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)

THURSDAY, JULY 29, 1993

Morning Sitting

Volume 12, Number 22

[ Page 9369 ]

The House met at 10:04 a.m.

Prayers.

Hon. M. Sihota: In the gallery today is a long-time supporter of progressive causes, Mrs. Jean Macdonald. She's passing along her wisdom to a young Toronto Blue Jays fan Cora Legg, who is with her today. I would ask all members of the House to make them welcome.

J. Doyle: In the gallery today are two very important constituents of mine who are very concerned with the delaying tactics of the opposition. They are my two sons, Adam and William, who are down here to bring daddy home -- hopefully very soon. Please make them welcome.

G. Brewin: I would like the House to make welcome 36 students from Victoria High School in my constituency. They are in grade 11, studying government and history. I am sure it will be an historic moment for them today. Would the House please make them welcome.

Introduction of Bills

SENATORIAL SELECTION AMENDMENT ACT, 1993

D. Mitchell presented a bill intituled Senatorial Selection Amendment Act, 1993.

D. Mitchell: This bill amends the Senatorial Selection Act, which was passed unanimously by this Legislature in 1990. The original statute provides an opportunity for British Columbians to vote, at a time of a provincial general election, for candidates to fill vacancies for our province in the Senate of Canada. At the time of the last provincial election, of course, there were no vacancies for British Columbia in the Senate.

This amendment to the act creates an additional opportunity for British Columbians at the time of local or municipal elections, such as those scheduled for this autumn. In order to revive the process of Senate reform, British Columbians will have the chance to take the initiative and breathe new life into a now moribund institution, which could become an effective provincial or regional voice in our nation's capital. B.C. Senators will also have the chance to show leadership on this issue by creating the necessary vacancies to be filled at the time of our local general elections this November.

Hon. Speaker, this is not a new idea: it flows from the original act which was introduced by a Social Credit government. In particular, it stems from the suggestion of the NDP official opposition of that day. It has also been recently advanced by a nominated federal candidate for the Progressive Conservative Party. Of course, there is a precedent for such a senatorial election in our neighbouring province of Alberta. It is in that non-partisan, or perhaps multi-partisan, sense and spirit that I propose this bill and commend it for consideration by all members of this assembly.

I would also like to thank all government members and opposition members for their special efforts in keeping the session going this long and giving me a chance to introduce this bill this morning. Hon. Speaker, I move that the bill be placed on orders of the day for second reading at the next sitting of the House after today -- or sooner, if the government wishes.

Bill M226, Senatorial Selection Amendment Act, 1993, 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.

Orders of the Day

Hon. M. Sihota: Now that I know why we've been here right through from March 18 to July 31 -- or whatever date it is -- I'd like to call committee on Bill 60.

PENSION STATUTES AMENDMENT ACT, 1993

The House in committee on Bill 60; E. Barnes in the chair.

Section 1 approved.

On section 2.

K. Jones: Could the minister explain section 2(h): "'pensionable age' means 60 years of age." In the Pension Benefits Standards Act the definition is: "...in relation to a pension plan, the age or the date referred to in section 38(1)," which under that section is left undefined. What difference does this make to the act? Why is it not consistent with the PBSA?

Hon. L. Boone: It is consistent with the PBSA rules, and applying the PBSA rules to our plan makes the age 60.

Sections 2 to 16 inclusive approved.

On section 17.

D. Symons: I want to ask about the requirements for vesting. It establishes a five-year eligibility standard required for payment of pension, and so forth. What would be the cost to the pension plan of introducing this particular amendment? I gather there would be a cost. How are those costs going to be built in so that the fund will be of sufficient size?

Hon. L. Boone: If you refer back to section 8, the employer contribution costs were increased to pay for the cost benefits. This act, as I stated before, merely brings the pensions into compliance with the Pension Benefits Standards Act that was proclaimed in January 1993. Last year we brought in a bill that enabled us to make these changes by regulation. This bill brings those 

[ Page 9370 ]

changes through an act and makes them legal for a longer period of time, because the previous act expired in one year.

D. Symons: A further question on that topic regards the fact that back in 1991, when the Pension Benefits Standards Act was introduced by these fine members sitting on my left but politically on my right, a member from the opposition side, Mr. Mark Rose, stated: "This calls, at the moment, for vesting after five years, going to two years in 1998.... It seems to me that it's not too much to ask to have earlier vesting." I'm just curious as to what happened to the NDP principles between when they were in opposition then and being government now.

[10:15]

Hon. L. Boone: I'm not here to debate the Pension Benefits Standards Act. That was debated, as you point out, in 1990. We're merely here to bring in an act to comply with the Pension Benefits Standards Act.

Sections 17 to 50 inclusive approved.

On section 51.

K. Jones: I'm just trying to locate the section that refers to an exemption being made to the Pension Benefits Standards Act. I think it's section 50 or section 51. I'll just give this presentation that I have. Why should the plans be exempted from the application of definitions of termination of membership and years of continuous employment that are set out in section 1(1) of the Pension Benefits Standards Act? These definitions impose specific requirements for all other multi-employer plans, based on the number of hours worked. That will cause considerable additional administrative problems for the sponsors and administrators of these plans. Why are these plans in these various locations being exempted?

