1994 Legislative Session: 3rd Session, 35th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, MAY 3, 1994
Morning Sitting
Volume 14, Number 22
[ Page 10461 ]
The House met at 10:04 a.m.
Prayers.
Hon. G. Clark: In Section A, I call Committee of Supply for the purposes of debating the estimates of the Ministry of Aboriginal Affairs; and in the House today, I call second reading of Bill 20, standing in the name of the Minister of Finance.
LOCAL GOVERNMENT GRANTS ACT
Hon. E. Cull: I'm going to be very brief in my second reading comments on this bill and leave more time for the Minister of Municipal Affairs, who I know has worked hard to achieve the agreement reflected in the bill.
Bill 20 repeals the Revenue Sharing Act of 1978 and creates a new funding framework for provincial support to local governments. The revenue-sharing fund special account is discontinued in favour of a voted appropriation: vote 48, local government grants. The bill establishes a municipal general grant base, with a formula-driven adjustment, to respond to the prevailing economic climate. This was central to the request of the Union of B.C. Municipalities when they worked with the government over the last year to revamp this program. It also commits the government to annual consultation with representatives of the Union of B.C. Municipalities on grant administration and to a review every five years of the municipal general grant support. As I have already noted, the bill is the result of a joint provincial-UBCM review of the system of local government grants that was completed in September 1993. I believe that it achieves a fair balance between the needs of the province and local governments.
With that, I will move second reading.
F. Gingell: I can appreciate that municipal governments would rather exchange promises of great wealth and riches, which they never get, for something that is a little more clearly defined and, I hope, committed to. Commitments by provincial governments to support other levels of government are, in the normal course of events, no better than one year's budget.
I think one has to go back to the history of the municipal revenue-sharing arrangement. When municipalities talked to the provincial government in the mid-1980s, I believe, about their needs and their responsibility to deliver services and, particularly, to pay for major infrastructure in the way of roads, sewers and other needs, there was a clear understanding that it is critically important for local government to have secure and assured sources of revenue.
Property tax has always been seen as a weak link in the taxation system, because it goes against the very foundations of what we think of as progressive tax regimes, which call for people to pay taxes on the basis of their ability to pay. Property tax, of course, does not. I think we all accept and recognize that the suggested market value of a piece of property that you do not intend to sell -- a piece of property you've acquired in the normal course of events to live on and to bring up your family -- is indeed no measure of your ability to pay a local tax annually. Although assessed property values in Vancouver and Victoria have increased at unprecedented rates in the last few years because of outside pressures, such as people who retire early and move to warmer and more enjoyable climates, that increase certainly in no way gives the property owners who were there first an ability to pay higher property taxes.
So what happened in the mid-1980s? Provincial and municipal governments got together and recognized that some new arrangement had to be made. The arrangement they made was to have a portion of provincial government revenues -- those that were not based on property values but on normal economic activity revenues -- assigned, earmarked and put to one side for local government. I don't have particular numbers in mind, but the percentages are clearly stated in the estimates. It is a percentage like half of 1 percent of our provincial retail sales tax; it's an additional percentage of natural resource revenues. There may also be a percentage of a third revenue stream.
The government recognized that municipal governments needed to have some secure source of revenue, so that the provincial government could pay municipal governments what are called unconditional and conditional grants to assist them in meeting their responsibilities. Every year we get out our pencils and our calculators, and we calculate the amount of money under this agreement that should go into what's called the municipal revenue-sharing fund. The provincial government, with no commitment but by order-in-council -- one presumes it's through the normal treasury process, and it's certainly part of each year's budget -- determines what amount of money out of that so-called reserve is to be paid to municipal governments.
The then-Minister of Finance, now the Minister of Employment and Investment, went around this province in the summer and fall of 1992 and in the spring of 1993, speaking to municipal governments. He suggested, with horror and shock in his voice: "We were surprised when we came into government that there wasn't a bank account there with a quarter of a billion dollars." That is the amount to which this municipal revenue-sharing fund had grown. Well, of course there wasn't any bank account; of course the money had been used by the provincial government to reduce borrowing for other purposes. It would have been poor cash management for them to have done anything different. What was true was that under this previous agreement, funds which had been voted on by this Legislature had been set aside for the purpose of supporting the costs of municipal government, and the provincial government had not used them.
