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

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

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JULY 27, 1993

Morning Sitting

Volume 12, Number 18

[ Page 9213 ]

The House met at 10:05 a.m.

Prayers.

Orders of the Day

Hon. G. Clark: First, I would advise all members that the House will be sitting tomorrow. With that, I call committee on Bill 78.

PUBLIC SECTOR EMPLOYERS ACT
(continued)

The House in committee on Bill 78; E. Barnes in the chair.

On section 5.

F. Gingell: I'm wondering if the minister could advise us if they have done a staffing plan for this organization.

Hon. G. Clark: We're in the process of doing a staffing plan for this. We're looking at reallocation of resources within government to do that, because we think efficiency gains are to be had in this regard. In other words, if some of the work being done by the council would have been done otherwise by the member association, it may be appropriate for them to be participating in it. But in any event, the size of the staffing that is probably required is somewhere between 12 and 20 individuals to service the Public Sector Employers' Council. To give you a sense of that -- as Korbin has pointed out -- this manages a payroll of $10.9 billion, so even tiny or modest savings in terms of dealing with that question are more than offset. It seems to me that this is a high-level sort of function which will require probably a dozen or so people.

Sections 5 to 7 inclusive approved.

On section 8.

F. Gingell: Section 8 requires the minister to recommend that the constitution and bylaws be prescribed by the Lieutenant-Governor-in-Council. In the scope of the work that has been done to this point, have those bylaws and rules been developed yet?

Hon. G. Clark: The only association that is very far along in this process is the new Health Employers' Association. In part, the previous royal commission got people thinking in this direction, so that had had a bit more lead time. Then the work of the Korbin commission brought it home, as did the social accord negotiations and the like. So a lot of work has been done in that regard.

Lynn Smith, dean of the law school at UBC, was hired under the auspices of the Korbin commission to pull together what they call a working group on a constitution and bylaws for that association. She has made a report. The two main organizations, CCERA and HLRA, have been working hard on a constitution and bylaws. They have not been approved yet, but I think it's fair to say that they are close to completion. So obviously the sector will be submitting a constitution and bylaws for our consideration.

Again, in keeping with what we're doing here, the important thing is to have the sector itself work on a constitution and bylaws, not to have it imposed by government. That's not our intention, nor even remotely our desire. As I say, lots of work has been done. I think they are very close to submitting a constitution and some bylaws to us. We'll have to review it. There may be some discussion back and forth, but that's the area where we are the closest. In the K to 12 area, obviously this is something equivalent. We are fortunate that Lynn Smith has agreed to work with the school boards to try to pull together an employers' association similar to health care. I believe that work has just begun. The Crown corporations work is just beginning as well, and an informal group has been put together. Gary Moser, GPSD, is working on that with the Crown corporations.

Finally, there is the social service sector, which is a huge and complex task. As I advised members of the House last night, my read on that is that we are not going to get a constitution and bylaws for a year and maybe longer; we're working on that. Having said that, this very huge and disparate sector is really excited by the prospect of having an employers' group. They have had several meetings to try to pull it together. I don't know how many there are, but dozens of people representing dozens of employers have had several meetings. So things are moving along from the employers' perspective, even in that disparate sector.

The ministers may criticize me, and I don't want to put cold water on the process by suggesting that it's a longer one than.... They are driving very hard. But my read on it is that we're not going to be in a position to have a constitution and bylaws probably for a year. I'd be happy if it were sooner, but it will probably be a year before we can pull that together in any rational way and have the degree of consensus and support from the sector required to make an employers' association work.

F. Gingell: This whole question of employers' associations is going to be relatively simple if there is a coming together of the minds. It may take a long time, but at least you will always be working towards a clearly defined end point.

[10:15]

There are arguments and disagreements about who should be within the group and who is to represent the organization. I would like to again focus on the BCSTA issue. Isn't it going to be terribly difficult to develop a set of rules when you're going to have arguments to start with about who represents whom and who speaks for which organization? Which will come first: the minister's discretion in determining who will represent whom or the creation of the bylaws and constitution, which may very well include that determination?

[ Page 9214 ]

Hon. G. Clark: First of all, there's no discretion to speak of with respect to who has to belong to the association in the K to 12 area. That's the first decision that's made by this act. All school boards will be required by law to be members of the employers' association. That determination is made.

Broadly speaking, I think there are ten boards that are not in the B.C. School Trustees' Association and 65 boards that are. The member is quite correct that there is a reason why there is a division. I don't think anybody is under any illusions about that. I'm not sure what the reason is; it's not my area. But there is a division among boards on certain perspectives. We're saying to them: "I'm sorry, but for the purposes of bargaining on the employers' side, that division isn't tolerable. You have to come together in an association." But there are institutional rivalries or imperatives. I haven't had any direct dealings with them, but I think that the School Trustees' Association would probably argue that they should be the employers' group. Obviously they are the dominant employers' group and have a major role to play in that regard.

My understanding is that the ten boards that aren't members understand they have to cooperate on this. Lynn Smith was put in there to try to facilitate that. I don't want to be naive, but I'm very optimistic that we'll come up with an association that all members can participate in.

L. Hanson: I hope you will allow me a little latitude, because you've been going past a couple of sections so fast that I missed a question. It's a general question.

Could the minister confirm my understanding of the situation. The cost of the operation of the Public Sector Employers' Council would be a government responsibility, but the cost of the employers' associations -- even though government does fund most of them -- would be a responsibility of the associations. In a couple of the sections we just passed, there is authorization to levy fees and assessments, and that would be to do with the employers' organizations as opposed to the operation of the employers' council.

Hon. G. Clark: The short answer to that is yes. That's correct, but it's a little more complicated than that. I'm just going from memory here, but I think, for example, that CCERA, the Continuing Care Employee Relations Association, actually gets a grant from the government to fund that directly as part of our budget item, whereas the hospital labour relations association gets no such grant from the government. We fund hospitals, and then they tithe or tax to fund their employers' associations. It's all paid for by the taxpayers -- by the provincial government, that is -- but in one case it's done almost voluntarily, and in the other case, there is a grant from the province.

As we merge these questions, I think it's fair to say that there's a little bit of debate over it. I'm sure all the employers' association would prefer that the government gave a whole bunch of money to fund their association. That's not in the cards, frankly, but the member is correct that the council will be a line item in the budget, debated in the House and paid for directly by the government.

L. Hanson: The minister has already answered the question. The point I was trying to get at was what opportunity we would have in the House to debate the performance of the councils, and that line item would give us that opportunity.