Hon. L. Boone: It's hard to follow when you don't have the exact section in front of you, but I understand that the member is talking about the fact that this plan is different from some of the multi-plans that are mentioned in the Pension Benefits Standards Act. Therefore we've put in some provisions that enable us to administer the plan better for our plan members.

K. Jones: Could the minister give us a clearer explanation of why that would be required? Perhaps it's a good idea, and maybe it's something that should be provided for in other plans. Perhaps you could give us the reasons for it.

Hon. L. Boone: I understand that the multi-employer plans are based on the hours of work, and we do not base that on the hours of work. So we have brought in something that is based on the salary of the employee.

Sections 51 to 142 inclusive approved.

Title approved.

Hon. L. Boone: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 60, Pension Statutes Amendment Act, 1993, reported complete without amendment, read a third time and passed.

Hon. L. Boone: I move that the House recess for five minutes.

Motion approved.

The House recessed at 10:24 a.m.

The House resumed at 10:31 a.m.

Hon. R. Blencoe: I call committee on Bill 58.

MUNICIPAL AFFAIRS, RECREATION AND HOUSING STATUTES AMENDMENT ACT (No.2), 1993

The House in committee on Bill 58; M. Farnworth in the chair.

On section 1 (continued).

Hon. R. Blencoe: I want to make a clarification from last night. My colleague, the critic for the third party, suggested that there was some understanding from the organizations, which met with me a day or two ago on this issue, that I would make some amendment to the legislation. I will just make clear, hon. member, that what I said to the organizations was that I would make a statement of clarification in the House, and I would also put it in writing. Some members took exception to my statement late last night. The basic reason I was doing that was to indicate to those organizations, the mining industry and the Canadian Property Tax Association, which represents a lot of industries, that I would put it on the record here in the House, and follow it up by letter. That's the reason for that statement last night.

L. Fox: With respect to section 1, last evening the minister suggested that one of the concerns of the ministry and the Assessment Authority was that they wanted to protect the assessment rate for the purposes of municipal taxation. My question to the minister is: how many mines are within a municipal boundary?

Hon. R. Blencoe: As you know, we're not just talking about the mining industry here; we're talking about all industrial bases. The direct answer to your question on mining is that there are very few. As you know from my discussion last night, we are considering an extensive list. It's nothing new; it was done under 

[ Page 9371 ]

your legislation when your party was in power. There is an extensive list of what we consider to be industrial plants. Mining is only one component of them.

L. Fox: The issue that I was arguing last evening was primarily around the mining industry. I made the point that there should be some flexibility. It would be very similar, by the way, to what is done with commercial assessments. Premises are assessed on the basis of income, which reflects the ability of the commercial property owner to pay the taxes. What this act did prior to this amendment was carry that principle forward into the industrial area. If an industrial plant was shut down because it was unprofitable or the machinery wasn't able to function in a profitable way -- whether because of ore prices, because of antiquated machinery or whatever the reason -- the act allowed the same principle to be applied in the industrial sector. Given that, and given that in the mining industry it's not the municipality's but the provincial government's tax base that's eroded, does the minister not see that the principle should be the same throughout the assessment classification? If it is good enough in the commercial classification to assess an income approach, why do we not have the same rationale and the same principle in the industrial classification?

Hon. R. Blencoe: The member brings up an interesting topic. The UBCM and others are part of the local government financing studies you were involved in. If it was raised, it was not resolved, as far as I know. You're talking about a fundamental shift that would take....

Interjection.

Hon. R. Blencoe: No, you are, hon. member, in my impression. It would be a significant shift in the whole system of assessments and property taxation. It may very well be that we want to take a look at it, but the system we have right now.... The issue here continues to be and will be judgment. Obviously the problem in the property taxation system is when to measure a mine or an industry that has clearly become unprofitable and has shut down. Then you kick in considerations in the assessment system. But how do you, in property taxation, when there may be a temporary lull, or the company that owns may still be profitable, but in terms of owning something, at that particular time that plant may have some temporary unprofitability.... Should that affect the property taxation system? Or if you get into trouble with an industry, should you kick in other systems to help during that difficult time -- as we have for the job protection commissioner and with the MEVA that I introduced for Cominco? We found some other ways to give property tax relief in a dramatic situation.

Hon. member, you probably know -- better than I, because you have been a mayor -- how to measure a property tax system. You have looked at the true interpretation of it and looked at what outside economic issues of the time should affect those property taxes. Rightly or wrongly, we have a combination of taxation systems in this province. I talked about that last night. We have a mix of property, income and consumption taxes. Your studies -- the UBCM's work -- took a look at where property taxation fits. Your government took a look at this issue in '87, '88, and '90, and came up with things that we supported in terms of balancing that stability. Quite frankly, our interpretation of this maintains that stability.

It is a judgment call, as my colleague from the Liberal Party said, and maybe you're going too far. My job as minister is to ensure that the tax base at the local level is stable and maintained in terms of industrial plants. There is a question. The advice is that maybe there's an interpretation that could be construed to expand that to dramatically affect local government.

The issue you raise, hon. member, is that maybe it should go back into the hopper for the UBCM, the local government financing and those issues. I don't profess at this stage to say that I have the expertise to give you an answer on that, because I don't. This is a very complex technical issue. As you know, when you move something over here, nine times out of ten something else will raise up there and create another problem for you in this very delicate issue.

