds his illiteracy by adding inflation separately in order to make government spending look more responsible. I could go on and on about what this member says but it's obvious that he doesn't really understand where he's going. Even though he is a minister he is rubber-stamping the Gunton-Williams philosophy they've been asked to carry out along with the rest of the back benchers.
Now, I was asked.... Pardon?
An Hon. Member: The amendment -- address the amendment.
D. Jarvis: Well, I am addressing the amendment. Actually I was asked by a member here if this was a
[ Page 5555 ]
Pecksniffian amendment. And I said no, it's not a Pecksniffian amendment. This is the actual fact.
There are some other responses on this bill that I wanted to make a note on. There was the Minister of Energy, Mines and Petroleum Resources. When she was discussing the bill in first reading, she said that you have to compare this to the method of financing that many municipalities and private companies use. When you take that response and look at it, the minister is comparing the boring programs of Build B.C. to what private companies demonstrate. That's just exactly how the NDP understand the market system out there. Private companies can be sold or foreclosed if they can't pay their debts, but that doesn't apply in this instance to this bill. The problem is that in the private sector, if the management or executives go out and borrow money and lose it, they get fired, but when you're in government you just continue borrowing and borrowing.
Interjection.
D. Jarvis: They will be toast next election, and the maximum will be 918 days from now.
The minister from the Kootenays also stated, believe me, that accountability is very rigorous, and they have to go to Treasury Board for their funding -- the response to that being that we're not part of the inner circle of cabinet. The minister doesn't realize that Treasury Board essentially involves an in-cabinet discussion. How can there be any accountability when we are not privy to what goes on in Treasury Board? It's only Mr. Gunton who is aware of what's going on in Treasury Board. As I said earlier, this Bill B.C. is the start of the Guntonization of British Columbia.
C. Tanner: The what?
D. Jarvis: The Guntonization of British Columbia.
I see that I've only got a few minutes left. Let me point out a few specific things that were said by the Minister of Finance. The minister said a few months back that there was no magic to balancing the budget in British Columbia. In fact, he said, it's extremely easy -- absolutely one of the easiest things you could imagine.
The last two NDP budget deficits were the two largest consecutive deficits of any provincial government in B.C.'s history. The NDP had been in power less than three months, and they abandoned their commitment to the balanced budget. Now we have this insidious Bill 3, or Bilk B.C.
The Speaker: I regret, hon. member, that your time has expired.
L. Fox: It's a pleasure to rise and debate the amendment that's before us. I'm sure that the very sizzling debate that's happening will cause people to shift from the hockey game to channel 17.
As I've listened to debate in the House from the government members, it has increasingly caused me to have more and more concern over this bill. I listened to the Minister of Labour today talk about the fact that this bill was going to allow building of ships in the Esquimalt riding. I listened to members say that this bill is going to build the Island Highway, reforest our province and give all our welfare recipients an opportunity to work. When I look at other members of the back bench, one member for Bulkley Valley-Stikine is going to build fire halls...
An Hon. Member: And libraries.
L. Fox: ...and libraries in her constituency. Other members are virtually going to rebuild this whole province with the $100 million in Build B.C. That really draws a lot of concern, because it's obvious that what we have been saying and what the official opposition has been saying is in fact verified by the statements on the government side. There's no question in their mind that this is going to be a grandiose bill with a magnitude of opportunities within it to borrow money, to do all this building and mortgage our future. There's no question in my mind.
The Finance minister stood up there this afternoon and suggested that the opposition, through this process, was attempting to delay the buying of seedlings. Man alive, hon. Speaker. How can we accept that kind of logic? The Forests ministry in the past five years has planted three billion trees. There's no question in my mind that we still have NSR lands there, and there are some opportunities to create jobs. But those opportunities exist within that line ministry. We don't have to be out there mortgaging our future trees in order to plant them. We have the opportunity right within the Ministry of Forests to do just that.
When we talk about building schools, the Minister of Education is going to replace all the portables in this province through Build B.C. I hear government members from all across the province talking about the need to build schools and replace the portables. Well, when I see what $100 million can do, given the constraints on this province by the fixed-wage policy, I question whether it will build much more than one school. What we've done is compound the problem in this province of building these very necessary facilities by this government's issuing of the fixed-wage policy. This year alone the $200 million to $300 million that that will cost this province will prevent the government from building three, four or perhaps five necessary facilities, just to fulfil the promise of the last government. By the way, just to remind everybody of that issue, what that fixed-wage policy did was increase salaries of $24 an hour to something just a little short of $28 an hour.
This government just doesn't seem to know what's going on. The right hand doesn't have any conversation with the left hand, and we constantly see policies come forward which are in conflict with other policies of this government.
Interjections.
L. Fox: It's always nice to hear the backbenchers get involved, because when that kind of action starts to happen you know you're hitting home.
The member for Skeena is probably extremely happy. The Health ministry just recently announced
[ Page 5556 ]
they are going to build a $10 million hospital in that particular riding. As I understand it, that was not part of Build B.C. or Bill 3; that was done within the line Ministry of Health and will be jointly financed by the regional district and the local taxpayers.
There are all these opportunities within our existing structure, within the Health ministry, to build those necessary health facilities. And one further thing is that they have the input of the local regional hospital board, because that local board has to pay a contribution toward the construction. Build B.C. will remove that from the process; Build B.C. will be another one of the Bob Williams-Ken Georgetti companies. More and more I'm believing that this government is in fact a wholly owned subsidiary of the Williams-Georgetti corporation.
There's no question in my mind that the four appointees.... Let's look for a moment at how this new committee that's going to oversee this funding is going to be struck. The minister is going to be the chair of that committee, and we'll have four patronage appointments from this government who will sit on that board. It is going to be the best arm that this NDP government will have in the next election, because collectively they can decide where they are going to spend the money of Build B.C. in an attempt to enhance their opportunities to become re-elected. Over the years this same government and many of these members openly criticized the previous Socred administration when they paved roads in order to accommodate growth in the economy as well as in the regions. That administration was accused of paving its way into government, and yet what do we see from these people? What do we see from this NDP government but a structure that is so blatant....
An Hon. Member: It's sickening.
L. Fox: Sickening is right. It will not be open. Under the Social Credit administration those kinds of initiatives were at least debated in this House, and everybody had an opportunity to be part of the process. No longer will that be possible. Thirty years ago I would have told the government what they could do with this piece of paper. Up in my part of the woods, before we had indoor plumbing, stuff like this didn't stay in the house.
[9:15]
In all seriousness, this bill is without question one of the most disappointing bills that I've seen in this House in the last 18 months. There's no question in my mind but that it will create more debt than we can afford to pay. There's no difference between debt and deficit; both of them have to be repaid. We pay interest on both of them, and they compound the difficulties of this government to deliver services in the future. We could talk about reducing the deficit, as this government so proudly does, but look at what they're talking about. The debt service within this budget has increased by $400 million in the last two years. That should be alarming to this government, because that $400 million could have gone a long way towards meeting the social requirements that are out there. Instead, it's going to some bank in upstate New York, which the Finance Minister just came back from, and those people are capitalizing on our dollars.
When we look through the budget, it would have been very easy for this government to have shifted some priorities and built roads, hospitals and schools, to have done all the good things that drive the economy of British Columbia and to have capitalized on the opportunities that the Finance minister says are there in terms of being a good opportunity to build. The competition was keen. We could have done all that. All of it could have been achieved within the line ministries just by shifting the priorities in the budget. That's all it would have taken. If the government had the courage to support the amendment, I believe they would find this out if they took it out to a public process. They would be told time after time, in community after community, that the people of B.C. do not want the government to mortgage our children's future. It's pure and simple. They want cuts in the budget, credibility in the financing of the projects and accountability in their government, and they're not getting any of those three items.
Interjections.
L. Fox: It's really good to hear that I'm starting to reach these members. They're coming alive. That's great. I just heard the member for Cariboo North speak up. It's nice to see him back in the House. With all due respect, he came in to give us the hockey score, and I appreciate that.
We heard the Minister of Highways tell us that he's going to build Lions Gate Bridge and all these great projects throughout the province out of Build B.C., and he's going to pay it back with 1 cent a litre on gasoline and $1.50 a day in taxing of car rentals. Well, I think that's phenomenal. That man should run to be the governor of a banking system in Canada. If we envision the $1.5 billion that's going to be spent by Bilk B.C. in the next five years, and if we amortize that, we will be paying between $70 billion and $80 billion over a 20-year period to get that short-term gain for the long-term pain.
Future governments will not be able to commit themselves in any way, shape or form to deal with the health care, educational and other social needs or any other services that British Columbians hold so dear. What they will be doing is exactly what New Zealand is doing today: they will have sold off all their assets just to pay their debts and be unable to meet the welfare, educational or health needs.
Thus far from this government, we've already seen two tiers of health care. We've already seen 57,000 new people on welfare in the last year. We've already seen a decline in what we can afford for all other social aspects in this province. The Minister of Education, who just went through her estimates, was very apologetic to that community because she was unable to meet the financial needs. Why? Because this year we spent $400 million more for our debt services than in the last two years. All that money is going to the banking institutions instead of going into services in this province. That's caused by debt, and that's because this govern-
[ Page 5557 ]
ment in its two years has doubled the operating debt of this province and increased the overall debt from $20 billion to $26 billion. That's what's happening, and Build B.C. -- or Bilk B.C. -- will in fact compound all of that.
I cannot understand how the members on the government side can stand up and echo in nice words that we're going to build all these things and do all this work, and not understand that it could be achieved today within the line ministries. All of this could be achieved within the line ministries if this government had the courage to stand up there and account for it in the way it should be accounted for and to put priorities in its budget that would reflect the best interests of British Columbians, not the best interests of the NDP.
Interjections.
L. Fox: Hon. Speaker, the buzz is getting louder, and it just helps to wind me up.
The Speaker: Order please, hon. member. The Chair has tried to be fairly flexible this evening, but the noise level is getting rather high. I would ask the House to come to order and the hon. member to continue with debate in the same temperate fashion he has done so far.
L. Fox: Thank you, hon. Speaker. I'm sure by now everybody's switched from the hockey game onto this channel because they're just so excited about this sizzling debate that's happening in the Legislature.
An Hon. Member: The trouble is that you keep hitting the goal post.
L. Fox: Hon. Speaker, these people don't even understand what role I did play in hockey.
An Hon. Member: It was in the penalty box.
L. Fox: I want to tell you.... Somebody mentioned the penalty box. Well, there have been more people in that government that should have been in the penalty box in the last year and a half.
[E. Barnes in the chair.]
Interjections.
Deputy Speaker: Order, hon. members. Would the hon. member please get back to the reasoned motion amendment.
L. Fox: I am speaking to the reasoned motion, and I thought I was being very reasoned with rest of this.
It's disappointing to all British Columbians. The other day the Advanced Education minister brought a motion into this House. It said that because 76 percent of Canadians were against the purchase of those helicopters, the federal government should respect that. It's pretty sound logic. I don't know if he's right or wrong about whether or not those helicopters should be purchased, but I wish this government would use the same logic on its own policies, because 86 percent of this province is against the taxing policies of this government. And I wish they would respect that.
H. Giesbrecht: What about this bill?
L. Fox: The member in the far corner wants to be heard this evening, and the member for Skeena shouts out: "What about this bill?" This bill is part of this government's taxing policies. There is no question about that. I am amazed when the Finance minister talks about the fact that they are going to pay this debt with 1 cent a litre, when I'm told they had considered bringing in 5 cents a litre, and only then did they realize that the public pressure would be even greater than it is today. They thought that a first logical step might be 1 cent a litre, and then work it up from there, and that's exactly what's going to happen. The 1 cent a litre is an....
Deputy Speaker: Order, hon. member. We're not on the Ministry of Finance estimates, as I'm sure you realize. This is a reasoned amendment to Bill 3. It is not second reading of Bill 3, and I would caution the member when he strays too far from the text of the amendment which is before us. I am sure he has a copy, and it would help the Chair if you would follow that.
L. Fox: Obviously, my argument for supporting the reasoned motion.... I am trying to put that forward as to the concerns I have with the bill in order to support the reasoned motion. The 1-cent-a-litre taxation is in fact part of the bill that I was speaking to. There's no question in my mind that that is an introductory level of taxation. Look at the history. Hon. Speaker, it didn't seem to matter what level of government or what party was in power. Once a tax was instituted in a new way, sooner or later there would be an increase. If the minister is serious about paying off the transportation construction costs with that 1-cent-a-litre taxation, it's going to have to be increased. I would submit to you that we will see up to 5-cents-a-litre taxation within the next couple of years through this particular program.
I see that I'm getting close to the end of my time, but I want to ask each member in this House, one last time, to give consideration as to whether or not you want your child, grandchild, niece, nephew or whomever to have to pay beyond what is targeted today. It's my understanding that because of the effects of this government in the last two years, each family is looking at an increased debt load of $7,000. This particular bill is going to substantially add to that.
I am in favour of the amendment, and I look forward to speaking to the main motion.
F. Gingell: I rise -- not surprisingly, I suppose -- to support this amendment which clearly identifies the problems that Bill 3 brings. Many members of this government, when they were in opposition, expressed serious reservations on every single occasion when special accounts were created, because they were concerned that these special accounts would reduce this Legislature's control over public spending.
[ Page 5558 ]
The members of this government were guardians of the democratic right of British Columbians to have all spending proposals made by this government dealt with within this Legislature. Whenever there were occasions when they saw this right or these practices being changed, they were most indignant.
[9:30]
In my opinion, the purpose of this bill in my opinion is purely and simply a contrivance to make the deficit appear smaller than it would otherwise. It is a means by which they can take expenditures that would normally be included in a ministry's budget -- that would be paid for out of current taxation, to the extent that there isn't any deficit -- and move them away from this process into a special account or a Crown agency, or whatever term should be used, that allows them to go and borrow the funds without including them in the operating debt. They say that this borrowing will be self-funding. They suggest to us that there will be sufficient revenue to this organization to support the indebtedness.
The previous speaker, the member for Prince George-Omineca, spoke about New Zealand. I think New Zealand is a fine example for us, because in the Public Accounts Committee we look at financial statements of other countries and consider the changes being made in their reporting practices. What New Zealand has done that is different from British Columbia and from Canada is to make an effort to bring its financial accounts up to date, to be all-encompassing and to report all of the debts that the province has. As all members of this Legislature know, we carefully separate our debts into package A and package B. In package A are the ones that are supposedly incurred just for the purpose of covering our excess of operating costs over taxation revenues; and in package B, which we do not include in our balance sheet and which we do not show as a debt of the province, are those that are supposedly for third-party agencies.
Some of these third-party agencies, in the normal course of events.... The ones we deal with at the moment are the school boards, the university boards and the hospitals. When we deal with what is Build B.C. -- the organization that is being created by this Bill 3 -- it is a similar type of organization. It's going to be an organization with staff, and it's going to have a function. But the difference between this organization and, say, B.C. Hydro or B.C. Ferries, is that the revenues of B.C. Hydro from the sale of electricity and the revenues of B.C. Ferries from the sale of fares are sufficient to pay their debt, to service their debt cost without looking to the taxpayers.