F. Gingell: While we're on part 3, I seek a little discretion from the Chair and the minister. Part 3, the public sector employers' associations, is clearly going to have a role in dealing with compensation from employees who are not subject to collective agreements. That probably includes all senior management. In the normal course of events in corporations, the president or chief executive officer deals with a series of employees who report to them and subsequently gets those salary levels approved, and his or her own salary is subject to negotiation between themselves and the chairman of the board or a committee set up for the purpose. Recognizing that the input of the council is going to be more important in the future than the input of the board of directors, how does the minister envisage that the chief executive salaries of Crown corporations will be determined in the future?

Hon. G. Clark: I think we are trying to do more of a compensation analysis in terms of duties of the job, etc., and to get some kind of rational way in which we can look at compensation for senior management staff. The member is correct. The boards of directors of the Crown corporations still have a major role to play, and we'll be trying to set, at the employers' association level, some broad parameters and guidelines under which we expect them to operate the boards. So there's still latitude allowed. We're not going to micro-manage the sector; at least, that's not the intention at this time. It's more to try to get some evaluative framework.

There's a certain amount of peer pressure that we can apply as well. Is it fair for Frank Rhodes at B.C. Ferries...? I think his salary is $115,000 a year, and he very successfully does a superb job. He came from a deputy minister position in the Premier's office under the previous government directly to being CEO of a Crown, and he kept the same salary. Others are substantially higher than that -- even others who, one might argue, have less onerous tasks. I'm not suggesting that Frank Rhodes is underpaid or should get a raise, although some might argue that.

Interjection.

F. Gingell: The member for Surrey-Cloverdale.... I'll pass on those remarks to Mr. Rhodes.

But more to the point, it's the unfairness and the problems and tension that it creates -- leapfrogging and all that stuff -- in the Crowns, which really shouldn't make sense. They are all provincial Crowns; they should be subject to broad review and some comparative analysis across the piece. Obviously I want to be a bit careful here, because at the moment the boards of directors do control senior management 

[ Page 9215 ]

compensation. If that's the case, why is it that the Ferry Corporation CEO is paid significantly less? It's because the boards are all appointed by the government, and regardless of who's in power governments all are concerned about this question and try to exercise some dampening effect on some of the boards. To some extent they're successful, and to some they aren't. That seems to me the best explanation as to why you have that. So there's a market test which is important in running a major corporation: there's comparative across the board; and there's trying to get some consistency in applications.

I personally must tell members of the committee that in some respects the CEO salaries are the least important. Senior management is where you get a whole layer of people who are very highly paid, and I think that is where there have been some anomalies and real concerns -- at least I would say there's some real concern. If you're trying to attract someone to manage a 3,000-person corporation which is essentially a commercial operation, the market is absolutely a determining factor. There is a broader market, if you will, for the CEO positions. In some cases there's less explanation for the fairly high-priced middle management.

Anyway, I'm not trying to pass judgment on individual Crowns. I'm saying one of the tasks of the employers' association will be to review all these questions across the board and try to set some guidelines and parameters. I'd be delighted, frankly, if it was decided there should be some rollbacks in senior management compensation in some sectors, because they're out of whack. It may require some red-circling over time, if you will, and some way of dealing with this question. That will be a task of the employers' association in every sector.

F. Gingell: One of the items that comes up in public sector CEO salary issues is the question of bonuses. Do I take it that all of these items will be included? Do you have any policy position that Crown corporation senior managers should not have bonus arrangements, which clearly wouldn't be available within the public service?

Hon. G. Clark: The answer is no. There is no policy in this regard, and there has not been one that we can detect anywhere. There is no consistency across the sector. This is precisely what the employers' association might look at. If you want my personal view, I don't have any problem with bonuses for senior management personnel if the performance or productivity bonuses are based on real criteria. I don't have any problem with that at all. I do have a problem if it is just a way of pretending that they are getting a wage increase and it is part of their pay package, so it is just a veneer of bonus provision. Anyway, that's my personal view, and that's something the employers' association should come to grips with.

K. Jones: Could the minister outline the relationship that would exist between the Crown corporations employers' association and the Crown corporations secretariat?

Hon. G. Clark: Obviously there will be some connection, but the Crown corporations secretariat has not developed a personnel side. It deals with largely operational questions: efficiency and productivity on the policy side, which is set by a cabinet committee. But it has dealt somewhat with senior management compensation. For example, as chair of the Cabinet Committee on Crown Corporations, I sent a letter out to all CEOs and all Crowns telling them that they should be freezing their management compensation. In fact, they have done; salaries over $100,000 are frozen absolutely. We have used that tool to try to impose some discipline, but it's really an ad hoc thing. So this deals with the Crowns themselves getting together to deal with managing compensation questions. The secretariat will be actively monitoring this as part of their overall monitoring of Crowns, but they're not really equipped, nor do I think it is the right vehicle to deal with labour relations questions and senior management compensation, and Korbin suggests that as well.

K. Jones: Would it not be a logical thing for the Crown corporations secretariat to exercise a controlling influence through the Crown corporations employers' association on the direction of compensation, labour relations contracts, pay levels, pay equity and all of these different issues in order to bring standardization and a government direction to the whole process?

Hon. G. Clark: I think that would potentially lead to some duplication. There's more to the public sector than Crown corporations. We're establishing a Public Sector Employers' Council with a small secretariat to do that. It makes more sense to have that same expertise apply to the broad public sector and not just to the Crowns. Setting up an arm of the Crown corporations secretariat to deal just with Crowns, and then having to set up a similar kind of agency under the Public Sector Employers' Council to deal with everything else would lead to duplication. I think it's fair to say that they should be actively reviewing this in terms of watching and monitoring what is happening. I think it's better to have the kind of expertise that is contemplated by the bill than to set up another structure.

[10:30]

K. Jones: Would there be any joint directorships between the Crown corporations secretariat and the Crown corporation employers' association? Would Mr. Williams be sitting on this employers' association, or some person working on his behalf?

Hon. G. Clark: I do not know.

C. Serwa: I have some concerns with respect to section 8. It appears to me to be not dissimilar to section 4. The minister has absolute discretion with respect to the constitution and bylaws. My reading of it indicates that the minister can ask cabinet to prescribe the constitutional bylaws and rules of the association if in the opinion of the minister the members are unlikely to agree on them. Is this the minister's interpretation?

[ Page 9216 ]

Hon. G. Clark: Yes.