A. Cowie: I've been listening to this debate, which went on last night for about an hour. I don't think we're going to see a resolution in the debate. What I'm more concerned about is fairness and the fact that there has been clarification and communication.

Along with others, including the minister, I met with the representatives of the Mining Association; the lawyer concerned, John Lakes; and the representative of the Canadian Property Tax Association. Very late yesterday we did receive the clarification that the hon. minister has referred to. I think the key thing we have to be thinking as legislators -- especially in Municipal Affairs -- is whether we are being fair to the communities as well as to the companies. If we were to base our taxation on income, which is essentially what the third party is suggesting, then we would have problems with the economy going up and down. If the economy goes down, then the income will go down, and therefore the taxation will also be down.

It would appear that we are talking about specific, unusual situations here anyway. We don't want a case where companies throughout the province can be taxed on income. Otherwise we will have absolutely no stability at all in the communities. So that's why it's based on the value of the land and the facility itself, including the machinery. I think that's only fair.

We have here a situation where a company can decide that if they don't want to operate, they can reduce the tax down to 10 percent by simply having it as a non-operation company. I believe, and the third party and my Liberal leader did mention, that there is a problem and perhaps an unfairness here: three years is perhaps an unfair adjustment period in that situation.

Also, a large company could theoretically manipulate the situation, where they decide they are not making enough money and therefore are going to close the plant temporarily for three years. That will drastically affect the community. Whether it's in the 

[ Page 9372 ]

community or not -- say it's in the regional district -- it will drastically affect the economy of that area. And the tax will be shifted over to the residential; there's only one place to put it.

So that's the problem. It's a matter of equity and fairness. I don't think there's any winners or losers in this argument; you have to look at specific cases. I understand the clarification is that that can be done.

I have a question: why was it necessary to take out the words "can be used for"? That seems to be the key to what has angered some of the industrial people. Why was it necessary to take that out?

Hon. R. Blencoe: I'm going to try to explain this in lay English because it is very difficult. I'm not allowed props, but let me use it: say you have an industrial plant here and a company that owns it over here. If that company as a corporate entity is fine over here, but has a plant that for whatever reason has temporarily reached some kind of...

An Hon. Member: Trouble.

Hon. R. Blencoe: ...trouble -- that's fine.

The issue is: if corporate concerns, the economic times or whatever has happened to that company affect the plant -- and under our property assessment system, based on a classification system, it "can be used" as that plant or industrial use -- should we try to disconnect to some degree? Nine times out of ten, if it can be done, that property tax is based on classification and on "can be used." Obviously the Assessment Authority and appeal board have to take into consideration that there are some extenuating circumstances, and they arise.

[10:45]

But you have to be extremely careful -- again to the member and all members -- when you're looking at the property tax base of local government. If for a certain period that plant can be used as what it is deemed to be used for, but the company has some particular problem, should we say property tax should be totally cancelled for that period? If you did that, hon. member -- and all my colleagues know -- you'd raise some real problems. If that company is running into major industrial problems or economic woes, what we do is to pull in other kinds of support mechanisms -- the Job Protection Commission, the MEVAs that I produced last time and other things. It's a hard one to explain in terms of....

The Chair: Before I recognize the next speaker, I would like to say that second reading on this bill was debated extensively on July 15. This is not the place to revisit that debate but rather to debate the specific wording of this particular section. With that in mind, I will recognize the next speaker.

L. Fox: I am debating the whole idea of what an industrial improvement is, which is contained within section 1. The minister suggests that he looks at means other than the assessment to alleviate the concerns of industry. In respect to the mining industry -- and I have to repeat this -- there are very few, if any, mines within municipal borders. Very few mines, if any, pay taxes directly to a municipality. There are a few, I would concur, but very few. We are talking not only about the municipal tax base but about an assessment that affects provincial as much as municipal revenue -- more, in fact, in terms of the mining industry.

The minister suggested a few moments ago that the job protection officer had a role to play. I find equating that to this section rather difficult to understand. What we are talking about within this section is a mining or sawmill complex that has been shut down for a substantial time. In my experience so far, what I've seen is that the job protection officer gets involved prior to a shutdown. If he can come up with a solution to some of the problems, it is done prior to a shutdown. But when we have an ore value problem, which is out of the control of this government -- or of any government, for that matter -- it can cause a shutdown in a mine for a substantial time.

Last evening I named two specific cases. I don't want to be repetitious, but it's important that we understand what the amendment under section 1 is going to do to the mining industry, or has the possibility of doing or preventing. I refer once again to what happened with respect to Bethlehem Resources Corp. when they purchased the Noranda mine in Revelstoke in 1979. The mine was not operating at the time. It stood in abeyance, totally stagnant, for more than two years. The legislation as it was previously written, prior to this section 1 coming in, allowed that corporation some relief for those two years. That relief was by way of $34,000 a year in taxation versus $300,000 a year under this clause. Because of that, they were able to reopen that mine in two years' time. They now have a payroll of $6 million that goes directly into Revelstoke's economy. They now produce about $88.7 million of copper and zinc during a time that the mining industry is at one of its all-time lows. Under this amendment, that corporation would never have been purchased by Bethlehem Resources, because in the market of the day they could not afford to spend that $300,000 a year in local taxes. In order to save itself from those kinds of expenses, Noranda would have had to knock down all their improvements. They would have had to level the grounds, and then it would have been a section 1(a) situation, and we would have been able to figure out whether ore has value when it can't be mined on a profitable basis. That argument would have been paramount, because there wouldn't have been any holdings other than the ore body itself. That $34,000 they did pay may have been reduced to zero, because they wouldn't have had improvements. The Assessment Authority would not be able to prove that that ore body had a value, because it was not able to be mined at a profit. Those are key issues in this section.