If the revenues of this organization are going to come only from a gasoline tax, a sales tax on automobile rentals or tolls from passing through a turnstile that they set up on the road.... All these forms of revenue are purely and simply taxes. They aren't something that the organization earns for a service it has delivered; it is purely and simply a tax -- like the tax on gasoline or the tax on the rental of an automobile that the government collects.
This year's budget suggests that the amount of money these taxes will collect for a full year is going to be $52 million. If you want to turn to page 51 of the 1993 budget, you will see that for a full year they anticipate that these additional taxes will raise the sum of $52 million.
The other day the Minister of Finance had his B.C. bonds come due. That was the end of their first six-month term, and they were renewed. He had to determine a rate of interest that would be sufficient to encourage the people who had bought the bonds originally to retain them, while not paying anything more to the bondholders than was necessary. The rate the minister settled on was 53/4 percent.
During the course of these discussions, government members have been saying that they want to take this revenue stream, borrow money and be able to repay it over a period of time, when these assets will have some value and some use. If we are talking about building roads and bridges, a good bridge has a life of 100 years. But let's not take as long a period as that; let's just take a period of 20 years. With the Finance minister's current interest rate of 53/4 percent, over 20 years -- and they say that they will raise $52 million each year from this tax -- that will allow them to go out and borrow just over $600 million. I think the actual number for 53/4 percent, 20 years and $52 million is $604 million. In addition to that, $100 million is being put in from this year's budget to get this fund started. So as a starting point, it looks as though the government will be able to spend a total of around $700 million purely and simply by mortgaging this future cash flow and taking the $100 million that they are starting the fund off with.
We all know the concerns that the International Monetary Fund, the World Bank and the bond-rating services have about the financial position and situation of both the Canadian federal government and the Canadian provinces. I know that we can all feel happy on the one hand, but unhappy on the other, that the position in British Columbia is certainly better than it is in other provinces and we are in better financial shape. But other provinces have recognized the size of their problem and are taking steps now to reduce the amount of money they are borrowing. They have come to the point where they believe they are at the crunch.
Interjections.
Deputy Speaker: Order, hon. members. The Chair is having some difficulty. I can't hear the hon. member speaking. I'll ask members to keep their conversations down, please.
F. Gingell: We were dealing with the problems of borrowing. This bill deals with the ability, by order-in-council, of the cabinet to go out and borrow money. And why is it important for the bill not to be passed now? Because it gives the government a dramatically increased ability to borrow money with a valid excuse -- or what they would call a valid excuse. "We have a cash flow, Mr. Bank, of $52 million a year. Will you loan us money at 53/4 percent? We'll commit this cash flow to you for 20 years. Would you please loan us $604 million?" That's where we had gotten to, and I want to
[ Page 5559 ]
bring to your attention a subject that I know you're concerned with too.
We in British Columbia have to make sure that we do not fall into the same trap as the federal government, Ontario and the prairie provinces of borrowing too much and spending money that we simply cannot afford. It is no good for us to masquerade these costs by swinging them around and putting them through Build B.C. rather than through the regular estimates. That doesn't change the amount of money; it still has to be paid back.
There's a lesson to be learned that I'm sure the Minister of Finance recognizes, that became apparent yesterday when the federal government brought down their budget. They are over $400 billion in debt. We know -- and I know that our Minister of Finance recognizes -- that the federal government cannot solve their problems without getting on with the tough task of doing the things that have to be done, and making the decisions that are necessary to cut government spending. And what did the federal government do yesterday? The federal government just came out with some statistics. They said if we have inflation of 1.5 percent and interest rates of 5.3 percent, and we have economic growth in real terms of 2.2 percent and growing to 4 percent, by 1998 we will have our deficit in balance. It really is just a bunch of hocus. We have to deal with....
An Hon. Member: No pocus?
F. Gingell: Absolutely. The pocus comes from Poco; we know where that comes from.
We have to start dealing with some real facts. We have to set an example. We have to ensure that this government follows the desires of the people of British Columbia, which is that they don't spend money we can't afford. And this bill just gives this government the opportunity to spend a lot more money. Will it come to this Legislature? Well, $100 million of it will. In fact, I think the $52 million will be debated by this Legislature once -- when the taxes are brought in.
But I believe that the amounts that flow to the financing authority from our budgetary process are the only ones that will be subject to the estimates debate. And is it right that...?
An Hon. Member: You're doing a wonderful job.
F. Gingell: But I've lost my train of thought. You think you can hear better up there, do you?
...this Legislature should approve change in our process, change in the practices that have become honoured traditions in this House and change in the traditions of democracy that require the spending of government funds, in all manner, to come through this Legislature?
[9:45]
At the moment there are other forms of government spending which avoid public scrutiny, where we don't deal with the approval, the debate and the discussion of the original expenditure. We only subsequently are allowed to debate the annual allotments that the Ministry of Education, for instance, gives to school boards to allow school boards to pay off the borrowings that they have made to build schools. It seems to me that we're doing things backwards. We shouldn't deal with the issue of whether we need to debate the grants made by the Ministry of Education to school boards to pay off the money that schools have borrowed to build schools. They were authorized to borrow the money; the expenditure of the funds was approved. We can't turn around at this point and suddenly default on those borrowings. We simply can't do that.
So why do we bother to debate that, when what we should be doing is debating and discussing the original capital expenditure? That's what this bill is all about. It may be all very well for us to subsequently debate allotments made to Build B.C. through taxation or transfers from other ministries to pay our annual debt service, but the important issue is debating and discussing first, and getting legislative approval for the capital expenditures that can be made.
And do they intend to make them? Do they intend to borrow money? Oh, yes, they do. It's all in Bill 3. In fact, a great series of sections of Bill 3 deal with the question of how much money they can borrow. Section 23 deals with borrowing powers. Obviously they intend to borrow. Section 24 deals with sinking funds. Obviously they intend to borrow and have sinking funds. Section 25 of the act deals with the limit of outstanding debt, a rather complex and complicated thing where you deduct off the sinking funds, and you add the premiums that are unamortized, and you worry about the Bank of Canada Canadian dollar, noon spot exchange rate for the currency borrowed as quoted on the day of the borrowing, etc.
So clearly a great deal of thought has gone into the process of how the government will borrow under the Build BC Act, under Bill 3, that isn't approved by this Legislature. There is nothing in this act that requires this government to come to this Legislature to get this Legislature's approval on the borrowing that it does. It just has to meet the conditions that are laid down in sections 23, 24 and 25. That's all that is required.
Once you borrow, it has to be paid back. This Build B.C. has no separate, real, fair revenue stream of its own. Its only revenue stream will be from taxes, whether they be gasoline taxes, sales taxes on automobile rentals or tolls on new roads. They're all taxes, and great battles have been fought in the democracies about the right of parliament, of the citizens of the province, to have a say in the issues that cause them to be taxed.
So what's happening here is that we are going to have the government borrowing money first, without approval, having to go through the processes or to bring those issues before this House, and then they are going to tax us afterwards. After they've borrowed the money, created the debt, mortgaged our future, mortgaged, in effect, the earnings of our children and -- what was the expression I used in the budget speech? -- shackled our children to debtor's chains, they are going to bring that back; that's going to come back every year to be voted on. But then it's too late. The money has already been borrowed. What choice do we have? As I said earlier, there isn't any point in trying to not raise the funds to pay our debts.
[ Page 5560 ]
[The Speaker in the chair.]
As we said earlier, hon. Speaker -- and I believe others have said this before me -- there is no function that this new agency does that cannot be done or is not presently being done by a ministry or by the Crown corporations secretariat. I believe that whatever is said, and whatever action is taken, passing Bill 3, creating Build B.C., the Committee on Building British Columbia's Future, the British Columbia Transportation Financing Authority and the Build B.C. special account will not be done without some more employees and without creating a new bureaucracy. I'm willing to take a wager that there will be at least one brand-new more-than-$100,000-a-year employee who will be on the government payroll because of this act.
Why is that, when all of these duties and responsibilities can be carried out by the ministers? It surprises me that the ministers in the government who sit -- when they're here -- on the other side of this chamber, would allow this to happen. Surely many of their responsibilities, which they have taken an oath in front of the Lieutenant-Governor to perform on behalf of the people of British Columbia, have been removed from them because of this bill. It seems strange to me that they would voluntarily allow that to happen. Why would the Minister of Forests allow silviculture programs to be carried out through Build B.C.? Why would the Minister of Transportation and Highways allow the construction of highways to be carried out through Build B.C., rather than through his own ministry? Why would the Minister of Advanced Education, Training and Technology allow technology and training programs to be developed, delivered and serviced by Build B.C.? It really doesn't make logical sense to me.
The board of trade has put out a document, which I'm sure everybody has seen. It says: "What's the Rush?" Well, I also wonder what the rush is. But looking at the clock and seeing that the hour draws near, perhaps the best rush we can have is to finish this evening's debate. With that, if I may, I would move adjournment of the debate until the next sitting of the Legislature.
Motion approved.
Hon. M. Sihota moved adjournment of the House.
The House adjourned at 9:56 p.m.
The House in Committee of Supply A; D. Streifel in the chair.
The Committee met at 2:42 p.m.
ESTIMATES: MINISTRY OF FORESTS
(continued)
On vote 40: minister's office, $404,772 (continued).
W. Hurd: I believe as we left the discussion this morning we were talking about the bonus bid system, the small business enterprise program and, in particular, the upset price, which, as the minister has indicated to the committee, reflects the costs of reforestation on those small business enterprise lands.
The issue I was trying to canvass at the time left the minister in a state of confusion, and I'm prepared to admit that may have been a result of the way I phrased the question. I will try to rephrase it.
Essentially the question I was asking was whether the upset price, which reflects the cost of reforestation, was in any way similar to the cost of reforestation on licensed land, and how the ministry monitors the comparison of those costs to ensure that in fact the bidders on small business wood are dealing with an upset price that is clearly not conveying an advantage to licensees who may be involved in surrogate bidding through a bid-proposal system. So I think it's an important question, and one that as a member of the select standing committee I certainly encountered in the course of our deliberations throughout the province.
I'm also delighted to have here the member from Langley, who is also a member of that select standing committee. So I think it's an issue on which we would certainly like to get some comment for the committee.
Hon. D. Miller: Certainly. I do have some numbers I will read in a moment, but I want to say a word, first of all, with respect to the silvicultural levy. Let me back up just a touch.
The method we use in accounting in small business accounts requires that we calculate -- as any business operation would -- our costs of doing business. When we put up a sale, for example, there's a variety of costs involved in that. Beyond the staffing resources, there are engineering costs, roadbuilding costs and the silvicultural levy to which the member referred. There are a variety of costs encompassed in that; it is not just a silvicultural cost. I just wanted to make that point.
Those silvicultural levies are determined, based on experience -- our own experience and the experience of industry. The ministry is constantly refining that information to ensure the levies are in fact accurate.
Having said that, I want to go back to reference what I said earlier this morning. One should look at section 16, which is the only one involving the bonus bid. It's in two parts. One is the upset price -- in other words, our base cost, if you like. The other is the bonus bids that are received. The member seems to be heading down a trail that suggests that our fixed costs may be too high. Just to illustrate the point, I've got some figures on six timber sales in different forest districts, which include the upset price and the bonus bid. The first is Alberni. I don't have a date on these, but I assume they are for this year, if not late last year. The Alberni forest licence, with an upset price of $21.54, was bonus bid an additional $40.70, for a total of $62.24. Clearly in that instance, you
[ Page 5561 ]
can see that the bonus bid, which is the competitive part of the bid, exceeded the upset price by almost double.
I'll just quickly run through these: Penticton, an upset price of $10.32 and a bonus bid of $32.19, for a total of $42.51; the Queen Charlotte Islands, an upset price of $10.13 and a bonus bid of $48.48, for a total of $58.61; Quesnel, an upset of $17.32 and a bonus of $26.50; Cranbrook, an upset of $10.15 and a bonus of $6.67; one on the midcoast: an upset price of $13.25 and a bonus of $5.36.
Those bonus bids reflect many things. They reflect the level of competition, the type of wood that is being offered for sale and the economics that the bidders feel are there. In other words, they feel that by bidding, in one case, a bonus bid of almost $50, they can still go in, harvest the sale, sell the wood, be competitive and make money as a contractor. So in four of the examples I just read out, the bonus portion of the bid greatly exceeds the upset stumpage that the ministry sets.
W. Hurd: I am appreciative of the fact that the bonus bid reflects market conditions, as the minister has indicated. But if there is surrogate bidding, and the minister alluded to this this morning -- where the licensee has the ability to meld that higher-cost wood into a wood basket, which he acquires at considerably less cost by virtue of being a licensee -- is there any concern on the part of the minister that these rather large bonus bids are a result of the ability of the licensee to participate in a surrogate bidding process and being able to bid up the price more because they are recycling the competitive wood through a wood basket which includes quota wood, thereby effectively reducing the overall price they would pay? Is there a concern on the part of the minister that there needs to be some sort of control over the surrogate bidding process to ensure that small business enterprises are not just acting for a major licensee combining the higher and lower cost wood and then bidding up the cost of the small business wood on that formula alone rather than the market conditions of the product that they are trying to manufacture?
Hon. D. Miller: This is an interesting discussion. There are some who would propose that the general price we establish for wood -- stumpage rates -- should be determined strictly on a competitive basis; that we should not continue with an administrated price system. If I interpret correctly what the member says, if that were to be the case, there would be a levelling out. In other words, the competitive bids would drop and there may be some adjustment on the comparative value stumpage system. I don't think that's inconsistent with the argument I made this morning. I refer to the defence we put together with respect to the countervail, wherein we argued that it was wrong of the Americans to simply look at the small business wood and incorrectly assume that that's the going price of wood. Clearly it is not, because it didn't account for that fairly significant volume that is noncompetitive, in the sense that timber sales are not bid, that they're allocated to long-term licences.
The issue of surrogate bidding is one that's been talked about for a long time. Let me try and put it in this context: is it necessarily a bad feature that people will competitively bid up timber sales, and then in turn sell that wood to a major licensee? Is that necessarily wrong? We do separate section 16 between competitive sales and bid proposal sales, bid proposal being the so-called value-added sales charged with the administered stumpage price.
Section 16 is really a device that allows the market logger, the independent contractor, to stay in the business of logging. Where they sell their wood is their choice. I don't have a record of where the wood goes, but I would suggest that the vast majority will go to established companies in the province. It's also important to note, again an issue we discussed on the export side, that we do maintain a market logger OIC in some locations -- mid-coast, north coast, Queen Charlotte Islands -- to the extent that that may have some influence on the price.
So is it necessarily wrong that we have a system that results in a portion of our wood being bid to some pretty high prices, and that that wood in turn is manufactured by domestic manufacturers? It seems to me public policy is not badly served, in that the Crown and public are realizing the best possible return for their asset, for timber, which is the mandate of the ministry. But we also have other mandates which we carry out through different types of allocations -- section 16.1, forest licences -- where we are saying, in effect, that in return for some secure allocation of resource over time, we expect you to do some manufacturing, to employ some British Columbians -- in other words, to contribute to the economy and to process the resources domestically. I'm not convinced that it's necessarily bad public policy with respect to high bids on the section 16 wood.