C. Serwa: Again it gives the minister great discretion. Not only can the minister disapprove of the bylaws, but he can decide that the members of the council are unlikely to agree and write them on his own. The red flag goes up when I look at this section. The red flag is after the minister's comments last night, so perhaps it's the appropriate colour, but we'll leave that where it may.

With reference to section 4, again the minister has absolute discretion and authority. The minister clearly indicated yesterday that the ultimate responsibility lies with the minister, Treasury Board and cabinet in this initiative. It seems to me that if we were forming this employer's council with the express intent of openness, cooperation and consensus development, we shouldn't require all of these discretionary powers to be placed in the hands of the minister. Section 8 indicates either my way or the high way, fundamentally. That's my reading of it. Will the minister confirm that?

Hon. G. Clark: Hopefully we won't require the use of this section, but not every single employer may want to become part of this association. It seems to me that it's important that the government, in this case through the minister, have the power to compel the association to function. I agree with the member; it's always better to have consensus, but when a college is accountable to raise taxes, then maybe they can be accountable in this regard as well. As long as the government is responsible for 100 percent funding of 300,000 employees, and the government here is clearly saying that Treasury Board has to have a role in this, then it seems to me, as the member said last night, that the executive council is ultimately responsible for these questions and has to have the power to compel compliance with the association.

I sincerely don't think that the use of this section will be required. But it is required that this section be here in the event that there are any problems associated with trying to make this work down the road. The member is correct if he's making the argument that this is trying out the government as a central agency to pull the thing together, and it does put more power on the government. It's not the Quebec model, where the government's taking over bargaining. It's not the decentralized model we have today, which is almost anarchy in the public sector. It's a compromise that gives more power and influence to the government and compels compliance in sections like this. But it still allows for collective bargaining by the employers and the employers'association to take place.

C. Serwa: I appreciate the remarks, but section 8 fundamentally gives the government of the day the opportunity to impose their political values and priorities on all public sector employers, whether they be school boards representing the interests of the community.... That's clearly what section 8 does. Perhaps the minister has no difficulty with it, but the people of the province will have a great deal of difficulty. I say this in all honesty, because by having the ability to impose political values and priorities, exactly what I'm concerned about will in all probability happen.

The government of the day is fundamentally controlled by the union sector. There's no question of that. I'll give you an example. In any single event over the past two years when it came to the question of public interest and welfare as opposed to union interests, not once did public interest and welfare win out. In this particular concern, you're taking away the opportunity for individuals of a community -- a school board, for example -- to be able to indicate their views on what should transpire. You're putting them all into the purview of the Minister of Finance and the government of the day.

It appears to me that if no one is aware that the red flag should go up to warn people that taxes and wages will go up considerably, because the government's agenda will be met.... The self-interest of this current government and of the union system is in direct opposition to the public interest, and that's what this bill, in section 8, as in section 4, does: it puts absolute control and dominance to all public sector bargaining throughout the province of British Columbia under the thumb of the Minister of Finance.

L. Hanson: I would like the minister to comment on what appears to be overkill in this act. Section 7(4) says: "Despite any other Act, the constitution and bylaws or rules of the employers' association are not effective until approved by the minister." Then, in section 8, which is now under discussion, it says that if the members of an employers' association are unable to agree, the minister can appoint someone. As a result of that advice, he can prescribe the constitution and bylaws. But over and above that, it says if he even thinks that they might not agree, he could do all of these things. It seems to me that there's adequate protection in the other sections of the act. I would like the minister to comment on why it is necessary to put that "unlikely" in there. To me that smacks too much of an opinion or of too much discretion on the part of the minister, when the security is there for the minister to approve the constitution and bylaws before they are effective. If they can't generate their own constitution and bylaws, he can appoint an investigator, but he can do that even if he thinks there's any possibility that they may not agree. It sounds to me like this section of the act would put overkill responsibilities in the hands of the minister. Why not just put a sentence in to say that if the minister doesn't think they're doing what they should, he can do anything he wants? That's really what it says.

Hon. G. Clark: The member is correct: this gives discretion to the minister. But a lot of the criticism of this act from members of the opposition is that it doesn't really do anything; it just coordinates. This section essentially gives the act some teeth. This requires the employers' association to form, and if they don't have a constitution and bylaws within a certain period of time, as determined by regulation, the minister has the power to appoint someone to 

[ Page 9217 ]

investigate and make recommendations. Finally, it gives the Lieutenant-Governor-in-Council to power to impose. You can't have it both ways. You can't say this is a toothless paper and just a bigger bureaucracy, and then complain when it has a section that gives clear discretion or teeth, if you will, to the government to try to make this thing work. In that respect, I think it does give discretionary power to the minister and the Lieutenant-Governor-in-Council. I don't think that is likely to be required, but it may be required to try to move the thing along.

L. Hanson: The minister is talking about teeth in the act, and so on. While I don't agree with the act and a lot of the things in it, I suspect that if the government, which has the majority, desires to put this sort of process in place, we're not going to have an awful lot to do with it. It seems to me that the minister's explanation for the "unlikely to agree" is overkill. It says very clearly that they can't have any constitution or bylaws unless they're approved by the minister. If they can't agree on their constitution and bylaws, the minister has the opportunity to appoint an investigator, if you will, to look into the situation and make recommendations to him. Then he has the authority to impose on them whatever the constitution and bylaws are. While I don't agree with the act, I think that is certainly considered teeth, if you will. Why does the minister need to have the authority which says that even if he gets up on the wrong side of the bed today and he's unhappy, he can decree that it's unlikely that they're going to agree and go through that whole process?

Sections 8 and 9 approved.

On section 10.

C. Serwa: Section 10(1) states the following: "An employers' association or 2 or more members of an employers' association may apply to the board for accreditation under section 43 of the Code." Fundamentally, if the minister agrees and the Labour Relations Board approves of the idea, then a regional or even provincewide bargaining agency can be formed. Is that correct?

Hon. G. Clark: That is correct.

C. Serwa: That really means that -- again, the minister can correct me if I am wrong -- the public sector bargaining groups that dissented from the other group and from the application but come within the regional area stipulated by the Labour Relations Board can be compelled to become part of the new bargaining group. Is that correct?

Hon. G. Clark: Yes, that is correct. There is one caveat to that. This says that an employers' association or two or more members may apply for accreditation; it doesn't mean they will be granted accreditation. There will be a hearing by the Labour Relations Board, and if there are school boards, in the case of education, that don't agree with that, they will be clearly able to make their case before a quasi-judicial tribunal like the Labour Relations Board for adjudication. But the member is correct in his remarks.