I know this is not second reading debate, and I apologize for the length, but I think it's very important in order to understand what this section is doing to the mining sector of British Columbia.

Interjection.

[ Page 9373 ]

L. Fox: That's right. We would not have had that economic activity in Revelstoke had this section been in place. I believe the minister pointed out that there were amendments in '87 and '89. But there were four words in that amendment that I believe were put there on purpose to allow industries with problems some alleviation in hopes that those buildings could be maintained and those jobs returned to the local economy. Resource communities are trying to stimulate a resource that seems to be going downhill. We are not going to do it by putting through this amendment.

Hon. R. Blencoe: I will see if I can wrap up, because I don't think we're going to agree, and we could go on for some time. There are clearly some policy differences in what we perceive to be protecting local government....

An Hon. Member: We're trying to protect jobs.

Hon. R. Blencoe: Hon. member, we also want to protect jobs, and we do that every single day.

Interjection.

Hon. R. Blencoe: You may want to play your political games in terms of this issue. My responsibility is also to local government and to make sure the tax system is as fair as possible to all taxpayers.

Be that as it may, I want to give some comfort to the member before I make a suggestion. I think last night the member was asking about the statements or the rules or the wording for the closure allowance and the regulation on depreciation of industrial improvement. I will send a copy to the member. The closure allowances are clearly laid out in the Assessment Act. The member was referring to a shutdown for a substantial period of time. This closure allowance states that if a shutdown occurs for three years, the owner can then apply for industrial improvements to be reduced to 10 percent of their cost. I think the member is aware of that. This was developed in 1988, so it was during the term of your government's administration.

I don't think we are going to agree today. I think there's a major policy difference. At this point we do not feel that local government should bear the carrying costs for what might be construed as a technical interpretation. I think, though, that there is common ground among us all to ensure that permanently closed or unstable plants are valued lower than active or profitable plants.

I'm quite willing to say today that if both the UBCM and the Canadian Property Tax Association, which represents a number of industries, wish to ask for a policy review on this issue, I'm quite willing to do it -- obviously without prejudice, in terms of where we might be going in the future. But if there are outside objective groups that wish to take a look at this debate and this issue -- and the UBCM and others may wish to suggest a review -- I'd be very willing to do that in order to clear the air.

Right now, hon. member, my concern is for this year and this tax base and, quite frankly, I think this will do it. I know there's a difference of opinion, but I'm quite willing, as minister, to agree to some sort of review of the issue.

L. Fox: The minister suggested that the legislation that was passed previously allows an industrial development to apply after three years for a reduction of assessment down to 10 percent. I understand that. The problem is, in terms of the Revelstoke issue, that under that legislation, without the other legislation that existed, they would have had to pay the $300,000 a year for three years before they could achieve a rollback to the 10 percent in their assessment. That's $900,000.

If there were no opportunities on the horizon for a mine to forecast an improvement in ore prices or a change in the technology of mining that ore so that they might be able to do it more efficiently, the minister is suggesting that he's prepared to see those industries pay full taxes for three years before they can achieve the rollback of 10 percent. I understand the fact that the minister isn't going to give on this bill; I think that's fairly obvious. But I think he should understand as well that issues are going to come forward. The Premier announced last fall in Europe that we were going to see a 20 percent reduction in the AAC in British Columbia. There are areas in this province where mills will be temporarily closed because of overcapacity already, never mind with an AAC reduction. The minister is saying that in the interim those sawmills are going have to pay full taxation even though they don't have a resource to mill.

[11:00]

This legislation will allow the government or the Assessment Authority to continue to assess them as though they're profitable and as though they're an operation that can in fact operate. I think the complexity of the issue around section 1 is going to raise its head considerably over the next couple of years. That's one of the reasons that we see the act here. I find it unfortunate, because we should be looking at the resource industry to see how we can protect it, how we can restimulate it and how we can save those plants from being bulldozed over, so that somewhere down the road we might be able to convert or modify them and we may be able to generate jobs within that location once again. I think it's beyond the Minister of Municipal Affairs to answer, but it's a major question for cabinet to deal with.

A. Cowie: A point of order. I've been hearing this argument for two hours: one hour last night, and for an hour today. We're never going to get an agreement. It's a second-level debate. It is getting to be repetitive and tiresome and has no meaning whatsoever. I would suggest we move on.

The Chair: I'm sure that the hon. member for Prince George-Omineca is mindful of my earlier remarks that his comments be strictly relevant to the section so that we can move on to the next section.

L. Fox: I believe I've been very relevant to this section. I am disappointed in the Liberal member and 

[ Page 9374 ]

the opposition critic. I shouldn't be, because he instructed his caucus that there were no problems with this bill and that they should all support it. In fact, ten of them stood in a standing vote and supported the bill.

The Chair: On the section.

L. Fox: I'll get back to the issue. As I said, this issue is not only around assessment but around economics. I think this section goes beyond the minister and even affects the Minister of Economic Development. If that minister were in the House, I'm sure he would support what I was saying.