I think there's another, probably far more interesting, argument relative to the broader issue of resource rents. But the number-crunching that we've done for the countervail duty case clearly indicates there's absolutely no question at all. Anybody who refuses to accept the work -- and they're all in the United States -- is simply pushing their own economic argument that it's protectionist in this regard, in terms of the countervailing duty and the softwood lumber issue. There is clearly no argument. Our arguments are factually irrefutable in terms of the issue I previously talked about, which is: are we collecting appropriate resource rents?
W. Hurd: I don't know if I've done an excellent job of explaining the concern of the opposition or the committee. What I am trying to address is the ability of a licensee to participate in a surrogate bidding process. Are they able to bid the wood higher because they can take advantages of economies of scale in terms of manufacturing? They have licensed wood which may or may not be cheaper for them in terms of it being a cost centre for their business. Does that convey upon them the ability to bid up the price of small business enterprise wood? That, after all, is meant to foster the
[ Page 5562 ]
growth of small businesses in the province, not to supplement the fibre for a large, integrated sawmill.
It just seems to the opposition that the purpose of this program is to ensure that small operators don't just involve themselves in a surrogate bidding process. This is something that the select standing committee I'm on dealt with at some length. We were advised that firms applied for a small business licence and never actively participated in the harvesting in any way. They simply spun the quota off to a major company, which in turn logged it and did all the paperwork. The small entrepreneur in essence maybe even had a value-added plant, but became sort of a market logger as a sideline business. In allowing that type of surrogate bidding and those sorts of paper transactions to occur, surely the purpose of the small business program is being thwarted or frustrated in some way. It would be helpful if the minister could advise us whether he believes the surrogate bidding process within the small business enterprise program is a problem; whether the manufacturing plants that the companies claim are going to be built are in fact being built; whether there is any intention to build them; and whether he feels that legitimate small enterprises which might want to bid on this wood are frozen out of the process, because from the very beginning they are bidding against other small firms, which are creations of major licensees, to some extent, to simply get the wood back to where it was in the first place. The small business forest enterprise program was a takeaway from major licensees. That's how it was created. There is concern in the opposition and some of the small business licence participants that the wood has come full circle, that it's ended up back in the log yards of major licensees by a sort of roundabout bidding process.
Hon. D. Miller: Although I did issue a caution not to confuse section 16 timber sales with section 16.1 bid proposal sales, it appears to me the member has done just that.
Let's try to keep those two as separate entities in our minds. I did say that with respect to the first, section 16, that they are there to allow the market logger, the contract logger, the person who is in the business of going out and logging trees, to have an opportunity to continue to exist as a business. What they do with the wood that they harvest, that they bid on, is their business. I did say, though, that it was my sense that the majority of that wood probably found its way to existing domestic manufacturers. I've also said that if they are paying a very high price for wood, I think that's good, because it means we are receiving more revenue for the sale of the assets we all own.
The bid proposal, section 16.1, is wood that is granted in longer-term licences, typically five years -- it could be longer, but typically five years. It requires the holder of the licence.... We compare those bids on the basis of what they propose to do with the wood. It's an absolute requirement that they process the wood in a value-added way, to add employment, to create more employment per metre of wood than we're currently realizing.
I think the program has by and large been successful. It has been analyzed independently a couple of times. There are published reports the member can read on that. Although not perfect, it is generally successful from this point of view: we have increased the level of value-added manufacturing in this province over the last half-dozen years fairly considerably. I think about 10.6 percent of the total harvest of the wood goes under the value-added category; remanning value added is 10.5 percent of the wood. That wood creates 28 percent of the value of all solid wood products, and 36 percent of the employment generated in the solid wood sector. So clearly you can see that the program, by those kinds of measures, appears to be successful.
What you're doing, I think, is attempting to mix up the two: you are mixing the wood that's sold competitively with the value-added program. I would caution you not to do that. It's an easy thing to fall into, because they come under the broad heading of the small business forest enterprise program. But I would urge you not to do that.
To go back to the first point you made, I guess we could get into some theorizing here, but accepting my argument.... "Major licensee" is a term we use for somebody who has a tree farm licence, forest licence or long-term major tenure. It seemed to me you're saying that because they have a relatively low price -- in your words -- or administered price for wood, they are then able to bid up or surrogate-bid the section 16 wood and somehow enjoy some advantage that others don't enjoy. I think that's probably true. But theoretically, if we were then to increase the administered price to take away any perceived advantage you feel they may have, I presume the corollary of that theory is that the bid price would go down. It seems to me that's the flip side of what you're proposing.
There's one other point that I think is worth noting. Were we simply to try to influence the bid prices we receive -- perhaps by eliminating upset, for example, and I'm not convinced that would have any impact, quite frankly, but let's say in theory it did -- it seems to me all we would do is create an opportunity for those people who typically finance the small business logger, the contract logger -- brokers primarily. We'd simply be creating an opportunity for the broker, the middleman, to reap a huge benefit, to take the lion's share of the value of the resource simply acting as a broker. If you want to talk about public policy that's no good, that's one. I would never suggest we do that.
So I hope I've been clear. I think it's important, as I said, to try to draw a distinction between section 16, which are competitive sales to allow contract loggers to bid and to stay in business, and 16.1, which is designed strictly to try to promote the value-added manufacturing. They are two separate things.
W. Hurd: With respect to 16.1, I'm aware that there's a formula used by the ministry to determine how much value is being added, and of course that's used in the consideration of how the licences are awarded. Has the ministry given any thought to adjusting those rules, recognizing the fact that some small operators who are seeking to remanufacture
[ Page 5563 ]
lower-grade material are placed at a disadvantage in bidding on category 16.1 wood, because they are taking a low-grade material and are not able to add the value that certain other types of firms can -- like perhaps a furniture maker or a log home manufacturer or some other enterprise that is using high-value or clear material on the marketplace.
This is an issue that was raised again with the select standing committee: whether the rules governing the bidding system on 16.1 category wood are fostering the growth of the reman sector in the low value end of the equation. They aren't in a position to demonstrate to the minister that, compared to the people they're competing against for those small business licences, they're adding sufficient value.
Hon. D. Miller: I have had representations on that issue -- the notion that we would somehow make a distinction to those who are bidding on generally low value stands. I've left the door open with respect to looking at the issue. We have not come to any conclusion internally. There are a couple of arguments. One is that if the wood that's being offered for a bid proposal is low-value wood or low-value stand, then it seems to me that all of the people who are bidding on it are under the same handicap. They're clearly bidding on low-value stands, and it's their proposal to utilize that resource and add employment. So they're all on an equal footing, if you like. None of them are at a disadvantage with respect to any bid or proposal they might make to utilize the wood. I don't think the member catches my drift here, Mr. Chairman.
W. Hurd: I may not have phrased the question well. I was talking about the type of manufacturing activity that the bidder is involved in. My understanding, and the minister will correct me if I'm wrong, is that the value being added on the manufacturing side by the enterprise determines whether they will be successful in winning a 16.1 category licence.
If you can demonstrate to the Ministry of Forests, under the small business program, that you're adding a large amount of value per cubic metre, that will weigh more heavily in your favour than if you're simply manufacturing low-grade lumber, for example, and adding only $100 a thousand. So it's the manufacturing component I'm questioning here in terms of access to 16.1 wood. The concern expressed -- certainly in the tours we conducted around the province, but elsewhere as well -- was that if you were involved in a manufacturing endeavour, taking material with a $100 value, remanning it and only adding $100 in value, bidding on category 16.1 wood placed you at a huge disadvantage to a company that might be involved in a different line of manufacturing and could prove that they were adding a much higher value per cubic metre of wood.
I'm asking whether there's been any thought given to adjusting the rules to foster the growth of reman industries which are trying to add value to a lower grade of material and want to have access to category 16.1 wood. The system now, I believe -- and I'm sure the minister will correct me if I'm wrong -- in terms of access to 16.1 wood is weighted towards the value being added by the manufacturing plant.
Hon. D. Miller: There are a variety of factors in analyzing any bid. Internally, my staff goes through a numerical rating which is a combination of factors: employment, value, those kinds of things. But I want to go back to the central issue here.
What you are suggesting is that if a "low-value stand" is offered under a competitive bid proposal.... I don't quite follow it. If it is a low-value stand, then it seems to me that every enterprise that bids on that stand is on the same footing. It is what they propose to do with it that determines who will be successful. So I'm not certain the member has made a case that there is a rationale for a different set of criteria, given that we are talking about low-value stands.
W. Hurd: I'll try again here. This is almost reminiscent of some of those long select standing committee meetings we were involved in around the province.
I understand that under the 16.1 category small business quota, that if two companies with manufacturing plants are bidding on that wood, the Ministry of Forests, in determining which company will be successful, takes into consideration the value that the manufacturing plant is adding to the basic raw material. I guess my question, then, is this: because that is a consideration in awarding category 16.1 wood, it places the remanner -- who is perhaps adding very little value to the resource by taking low-grade lumber and adding only $100 in value to it -- at a disadvantage in competing for category 16.1 standing timber.
I wonder whether the minister is aware of that problem and whether his ministry has given any consideration to adjusting the rules, because clearly the opportunities in the province in the reman sector are related to trying to find a better use for low-grade material. That was pointed out to us in the committee. Anybody could take a clear piece of lumber and add value to it; that goes without saying. It's a simple process. But taking the low-grade material and adding value to it is a much greater challenge. The ministry's small business bid proposal system, the 16.1 category, appears to discriminate against those entrepreneurs who are trying to reman the low-grade material, because they don't add enough value to meet the Forest Service regulations when they are going head-to-head against manufacturers who are manufacturing different products and therefore creating more value. So it is a crucial issue to the small business forest enterprise program, and I would certainly invite some comment on it.
Hon. D. Miller: Maybe we are confusing each other.
Back to the fundamentals. If the ministry puts up a stand of timber for a bid proposal sale, a variety of manufacturers -- some existing and some with new proposals -- will bid on that, and they will say in their bid what they propose to do: how much value they propose to add, how much manufacturing and employ-
[ Page 5564 ]
ment. All those things are analyzed, and they are all on an equal footing. I don't, by the way, agree that it is simply a matter of adding value. That is the tricky part of the whole issue, quite frankly: it's easy to add cost but it is not that easy to add value. Also, presumably, those manufacturers who require a high-quality log are not interested in low-quality stands and therefore are maybe not in direct competition with a reman.
So, again, I am a bit perplexed. I said that there had been representations made to me on the issue and that we had not come to any conclusions. I still have not come to any conclusions. I'm quite prepared to be open with respect to domestic value-added manufacturers who find themselves handicapped by the system. We want to have a system that is fair and that provides equal opportunity. It's also important to utilize the lower-value stands, and there are some good examples in this province of people doing just that. They are taking wood that a number of years ago nobody would even look at. It was just considered junk and was left in the bush. There is a manufacturer in Quesnel, Joe Cerasa, a fellow millwright, who is taking low-quality pine stands of very small diameter -- three-inch, I think -- and manufacturing finished products. He's a very energetic entrepreneur who has gone out and found his own markets for some of this stuff. He's the kind of person we like to see in the forest sector of this province.
When it comes right down to it, wood has been up for competition. Whether it's 16 or 16.1, there's still an element of competition. It's the person who proposes either to pay the most or to do the most who will be successful.
W. Hurd: I think I'm going nowhere fast here. I really am a patient member. I think back to the meeting on Saturday, when I sat with the Minister of Forests along with seven other politicians. We spent the whole evening listening to the minister speak; we're very patient people.
[3:15]
I'm trying my best to phrase this question from the manufacturing side. It is my understanding that if plant A and plant B are manufacturing two different products, and plant B can demonstrate that it is adding more value to the resource that it brings into its mill in the form of rough lumber, it will have an advantage when it comes to receiving consideration for bidding on a 16.1 licence. I could be totally erroneous in that assumption, but I was led to understand that the value being added at the manufacturing level on the plant floor was a consideration by the Ministry of Forests for access to 16.1 wood.
Hon. D. Miller: This may be a fascinating topic, but I see some blank looks around the room. Let me take one last shot at it.
There is a requirement under 16.1 that the volume of the licence -- or its equivalent volume -- be utilized. I think that's an interesting phrase. What it means is that section 16.1 wood is really your entr�e, if you like. Timber stands in this province are varied and mixed. It's not that the particular sale and the actual timber volumes on that sale meet your requirements; they may or they may not. But they do give you an entr�e in trying to secure your raw material requirements.
Many value-added manufacturers don't want round logs; they want boards of a certain dimension. I'm looking forward to the committee's report to the House. One of the issues that has arisen is that many of these manufacturers allege that they cannot buy those boards in British Columbia. They say that the major commodity producers really aren't interested in selling them. That's a fairly serious statement; it's a serious issue. We want these types of manufacturing companies to flourish.
So to the extent that 16.1 wood is your entr�e, it allows you to trade for your requirements, for example. You might have in that stand different species of wood and different qualities of timber. Typically you will trade the wood you have available under your quota for your raw material requirements.
I'm not certain we're getting anywhere with the issue, but perhaps both the member and I are somehow to blame, either in not being able to explain it well enough to each other or in missing somewhere along the line. I'd be happy to pursue the issue separately. I know it has been raised, but at this point I don't think we're making much headway with respect to the fundamental issue itself.
As I said, we want the program to be fair. We are interested in continuing to encourage value-added manufacturing. It is clearly the way we must continue to go in this province. We can get more value and more employment, particularly out of the high-quality wood that we have, because they don't make it. You just don't create that kind of quality. We must continue to try to look at systems that allow that wood to be manufactured to its highest value.
L. Stephens: I currently sit on the Select Standing Committee on Forests. I must admit that before I was on this committee I'd never been closer to a sawmill than the front gate, to drop off my son for his summer job as firewatch. It's been a real experience for me. The members of the committee who have worked in the forest industry have proven very helpful, and I'd like to say how thankful I am that they were there to help.
One of the things that we did hear repeatedly when we went around and were discussing this issue of remanufacturing was the concept of value-added. There seemed to be differing ideas on what that means. Some people felt that it was adding higher value to the wood; some people felt that it was a higher dollar value, as related to the export commodity market. That was their understanding of value-added. Would the minister be able to give me his idea of what value-added is in the secondary wood remanufacturing sector?
Hon. D. Miller: I don't think it's possible to have an absolute definition of what might constitute value-added, though there are several things that we need to say are requirements. There is an argument around the issue of adding cost. I don't think it's a black-and-white argument. The company that's been most forceful -- with me at least -- in arguing that has been MacMillan
[ Page 5565 ]
Bloedel. There's a chap at M&B who used to correspond with me fairly frequently. It's fallen off now since I've become the minister. We exchanged theories on some of these....
Interjection.
Hon. D. Miller: They have been fairly forceful in cautioning that we shouldn't delude ourselves: if all we do is add cost -- I can't remember some of their number arguments -- we really aren't doing ourselves any favour. On the other hand, I think there's an argument in terms of employment and those kinds of things. I almost feel as though I'm appearing before the standing committee. You should have invited me to appear. I thought by this late date the committee would have an essential grasp of all the issues, and I'd be prepared to submit a definitive report to the House in a matter of weeks. We'll see. I'm not so certain, judging by some of the questions.
The question of value-added also relates to some of the issues we were trying to explore with the Liberal Forests critic. There is some relationship between the value of a stand and the value of the quality of the wood, and what is being done with the wood. I've used the manufacturer Milestone in Vernon as an example. It takes very high-quality spruce logs and utilizes the whole log -- very innovative in terms of the manufacturing -- and produces doorstop and window-stop. It employs far more labour per unit of wood than a commodity mill and realizes a pretty good price for the product it manufactures. To me that almost epitomizes the sort of value-added that many people tend to visualize.