C. Serwa: That means that the entire association can become one bargaining agent. Fundamentally, what we are talking about here is a sectoral bargaining situation -- sectoral, regional or, as the minister says, provincial. Is that correct?

Hon. G. Clark: Yes.

Section 10 approved.

On section 11.

F. Gingell: I just want to make a comment on section 11. We've read it and gone through it, and it looks to me like a game of snakes and ladders. I wonder whether the minister was planning on copyrighting it: "How to Get your Bargaining Group Accredited."

I appreciate that the minister wishes to see the association move forward in a specific direction. And if it doesn't, he would like the power to give it a little nudge now and again to push it along. I must admit that I didn't have as many concerns about ministerial discretion in section 8 as I do in section 11. It really does allow the minister to pull together whichever groups he thinks should be represented in whatever fashion. I heard the minister say that it is a different minister. I was not aware.... Yes, I am. Perhaps the minister could comment on that. I must admit that I didn't appreciate that it is now the Minister of Labour and Consumer Services we are discussing.

[10:45]

Hon. G. Clark: This section deals with the Minister of Labour and Consumer Services, who may direct the Labour Relations Board to consider whether an association may be an appropriate bargaining agent for the employers in a sector. So the thought here is that if it's in the interests of labour relations peace and harmony or good productive labour relations, the Minister of Labour would have the discretion of asking the Labour Relations Board to hear whether or not accreditation would be a more appropriate venue for bargaining.

I am not absolutely certain of this, but I am quite sure that the Minister of Labour currently has similar powers dealing with unions. A section of the labour code deals with the creation of a council of unions. If you know the labour history of British Columbia, you'll know that there are two big examples where councils of unions were essentially forced on a sector by the Labour Relations Board. One was the Building and Construction Trades Council of all the different construction unions; the other was the Council of Trade Unions on the B.C. Railway. In both cases, as I recall, the unions involved were not all delighted with the prospect of being forced into bargaining as a council.

This section gives a parallel section to the employers' side. The minister essentially has the opportunity or discretion to direct the Labour Relations Board to see 

[ Page 9218 ]

whether or not there should be a different bargaining structure from the employers' side. Obviously the one that comes to mind and that people talk about is the K-to-12 section. This is an opportunity. If the parties cannot agree on a different kind of bargaining structure or there's some concern about it not working, rather than the minister or government prescribing a bargaining structure which might be more appropriate, now -- if this act is passed -- the Minister of Labour may direct the Labour Relations Board to review the question of the bargaining structure in that sector for decision and adjudication -- for the employers' side, anyway.

F. Gingell: I appreciate that the minister may not agree with the supposition from which I start, that the Minister of Labour tends to represent labour more than employers. I was wondering why, in this particular set of circumstances, the government wasn't considering allowing these directions to be made by the minister concerned -- if it be K to 12, by the Minister of Education; if post-secondary, the Minister of Advanced Education; if in the health area, the Minister of Health, etc. -- or at least give that minister some rights or veto, and require it to be a joint action by the Minister of Labour plus the minister responsible for the sector involved.

Hon. G. Clark: I totally disagree with the member's premise. The Minister of Labour is not on the side of labour, and should not be. The Minister of Labour represents the government, in trying to be neutral with respect to labour disputes and to be even-handed in balancing the interests of the employer and employee. If there is labour relations dysfunction in a certain sector -- regardless of who the cause is, the employer or the union -- the minister has certain opportunities to try to have the Labour Relations Board review this question.

I want to make it clear that the Public Sector Employers' Council will have ministers from the various sectors on it. I assure the member, if this is any help, that the Minister of Labour will not be operating in a vacuum. I'm sure the Minister of Labour would not act except on the advice of the government and various sectoral ministers. This is a discretion the minister has, to send it to the board for adjudication.

L. Hanson: In the simplest of terms, this section in fact seems to give the Minister of Labour the authority to order provincewide bargaining in the education sector. But it only seems to be triggered if a.... As I understand it, going back to the start, all of the school boards would be required to be part of the sector's association. And if any two of those school boards applied for accreditation as an employers' organization to bargain, then after a due process that process would give the minister the authority to order all school boards to be included in that employers' organization.

Hon. G. Clark: The minister may send the question of accreditation to the Labour Relations Board on his or her own motion, or upon application from two or more employers. If there are two employers who make such a request, the minister may direct that the board hear the question, or the minister may do it on his or her own.

L. Hanson: I did not read it that way, but I will take the minister's assurance that this is the case.

The minister said earlier that 65 of the 75 school boards belong to an association now, and that this act would require that every school board be a member of the employers' association, regardless of that. For clarification purposes, this section of the act would give the Minister of Labour the authority to order province-wide bargaining by every one of the school boards under one employers' organization.

Hon. G. Clark: You are missing, though, a few steps in the process. That may be an outcome, but the minister certainly does not have that power the way you're describing it. So let's just go through it again.

The act creates an employers' association and that is required by law, not for the purposes of bargaining, but for the purposes of coordinating collective bargaining and other questions -- excluded staff, etc. If two or more boards seek accreditation or suggest that they be accredited as a bargaining agent, or the minister on his own initiative refers that question of bargaining to the board, then the board has a hearing into the question and listens to the evidence. If it subsequently makes a recommendation to the government or to the Minister of Labour that provincewide bargaining take place, and that all boards participate in that in some structure or form, then the Minister of Labour may direct it to be so, as you will see in the next section. So you can't just do it, but if certain things happen, then that is an option for the Minister of Labour.

L. Hanson: I would like to believe the minister, but that's not what I read in this section -- and I know the process that you are talking about, the Labour Relations Board and the investigation into the circumstances and so on; I'm not disputing that. But section 11(6) says: "When the minister receives a recommendation from the board, the minister may direct that the employers' association or any group of employers in the employers' association has exclusive authority to bargain collectively for the employers who are named by the minister and to bind those employers by collective agreement." This says to me that the minister has the discretion to modify that, despite the report of the board, because section 11(8) says: "The minister may rescind or modify a direction under subsection (6)." So if it goes through the whole process, a recommendation comes forward; but the Minister of Labour can modify that if he feels that, for whatever reason, it is not the appropriate organization. In fact, even though you do go through the process, the power to decide whether there should be provincewide bargaining lies directly with the minister. He may choose to listen to the recommendation of the Labour Relations Board, and he may choose to agree with it. But it would seem that if he doesn't, he has the discretion to do as he sees fit.