D. Jarvis: I have to stand up to say that I concur with the member for Prince George-Omineca. It is going to create early closures in the mining industry. Companies will be very reluctant to close mines down, mothball them and wait for a better market to come along. You say that this is an unusual situation. There is such a situation right now with Amax mine, which pays approximately $7,500 a year on taxes. This will shove them into the $200,000 range. Therefore they're going to demolish all of their buildings. It's going to be a regressive situation with the mining industry in this province, and I will vote against it.

D. Mitchell: I have a brief question for the minister. Like some other members in the House, I've struggled with the concept of industrial improvement as defined in the act. The minister used an example, which I'd just like to clarify. I think I understand what he was saying. I would note that section 1 applies to more than the mining industry, but we've been using the mining industry as an example. A number of open-pit mining operations are closed in British Columbia, many of them permanently. If an open-pit mine had a replacement value of, let's say, $50 million, my understanding is that the assessment could be reduced to 10 percent of that replacement value under this amendment. In other words, would a closed mining operation be assessed for $5 million per year for an inactive mine? Is my understanding correct?

Hon. R. Blencoe: Let me read the section to you. "The depreciation applicable to industrial improvements that are part of the plant shall, for the purposes of the assessment roll in the succeeding year, be deemed to be an amount sufficient to reduce the actual value of the industrial improvements to 10 percent of the cost of those industrial improvements." So it is 10 percent of the actual value of the industrial improvements.

D. Mitchell: I thank the minister for that answer. Clearly an inactive or unprofitable mine -- a mine that might be permanently closed -- would still be assessed at 10 percent of its value, which could be many millions of dollars. Could the minister tell me what discretion the Assessment Authority would exercise when many millions of dollars in an assessment for a closed and unprofitable operation couldn't be paid? What discretion would the Assessment Authority have in terms of assessment?

Hon. R. Blencoe: The Assessment Authority has some discretion, but you have to remember that the Assessment Authority is dealing with real property tax and with use. If its use has changed from the original intent, and if the machinery and equipment have been removed, then the classification and the assessment systems would change. What you are talking about, though, is when other processes kick into place, it becomes really a taxation issue. Then we have to take a look -- and I know the hon. member doesn't like me doing this -- at what other mechanisms are in place to help resolve that taxation issue. I did this with the MEVA for Cominco this year. We have an arrangement there now for substantial reductions in property taxes by the community of Trail, and the regional district has agreed to millions of dollars in property tax relief over the next ten years to enhance the viability of that plant.

The question really comes down to this. If we are going to have a pure property tax system and try to maintain it as best as possible, how much do we utilize the existing property tax system to deal with economic downturns and potential or temporary unprofitability of sites? What is temporary? Where does it kick in? After much study, the former government believed it was three years. Hon. member, you know Mr. Couvelier and the others who were involved in that. This period could be looked at. As it said in the review, it could be put back down. Maybe it's not enough. Maybe it's too long to wait. I don't know, and quite frankly, I don't profess to know. There may be some real experts in this field. But the more I work on this issue and the more I look at it, there's always some other problem that arises.

D. Mitchell: The minister has indicated that there has been some consultation with UBCM on this issue. Could the minister tell us whether or not he has had any specific consultation on this specific amendment with the Mining Association of B.C.?

Hon. R. Blencoe: Yes, I had a meeting this week. Basically, our interpretation was that this was not a policy shift; this was a change to ensure that the stability of the tax system was maintained; and that if there was any significant policy shift, we would have consulted them. It may very well be that we will now consult if UBCM and others believe this area needs to be reviewed. I also met with a representative of the Canadian Property Tax Association, Ms. Jeanne Elliot.

A. Cowie: It's quite obvious that I feel there has to be a consistent method of taxation based on land value and on improvements. That's the way we do it in this business. There have only been two operations mentioned where they were designed improperly and could never function -- that's a very unusual situation. I have a problem with the three-year term; in fact, this party has a problem with it. We feel that maybe it isn't fair. The minister himself said this is very technical, and perhaps we should review it. It would appear to me that if the minister would withdraw this section for another year, it would be the fairest way to go. Unless he is willing to do that, I am afraid that I am going to have to 

[ Page 9375 ]

vote against it, even though I have a lot of sympathy with the method of evaluation.

Hon. R. Blencoe: I understand the position and the shifting sands on the opposition sides. There are differences of opinion on these kinds of issues. That points out that this is not an easy issue to resolve. I am not prepared to withdraw this, because the risk is too significant for local government and the residential property owner, who will pay the shift, if there is one.

To the member for North Vancouver-Seymour, you cited the Amax situation. It paid $7,500 pre-Carolin. I assure you that today it will pay $7,500 post-Bill 58.

L. Fox: It's obvious we're not going to get anywhere that way, so I want to get to some of the minister's understanding of the various clauses.

Subsection 1(A) says: "'industrial improvement' means an improvement that is part of a plant that is designed and built for the purpose of one or more of the following: (a) mining, extracting, beneficiating or milling of metallic or non-metallic ore." Can the minister tell me at what point a mountain of dirt becomes an assessable identity called ore?

Hon. R. Blencoe: The list before you in section 1(a) is the same list that was introduced by your government.

L. Fox: I am aware of that, but now that you have made the amendment, which changes the intent of the section -- to quite a large degree, in my view -- I would like the minister's explanation. At what point does gravel or dirt become ore, now that you've changed the intent of this legislation?