I referred to C&C Wood Products, wnich takes low-quality stands and produces products that are value-added. It's a function of economics, I suppose, but some of the wood that until a short while ago was being used to create chips for pulp mills is now being sawn for lumber. That's not quite in the value-added, because it goes to the economics of the wood itself. So I don't think there's an absolute definition of value-added. But to the extent that we can add capital and labour to the resource, and produce products as far down the chain as possible, that's my general notion of value-added.
To go back to the Vernon plant, we've taken it quite a way down the chain. But we haven't gone that one extra step: we're not manufacturing the window or the door here. Canadian Woodworks in Prince George manufactures the door and the window with the glass in and then ships it to Germany. So clearly there are additional steps.
L. Stephens: One of the issues that was brought up too was the exporting of wood that is the species we need here in B.C. for that very much higher value than we have now; most of it is going to Japan. Do you have some thoughts on the higher-value clears that are being shipped to Japan specifically, and whether or not we can make more of that kind of wood available to our own domestic remanufacturers?
Hon. D. Miller: There's probably a general misconception about what the Japanese market is. I'm not certain what people think it is, but I'll tell you what I think it is, having been there.
It's not a single market; it is quite a mixed market. A variety of products are in demand in Japan, including standard-dimension lumber, 2-by-4s and plywood. Plywood is not a dimension lumber, but the standard product that we tend to think of as being manufactured in this province. One of the differences -- and I think I talked about this the other day -- in the Japanese or European market is that they tend to pay a much higher price for wood than the U.S. or North American domestic market pays.
There is also a demand for products like the Japanese house posts -- products that in a Japanese house typically will be open and exposed, a hidden feature like a 2-by-4 or a 2-by-6 that's covered over with wallboard, paint, wallpaper and all the rest. Obviously in that regard quality is an issue. In my view, that is a value-added product. Well, it is to this extent, because there are other components in the Japanese market: that product is taken by the builder and employed in constructing a home; we can't take it any farther. We receive a good deal of value for that product. It's a good market.
I think we can go farther in some respects. I talked yesterday about making that same kind of house post, not as a solid-wood piece but rather as a very high-quality laminated core with a very thin veneer overlay, so that, if you like, we stretch out that resource we have here even farther. There is some of that type of work. I saw some products in Japan that were exactly that, very high quality, and I think we can go farther there too. So I'm not suggesting that we stop, only that those squares or house posts are a very valuable product. But there is also a market in Japan -- a very large market -- for rebuilding temples. They pay a very high price for their requirements, and their requirements happen to be larger timbers. They pay an extremely high price. Occasionally -- not too often -- we'll sell them a single log, or six logs, and they pay an enormously high price.
Going back to what I was saying before about the difference between adding cost and adding value, in these cases -- and they really are very few, we are talking about a very small volume of wood compared to what we harvest and manufacture in this province -- we would lose value. If we simply took that log and sawed it into boards, we would lose value. We would never sell the boards for what we could sell the log for. Going back to what I described as some definition, you add capital and labour, but you've got to get the return on your product price to cover the capital and labour and retain profitability. This is where we sometimes run into the argument with M&B, where they say that even if you retain profitability it could have been higher profit if you didn't add that capital and labour.
[3:30]
The Japanese market is not a single market. It is very mixed. There are different requirements. We are making, in my view, a fairly good shift of our market to Japan and countries in the Asia-Pacific, and I think that is going to continue. Domestic manufacturers clearly
[ Page 5566 ]
feel somewhat burned by the United States. They feel offended that in this huge marketplace in North America, despite the fact that we have a free trade agreement, the U.S. has once again tried to harm the domestic industry in B.C. by imposing the countervail on top of the one that was already imposed in 1987. We're currently at 21.5 percent, if you want to use that argument. So a lot of domestic manufacturers in B.C. feel quite harassed and burned by the United States, and they clearly have put a lot of effort into finding alternative markets.
The Japanese market is a very good one, and I think there will continue to be a shift of production into that market. In my view, we will continue to get investment from Japan in manufacturing in B.C., because there has been a clear trend where their domestic sawmilling industry has really declined over the last number of years. There are fewer mills, there are fewer people employed in Japan in that end of the business, and more and more they realize that the manufacturing of many of their products has to take place outside of Japan. B.C. is, of course, a prime location for that kind of activity.
L. Stephens: I suppose the question is whether or not we here in B.C. support secondary manufacturing, and what it needs to compete and to build business. The Japanese market is primarily yellow cedar and primarily goes out in cants for the Japanese home market to further value-add there into housing components. Time after time, we hear that the remanufacturers here need certain dimensions, certain species, a certain grade -- and the grade is clear, for a lot of the higher-end-user manufacturers. There is no question that there is room for lots of these markets. My question is: does the province want to encourage, support and expand the secondary remanufacturing industry in B.C.?
Hon. D. Miller: The answer is yes. We have, and we are continuing to do that.
The member is completely wrong when she suggests that the primary market in Japan is for yellow cedar. That is absolutely not the case. There is indeed a very strong market for yellow cedar, but it is absolutely not the dominant, overwhelming market for B.C. wood products. Go to the docks in Tokyo and take a look at the piles of lumber there that come out of B.C.; it's not yellow cedar at all. You're dead wrong. I'm a bit concerned. I guess we're straying into the committee area....
Interjection.
Hon. D. Miller: It's not cants. If a member of the select standing committee, which will shortly deliver a report to the House, is labouring under that delusion, then I....
Interjections.
Hon. D. Miller: I will attempt to bring back -- I'm not certain I can get it -- to the House a breakdown with respect to the shipments to Japan, both in species and in range of products. Believe me, if anyone thinks that our primary shipments to Japan are yellow cedar cants, that isn't the case.
L. Stephens: That's not what I said.
Hon. D. Miller: I'm sorry if I have offended the member or misinterpreted what she said.
The Chair: Before we proceed, in the sessional orders there has not been a provision for the independents. Is leave granted for the member for West Vancouver-Garibaldi to speak on vote 40?
Leave granted.
D. Mitchell: Before we get off this whole question of section 16.1, I want to get some clarification on what the member for Surrey-White Rock was saying. The minister indicated that there have been a number of successes under this program and some failures too. He referred to some independent reports that have been done on it. I wonder if the ministry has done any audits of section 16.1 -- its success and failure rates -- in terms of the successful applicants for timber, especially those who have proposed to build secondary manufacturing plants. He has referred to successes and failures, but it would be interesting to know if the ministry has produced an audit of the successes and failures. If members of the committee could be supplied with a copy of it, that would be very interesting.
While we're on this, the minister was responding to the member for Surrey-White Rock, who was trying to clarify an issue. There is some confusion about what the criteria are for a successful applicant for timber under section 16.1. What are the criteria that the ministry uses? We know what the stated criteria are. But are applicants successful when they apply for timber under section 16.1 primarily because of issues relating to added value? Is it market development? Is it forest utilization? Is it social benefits or jobs? The minister might say it's all of the above. But there is some confusion in the industry among small operators and large operators who end up being partners with the small operators, as the minister has indicated. What are the key criteria that the minister uses in awarding timber under section 16.1?
Hon. D. Miller: They are a combination of factors. I don't know why there would be confusion. We have a number of reports, and I will be happy to table them or provide them to the member. They are analyses of the 16.1 program since its inception. I can't recall the titles, but we will certainly get them. I'll be happy to provide them. So it's a combination of factors: employment and value per unit, if I can use that description. What are we getting out of a unit of wood? How much employment and how much value will be created? I hope that satisfies your question.
D. Mitchell: Well, are the criteria objective, or is there some subjectivity in this process? When the various applications for timber that's advertised under section 16.1 go to Victoria to the ministry, something
[ Page 5567 ]
happens to them. A decision is made. If it's overall value per unit, is a degree of subjectivity applied there? Is a formula used, for instance? Could the minister provide such a formula?
Hon. D. Miller: There may be a formula; I'm not aware if there is one. My staff makes recommendations to me. In addition to the pure issues of value, and the extent that you can look at employment or at what's being added to the primary resource, there are also social factors. Will a proposal generate employment in the region where the wood originates? These are a little more intangible; they do not override. For example, if someone who is outside the region proposes to add significant value, you cannot turn a blind eye to that. So there is some subjectivity with respect to the awards. It's a combination of things. The wood belongs to the people of the province. Our obligation is to try to get the best value for the people of the province in selling that wood and in having that wood manufactured, bearing in mind that there are regional factors around that question. So there is some subjectivity, and I think that we exercise that in a fair and balanced manner.
Overall, anytime you are trying to change the direction of an industry -- in this case away from commodity products into the value-added field -- and you develop programs to support that, it's my sense that you probably will encounter, at least initially, a higher incidence of failure. I don't have any numbers, and I don't think we really do have. I'll see what we have internally in the ministry, in terms of all the sales that were issued -- how many have been successful, in terms of still being around, and how many haven't been. I would hazard a guess that there's probably a higher incidence of failure. I just think that's the way things work.
You're trying to nurture the development of a new industry in this province. There are a variety of ways you can do that. Some governments in the past have chosen to use monetary incentives directly. I don't think that that works; generally it doesn't. We are taking the approach that access to the resource is the vehicle that will engender that change. As I say, by the statistical benchmarks, it's been relatively successful. We've clearly seen that trend happening, and I think we'll see it continuing.
I think there are some larger issues. The member talked about what the wood is manufactured into. Anybody who has followed forest policy is aware of the debate with respect to the tenure system -- the allegation that those who have tenure aren't interested in value-added; they're interested in maintaining whatever products they continue to manufacture -- and that that's an impediment that should be corrected. I presume the correction that people are suggesting is a further taking of tenure wood and an allocation of that wood to the value-added sector. That always has to be balanced, in my view, with the fact that we have a domestic industry.
Anytime you want to move and change things, the transition is not a nice, neat and tidy one. If you want to take away wood from somebody who's got it and who's manufacturing products with it and employing people, and give it to someone else, you have to deal with the issue of displacement. What are you going to do with mills that might shut down as a result of that kind of policy? That's a fundamental policy issue in this province. As I said, it's been talked about. It has not always been controversial, but certainly at its origin in the mid-forties it was controversial. It continues to be -- and has been, to lesser or greater degrees, throughout that time. It's an unresolved issue, and one that we will be attempting to deal with in the sector strategy group that this government recently announced.
D. Mitchell: I have one final question on this. I look forward, as I know other members do, to seeing the list that the minister has undertaken to provide with respect to the success and failure rate of applicants who have been successful under section 16.1.
The minister has admitted that there is a degree of subjectivity with respect to the decisions to award timber under section 16.1. Implicit in that answer -- correct me if I'm wrong -- is an admission that there is a political aspect to the decision that is made. The minister has indicated that his officials do make recommendations, and I would imagine that the minister must have some input into those recommendations -- and not just this minister; previous ministers, presumably, and probably future ministers as well -- unless, of course, a process is put into place to limit or eliminate political decision-making with respect to the awarding of timber licences, which is a grand tradition in British Columbia political history.
Could the minister comment on whether or not there are any plans or efforts to reduce or eliminate political decision-making when it comes to the awarding of timber licences through the public application process, with respect to 16.1 or any other timber that's awarded? Would that not benefit any government, to eliminate any future charges that may occur with respect to favouritism of one kind or another?
Hon. D. Miller: It's an interesting topic. The member alleges that politics has always been involved in the allocation of the resource in this province. That argument might find favour in some quarters and not in others, I suppose. There certainly is an issue with respect to ministers exercising their mandate. If the view of the member is that one must completely remove any possible element of politics, of subjectivity that may be open to a political bias, then to some degree it would be advocating that we simply pass off the responsibility that's currently contained in the Forest Act to some other process.
For example, under the Forest Act, I approve the transfer of licences. All members might be familiar with an incident that occurred last year. It's an obligation that I have under the Forest Act, and which I exercise with a great deal of care. In fact, since I was named the minister I have added to the process by striking panels of MLAs from the areas that are affected by the licence. And I have not been political, in that I have included all the MLAs whether they happen to be with my party or any other party. I know some members here who've sat on those panels and -- even though nothing is perfect
[ Page 5568 ]
-- by and large, they have reported to me that they think the process is satisfactory.
[3:45]
D. Mitchell: The recommendations aren't binding, though.
Hon. D. Miller: I was going to make that point: the recommendations are not binding. At the end of the day, even with the assistance of an MLAs' panel or any other vehicle I might choose to employ, the decision is mine. I suppose some people may wish to characterize that as politics. I characterize that as a minister of the Crown, with an act that requires you to do certain things, exercising care and prudence in carrying out the responsibilities contained in the act.
So I suggest that the discussion we're having is largely hypothetical or theoretical, if I could put it that way. I don't think you can eliminate -- nor do I think that you should eliminate -- what you refer to as politics from our system. I think it's fundamental to the system. All governments are comprised of individuals who have a particular bias or political belief, and they will take measures based on those beliefs. So perhaps the member might want to advance another theoretical argument.
L. Fox: It is with pleasure that I enter into these debates. I've found myself coming into the middle of a discussion where I wasn't sure I had any understanding, really, what 16.1 was, because the debate was rather confusing.
But let me just say in terms of the bid proposal in 16.1: having been in a vicinity that has gained substantially through this process, in terms of economic gain through both jobs and investment into my community, I hear discussions from the opposition sides that it should be perhaps a more finite process. That concerns me somewhat, because I believe the success of 16.1 will be to have enough flexibility in it that it provides for innovation beyond what we can perceive today. And I really hope that's maintained. In terms of the concerns -- and I am trying to clarify this in my own mind to be sure I have an understanding of 16.1, which I thought I did have -- it seems to me that the proposals are very seldom put forward by an existing plant. It's usually a new initiative for a new plant -- other than the Woodland situation in Prince George, where I believe they did have an existing plant, and needed some wood in order to assure the viability of their continuing to grow. Obviously it was good for the economics of that company, and for those 100 jobs, that wood was provided. Perhaps the minister could tell me how many 16.1 applications were made by existing production plants versus new facilities.
Hon. D. Miller: I'll attempt to get that; I don't have it at my fingertips. But I do want to say that there are a number of people who have been successful in previous 16.1 bids and who now hold more than one. I don't know the number; we'll try to get it for you. There's no limit. In other words, you're not precluded, as the holder of a 16.1, during the term of that original licence, from bidding on another one. In fact, it's only prudent you do so, if you want to try to continue to have some assured wood supply.
The program is based and has to be fundamentally based -- this is important, and in fact it's one of the first questions I asked -- on our ability to deliver a sustained volume. In other words, if we now have whatever the volume is -- and I read the numbers out earlier -- committed to the 16.1 program, we have an obligation to ensure that we will be able to continue to commit that same volume, or over time an even greater volume, to the program. If we had designed the program and we had not been able to deliver that, then we would find ourselves with a bunch of manufacturers who would ultimately run out of supply, and the program would crash. We have to continue, having committed a certain volume to that program, to commit that volume. I suggest that over time we will see a greater volume committed to the 16.1.
Lots of bidders who started on a 16.1 have also acquired a second one, and you'll see them over time continuing to bid on those kinds of sales.