[ Page 9219 ]

Hon. G. Clark: I think the member is reading too much into it. You have to read the section in totality, and not just pull subsection (6) out in isolation and read: "When the minister receives a recommendation from the board...." This is clearly contemplating a recommendation from the board for, say, the purposes of provincial bargaining or for an accredited employers' association. All it's saying is that when there's a recommendation from the board, the minister may direct the employers to follow that recommendation. This section is supportive of the board's determination, rather than something different.

I grant the member that subsection (8) is not necessarily supportive. It says the minister may rescind or modify a direction under subsection (6). What is contemplated here is that the board may make a recommendation on a structure and the minister may compel the association to follow that recommendation, or the minister may modify that recommendation. But I think the member would agree that if you're trying to impose a new bargaining structure on a sector -- and this follows along the lines of the member for Okanagan West -- the Minister of Labour also has a staff at his disposal, as the member well knows, of very competent people in the labour relations field. So the board may make a recommendation which in general is very acceptable. In fact, I suspect that would be the case in most cases. They would have a hearing into the matter and make reasonable recommendations. But some modification of that may be required or advisable, and the Minister of Labour would have that power and would be held politically accountable for his actions. I don't think that's a problem.

We're saying here that we want the Labour Relations Board to make these determinations, because that's the appropriate forum for full and thoughtful discussion of these questions. But we're not ducking the responsibility of government. In other words, if the government were to take out subsection (8), we'd be saying that only the board can make the determination on the appropriate bargaining structure. Frankly, it would be a bit of a cop-out for the government to say: "You deal with this hot potato, and we'll implement whatever you say." Clearly we want them to deal with it, because they're much more thoughtful and have expertise in the area to review the question for full debate. But we're also saying that the government and the Minister of Labour are accountable. It may be that the Minister of Labour and the government may wish to modify or change the board's recommendation and be held accountable for that. I think that's appropriate.

L. Hanson: I don't disagree with some of the minister's remarks, but I disagree with others, because the Labour Relations Board can make a recommendation, but as I read this, the Minister of Labour is the only one who can impose it. The Minister of Labour is not obligated to impose that recommendation or any recommendation, and has the authority to change the imposition of the recommendation. To me, that says that the ultimate decision as to whether there's to be provincewide bargaining in the school sector -- which has been a subject of some discussion in this session; I can remember a Sunday when I sat in here talking about it -- now lies completely with the Minister of Labour. I'm not arguing that the Minister of Labour may not use good common sense. But the fact is that the authority is still there, and the authority to override any recommendation is there. Hopefully, every member of government would use good common sense in applying their authority. Sometimes we wonder, but that's what we hope would happen. I think the minister would have to agree that the final authority sits with the Minister of Labour. It is at his discretion whether or not we have provincewide bargaining in the school sector -- or any other sector, as far as that goes.

[11:00]

V. Anderson: I want to get the implication of section 11(2). It says that the minister must not make a direction under this section unless an employers' association has made an application for accreditation. It seems to me that there's a limitation here, and I'm not quite sure of its meaning. To give an illustration, if two school boards were to ask for accreditation to bargain together, does this mean that once they have asked, the minister can direct them to bargain provincewide, or is he limited only to the kinds of accreditation they have asked for? Does this subsection (2) put a limitation on the minister's action in directing school boards who have not asked for that particular kind of accreditation?

Hon. G. Clark: We are far more limited than that. We have canvassed this. The Minister of Labour's only option is to refer the question to the board for consideration but not to make any action on his own.

C. Serwa: My question also relates to direction by the minister. Section 11(2) says: "The minister must not make a direction under this section unless...." The specific concerns I have are to do with the focus of the subject-to clauses -- for example, the focus on 11(2)(b), where "the minister considers that the direction is necessary to secure and maintain industrial peace and promote conditions favourable to settlement of disputes." This is basically an open-ended type of opportunity to impose political values and priorities for the purpose of settlement. Not once in this particular bill is concern for the taxpayers' ability to pay mentioned. Anyone can resolve a strike situation by giving the bargaining agents for the employees whatever they ask for -- asking them what is the most they will possibly take and then giving them that on the table. That certainly satisfies them, but it doesn't fall within the public sector's ability to pay. In the private sector, there is an incumbent responsibility on the private sector unions to be cognizant of the values and costs of production, because that's job security. In this particular situation, without any reference to the taxpayers' ability to pay, it indicates to me and to the public the inherent bias of Judi Korbin and the government of the day with respect to public sector bargaining.

Would the minister not deem it responsible to have included a section in this bill indicating that one of the 

[ Page 9220 ]

concerns is the taxpayers' ability to pay? As the minister has indicated, from his perspective, that is the reason for this whole bill. Yet not once is that indicated.

Hon. G. Clark: It says in section 4(1) that the purpose of the bill is to be "consistent with cost efficient and effective delivery of services in the public sector," and that's precisely the whole thrust of the bill. I don't see why we would want to repeat the purposes section in this section, which deals with direction by the Minister of Labour. I don't think it would be appropriate.

Sections 11 to 20 inclusive approved.

Title approved.

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

Motion approved on the following division:

The House resumed; the Speaker in the chair.

Bill 78, Public Sector Employers Act, reported complete without amendment, read a third time and passed.

[11:15]

Hon. G. Clark: Great progress this morning. I call committee on Bill 7.

SOCIAL SERVICE TAX AMENDMENT ACT, 1993

The House in committee on Bill 7; E. Barnes in the chair.

On section 1.

W. Hurd: I wonder if the minister could define the term "tangible personal property" under this section, where reference is made to the purchase price. I'm particularly concerned about the issue that has come to light regarding the way in which vehicles are being sold in the private marketplace.

Hon. G. Clark: I'm sorry, hon. Chair, but "tangible personal property" is not in section 1 of this bill. If the member wishes, there is a definition of tangible personal property in the Social Service Tax Act, but it has nothing to do with this section.

C. Tanner: That expression is used throughout this amendment.

Hon. G. Clark: I will read the definition in the act, which has been in existence and has not been changed for many years: "'Tangible personal property' means personal property that can be seen, weighed, measured, felt or touched, or that is in any other way perceptible to the senses, and includes fixtures, electricity, and natural or manufactured gas" -- careful with that one -- "computer software, telephone services and cable television services" -- which are not covered by the act, but in terms of the definition are tangible personal property.