Hon. R. Blencoe: At the same point it did before the bill, and that's the position I take.

Interjection.

Hon. R. Blencoe: Clearly we have a difference of opinion, hon. member, and if we have that difference, then it should be subject to what I have already offered today.

L. Fox: I might as well give the answer to the minister. The reason I wanted his explanation on this is to build the rest of my argument. In a court of law, ore is not ore until it's mineable at a profit. Therein lies the principle I have been talking about for the last hour and a half: ore has been defined by the courts as non-ore until it can be mined at a profit. So that principle should go into the fixed assets of a site.

I have one other point, and then -- out of frustration -- I am going to give up, because obviously the minister isn't prepared to listen. The minister made reference to the fact that when machinery and equipment are removed.... The minister should know that machinery and equipment hasn't been part of the assessed value since 1982 or '83. He is talking about improvements attached, not machinery and equipment, because machinery and equipment are not part of the assessed value.

Hon. R. Blencoe: We are bringing in all sorts of other issues that are separate from the property taxation issue. The member knows that that cannot come into this particular issue.

Interjection.

Hon. Blencoe: Hon. member, if you wish to get into the profitability from year to year in terms of gauging property taxes and bringing that as a measure for property tax, then I can assure you that you are into a whole different ball of wax in terms of stability of local government -- and you know it. What we're dealing with here is something that in '87, '88 and '90 your government tackled to deal with this very issue, and it came up with rules, laws and regulations that tried to deal with it as effectively and fairly as possible. We are only trying to return to that status quo.

If there is concern in some quarters that we need to do a further review of some of these things, in terms of what I've suggested -- maybe three years is long or whatever -- I'm quite prepared to do that. If the UBCM and those industries with property tax ask for that, then we can take a look at it.

[11:15]

H. De Jong: I've been listening with great interest to this debate. The minister mentioned that he had talked to the UBCM about this as late as yesterday -- or perhaps earlier; I'm not sure when he talked to them. The UBCM and the municipalities also have a memory of things. I suppose that the UBCM collectively has a memory of what this government did in history. That history was very bleak. I'm making these comments in relation to section 1.

The Chair: On this section, hon. member.

H. De Jong: I have to get into some historical evidence; I think it's not uncommon. I've been in this chamber for many years, and the opposition would speak for 15 minutes. Then somebody else would get up and give them another 15 minutes.

Back on the issue, the minister made some rather unrealistic statements last night in terms of the cost that could be moved on to the residential taxpayer. I believe that that was nothing more than a scare tactic; he certainly had no facts or evidence to base those figures on. He admitted that himself in the debate. I think it would be very unrealistic to think that all of the industrial-zoned properties within a municipality or regional district would go belly-up in the same year and cause that kind of effect on residential taxes.

An Hon. Member: It may not be unrealistic with this government.

H. De Jong: Well, it could be. Perhaps that's exactly the point.

[ Page 9376 ]

I believe that the municipalities have pushed for this kind of legislation, because they are afraid of that kind of situation. While the minister has said that there isn't much point in discussing this issue on the floor here because of the substantial difference of opinion on this particular issue, the minister should minimize the effects that this change in this act could have on the economy of B.C., which is a government situation. It's the government that says they are trying to enhance industry, create jobs and sustain jobs. That's what I've been talking about: a sustainable economy. If this act goes through, it will undoubtedly....

The Chair: Hon. member, we are not in second reading debate. We are on section 1. Please, hon. member, constrain your remarks to section 1. Second reading debate, as I stated earlier, was extensively canvassed on the 15th of this month.

H. De Jong: Again, I would simply ask the minister, in light of what I and many others have stated here, to stand down this section and discuss it with his colleagues in cabinet. I believe that this issue is so important that if it can't be resolved on the floor here, it should be resolved in cabinet.

Section 1 approved on the following division:

On section 2.

L. Fox: Section 2, concerning section 15.2, repeals sections 144 to 147 of the School Act. When you read 144 to 147 of the School Act, obviously there are going to be new initiatives. I'll read section 144 for the House:

"Subject to this Act, property that is in a municipal area of a school district and that is exempt from property taxation under the Municipal Act or the Vancouver Charter, as the case may be, is also exempt from taxation under this Act. Land included in a timber lease or timber licence issued under an enactment of British Columbia or of Canada for which a stumpage, as defined in the Forest Act, has not been reserved or not made available to the Crown in right of the Province, or which is held for the specific purpose of cutting and removing timber, and for no other purpose while so held is exempt from taxation under this Act."

What this tells me is that if people who happen to live in rural areas of the province have some trees which, in the determination of the assessor, could be marketable, they are now going to be assessed the value of those trees. Would the minister either confirm or deny that?

[11:30]

Hon. R. Blencoe: I can see how the member might see that in the wording. Let me try to clarify that for him. I think I can give him the comfort he requires.

There is no change in content here. The term "repealed" is a reference to an old outdated act, the Education (Interim) Finance Act. That title is no longer used. We now use the title School Act. All we're repealing is the old reference to Education (Interim) Finance Act and putting in the words School Act.

Section 2 approved.

Sections 3 and 4 approved.

On section 5.