L. Fox: Is the second one they bid on a replacement because of the fact that their other licence is expiring, or is it additional, which allows for an expansion of that plant or a new plant in another community?
Hon. D. Miller: Typically, it will be to continue to have an assured wood supply. The important element that's built in here is competition. The difference between these allocations and, say, a forest licence or a tree farm licence, which are evergreen licences -- in other words, if you do everything that the licence requires you to do, you have the opportunity to renew that licence -- is that these don't have that. They are for a fixed term, and you therefore have to remain competitive. It presents more of a challenge. But presumably those manufacturers who are able to develop facilities and products that make them good, sound commercial enterprises, will continue to be able to bid on 16.1 sales -- and in a competitive manner, win those sales.
L. Fox: I have one final question with respect to 16.1. There was some dialogue earlier about difficulties and perhaps some failures in the businesses within 16.1. It seems to me, when I look at some of the initiatives that have failed in my region of the province, it's been for two reasons: one has been underfinancing, and the second has been the lack of marketing expertise. Recognizing, of course, that the minister can't do anything about the lack of financing, has the ministry been working on some kind of marketing assistance for these 16.1 entrepreneurs?
Hon. D. Miller: It primarily falls within the ambit of B.C. Trade, and there are other organizations, but clearly the government has also made some commitments with respect to trying to assist companies on the marketing side. I think that's a key area for the province, quite frankly. Someone said to me: "Traditionally, we've been sellers, not marketers. We need to
[ Page 5569 ]
be better marketers." We need to go out and find out what the markets are, for what kinds of products, where they are, those kinds of things. I think government can do a good job in assisting there.
We do put money into the COMDP program, the cooperative overseas market development program. In my view, that has done some useful work. That's a joint program with COFI and the federal government. They've done some extremely useful work in identifying market opportunities, particularly in Japan.
We will continue, through B.C. Trade.... I'm not certain, but there may even be some money available on the marketing side through B.C. Trade. I'm not certain; it's not under my estimates. The member might want to canvass that issue with the appropriate minister. But I think that's an area in which we can help. There is currently some work underway, and to the extent that we have the resources to do more, we will do more. I do agree with you: I don't think the government acting as a bank is necessarily the wisest move in terms of trying to stimulate the development of an industry.
F. Gingell: Earlier this year, and late last year, we had some discussions about the supply of hardwoods for a hardwood mill, and the problems they were facing. It seemed to me, in discussing the matter with them, which was somewhat confirmed by our discussion, that the problems were really all bureaucratic rather than being lack of fibre; that it's the way this material is added up in the forest management licence: what is a weed to one mill is a valuable product to someone else. Can you bring me up to date with what has been happening in this area, and what plans your ministry has for solving the problem?
Hon. D. Miller: It's amazing how often people rush to government to solve problems in the marketplace. I often find it's those very people who suggest quite strenuously that government has no business being in the marketplace. But fair enough, I understand, the world is filled with contradictions.
It's certainly not, in my view, a bureaucratic issue at all. I myself, and previous ministers of forests, have been delighted with the prospect of someone utilizing hardwoods in this province to manufacture, in this case, lumber and, ultimately, perhaps more finished products.
You can see in some of the building supply stores some of the very high-quality products. In my view, alder wood makes excellent furniture, and you can see it in some of the stores, certainly here in Victoria. There are some shops in Vancouver selling this kind of thing almost exclusively. It's bare, unfinished; it's made of alder. Alder is a magnificent wood, and will take almost any finish. You can make it look like anything you want. It's a very good wood for furniture, in that it takes a nail well. It's an excellent wood. We don't have the supply Washington or Oregon have in terms of volume or quality, but we do have some.
The original plant was started by a guy I really had some time for, who put a lot of effort into it. I think he received a fair amount of support from some of the major companies. I recall having intervened with the former Minister of Forests for the government to try to step in and keep that company afloat. There's been a change of management. The company, which had originally been granted a forest licence in the Fraser timber supply area to harvest alder stands, had some difficulty with it. That licence didn't really work out the way it was originally designed. He found that the stand mixtures were not appropriate to the volumes identified in the licence. Another issue developed, in that ther request was made to allow harvesting of deciduous stands. There was some trouble identifying sufficient volumes. It generally didn't work out in terms of securing the kind of supply that the company wanted.
So I met with them earlier this year. They've submitted, through the Vancouver regional office, a revised application. They're looking at a different kind of licence; it's a bit of a hybrid. I'm a bit uncomfortable. I don't like to create too many of these; you tend to run into trouble if you do that. But nonetheless, it's under active consideration. It would be using an existing licence form in a slightly different manner, but the intent is to give the holder of the licence, this company -- but it would have to be bid for -- the opportunity to harvest deciduous or alder stands from a variety of locations on southern Vancouver Island znd the mainland. So we'll see where that goes, but it is being worked on currently.
In addition to that, I did suggest to the company that there were volumes available off tree farm licences, those volumes were currently not being harvested -- there was no requirement, no utilization -- and they should approach the licence holders to see what arrangements could be made. There was some resistance, as I understand it. I don't want to portray anybody as not being cooperative here, because I don't think this issue is finished. But there was a suggestion that there may be resistance because, if they did harvest deciduous stands on a tree farm licence, under our rules that would have to come off the cut control provisions that apply to that licence.
[4:00]
That, by the way, has surfaced as an issue in another area. People are seeking salvage rights on tree farm licence lands, and again, have said to me that the licence holders are reluctant to enter into those agreements because the volume that is salvaged is taken off the licensee's cut control -- which it must be. The chief forester gives an approval to harvest a certain volume, and unless there's an adjustment to change the licence to expand that allotment, then under our rules it has to come off the cut control. I don't see that as a major problem.
I see the major problem, in terms of identifying the volumes that might be available, as being that there are simply not the kinds of volumes that people in the past thought there were. They were overly optimistic. But the company has done, I think, some very good work. I was quite impressed with the work they've done and the proposal they put together. We're looking at it and seeing if we can't meet their requirements and maintain that operation, and hopefully one day make those tables and chairs that are coming in here from Oregon, right here in B.C.
[ Page 5570 ]
F. Gingell: Just for the purpose of clarification, the bureaucratic question that I brought up was one that required the amount of the deciduous or hardwood cut from the forest management licence to be counted in that count. I was under the impression -- perhaps wrongly -- that when the original measurements were being made of the total fibre available in those licences, and what the annual cuts might be, the deciduous or hardwood volumes were not included in that original measurement. So it seemed that here was a product which can lose its value very quickly once it dies, gets to the end of its life. Once it is fallen it quickly gets discoloured, and other problems dramatically reduce its value. I wish to encourage you in any process that will encourage the harvesting of this product while it still does have a value, because clearly there's an opportunity for more value-added production in our province.
Hon. D. Miller: Just finally, Mr. Chairman, I don't disagree, and we are expending efforts to see if we can't accommodate that interest. I suppose it's sometimes a temptation to characterize something as bureaucratic, which would suggest that there is simply resistance as opposed to some fundamental issues -- in this case, the issue of cut control. If the stands are included in the operable land base, then they are included for purposes of cut control. I think there is a way, and the issue, as has been described to me by some, is that there has been a lack of cooperation. I am not necessarily accepting that; I'm saying that that's how some people characterize it: a lack of cooperation on the part of the licensee.
Additionally, I would suggest that there is a problem with respect to location of deciduous stands. We do not have extensive deciduous forests; they tend to be more in pockets and, in some cases, fairly far removed from the plant. In addition to that, there are the economics of harvesting these pockets and moving them with some dispatch to the plant. As you pointed out, there are some time requirements with respect to alder and the prevention of staining and discoloration. It's also interesting to note that the nice brown color they get comes from steaming in the dry kilns; I didn't know that until I went to the plant.
L. Fox: I just have a few questions to ask. I apologize to the minister and his staff if, over the last day or two, they have been asked before. Obviously, as I'm sure the minister is aware, both committees are going, and it's not possible to either keep up to what's happening or attend both.
I was at an intermunicipal meeting on the weekend with a group of locally elected representatives from Smithers to Fort St. James. The issue of the forest land was front and centre in their concerns, given that all their economies are driven by the forest industry. There was a suggestion made there -- and I know it has been the position of COFI, and even Share B.C. has stated this -- that the government should look at creating an FLR. We have an ALR, and a park proposal to put aside 12 percent of the province. Maybe we should be looking at a forest land reserve, which guarantees a geographical area for the purpose of protecting our industry. Perhaps the minister could comment on that.
Hon. D. Miller: I don't reject that notion. There may be some value in creating that kind of zone. Not only would I say that we do it now, because land in the provincial forest is under the purview of the Minister of Forests.... If, for example, someone applies for a piece of land in the provincial forest for another use -- typically it would be through the lands branch -- then it requires my permission for that land to be removed from the provincial forest. That's the case, but I don't think there is any feeling in the province that forest land should have zoning that may be equivalent to the ALR, which has much tougher conditions. It's not a simple matter to take land out of the ALR. Right now it's generally an administrative process. I don't rule that out at all. In fact, that's an issue I want to talk about in the forest sector group.
Beyond that, I think we need to look at those lands where we can practise some fairly intensive management. The member's riding might be a good area, because I think there is some agricultural land that was previously applied for and is probably lying fallow. It's not being used for anything, yet it's probably pretty good growing land for trees. Should we be looking at taking those kinds of lands that may be available and putting them into that kind of category, where we could practise the intensive management that we've been talking about here for the last couple of days? I think there is something to that. I don't have an absolute opinion on that issue or how we would do it, nor have I run the argument to see what the disadvantages may be. Generally, with any good idea there are always some negative consequences. But I don't disagree. To the extent that we can isolate those lands to practise more intensive forestry and produce more volume over time, I think it's something that we should be pursuing. I intend to do that through the forest sector group.
L. Fox: Perhaps I should write this intermunicipal group and suggest that if they have any ideas as to how this might be formulated -- not in terms of the geographical areas, but how this might work -- they should advance those to the minister for his consideration.
Once again I apologize if you've dealt with this earlier, and I don't want to get into future policy here, but I certainly want some understanding as to where it's at. There was, of course, the thrust by the ministry to develop the forest practices code. Is that something we're going to see in the next short while, and what role will that play over private land, particularly land that may be within a regional district planning area -- or those things of things?
Hon. D. Miller: With respect to the first suggestion, perhaps the member might care to recommend.... I'm not saying this because I want to dodge you. If you want to write to me on that notion, fair enough. But there is a municipal representative on the forest sector strategy group. It's the mayor of Prince George, John Backhouse. To the extent that there's a relationship with
[ Page 5571 ]
other municipal leaders, I'd suggest it would be useful to have the group that you're talking about take the time to either write to or sit down with John Backhouse and discuss the idea, so that he might be in a position to bring that to the forest sector group.
We will have a discussion paper out later this spring on the policy issues around the forest practices act or code. The public will have an opportunity to provide their input on those policy areas, and it is my fervent hope that we will, unless things change materially, have an act before the House for debate at the next spring session of the Legislature. I think it's going to be an interesting one. A forest practices act is clearly required in this province, and we may have some interesting discussions around what's contained in it, the cost of having it, and the implications for the land base of having it. Clearly, something will be required. This government has made a commitment to bring that forward, and we will do that in the spring session of 1994.
L. Fox: I'm pleased to hear the minister suggest that the first thing that's going to happen is that you're bringing forth a discussion paper on it, which will allow public input, and input from the members.
Interjection.
L. Fox: Obviously, if it's coming first in a discussion paper, then we'll have ample opportunity to explore the issues around private land.
It's recently come to my attention that the minister is the lead minister with respect to the Vanderhoof Pulp and Paper initiative.
Interjection.
L. Fox: Well, that was my understanding. Vanderhoof Pulp and Paper has been a bit frustrated in trying to figure out who is leading it, but they were under the impression, and passed it on to me, that they were finally satisfied now that the Forests minister was leading the issue. If that's wrong, then perhaps I'll stop my questioning.
Interjection.
L. Fox: You are? Okay.
There are a couple of things here that are very time-oriented. The PA that was awarded to that company.... If the time frame doesn't run out this spring or this summer, it's very near to that point in time. The issue of infrastructure and so on, and how -- or whether or not -- this government is going to play a role in that, is something that's to the fore of most minds right now in the Vanderhoof region. Is the minister in a position to give us an update as to what the status of this particular initiative is?
Hon. D. Miller: No, I'm not really in a position to give you a status report. I've discussed this project with Mr. Killy for a number of years. He was suggesting that he had some level of frustration. I told him that's something I constantly had, but if he wanted to come and talk to me about it, I would. Anyway, we had a conversation. I got some people in my ministry to examine the issue. My interest primarily was that Mr. Killy didn't feel he couldn't get answers; he was sort of expressing that kind of frustration. We did take a look at it. I don't really wish to comment in detail about the specifics of the project. Clearly, if the proponent of a project wants to proceed, they have to go through a process where at certain points they have to make some key decisions.
I'll use the Orenda project as an example. At a certain stage the proponent applied for permission to proceed, and had to go through the review process that's a requirement under legislation. There was a review panel, extensive studies were submitted, and all the rest of that took place. And finally, at the end of that fairly extensive process, the proponent in the Orenda case was given permission to proceed. So clearly there's that time when anybody who's proposing a project has to make their own decision about whether they want to go or not.
[4:15]
There were a number of issues around that Vanderhoof proposal. It was announced, if I'm not mistaken, as a real project in the spring of either '87 or '88, because I happened to be standing in the House when the minister at the time, Mr. Parker, announced that as a fait accompli. I remember responding then as the opposition critic, saying: "We welcome the investment in the province." Clearly, since that time we haven't seen the project built. So there were some questions around the issue of the power arrangements that had been negotiated with Alcan. I don't think that was insurmountable as an issue. There were some issues around site location, and again I'm not certain where that may lie. There were some problems, I understand, with the initial proposal for the site location. And I would suggest there may be issues around discharge, probably heightened with respect to the current Kemano issue, and the impact that project may have on the Nechako River.
So it's not untypical, if someone has a proposal that seems to make sense in terms of the numbers and all the rest of it on paper.... These kinds of hurdles are typical of these kinds of projects. So clearly the proponent has the obligation to at some point say, "I'm going to go forward," and apply for the necessary permits. The Crown will then respond.
I guess one final issue was with respect to the outside-the-gate infrastructure costs, and whether the Crown is prepared to participate in those. I just assured Mr. Killy we were open: "Table some proposals and we will certainly respond to them." There's no fixed formula in those kinds of arrangements. I think it's reasonable at times for the government or the Crown to participate in financing fixed costs -- railroad, etc. But there's no precise formula that you could ever put in place on that issue.
Occasionally we get developers -- for example, the one I referred to, the Orenda proponents.... It's kind of curious, actually. I read in the newspaper that they said they were going to give the government an opportunity
[ Page 5572 ]
-- and you know, we're always interested in opportunities. The opportunity was that we provide a loan guarantee of $100 million. So it's, let's say, perhaps an unusual choice of language. It is legitimate, nonetheless, for proponents to discuss with government any support they feel they might require, or the government can provide, in terms of outside-the-gate infrastructure costs.