For any members who are concerned, there are sales taxes in every jurisdiction in Canada, and they all mirror the same definitions. For the purposes of discussion, so that members know, we have the narrowest sales tax base in the entire nation. Even with the broadening of sales tax to labour services, we are the only province in Canada that doesn't.... There is only one province that doesn't do that now, so all the definitions.... There is nothing here which is revolutionary or changed in any way. Tangible personal property has been in the act for many years, and it exists in every act in the country.

C. Tanner: The reason I wanted the minister to read that.... I knew he was familiar with it, but the fact is that it covers virtually everything. Could the minister give us an illustration? This new amendment covers repairs to an automobile, but does it cover a motorboat or other personal possessions which would require repair?

Hon. G. Clark: I am reluctant to get into debate in this section. If the member wants to debate the original sales tax, you can look at section 4, which has a huge list of exemptions. It goes to (z) and (z.1), and continues on at great length with several pages of exemptions. So the definitions say this is tangible personal property. The member is correct -- this is very broad. It's the same everywhere else in the country. There is a huge list of exemptions from the act, and two of those exemptions are being removed later on in this bill. After Bill 7 is passed we will still have among the narrowest -- if not the narrowest -- tax base in the entire country. As I said in second reading, we don't cover bicycles, cable television or basic telephone, etc. Practically every other province in this country does. There is a modest 

[ Page 9221 ]

expansion here, but there is a huge list of exemptions in the act, which continues to this day.

The Chair: Before recognizing the hon. member, the Chair should advise the committee that under our guidelines we are required to adhere strictly to the sections. The Chair appreciates the relationship to the bill, but this is an amendment to the act, and we are required by our standing orders to proceed according to the sections as stated.

W. Hurd: At this point I would settle for an explanation from the minister of the reasons why the definition of purchase price under the previous act has been repealed and a new definition substituted. Under section 1, could the minister advise the committee why it was deemed necessary to rewrite the definition of purchase price in the amendments to the Social Service Tax Act?

Hon. G. Clark: The member is correct. We had to add in a definition of purchase price for all the things we are now covering, such as parking. You'll see that later on we had to add the same section consistently -- in the case of parking, taxable services, labour services and in the case of parking again. The member has correctly pointed out that there is a new addition to the definitions, which will be consistent now throughout the act. We added those things that we are now taxing in British Columbia, which, again, most provinces have long taxed.

J. Weisgerber: Section 1(h), in the definitions, refers to those services that are not taxable, and it basically identifies any prescribed item listed above that may not be taxed. I assume that the minister anticipates bringing out from time to time, by regulation, a menu of services that would not be taxable.

Hon. G. Clark: Yes, anything that is not taxed now under the sales tax, and by regulation. There's a huge list of exemptions I mentioned earlier; it's a massive list of exemptions from minutiae to nought. For example, as the member may know, every year we exempt more farm products. We have a sales tax exemption for farmers, but because of new technology there are new things coming along, so we have to add the exemptions in order to be consistent.

What we are doing here is taxing services, and we're not proposing to tax the labour services associated with tax-exempt material. If a farm product is repaired, it will not have the sales tax applied to the repair service if the repair is on something that is exempt from the sales tax.

J. Weisgerber: I understand that the list will be the same list; the rules will apply in the same way they do to the purchase of the property. For example, if fence posts are used to fence a residential property, they are taxable, but if they are used to fence agricultural pasture, they are not. So the same installation regulation would mirror those.

Hon. G. Clark: That's absolutely correct.

V. Anderson: In section 1(d)(a), it says: "...the actual value of the tangible personal property...." I know this comes up in another section too. If an item is on sale, one can decide to tax on the "real value" rather than the sale value. What's the meaning of "actual value" in this section?

Interjection.

V. Anderson: In section 1(d)(a), where it says purchase price "means...the actual value of the tangible personal property...." If it is priced at $100 but is on sale for $50, what is the actual value on which it's taxed?

Hon. G. Clark: This is exactly the same; this mirrors the existing language. All we're adding here is "the value of services rendered." But "the actual value of the tangible personal property exchanged, acquired or repossessed" is in the act now. We're just extending it to cover services that parallel that.

L. Fox: One change that has been made with respect to that is by repealing the definition of purchase price and substituting "the actual value of the tangible personal property exchanged...." It would suggest that the minister is going after bartering or that type of structure. For instance, if my neighbour should leave on holidays for a couple of weeks and I volunteer to do his gardening and look after his flower beds, that's an actual exchange. Under this act, is it the intent of the minister to find a way of taxing that kind of situation?

Hon. G. Clark: Just to be clear, when that member's party was in power, that was the case. It continues to be the case. If you sell something from a garage sale, you're supposed to pay sales tax on it by law in British Columbia. The fact is most people don't. It's also extremely difficult to police. It may be a growing area. We're not about to hire thousands of tax police to inspect it, but the law in Canada, the United States and every western country is that if you make a private sale, you're supposed to remit sales tax. I don't want to overstate the case, because everybody does it, including all members of the Legislature from time to time, I'm sure. What we're doing here is no different. When it comes to labour for repair services, the same base applies as applies to the sale of goods. I want to remind all members that every province in Canada, save Saskatchewan and Alberta, has exactly this same parallel. This is not a huge expansion; this is a modest expansion consistent with every province. This section mirrors what exists in other provinces.

L. Stephens: Section 1(b) says that a parking right "means the right to park a motor vehicle at a parking site for a period of time of any length." Could the minister give an example of a parking right? Would that be a renter who pays a monthly parking fee in addition to their rental accommodation in an apartment building or a townhouse unit or whatever?

[ Page 9222 ]

Hon. G. Clark: We exempt residential parking in all forms from the parking tax, we exempt on-street metered parking, but we do not exempt commercial tenants who rent space for their business activities.

I am not trying to forestall these questions at all, but it would be better to view this section in light of sections later on that deal specifically with the parking question. It might be more appropriate to have a more detailed discussion about that later.

[11:30]

V. Anderson: It may be more appropriate, but my question is in the same area, under "parking site." When it says, "for a price or other consideration," I think of a parking lot at a mall or someplace where they give you a ticket in place of the parking fee. Are the malls all covered now, in terms of the parking spots that are either free or for which you get a ticket in place of paying?

Hon. G. Clark: If there is no charge for parking, there is no tax. If there is a charge for parking, there is a tax. So if you're at the Pacific Centre mall and you pay for parking, you'll pay the sales tax on it. If you were in a suburban mall, you wouldn't.

V. Anderson: I'm thinking of an illustration. When you go into a parking lot, you pay if you park there. If you go into a store that gives you a ticket, which you turn in when you go out, does that mean the store has to pay for the ticket they've given you, and that they're charged for it, regardless?