A. Cowie: I would like to ask the minister what the real reason is for the wording here. It would appear that what the wording does is give complete autonomy to each individual island within the Islands Trust -- that's the way I read it -- to do their own planning and set up their own regulations. I would have thought that we should be looking at the whole of the islands, and not each one individually, at least until we have an overall approach. Would the minister comment on that?

Hon. R. Blencoe: The purpose of this section is to clarify the authority of the Lieutenant-Governor-in-Council to make regulations in relation to the Islands Trust. The cabinet and Lieutenant-Governor-in-Council currently may, by regulation, make Municipal Act provisions apply to the Trust. This clarifies that Municipal Act sections that are made applicable to the Trust by regulation may be made applicable to one or more bodies of the Trust and not only to the whole Trust. So it is ensuring that you can break down that regulation and make it apply to individual Trust communities. The deputy minister reminds me that many of the Trust's responsibilities are in fact exercised at the island level, not at the overall global or Islands Trust council level.

A. Cowie: Does the minister actually support that each island on its own will have complete autonomy? That's like a small area of Dunbar deciding its whole future. Surely it has to fit within an overall city plan, and there has to be some overall consistency. There's a real danger at the present time that a small group of people can simply take over an island and restrict other 

[ Page 9377 ]

people from using it, or it could be the other way again. It doesn't seem logical to me.

Hon. R. Blencoe: This section is here before us because of the advice of legislative counsel. If we don't do this right now, we won't be able to make new regulations or changes for the Islands Trust or for certain bodies of the Trust. The issue raised has come up consistently -- certainly to me -- in the last year and a half. It would be very useful if you.... For next session, we have a number of issues that we will bring forward for legislative change, hopefully in spring 1994. That's one of the areas that is currently under review. You may wish to give a more definitive description of your concerns to us and to the council.

L. Fox: I request leave to make an introduction.

Leave granted.

L. Fox: Hon. Chair, just arriving in the gallery are two friends of my wife and I who have travelled all the way down to Victoria to verify that I am still in Victoria. As we all know, our own constituents don't believe that we're still here; they believe we're on holiday somewhere. Nelson Irving and his wife Ann are longtime friends from Vanderhoof, and Nelson is my fishing partner. I've had to refuse three fishing trips with him in the last month because I was here. Would the House please make them welcome.

Sections 5 to 8 inclusive approved.

On section 9.

L. Fox: Just for information, the issues from 6 through 8 pretty much reflect what's happening, and, I guess, the minister has now reflected the practice in legislation.

What concerns me here is section 267(1)(b): "...all or part of the expenditures made or expenses incurred by a council member when the council member is (i) representing the municipality, (ii) engaging in municipal business, or (iii) attending a meeting, course or convention." In the previous legislation municipal councillors could not apply for expenses. The exception was when they were on business within their own municipal borders. This appears to expand the opportunity for a councillor when he attends a meeting -- and we'll get into it a little later. It appears that it extends the right of a councillor. Is that correct?

Hon. R. Blencoe: The member is correct. One of the outstanding issues that has been raised by local councils and the UBCM for years is this artificial distinction between inside and outside municipal activities. As you know, many municipal officers or elected people were potentially in violation and in serious trouble for legitimate expenses incurred. By the way, in here it's up to them to determine what is a legitimate expense and report annually. If they claim for legitimate expenses inside their own municipality, and it clearly isn't allowed or there is some concern, they will be challenged. A number of issues have been raised over the years on that.

It's a longtime irritant that I, the UBCM and everyone has looked at. It provides greater flexibility for municipal council to determine how expenses may be paid while ensuring that they are not paid more than once for the same expenses. That's a long explanation, but yes, you are correct.

L. Fox: If we apply the logic in this legislation to us as legislators and use the same criteria, we could expand our personal expenses quite substantially. As everybody in the House knows, we cannot charge for lunches and so on when we, as legislators, take somebody to lunch -- even if we're on official business.

There's a great opportunity here for misuse. As well, the municipal councillors, mayors, and school district trustees have a one-third tax-free part of their salary that was put there because they incurred some expense within their respective municipal or school district borders. In my eight years as mayor, I paid when I was in the community. When somebody came into the community on official business, the administrator could always pay. That was the standing practice in many municipalities. Now we have a situation where a councillor could take a person to lunch and pay the bill. I don't believe that is in the best interests of the local taxpayers.

Hon. R. Blencoe: It may very well not be in the interest of the local taxpayer, but I would say that -- if we are to believe that local government is a true and sophisticated level of government and elected and accountable -- it's up to them in a bylaw. Section 2 states that they must state and specify the types of expenditures that may qualify for payments and the levels at which payments may be made. In a later section, they actually have to report those expenses on an annual basis, tabled publicly.

Whereas you may have some concerns about what they will and will not do, I happen to believe local government has got to the level where they can make those kinds of decisions for themselves. They can be accountable. The electorate has every opportunity to do what they will to their elected councils if they abuse it -- laid out by bylaw.

I'm trying to cover here that I do not wish to see the continuation of local councillors being subjected to breaking the law, if they have genuine expenses laid out by bylaw that they cannot claim for. I don't think that's correct. They are still accountable. They must make a bylaw and table those expenses. Same for us here -- we get to control it in terms of expenses, so if we do something that is not acceptable the public will let us know. This is a local decision by locally elected officials.