L. Fox: The last item you dealt with, Mr. Minister, was the key component to seeing it move forward, and that was outside-the-gate infrastructure costs. The concern of the residents of Vanderhoof is that this particular initiative could locate in Prince George, for instance, and could utilize the same wood supply because it is over the Prince George TSA. They wouldn't have to face these infrastructure costs, because much of the infrastructure is already in place in that city. The seismic conditions of the soil are such that it is a lot easier to find a location within the Prince George region than it is within the Vanderhoof region. So there is considerable concern that this additional $30 million worth of infrastructure needed to locate in Vanderhoof...that the government should, given the promises prior to 1952, irrespective of which government.... And I say that the government from '86 to '91 also failed to meet those obligations, by not dealing with this particular issue. There is considerable concern that unless the government comes to the table on this infrastructure issue, the Vanderhoof Pulp and Paper proponents, who are primarily concerned about having a company that's able to make a profit, will locate in Prince George versus Vanderhoof. Once again the community of Vanderhoof will have lost out on another opportunity. Before we can go through the major project review process, which will deal with the issues of effluent, and deal with all those other issues you pointed out, there has to be some assurance that the government is going to come to the table, if in fact it could meet all those other criteria to mitigate some of the impact of locating in Vanderhoof versus Prince George. That is the key issue, and it is the issue that I understood was on your desk as the Minister of Forests, as the lead minister to deal with this -- in whatever the cabinet committee or other structure was -- to look at those kinds of economic development issues.
Hon. D. Miller: Again I repeat, I undertook after discussions with Mr. Killy to try to play the role of assisting in providing Mr. Killy with a better understanding of some of these questions. But, you know, this is a pretty subjective area. The issue of government investment in infrastructure is a serious one, and I understand the member's concern with respect to the need for that kind of economic activity to take place in his constituency, in his community. At the same time, when we undertake expenditures of the public's money, it seems to me we have an obligation to try to ensure that the best use of that money is made. I'm not taking any definitive positions with respect to location. I am simply saying that these are some of the factors at play when proponents of a development request the government to come in and pay some of the infrastructure costs. So location, the value that the Crown would receive through that kind of investment and the costs of that are all factors. I have simply tried to assist Mr. Killy in trying to have a better understanding of the issues and government's position on some of these issues. In that regard, I have instructed a member of my staff to put together a few people, and someone from the Ministry of Economic Development, to sit down and just go through the thing and try to find out if we could move it along a little bit.
What the current status is, I'm not certain. I did run into Mr. Killy in Prince George not long ago, but never had the opportunity to speak to him. So I haven't spoken to him directly about that. But clearly, where I can help or play a role in facilitating some good development in this province that will create jobs and economic benefits, I try to be useful.
L. Fox: As I understand it then -- just to be sure that I've got everything correct in my mind -- presently the ball is in Vanderhoof Pulp and Paper's court to come forward with a program that identifies the costs of infrastructure and perhaps how the payback to the province might be achieved. Or are the minister and his committee in receipt of those kinds of estimates? He has made public statements in our region that government would receive their investment back twofold prior to the start-up of that particular plant, through taxes paid by the corporation on equipment, as well as on the labour, and by the construction companies that build the plant. Maybe he might want to comment on that.
Hon. D. Miller: It's far better that we do not use estimates to get into some kind of public discussion about that particular project, and the costs, benefits and whatever else. I would prefer to state that I took it upon myself to try to do what I thought might be useful to assist the proponent, Mr. Killy -- for whom I have high regard -- in terms of the pulp proposal that had been made. I'm not certain what the final outcome of that is.
At the end of the day, the proponent of any major project has to make a decision as to whether they want to proceed or not. Whether they were at that stage in this particular venture, I couldn't tell you. Only Mr. Killy could tell you. Because I am the Minister of Forests, and I do deal with people in the industry on a regular basis, I've simply tried to facilitate those endeavours.
W. Hurd: I want to return briefly to a series of questions on the cut control provisions the minister talked about earlier. It's my understanding that the company in question that was raising the issue of hardwoods had expressed some concern that the hardwood harvest from a tree farm licence was considered part of the overall annual allowable cut from the licence. Because the hardwood resource had a limited shelf life that might only be another four or five years in some cases, some provision should be made for creating some additional type of licence within the TFL to allow for the harvest of these hardwoods without having it affect the harvest of the conifer or softwood species, which is really an unrelated industry. I think that's what
[ Page 5573 ]
the member for Delta South and opposition leader was alluding to earlier -- that there needed to be some method of extracting these hardwoods from existing licence quotas without affecting the annual allowable cut.
That was one question I had. I had an additional one with regard to the cut control issue, but I certainly welcome any discussion the minister has had along those lines.
Hon. D. Miller: There is that suggestion, but I am advised that if the timber is in the inventory, it's included in the cut control. The fact that the licence holder may not utilize the species doesn't alter that fact. Therefore the licence holder is free to make arrangements with anyone else, either through harvesting on their own and selling or by allowing that someone else to come in and harvest on their own, to dispose of those trees that are harvested.
I've already said, as well, that you don't get extensive forests of deciduous stands. They tend to be clusters here and there. They are in mixed stands, and the composition varies with the terrain. So it's not impossible.... I approach the issue this way: since the wood is here in British Columbia, surely our system should not be used as a constraint to harvesting the wood, running it through a mill and employing British Columbians. That's my approach to the issue.
In that regard, we are currently examining a licence proposal from the company. But they are free to make those arrangements with the licence holder. My deputy is checking, but I'm certain that any volume of deciduous that is harvested on the licence must be deducted from the cut control provisions and the annual allowable harvest rate established by the chief forester.
W. Hurd: That is precisely the point that is being made. Because they are being deducted from the annual allowable harvest, that acts as a disincentive for the licensee to harvest the hardwoods. It is better to leave them standing or not to be too attentive to how they harvest the conifer trees around a hardwood stand, because the economics are totally different. You could argue that the hardwood industry itself is totally different because of the stain problems and the other manufacturing difficulties that the minister alluded to earlier.
[4:30]
What is being suggested here is that because the life cycle of a deciduous tree is much shorter and the difficulties in extracting it from the cutblock are much greater and are totally different from the conifer species, including them in the existing cut control provisions is actually a disincentive to extracting the hardwoods from the conifers. Quite frankly, most licensees who aren't in the hardwood business have decided that no matter what entreaties they might receive from a hardwood manufacturer, it just isn't worth the effort to engage in an arrangement, because it is deducted from their annual allowable harvest. They have to pay similar rates of stumpage, and the cut control provisions act as a disincentive to get this hardwood material out of an existing forest licence.
Hon. D. Miller: I think we will probably be talking more about tree farm licences; I wouldn't rule out forest licences. I agree we are talking more about a tree farm licence. If you look at the location of deciduous stands, they are on the Sunshine Coast, here on the Island and in some of the Fraser timber supply area.
Is it a disincentive for a tree farm licence holder to allow people to salvage shake blocks or, as an individual I met in the Queen Charlottes is doing, salvage spruce and make pieces that will be manufactured into guitars? I suspect not. The fact that that volume of timber must be measured and must be deducted from a quota, I don't think is a disincentive at all, particularly in the area of shakes and the spruce I was talking about. The volume is so low compared to the overall quota volume that it is negligible. And on top of that, the licensees typically charge a fee or an overhead. They are able to recoup some money from the individual who wants to salvage, so I don't think there is a big impediment.
The other issue that I think has some bearing is that many of these stands are located in areas where it is not acceptable to harvest. The last time I was in the Alberni area, I was looking at some, because I'd been advised that there were some stands there. The area I looked at didn't have a lot, but it was readily apparent -- and I later confirmed this -- that it was in a area that had some bearing on fish habitat, and therefore, from a forest land planning point of view, we would have not allowed those stands to be harvested. It would not have complied with our requirements on the land.
So I don't think it's a major obstacle. I'm quite prepared to talk to licensees all the time, at any time, to seek cooperation -- and do. We are currently looking at an application for a licence for this company. I'm as eager as any Minister of Forests has ever been to try to get, and develop, some manufacturing capability on our hardwood stands, recognizing that they are limited, they are not extensive, but nonetheless can provide some useful work and create some useful products here in British Columbia.
W. Hurd: A question, then, on the cut control provisions as they relate to salvage. One of the concerns being expressed is that by including salvage wood in the cut control provisions, in the annual allowable cut, on the absence of sufficient penalties to discourage leaving some waste wood that could be salvaged, the entire system acts as a disincentive, at least for licence holders, to allow salvagers to come in. The penalties for leaving usable wood in the cutblock are not sufficient to encourage them to allow salvage, because it comes off their cut control and their annual allowable cut -- and their quota, I quess, to some extent. So is there any indication the ministry is reviewing the penalties that exist on the utilization side, to ensure -- if reusable wood is being left on the landing -- that in fact the Crown is recovering at least the equivalent value that would accrue if salvagers had access to it, and that it is included as part of the stumpage appraisal system for each cutblock?
[ Page 5574 ]
Hon. D. Miller: We have a zero tolerance policy; in other words, you cannot leave merchantable timber on a cutblock. We determine if you have or haven't by doing waste assessments through sample plots on a cutblock, and we bill the licensee for any usable volumes left on the cutblock. That doesn't automatically mean that those are removed. We simply send the bill. I don't know what the ranges are now; they've improved considerably over the last decade. We get some pretty minor waste volumes.
Nonetheless, anything that is left that people think they can use.... There's a great deal of work done on shake-block salvage in the province. The volumes, believe me, are minor. It's like that, compared to the volume off the licence as a whole. Clearly there's no major economic disincentive at all that would dissuade the licensee from allowing those shake salvagers to enter onto the cutblocks and salvage what they can. What is salvaged is scaled, and it's billed. But the companies themselves are charging the salvagers for the wood, so they don't lose economically. And to the degree that you would consider the addition of the volume that a shake-block salvager might add to the cut control, it's nothing. So there's no disincentive there. If any company feels that's a disincentive they can't live with, then we should have a chat. You know, that's absolutely foolish.
W. Hurd: The minister will be aware, then, of concerns expressed by these small salvage operators, who in the course of their travels will go out to a cutblock and identify material which they feel they could salvage and earn a profit on. They are advised by the major licensee that, in fact, it's cheaper for them to leave that material on the ground and deal with the Forest Service than it is to allow the salvager access to it and have it come off the cutblock as part of the cut control provisions. I guess we're asking a hypothetical question here. But is there any mechanism by which the salvager could bring this to the attention of the ministry, for a particular cutblock in the province, and have the ministry review the penalties or the cost structure it has in dealing with that salvage wood? If small entrepreneurs have a different set of operating costs, they may be able to salvage this material and earn a living from it. But they are being told, I'm led to understand, that it's more cost-effective for the licensee to leave the material in the ground. Although the small salvager is willing to pay for the wood, he is being told that it is not enough of an incentive under the cut control provisions for the licensee to allow him access to it.
Hon. D. Miller: Yes, I have been told. I've had letters, and I've talked personally to people in the business who have made that statement. I've asked my staff to give me some advice on that issue. I take a fundamental position on the issue. If there is wood, that wood belongs to the people of this province. If someone feels they can utilize it and create economic benefits or jobs, then I want that to happen. If there are companies that are not cooperating in that process, then I will deal with them.
I have heard that allegation. I have also heard explanations on the other side that may have some merit: we can't have salvagers coming in before the waste assessments are done. One of the explanations I got was the interference in the silvicultural side. But my bottom line is that if there is wood in the forests of British Columbia that people feel they can use, and if they are being prevented from getting at it, I will take action to change that. So we're looking at the thing internally. We're looking at the magnitude of the problem.
I also want to point out that there is a great deal of salvage work taking place -- and always has been -- to retrieve cedar for shakes and shingles. It has been a business in this province. The last time I flew over the west coast on a nice, clear day -- it's easy when you fly over a cutblock; you can see where the salvagers are, because there are little piles of blocks everywhere -- the landscape was dotted with salvage blocks piled up. Lots of them use helicopters now in some locations. So it is an ongoing activity. There have been some complaints that people are being thwarted by an attitude of the licensee. I'm certainly having that checked. If I find that to be the case, I'm quite prepared to take action.
I repeat: the addition of that to the cut control is not an issue. If any licensee thinks it is an issue, they should come and talk to me. We do waste assessments. If we discover usable wood that's left, we charge the licensee for that; we send them a bill. I know that they charge salvagers a fee, although I'm not certain what it is. There is absolutely no financial or timber -- using the AAC argument -- disincentive for licensees to allow salvage work to take place.
W. Hurd: In referring to licences specifically, given the fact that the cut occurs over a five-year renewable licence term, which the minister is fond of telling us is a feature of the Forest Act, would he concede that it would be theoretically possible for the company or the licensee to accept the penalties that the ministry imposes and preserve an annual allowable cut in a stand next door, which might contain higher timber values? Therefore if you looked at it on that economic basis, it would be cheaper for the licensee to pay the penalties for wastage, accepting the fact that the material on the ground is of marginal utility and recognizing the fact that by preserving an increased amount of harvest off an adjacent stand, there might be actual increases in revenue to the licensee. Is there any consideration being given by the minister to reviewing the penalties that currently exist for leaving merchantable wood on the ground, recognizing that the licensee has probably done an economic evaluation of his licence and has determined that the penalties may in fact be cheaper for his operation, for his licence, than having a salvage operator come in and select the material? Obviously the licensee knows where he's going in terms of his harvest plans. By preserving a higher annual allowable cut in the next year, as opposed to having that salvage material come off his cut control provisions, there may be a disincentive there.
[ Page 5575 ]
Hon. D. Miller: I think we are drifting into theoretical waters that are leading nowhere. Waste assessments are deducted from the cut control provisions. So if you leave waste in the bush that is usable wood, we measure it, we send you a bill for the volume, and we deduct the volume from your cut control. You can't do what you are alleging. If there is a problem with respect to attitude or willingness of licensees to allow salvagers onto the site to collect material that they think they can do something with, I am quite prepared to deal with it. I've indicated I'm looking at the issue. Nobody has an excuse to not allow that -- in my view; that's my public view. I'll say that to any licensee in the province. I think we're spending an inordinate amount of time on a problem that we are not sure exists. If it does exist, I've already made a commitment that we will deal with it. I don't think the theory that you advanced has any bearing whatsoever on the issue.
[4:45]
W. Hurd: I have a couple of additional questions on the small business category. One of the issues that has been identified as well is the level of deposit that's required for these types of licences. There is a concern that they are on the high side and actually encourage the surrogate bidding we talked about earlier. Does the minister intend to review the size of the timber volumes that are being awarded under these various licences, accepting that there is a concern about the size of the deposit that is necessary; and that the volumes may be too large for some small operators? Are these measures that are under review in the small business category timber sales and bidding process?