J. Weisgerber: I think it's simpler to handle this here, rather than in section 2. In the definition of a "passenger vehicle," it seems to me that at some point you get into areas.... If I used this definition and I was going in to buy a one-ton dual-wheel pickup truck for the purpose of hauling a horse-trailer, I would argue with you that its primary purpose was in fact not to transport individuals. I would resist paying the tax on those grounds. Can you tell me where the line is drawn on vehicles used for towing, particularly? It seems to me that this definition leaves some question on some vehicles.

Hon. G. Clark: It includes vehicles prescribed as passenger vehicles, so the regulation -- I have a draft here with me -- says: "Passenger vehicle includes trucks up to and including three-quarter-ton trucks; vans up to and including three-quarter-ton vans; station wagons and motorcycles, as defined by the Motor Vehicle Act; and does not include trucks larger than three-quarter-ton trucks; vans larger than three-quarter-ton vans; camperized vans designed for recreation purposes; motor homes and buses, ambulances and hearses." It says here that the definitions section gives the primary definitions, and then we'll refine them by regulation. I've had some lobbying about trucks, particularly from members from the north. I'm certainly going to be monitoring and reviewing that over the next year.

W. Hurd: I have just a brief question, again under the revised definition of purchase price. This may be a question that I could address under section 3, but I want to highlight subsection (a)(ii), where the property is "purchased, manufactured, processed or otherwise acquired outside the Province" and brought into the province. Can the minister advise how this might affect a large-scale construction project, such as a pulp mill expansion or any other type of business activity? Is this a change in the existing legislation as to what the province will be charging on those types of remanufactured items which are coming into the province as part of an orderly spending project on behalf of a large business or corporation?

Hon. G. Clark: No. This is identical to a section which exists today, and we are just rewriting it. The member should know that if you are an Alberta company and you bring product into British Columbia for the purposes of a construction project, you pay the provincial sales tax on it. Policing that keeps our sales tax auditors busy all year; otherwise it would be completely unfair to British Columbia construction companies.

C. Tanner: I have a little confusion on subsection (d), (b)(i) -- legal fees. Could the minister explain the definition of legal fees here? Does that mean that if you are paying GST on legal fees, you can assume that you are going to pay PST in the future? If you are paying GST on legal fees -- which you are -- can we assume when this bill is passed that you will pay PST?

Hon. G. Clark: No. The legal services question, and maybe there is a lesson here.... This was passed by this House in April. They are simply restating here the bureaucratic purposes -- and I don't mean this in a pejorative way -- the entire rewritten section. There is no change; they are just reformatting the entire section for the purposes of convenience and readability.

C. Tanner: I don't understand why it's here. Could the minister explain to me again why it is in this act when we already passed it in another act? Incidentally, we voted against the measure.

Hon. G. Clark: The legal draftspeople said that because of the amendments, it made more sense to redraft the entire section as amended for the purposes of simplicity and of making sure people can understand the tax. It is not required; we didn't have to put it in here. It already exists in law, but rather than having little pieces of amendments all over, they asked us to rewrite this entire rather small section and reformulate it so that it's readable for the public.

L. Fox: I want to get back to the definition of passenger vehicle in section 1(c). I know the minister read out a proposed regulation with respect to that, but I have had a great deal of concern ever since the budget came out and listed the exempt vehicles. When we look at a passenger vehicle, we consider that to be a vehicle designed primarily to carry only passengers, but most 

[ Page 9223 ]

pickups and light-duty vans are used in many respects for small business, and to transport loggers to and from work. Exempting one-ton trucks is a very interesting one, because a three-quarter-ton, heavy-duty pickup has a GVW of 8,600 pounds whereas a one-ton truck has a GVW of 9,000 pounds, so there is a 400-pound difference in carrying weight. You can buy exactly the same truck, and go to a 350 or a one-ton truck which is less efficient on the highway, and get out of the 10 percent luxury tax. You can do exactly the same thing with a van. You get exactly the same unit as a three-quarter-ton with very little load-carrying difference.

So it doesn't make a lot of sense to me to have three-quarter-tons included in a luxury class, and to exempt one-tons from that, because within a few pounds they're exactly the same unit. I'm interested to find out why the minister would exclude one-tons but leave three-quarter-tons in the equation. Why didn't the minister just exclude all pickups and cargo-designed vans, which are primarily for doing business rather than for luxury purposes?

Hon. G. Clark: That's a submission which I just mentioned has been made to me -- not by the dealers so much as by the northern members, if you will -- and I am taking it very seriously. I don't think many three-quarter-ton trucks fall in the luxury category. It has to be pretty well fully loaded to qualify. A purpose of the section was to try to deal....

Interjection.

Hon. G. Clark: Camperized vans are not included as a passenger vehicle; they're not covered under the luxury car tax. We will obviously be monitoring this to see if that's the case over the course of the year. Essentially, we're just trying to draw a rational or reasonable line between luxury vehicles and something used for work purposes. The member has made a valid point, which we are actively considering, and will consider for the purposes of next year.

L. Fox: I want to correct a slight error or oversight by the minister. He suggested that not many three-quarter-ton trucks would run into the $30,000 range. I suggest that he go down to any car lot and look at a supercab or an extended-cab four-wheel drive, which is pretty much the primary vehicle used in the logging industry. Most of them are over $30,000. However, in saying that, I recognize that since this legislation has come out, the purchase price of those vehicles is now $29,900. Later in this legislation we do away with the trade-in credit, so it really doesn't make any difference what the price is: it's going to be taxed anyway. But to suggest that there aren't any three-quarter-tons.... In the northern part of the province, many of the three-quarter-tons used in the woods do in fact exceed $30,000.

Hon. G. Clark: I give the member the commitment that we are doing that work now to see if that is the case.

A. Warnke: I want to follow up on a series of questions by my colleague for Saanich North and the Islands on legal fees. I'm curious, and perhaps the Finance minister can help here, how this particular section in Bill 7 was influenced or guided by the court case involving the legal services tax.

Hon. G. Clark: Not at all.

R. Neufeld: I have a couple of quick questions, one on the camperized van that you had in your regulations. What determines what is a camperized van? I know a person, for instance, who had a three-quarter-ton Van Amera that was certainly a luxury vehicle, but it wasn't a camperized van. How would you determine whether it is or not?

Hon. G. Clark: This is what the tax policy branch has to deal with all the time, but the rule is that it has to have a bed and a fridge or stove.