L. Fox: I have one final question. Is the minister not concerned that the federal Income Tax Act or authorities now may suggest -- now that councillors have the right to write off or incur expenses within your municipality -- that there's no longer a need to have the one-third tax-free part of their salary? If the purpose for that one-third tax-free was to represent the expenses 

[ Page 9378 ]

incurred by a councillor while he's in the course of his duties, then I suggest that this change in this legislation may cause the federal authorities to say: "Look, you're allowed to write off those expenses now by bylaw; therefore there's no need for this one-third tax-free portion of your salary."

Hon. R. Blencoe: We've already thought of that, that the one-third exception is still permitted. But the expenses that can be done under bylaw cannot be the same expenses covered under the one-third. There is no overlap or duplication; that will not be allowed.

L. Fox: I didn't want to belabour it, but that response begs another question. I was a mayor for eight years, and I got one-third of my salary tax-free. I was never asked to declare how I spent it, and I'm sure no other councillor has ever had to declare how he spent it. So how can the minister be so sure that these kinds of expenses are not an overlap? I am amazed by that assumption.

Hon. R. Blencoe: I think the member is trying to.... They have to, by bylaw, lay out the types of expenditures that may qualify for payment. They can, if they deem fit, maintain and say that the menu that they're prepared to accept will remain under the one-third exemption. What they can or cannot be reimbursed for is clearly laid out in (b) and (c):

"All or part of the expenditures made or expenses incurred by a council member when the council member is (i) representing the municipality, (ii) engaging in municipal business, or (iii) attending a meeting, course or convention; (c) an allowance, daily or otherwise, for expenses incurred by a council member when performing activities referred to in paragraph (b) (i) to (iii), if those expenses are not covered under that paragraph."

I believe in checks and balances. I believe to some degree in ensuring that local government does its job, but I also believe that they're elected and they're pretty smart people -- a lot of them. They've got good staff, and they can figure it out. We just want to make sure that they are covered, and that they can dutifully, if they desire, make decisions about their own expenses.

[11:45]

H. De Jong: I don't see anything in this section other than evading taxes that are normally due to the government, particularly the federal government in this case. This government is not necessarily free from criticizing the federal government for cutbacks on transfers to municipalities and other services in British Columbia. If this government really wants to be honest, then it should withdraw this section, because it's an abuse of a privilege extended to municipalities by way of bylaw that they have to draw up. It's the wrong direction. It's not a direction within the Confederation as we know it federally, provincially and municipally. There has to be a working together. But this is a wedge-driving thing in terms of working together and harmonizing the overall concept of making things work from a financial standpoint.

Section 9 approved on division.

On section 10.

L. Fox: Under section 10, section 270 is repealed. Once again, it's the same issue. We now provide the opportunities for councillors to spend money for receiving and entertaining distinguished guests. We are talking about the expansion of a councillor's right to spend money within their jurisdictions. I know it's exactly the same question as in the previous section, but I have to register my concerns, because it is certainly open-ended.

While I respect the rights of councillors to determine their expenses through bylaw, I think the minister -- even though he's had a short experience in council -- would remember that the public is very rarely aware of bylaws such as these. While they have to be done with a public process between second- and third-reading stages, very few members of the public pay attention to a change in the expense structure. If there happens to be a very large entry in the budget, it may very well be noticed. I am concerned, because I believe that as legislators we not only have an obligation to municipalities to provide legislation for them to function and legislation that gives them autonomy, but we also have a responsibility to municipal taxpayers. We are the next level of government, and municipal government is the creature, by statute, of the provincial government. There is an obligation for us on behalf of the local taxpayers. Section 270(c) is a very wide-open statement: "...to provide for receiving and entertaining distinguished guests...." Who knows how we describe a distinguished guest?

Hon. R. Blencoe: I will remind the hon. member, or he may not be aware of it, that all we are dealing with here is what is left after the previous sections were dealt with. I would also refer him to the current Municipal Act, section 270, "Special expenditures." All we're doing is carrying on with what has been accepted since 1960. I will read to you some of the areas in here: "...(a) to help establish, develop, maintain and operate airports, seaplane harbours...(b) to inquire into railway or harbour improvements; (c) to provide for receiving and entertaining distinguished guests; (d) honour persons who have, in the opinion of the council, served or brought honour to the municipality." Those expenditures are currently there. You as a mayor had those expenditures, and as far as I know they have been there since 1960.

A. Cowie: I feel I have to stand to make my position clear. What we seem to have from the third party is a Premier Klein approach, where we're going to bash and be frugal and then, when the time comes, probably not vote for it or not make any change.

Interjection.

A. Cowie: In my experience of many years of municipal governments, mayors have been very responsible. They have had budgets. They are capable of 

[ Page 9379 ]

carrying out their own economy within their council, and I believe we should trust them, just as we consider each member in this Legislature as honourable. If they are not, they are very carefully scrutinized, and their own constituencies, their own public and their voters can certainly look after that. We saw that recently in Surrey when various administrators had extravagant expenses. It was dealt with very quickly. If you don't have the rules, and if you don't make the people accountable, that's when you get into trouble. Then they play games behind the scene.

Even though I don't necessarily want to defend the government's position here, I think this is the best way to go -- and I think the third party, as I say, is just plain Klein-ism.

Section 10 approved.

L. Fox: Noting the time, I 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. L. Boone moved adjournment of the House.

Motion approved.

The House adjourned at 11:53 a.m.

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