Hon. D. Miller: No, we're not currently examining the issue of deposits. In fact, I would suggest that if there were an examination, given the value of timber these days, the only conclusion you would draw would be to increase them. If you want to look at some auditor general's reports, you'll see that the ones of a number of years ago dealing with revenue collection were illustrative of a problem that we had in this province with respect to timber marketing and that whole area of revenue collection. We discovered, for example, that even though under the Forest Act the licensee has the obligation to submit scale sheets to the Crown so the Crown can deduce what is owed, typically those were going to a broker, and we found that in some cases they weren't being submitted; the crown was not collecting revenue, and the system wasn't good enough to discover those mistakes until long after the fact, if at all. So there was a real tightening up a number of years ago, based on the recommendation of the auditor general to improve our revenue collection. I'm pleased that the Minister of Finance is listening to that. We have taken that seriously; we have improved. We've made major efforts to improve our ability to collect revenue. There is the occasional default. I can't recall the percentages, but on balance, if you look at the numbers over the years, ultimately the inability to collect after a period of time results in my going to the Minister of Finance and saying: "Write this off. It's an uncollected bill and I can't collect it." In one case I recall, the person who owed the money was indigent. Clearly we're not going to collect a massive stumpage bill from ten years ago from someone who is on the street. But we've really made efforts to improve our revenue collection.
The size issue is not under review, because we try to meet the needs of a range of small business operators. We recognize that there are pretty small operators who might typically bid on a very small sale -- 4,000 or 5,000 cubic metres -- and there are those who can handle larger sales. We try, in every district -- we're not perfect; in fact, I think we've got a ways to go -- to offer a range of sales of varying sizes to recognize the different sizes of operators that may exist in that region.
Where we tend to get into the really big sales is where the economics require it. There was some controversy a number of years ago over some very large sales we put up on the midcoast. They were helicopter sales. They were quite inaccessible and required the logging to be done by helicopter. It's very expensive to do helicopter logging. Clearly we are not going to put up 2,000 metres and expect that someone will make a serious bid on a helicopter sale. It just won't happen. The sale has to recognize the economics, in this case, of the method of logging that is required by the ministry. We try to have that range of sizes in order to reflect the range of businesses in the contract community.
Hon. G. Clark: Mr. Chairman, it's a unique experience for me to speak in the committee room of Committee of Supply, so I thought I'd avail myself of the opportunity. I understand that the deputy can answer questions as well, if the minister permits it. I'm particularly interested in whether the minister would allow the deputy to answer some questions, because I think this kind of parliamentary reform is useful.
I wonder if the minister or his deputy could give me a sense of the revenue we received from the small business program versus the revenue per volume of harvest from the more typical ways of allocating resources. Secondly, what are the prospects for continued growth in revenue from the small business program? Then maybe you could elaborate a little more on the bonus bid system and how that works, what percentage of the small business program is now taken up by that attempt to promote value-added, what the breakdown is and what the prospects are for growing that side of the ministry. I know there are some technical questions there, so the minister may want to have the deputy answer. But I know he's fully equipped to answer as well, if he chooses to do so.
Hon. D. Miller: I suppose the short answer is that I could refer the member to Hansard, where that issue was canvassed very thoroughly earlier today. I know we don't want to take the time of other members who have questions that I have not tried to elaborate on. But I will be happy to try to capsulize for the Minister of Finance some general views with respect to that issue and give some statistics relative to the volume sold out of the small business program.
First of all, you have to recognize that the small business program has two components: one in which we simply sell timber, and the bidding is simply on the
[ Page 5576 ]
timber itself; and one that is allocated to the value-added side, where the stumpage collected is the administered stumpage price or comparative value system price that applies to tree farm licences or forest licences. So there are two categories in terms of the price.
The revenue generated by the section 16 sales is in the neighbourhood of $200 million. My deputy is finding the volume. Suffice it to say, the value received for the price paid for timber sold under section 16 is considerably higher than the administered stumpage price that applies to the bulk of the timber in the province. In fact, the volume on competitive is seven million cubic metres, and the average price is $16.61. Perhaps my deputy might find what the average price on the comparative-value is. Okay, it's $13.62. There's not a significant difference.
I've advised members as well that we've constructed, in the countervailing duty suit brought by the Americans, in which they allege that we are subsidizing the sale of Crown timber, an absolutely impenetrable defence in terms of the system we currently have here in B.C. We had some interesting discussion about the relationship of why that timber is bid to where it's bid, trying to make some comparisons with the United States and the fact that much of their forest land is private land where cost figures are not available. To the extent that you can make an analogy between private land and tenured land in B.C., and between competitive bid sales here and competitive bid sales in the United States, the obvious conclusion we draw is that when you mix those two, we are collecting every bit as much resource rent as our neighbours to the south do. They, unfortunately, have refused to accept the facts and have imposed a 6.5 percent countervailing duty on softwood lumber leaving Canada for the United States. We are continuing to fight that case vigorously, and I suspect that at the end of the day there might be an opportunity for the Americans to see the light, particularly with the change in administration.
Let's say we based the stumpage system strictly on competitive sales. There are some interesting theoretical discussions one might have about that: what volume, for example, would have to be on the market to deduce an appropriate value? If you accept the argument that the bid prices currently made are made only because tenured manufacturers -- although it's very high-cost wood -- can spread that incremental cost across their tenured wood.... You'd probably have to do some number-crunching.
I'll just give the minister an indication of some of the values we're getting now. A sale in Port Alberni, for example, which had an upset price -- that's the price we put on, our costs -- of $21.54, was bonus-bid an additional $40.70, for a very high total price of over $62 per cubic metre of wood. There have been others in the past that have gone over $100.
As we are in the midst of this countervailing duty issue, with the free trade panel scheduled to report very quickly, obviously we have absolute faith in the arguments and the numbers we presented to the Americans on this issue. We can only hope they will see the light and accept them for what they are: irrefutable facts.
There are some broader issues with respect to the issue of tenure: whether or not some reform of that system would allow a different perspective in terms of establishing resource rents, and whether or not reform would further encourage the development of value-added manufacturing independence. There's a variety of pros and cons on that. There are questions raised in the unionized sector -- how the new plants, and others, are not unionized. I pointed out that this government has brought in a fair and balanced labour law that allows people the opportunity to become unionized. We deal with that all the time.
There are a lot of interesting arguments. I dealt at length with some this morning, and I don't want to, as I said, belabour the point or take an undue amount of time...
A. Warnke: But this is what you should do. Encore!
Hon. D. Miller: ...from members who may have new questions. But that should give you some idea of the general drift of the conversation. Perhaps if you have some other questions, you'll want to pose them now.
Hon. G. Clark: I'm pleased with that brief answer. I've known the minister for some time, so that really was a brief answer. Maybe I can ask one more brief question regarding the plywood industry in British Columbia and where you see us moving in that regard. There's the prospect of a couple of sales of plywood mills -- and the prospects of a plywood plant that's struggling on the Island. I wonder if you see this industry prospering, or how you see the rationalization of the industry shaking down, and what the prospects are. That is a value-added industry, and it's a highly paid industry at the moment. It's going through some struggling, although the price has come back now for plywood, and it looks like there are a couple of sales on the horizon, which I think probably bodes well for the industry. I wonder if the ministry has a perspective on that topic, and if that's an area where we can continue to perform and create jobs.
Hon. D. Miller: I think it is. I want to say at the outset though, before I get into some detail with respect to plywood, that it seems to me to illustrate the point that we just talked about. The advantages of the market, I presume, are many, and some might conclude that one of the advantages of the market is a significant increase in the value of the resource.
Hon. G. Clark: Assuming there's a market.
[5:00]
Hon. D. Miller: Yes, assuming there's a market. Of course, one of the things you cannot do in a free market is account for social issues. You cannot, for example, direct timber. You cannot say you're going to pass a law requiring that all timber that is suitable for making plywood must indeed go into making plywood. That would obviously be a major interference in the
[ Page 5577 ]
marketplace, and would exert downward pressure on price -- to the extent that plywood and lumber don't track; they serve different markets. So I hope the minister takes my point with respect to the advantages and disadvantages of the marketplace, and the use of that to establish price.
I have some deep concern about the plywood industry, and we've made some efforts to try to examine the industry and to see what efforts government can make to maintain that as a viable industry in the province.
The fundamental issue is twofold. One is that our cost structure relative to our competitors' is extremely high. So although we have reached some amazing efficiencies in the coastal plywood sector, there are some cost issues that have yet to be dealt with. Secondly, there's the issue of fibre supply, and in fact -- particularly in a hot lumber market -- greater values can be realized by sending logs that could be peeled and converted to veneer and plywood into the lumber market. Again we go back to the issue of the direction of timber.
Over time we have to look beyond plywood. I think there will always be a niche for plywood. In the study that we've commissioned, I think we indicated that. There will always be a niche, particularly for a high-quality plywood that we can manufacture on the coast of British Columbia. Beyond that, we need to look seriously at the issue of high-quality veneer and the application of that veneer to composite materials, and ultimately selling that as a finished product into a market like Japan. There is an opportunity there that I've encouraged. I've had some discussions with some people in the business. There's been some suggestion that people are looking at it, that they might make some investments along that line. It's new for British Columbia but clearly has lots of opportunity, and also offers the opportunity for sort of parcelling out that very high-value fibre that doesn't grow anywhere else in the world.
So we're looking at all these things to try to make sure we do what we can to assist manufacturers. I have said, and I have been quoted as saying, that I don't think the solution lies in constant interference in the marketplace on my part. I know that some people disagree with that. But by and large that's been generally accepted.
W. Hurd: I certainly welcome those questions from the Minister of Finance, although we long have known that he never asks an innocent question. I'm sure his comments about the need for more competitive bidding for wood will strike terror into the hearts of many licensees in the province when they have a chance to review Hansard.
I also want to ask about an issue we canvassed this morning, since the Minister of Finance is here, and that is the business plan which is filed with the ministry each year by the small business forest enterprise program. The opposition understands that it's a detailed plan. I wonder if there is any information in that plan about uncollected stumpage for the program as a whole. Is that uncollected resource rent running at a much higher level than what exists on tenured lands in the province? I'm sure the Minister of Finance would be interested to hear the answer to that, because it is an issue that affects the revenues available to his ministry. It obviously reflects on whether or not the small business program is being subsidized to some degree by the province because of the uncollected stumpage. So my first question is whether that uncollected resource rent is contained in the business plan that is submitted to the Ministry of Finance each year.
Hon. D. Miller: First of all, I want to say that the Minister of Finance and I used to share a small, ratty apartment in Victoria and had lots of opportunities to talk to each other. Since we've been in cabinet, we haven't had as much opportunity. But the minister has been very active in terms of that plywood issue and particularly the difficulties that some plants in the lower mainland have experienced. I certainly appreciate the efforts he and his staff have made in trying to assist, in terms of talking to capital and the employees to see if we can maintain that kind of employment.
The member was talking about subsidies. That's absolute nonsense, Mr. Chairman. We go through an exhaustive debate about how much more revenue we're generating out of the small business program, and then at the end of that lengthy discussion, the member gets up and raises some querulous question out of the blue about whether we're subsidizing anything under the small business program. That's absolute nonsense; there is no subsidy.
I talked about revenue collection and about the fact that we've made significant efforts to tighten revenue collection. That doesn't always mean that at the end of the day somebody is not going to go bankrupt or do something so that we can't collect the resource rents that are owing. That's why we require deposits, which the member was saying we should lower. So I'm constantly puzzled by the contradictory messages I'm getting from the opposition critic. I don't know what he means by the potential to subsidize through the small business program; it's absolute nonsense.
[P. Ramsey in the chair.]
R. Neufeld: Mr. Chairman, I too am interested to see the Minister of Finance here asking the Minister of Forests some questions. I was particularly interested in the small business program that he shows quite a bit of interest in. The Minister of Forests spoke about the small business program at great length earlier today, and I appreciate that. I would appreciate it if he would reiterate to the Minister of Finance when that program took place and under which administration.
Hon. D. Miller: I apologize, Mr. Chairman. I was talking to my deputy and didn't catch the last part of the question. I sincerely apologize. Perhaps the member could....
R. Neufeld: That's okay. It's an easy question. I would just like the Minister of Forests to explain to the Minister of Finance -- because of his interest in the
[ Page 5578 ]
small business program -- when the small business program started and under which administration it started. He's just grasping at the finance end of it. I'd like him to know where the seed came from.
Hon. D. Miller: Mr. Chairman, I don't think the member for Peace River North should feel offended. I think he misinterpreted the questions posed by the Minister of Finance.
W. Hurd: Mr. Chairman, I too am really interested in the line of questioning from the Minister of Finance, because he seemed to imply that more rents could be collected for the Crown. The small business enterprise program and the default on stumpage are not trivial issues. I'm sure the Minister of Finance would welcome the minister's opinion on whether the rate of default on stumpage is running at an acceptable level and what level that might be. How many millions of dollars are we dealing with here? At what stage is it written off by the Ministry of Forests or the Ministry of Finance?
Hon. D. Miller: Mr. Chairman, the pattern is one-half of 1 percent; that's on everything receivable. We don't write anything off. We wouldn't have the temerity to ask the Minister of Finance to write this off, unless we were absolutely certain that there was not a ghost of a chance of collecting. We run those files really hard, and we don't let people get away with anything. I frequently have people pleading with me to give them relief. Members of the opposition send me letters saying: "Relieve this person of their obligation." But we remain steadfast. We say no, these are rents owed to the people of British Columbia. We collect those rents, and we have a very modest write-off. I don't know how one-half of 1 percent compares to other businesses. Maybe the member would like to volunteer what it is, but I'd suggest, given the size of the revenue that we generate in this ministry -- over $900 million this year -- that that's not a bad performance. I'd say that would stand up to any business operating in this province.
W. Hurd: My question was pretty specific and, as usual, I received a generic answer. The question was: with respect to the small business enterprise program, is the rate of default higher than in licensed areas of the province, and what kinds of dollars are we dealing with? That's a pretty simple question, and I'm not implying any blame or casting aspersions at the stumpage system. These are very specific questions -- without any specific answers.
Perhaps I can ask the minister about an issue of range management in the province that has come to the attention of the opposition. It also appears in the ministry vote. Can the minister tell us the rationale behind the considerable increase in range fees that were applied by his ministry in the last fiscal year, and which will clearly have an impact on revenues in the current fiscal year under these estimates? Is it the position of the ministry that those fees were insufficient in past fiscal years to deal with the problems of land management on range lands? The minister will be aware that the new fees have imposed an additional cost burden on the grazing industry in the province. I would certainly welcome his input on those issues, which have been brought to the attention of the opposition.
Hon. D. Miller: Mr. Chairman, the increases have indeed been felt by the industry. The total revenue impact was some $200,000 a year. Like every other group in the province, the fee increases were not popular. I think we've had some very good discussions, and my ministry enjoys a good relationship with the cattle industry. There was discussion throughout the process of developing the new system. The new fee structure is far more market-sensitive than the old one.
As I said, I understand the dislike of any increase in the fee structure. Given that it is $200,000 spread over the industry, it is relatively modest. It resulted in a fee structure that is far more sensitive to the market and that bears a relationship to the price of beef. I am not in a position to explain the complexities of that, other than to say that it is market sensitive. We've had those discussions with the cattlemen. They've also raised some issues in respect to the cumulative impact of a variety of fee increases -- water, etc. We recognize their circumstances, but all British Columbians have had to bear some additional costs that we perhaps did not totally agree with. In terms of trying to deal with the budget issues that we have talked about, it was our view that it was a necessary increase.
The Chair: Hon. member, just before I recognize you, I am going to remind the committee about the sensitivity of the microphones in here and their tendency to pick up side conversations. Are hon. members of Committee A listening? Order, hon. members.
I think the Chair will try this one again for the hon. members off to the side having this enlightened conversation. The microphones are very sensitive, hon. members, and side conversations tend to be picked up. It sometimes interferes with the efficient recording by Hansard. Thank you for paying attention.