R. Neufeld: That's straightforward enough.

My other question is in relation to prorated vehicles of companies that are based in British Columbia. Will the tax on services -- the 7 percent on the labour portion that those companies have to pay -- be prorated in the same way it is now with the parts that are put on those vehicles?

Hon. G. Clark: No, there's no proration. If it's fixed in British Columbia, you pay the tax. If it's fixed outside British Columbia, you don't. The reason for that is because every province taxes labour services, so every province has a kind of reciprocal rule. You wouldn't want someone who was visiting Manitoba, Ontario or Quebec to be paying their labour services tax, and then on coming back have us try to tax them again. It is sort of a "home jurisdiction" question.

R. Neufeld: Maybe I didn't explain the question well enough. The prorated vehicles of trucking companies that are based in British Columbia at the present time are prorated the 7 percent sales tax that we're going to have -- it used to be 6 percent -- on the parts. That is prorated for the number of miles those vehicles travel within British Columbia. If they travel in Alberta, they are not taxed on that portion. You end up with those companies not paying the full 6 percent or 7 percent. Will the tax on labour -- the GST you're putting in place now -- apply fully? Or will that be prorated also?

Hon. G. Clark: No, I'm advised there is no proration on the labour services component. The member is correct that on parts, etc., there is a proration formula across provinces. There is no such proration or coordination on the labour services. Each province does it separately. No proration is applied.

[11:45]

C. Tanner: I'll need the Chair's guidance on this question, because I'm not sure whether it's within this section. This morning in my constituency office I had a 

[ Page 9224 ]

letter from a constituent who had got a bill from the government saying: "We have probated your wife's will. But we want $50 more than you sent us, because the fees went up on June 1 from $50 to $100. And we want GST." I'm asking the minister: under this act, will you now be asking for PST?

Hon. G. Clark: No.

L. Fox: I have one follow-up question. I'm really having problems getting the definition of passenger vehicle. The minister added to my problems a few moments ago, when...

K. Jones: He's added to everyone's problems.

L. Fox: ...he suggested that if a van had a fridge or stove and a bed.... I should point out that those fridges that come in many vans are portable. They can be removed from and plugged into a van, or stored in a home and packed out. You buy them with the van; they're not built in. The same van will have seats that fold down into a bed. Does that qualify as something other than a passenger vehicle?

Hon. G. Clark: It has to be a built-in stove or fridge. But the fold-down seat that turns into a bed does qualify, because it's built in.

K. Jones: If that fold-down seat goes into a bed, you're saying that it is considered as one. Are you considering the same thing for a single seat that folds down, as in a station wagon?

Hon. G. Clark: No.

Section 1 approved.

On section 2.

K. Jones: On section 2, I'd like to ask the minister about the subsection that imposes the taxation on the so-called luxury vehicles over $30,000. What is the rationale for choosing the breakdown between $30,000 and $32,000 to allocate an increasing percentage of taxation -- 7 percent, 8 percent, 9 percent and 10 percent on increases of only $1,000 in purchase price?

Hon. G. Clark: At first we didn't have what is called a notch provision at all. We said 10 percent over $32,000, but staff advised that it makes a certain logic to try to phase that in from 7 percent to 10 percent. So we phased it in at 1 percent per $1,000 up to $32,000 for the full 10 percent sales tax. It could have been a shorter or a longer phase-in period, but we were attempting to put a 10 percent tax on luxury cars. The definition of luxury cars -- a very small percentage -- was $32,000, so we worked back from there.

K. Jones: Can the minister tell us what the rationale is for the phase-in period? It's such a small segment of the purchase price that they've chosen to phase it in that it's almost as if it doesn't have much impact on various levels of cars. Is there a certain price range they chose as some justification for this?

Hon. G. Clark: The decision was made for the luxury car tax, and then we decided to phase it in so that it wasn't as big an impact at the margin on cars that just make the luxury classification. It's a phase-in and a way to be sensitive to that. If the member wants to make an argument that we shouldn't have a phase-in and just go right to 10 percent, then I will take it under advisement for next budget year.

K. Jones: Can the minister tell us why the increase is on the total purchase price, rather than on the incremental amount over the $30,000?

Hon. G. Clark: Because you can't buy a piece of a luxury car; either you have a luxury car or you don't.

K. Jones: Some of these luxury cars that we're talking about have substantial accessories. If the accessory isn't sold in the original purchase, keeping the price below $30,000, and then is sold at a later time, is that a way of getting around this tax?

Hon. G. Clark: I suppose the answer to that is yes. If it became a real problem, then they can deal with that by regulation, obviously. Right now, it depends on the timing: if you came in a few hours later and bought the accessories, that wouldn't be acceptable; if it was a few weeks later, then I think that currently that would probably be acceptable.

L. Fox: I should point out to the minister that many times -- before this act came forward, at least -- when a purchaser bought a vehicle, he bought add-ons at the same time, and it was included in the bill-of-sale price -- sometimes for financing reasons, other times just for the convenience of having one invoice. I'm sure the minister, in his last statement to the previous questioner, would recognize that now, in order to keep the price down below the $30,000 mark, individuals would probably request to be billed on a work order or another invoice, independent of the purchase price of the base vehicle. I'm sure the minister, in his suggestion to the previous member, is not suggesting that because individuals add accessories that would increase the price beyond $30,000, they're going to decide to have those billed independently; I'm sure the minister is not suggesting that this is not fair and reasonable.

Hon. G. Clark: I didn't say that, but the rule.... Before this budget, the tax people had a serious problem with certain car dealers who were carving up the bill of sale to try to escape different forms of taxation, particularly on labour services. Apparently they would draw a separate bill of sale for undercoating in order to avoid paying the sales tax on it. So the government instituted, by regulation, a rule dealing with the way in which dealers could split up the bill of sale. Most of that is now redundant with sales tax on labour services as well. There is a rule in place whereby dealers can divide up the bill of sale in a variety of 

[ Page 9225 ]

ways. We are not trying to say otherwise, but they can't do it for the purposes of escaping legitimate tax. That rule has some time limits on when certain things are performed. We have no intention of changing that rule. The existing rule seems to be sufficient, that accessories legitimately purchased several weeks later wouldn't be covered. But on the same day, under this section, I think services would be covered by the total purchase price. As a tax collection question, that ruling existed prior to us coming to office.

L. Fox: Given that statement, I have a lot of questions. But perhaps it's in order to move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; the Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. G. Clark moved adjourned of the House.

Motion approved.

The House adjourned at 11:56 a.m.

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