W. Hurd: Another caucus leak plugged.
Mr. Chairman, I was intrigued by the comments of the Minister of Forests about the market-based rationale for the grazing fee increases and the fact that they were related to the price of beef. Can the minister explain exactly what type of financial systems were used to assess the cost of beef, which I am sure rises and falls as any normal market would. How can a fixed fee schedule for grazing rights be market sensitive? I'm just intrigued by that.
[5:15]
Hon. D. Miller: The fee is a blended fee, and it has components of ground rent and the price per pound of beef, if I'm not mistaken. So that's why I indicated it had some market sensitivity: it's a combination of those factors. It was developed after some pretty extensive consultation between the range branch of my ministry and the Cattlemen's Association. There's clear understanding of the structure of the fee; I don't think there's a dispute with the cattlemen over the structure.
[ Page 5579 ]
There was a dispute, as there has been right across a variety of interests in the province, as a result of the increased cost that sector has had to bear. That's not unusual. Those complaints have come in, and I suspect that they have always come in whenever a government has had to deal with issues of revenue generation.
We think the cattle industry is an important industry for B.C. We think that they can live with the cost structures that resulted with the changes in the range fees. We'll continue to work together in a cooperative manner to try and even expand. Certainly there are ongoing issues with respect to the expansion of grazing land and the development of additional grazing land to support the industry. I don't know on a pure cost structure whether we recover government costs or not. But clearly it's an important industry, one that we want to continue to flourish. We don't think that the fee structure changes will make the industry uncompetitive in terms of other jurisdictions. We've had some good discussions with cattlemen over this issue. We haven't always agreed to everything, but we've had some good discussions.
W. Hurd: As we move down the trail of estimates in Forests, I just have some cleanup questions here, housekeeping questions. I'm asking this question on behalf of the hon. member from Vancouver-Langara, who had wanted to be here seeking information about the special silvicultural fund for social services recipients, which was announced in the first quarter of 1993. Could the minister explain the involvement of his ministry in that special account, and whether we're dealing with funding from the Ministry of Forests or money transferred from the Social Services ministry? Perhaps also he could explain how Social Services recipients are going to be trained, and whether that falls under his budget. We just welcome an explanation of this particular initiative.
Hon. D. Miller: The member had asked some questions previously. I'd like to table some information with respect to the market for wood products from British Columbia to Japan, to illustrate the point I made earlier. The information I have is that there are large and growing shipments of wood products to Japan totalling about 1,500 million board feet in 1990. That has increased, obviously, since that time. Exports of coastal species -- in particular, hemlock and fir -- dominate trade, while exports of interior dimension lumber -- spruce, pine and fir -- have grown rapidly in recent years to total about 280 million board feet. Coastal species are typically used in traditional housing and construction, whereas the growth in the use of SPF -- spruce, pine, fir -- is related to the introduction of 2-by-4 frame housing and the rapidly growing prefab housing components market. I mentioned earlier that they do buy dimension lumber, 2-by-4s. Export of coastal species tend to be in larger sizes, reflecting the traditional timber uses in the homes. Prices for hemlock squares, which is an end product -- the finished product -- have recently reached $900 per thousand board feet.
[D. Streifel in the chair.]
Now that was back in l990. Those are the current figures -- close to $1,000 for a thousand board feet. I'd say that's really getting some value. Similar endmarkets for dimension lumber have reached up to and above $450 per thousand board feet, and engineered wood products attained higher value. Clearly the value of trade is dominated by hemlock fir, not by cedar or yellow cedar cants as the member suggested earlier. These statistics bear that out. With respect to the money that's allocated under B.C. 21, as I said in debate in the House on the bill....Was that bill passed, by the way? Or is there still some ongoing debate with respect to that?
P. Ramsey: Ongoing.
Hon. D. Miller: So I guess we could debate the bill before the House, but I don't know whether that is something we should do in this chamber or whether we should do it rather expeditiously in the big House.
The Chair: You're quite correct, hon. minister, the bill is before the House, and as such it is not examinable in your estimates.
W. Hurd: The minister answered one question and failed to appreciate the other. It was an announcement made by the Ministry of Social Services some time ago about a special fund for some cultural work that's totally unrelated to the bill currently before the Legislature. It was an initiative to get social services recipients back into the workforce via forest-related projects, but I can see from the blank stares on the part of the parliamentary secretary and the minister that it may be we'll have to go back and find the press release. If the minister has any knowledge of that initiative, I'd certainly appreciate hearing about it.
Hon. D. Miller: Those looks the member refers to are ones of puzzlement. They are quizzical. We're trying to determine what the nature of the questions are. But I'm not responsible. I'm not aware of the specifics of an announcement or anything that the minister may have made, and clearly I am not responsible for the Ministry of Social Services out of the budget. But we look forward, the Minister of Social Services and I, to continuing the very productive relationship our two ministries enjoy with respect to utilizing the resources of the government in providing training and opportunities in silviculture. Indeed, I would hope the members share the support I have and will heartily endorse any further initiatives contained in the legislation dealing with B.C. 21 or Build B.C.
W. Hurd: I wanted to also inquire, while we're doing some housecleaning here, about an increase in the budget for advertising and publications by the Ministry of Forests. I realize that there's an international battle to be fought on the issue of forest practices in the province, but I'm wondering whether that increase in voted expenditure is required because of the
[ Page 5580 ]
advertisements being done by environmental groups in the province, or whether there's another type of initiative underway in the ministry that would explain the need for a budgeted increase for publications and promotions.
An Hon. Member: What about Clayoquot?
Interjections.
Hon. D. Miller: I don't think the increases are significant. They're fairly routine. We have a number of publications that we must advertise fairly extensively this year.
Certainly it's always a challenge to try to get the correct story out about forest practices, those kinds of things, and it's important that we spend the money that's required to do that. I think the members would agree that we simply cannot leave unfounded allegations unchallenged. So we're quite prepared to increase our efforts, particularly in Europe, and we will -- with the federal government and other producing provinces in this country. But we also have a number of publications that require extensive distribution: the forest practices discussion paper, for example, that will be coming out. All of those efforts require a budget to support the staff resources, the publishing costs and the distribution costs that follow. So the increases are not significant. I'm not certain what the dollar amount is, but it's not significant in the scheme of things, and it really is our ongoing effort to inform people within British Columbia about what's happening in this ministry, and to take our part with other producing provinces in Canada to combat the dissemination of completely unfounded allegations, mostly in Europe.
W. Hurd: The minister will be aware of a controversy within the forest industry about the fact that the government funds the B.C. Environmental Network with a grant, and it is using some of that money to conduct the kind of advertising campaign the minister talked about earlier. In any case, I have one final question regarding....
D. Lovick: Are you advocating censorship or what?
W. Hurd: It's regarding the minister's office. I wonder if he could explain to us the carry forward for office furniture for the coming fiscal year. We're always interested in hearing about the provision for new office furniture. I believe the figure is -- I'm just trying to find it in the estimates -- in the vicinity of $9,000 or $10,000 for the current fiscal year.
Hon. D. Miller: Has the member been in my office lately? I do need some new furniture, but I'm not planning to buy any.
W. Hurd: Mr. Chairman, there is a voted expenditure for that amount, I believe. If the minister is telling us of his willingness to exercise restraint and carry that forward for another year, the opposition will certainly be watching whether the minister's office does develop a new desk or table over the coming fiscal year.
With that, as the critic, I have no further questions on the estimates. Others may be willing or interested in taking up some of the issues.
R. Neufeld: I have just a few quick questions. I'm sorry I haven't been able to take part in all the estimates. The minister may have canvassed some of these already. And if so, I will go back and read the answers.
I'd like to know a little about the inventory and where the ministry is at in getting the inventory into line. I know that in opposition the minister spoke very often about the inventory not being up to date. I'd just like to know where we stand with inventory after 18 months under his ministry.
Hon. D. Miller: We are continuing to make efforts to improve that. In the last fiscal year we did devote an additional $10.25 million, I think, to the corporate resources inventory project. There is some additional money this year. I've forgotten exactly how much, but another $6 million.
Anyone who, like me, starts out dealing with forestry issues starts with some perceptions of what the issues are and what steps need to be taken to improve the situation. Like a lot of people, I tended in the early days as a critic to pick on what notionally appeared to be the issues. So I would, for example, chastise the government for not doing enough in inventory. I'm not putting you down or suggesting it is not a serious issue, but what I've discovered over time is that inventory is like most subjects in this field: it's fairly complex. We not only need to look at the inventory of our timber resources -- and that is not an exercise you can separate from looking at the land that it's growing on, the quality of the land, its ability to produce new crops of trees...all of that becomes part of the mix. We also have to look, and perhaps it's more difficult, at those issues that might constrain the harvest: for example, wildlife. Generally our inventories, if you like, in those kinds of areas have not been as good as they should be. So as a blanket statement, inventory is a fairly broad issue and goes beyond the issue of simply counting the number of trees that might happen to exist.
We are going through a pretty difficult period, as the member is well aware, coming from a forestry jurisdiction. This timber supply review, started under a previous administration, and continuing with me, is a very difficult exercise. Quite frankly, we failed in the past to live up to the obligations that we imposed on ourselves. We said we needed to do that reinventory work, that recalculation of annual allowable harvest rates on a regular basis. We didn't do it.
[5:30]
Lots of the places that we are looking at now haven't really had that kind of look in over a decade. In some cases longer. So to try to meet that challenge, the ministry established a timber supply review team internal to the ministry. We've got some very bright people in there who are working with the chief forester to do that as quickly as we can based on current information. We say we don't have the resources or the
[ Page 5581 ]
time to wait until we get the resources to do that kind of exhaustive work that some people would require. We've got to get on with it and come to grips with the issue of how much timber is there and what an appropriate allowable harvest rate is.
So we will continue to devote resources to the inventory program, and I think that's something that all of us should be conscious of. Long after I'm gone, I hope that succeeding ministers will feel a lot of pressure to not allow the process of reinventory, updating the information and the establishment of allowable cuts on the current basis to slide behind. Once you get behind there, it's a massive job to catch up, and the results are often traumatic because of the impact of reduced harvest rates. Inventory is very important to us. We will continue to devote the resources that we can to improve the quality of our inventories and apply that to the necessary work, in terms of the establishment of harvest rates.
R. Neufeld: Mr. Chairman, I appreciate the frankness with which the minister answered that question, because inventory is difficult. I think that once the minister got into really looking at what happens in the forests, he found out that it is very expensive and time-consuming. In some cases you get it all done and it was really for nought, because something else happens in that area.
The other area I'm interested in is enhanced silviculture. I don't know if you canvassed that before. If you have, I'll go back and read Hansard. But I'd appreciate if the minister could briefly tell me his thoughts on enhanced silviculture -- thinning and those types of processes -- so that we can keep up to a fairly good level of annual allowable cut in order to keep our industries going.
Hon. D. Miller: Indeed, we did canvass that at some length. I think the first speech I gave as the Minister of Forests in 1991 was to a silviculture conference in Vancouver. I spoke at length about what I thought was possible to achieve in this province: a greater level of investment in the land base, increased mean annual increment or growth rate; use of silviculture as a tool to determine the types of timber we want to produce through pruning -- for example, knot-free through spacing -- increased growth and all of those kinds of things.
Not that long ago I spoke to a silviculture group and said that I wasn't satisfied after a year and a half that we'd really made any progress on the issue.
We've got $20 million or so we'll be spending on incremental in the ministry itself. The real issue is how we get that private capital flowing into incremental silviculture. I don't know what the simple answer to that issue is. Capital wants long-term security. They are saying, in a sense, they're not going to make that kind of investment.
They're saying two things, quite frankly. They're saying we won't make that kind of investment unless we have some security we will be able to recoup the investment. And others are saying, unfortunately, that they're not convinced that kind of investment really has any return. But the only way it makes sense is for the Crown to do it, because the Crown can discount the social benefits that kind of investment regime might bring.
I'm convinced, even my staff is convinced, that the investments reap a real reward. There's a real return on capital through those kinds of investments. I will be riding the industry pretty hard to come up with some solutions. Not just the industry, but through the forest sector group we have labour, and academia, and the Ministry of Forests itself and the government all involved to try to find at last some regime here, some policy, that will allow those investments to take place. It's been an outstanding issue for years, and we need to get on with it.
R. Neufeld: Would I be correct, then, in assuming that the ministry has something in mind, some plan about enhanced silviculture, a program that could be put forward that people with tree farm licences and harvesting rights will have to start abiding by? You obviously had 18 months to look at those things. Is there some timeframe we can look at, instead of continually saying it? I'm sure probably Forests ministers in the past, along through the years, have said the same thing, and nothing has ever transpired to a real enhancement of silviculture. Is there some set timeframe you have in mind we could look forward to?
Hon. D. Miller: No, only because I don't have the habit of setting the kind of timeframes or limits we may not be able to meet.
I'm not interested in delaying at all. You're right, I was Forests critic for four years in the opposition and I talked about nothing else. I do recall, and I think with all the best of intentions, the previous minister saying: "Yes, we have to come to grips with it." It's not complicated in its essence. If you put a certain amount of money into the land, in intensive, you will get a certain benefit back. The question is: who puts the money in, and what kind of security do they have over time? They'll get their investment back. But the numbers are pretty sound. We can model what a certain level of investment will bring in any given area through increased growth, for example through increased mean annual increment, and in some cases the gains are significant.
Part of the thing that's changed, you know, is the economy. Maybe we've never had a better time to consider the issue because of the increase in cost of wood and the shortages that are occurring. In fact, in North America, currently and over the long term, there is a shortage of wood, and there will continue to be a shortage. It's something I would like to see my American friends acknowledge.
So the opportunity is there. The market side is there, clearly. And we're going to be working with all the dispatch I can bring to try and find some solutions.
R. Neufeld: I would agree. I would say that probably we are at a time where we could maybe impose or bring forward some new regulations for enhanced silviculture because of the shortage of wood
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in North America. But along with that we have to take into consideration that there is an awful lot of wood in Russia and elsewhere over there that could be utilized -- in fact I've heard it is already being used in some places in the U.S. -- and from Alaska. So all those have to be taken into account.
One other thing I'd like to just briefly touch on is a biodiversity guideline that was brought forward by your ministry. I'm not really familiar with it, so if you could just update me a little bit on it, I'd appreciate it.
Hon. D. Miller: Those have been drafted. They are being considered now by the clients, and perhaps later this fall we will be in a position to move in terms of implementation.
R. Neufeld: One last question. You may have canvassed this, and if so I'll go back and read Hansard. The forest practices code: I understand you don't like time lines, but is there some time when you think the forest practices code will be in place so that companies and the public at large can see that code and see what's really going on?
Hon. D. Miller: Yes. In fact your colleague just a few moments ago confirmed that our target is the spring of '94 for legislation. There's a discussion paper coming out this spring to give people and companies an opportunity to respond to some of the policy issues. I hope to have it in place with the help of all members in the spring sitting of 1994.
Vote 40 approved.
Vote 41: ministry operations, $482,227,253 -- approved.
Vote 42: fire suppression, $63,837,419 -- approved.
Hon. D. Miller: Mr. Chairman, I move the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The Committee rose at 5:42 p.m.
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