So that amount had grown from $250 million to about $360 million by March 31, 1994 -- the moment before, with the stroke of a pen, this government erased it. I should not have said with the stroke of a pen; I guess I should have said it has been erased with two or three strokes of an eraser. Although there had been an agreement, although these funds were clearly designated for other purposes and although administrations previous to this government had not used them for the purpose they had agreed to, this government has decided to expropriate them from municipal government.
[10:15]
They have come in, I hope, with a definitive arrangement on which municipalities can rely. When one starts talking about using measures such as gross domestic product as a means of determining an amount of money, I have feelings of uncertainty. As an accountant, I know that economists measure things in a different manner from accountants. They pluck figures from hither and yon. They get statistical reports from corporations which.... I don't mean that the corporations intend to be misleading, but these aren't tax returns with responsibilities and penalties for the way they are filed. Information gets fed into computers whether it's
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right or wrong, whether it's a close guess or the result of throwing a dart at a dartboard. All these things get accumulated and added together, numbers get subtracted from them that have the same kind of invalidity, someone comes out with a number that is called gross provincial domestic product and everybody believes that that is an accurate measure. I can assure you, Mr. Speaker, that it is not an accurate measure.
A whole bunch of things happen in the underground economy that do not get measured, do not become part of this measurement and therefore make the number even more invalid. Then some economists say: "We're not including what's in the underground economy, so why don't we add 5 percent to the number?" And another economist says: "No, no, no, the number we should add is 20 percent." And so it goes. I'm not in any way meaning to denigrate the profession of the economist. I just want to suggest to you that it is very difficult to measure in a carefully provable, meaningful manner the numbers that come out dealing with economic activity. There are therefore weaknesses, and I think we all recognize that.
Not only are we using that measure in determining the amount of money that will be paid each year, we've even got a more questionable number. That is the gross provincial domestic product for the current year, which hasn't happened yet, for which we are going to use the number produced by Treasury Board or the office of the Minister of Finance. Although I wouldn't in any way suggest that this Minister of Finance would play around with that estimate or guess as to what that number will be, who knows who will sit in that seat in the future, who may be tempted to produce a reasonable estimate that suits their purposes more than some other number does? In the end, under this bill, the provincial government has put a 2 percent cap on it. Is that correct? Is it a bottom cap or a top cap? I think it is a....
Some Hon. Members: Both.
F. Gingell: It also includes the word "real" in "provincial real gross domestic product." In my reading of the bill, I'm not sure that that term was defined. Perhaps it needs to be defined, if the word "real" there means that it is inflation-adjusted. It maybe makes a little more sense if "real" does not include the adjustment for inflation. Then 2 percent isn't much of an adjustment figure.
British Columbia has been going through growth in the number of people that live here of something in excess of 2 percent and less than 3 percent per annum for the last four or five years, I think. We've certainly had inflation, although much lower than it was. It's down into the 1, 2 and 3 percent range. But since the Second World War, inflation levels have gyrated fairly wildly in all countries of the world. In the two centuries before the First World War, inflation was virtually zero. A loaf of bread in 1938 cost almost the same amount that it cost in 1738. That was quite a surprise to us. We've seen the price of a loaf of bread in the last 50 years go up by huge numbers -- perhaps 100 times, or at least 50 or 20 times. Although this bill creates some certainty, I hope, for municipal governments, it does it in a way that doesn't give me feelings of comfort.
I'd like the minister, perhaps in her closing remarks, to deal with the issue of the definition of "real" in "provincial real gross domestic product." Limitations are put in to protect the provincial government from future swings in matters. But as they protect themselves with a 2 percent cap, one must recognize that that's not much assurance for municipal government. With inflation running the way that it is in 1994, perhaps that is reasonable. But believe me, just like the price of real estate, gold or copper, everything will hit its cycle. We must recognize that cycles that happen in pricing are real. They will always be with us. That's just the way the economy of the world works.
During committee stage of this bill I also look forward to discussing the issues that deal with per capita grants and whether the movement of population into the province has been properly addressed in this bill. As we all know, in the last few years it has taken place in areas like Kelowna. My initial reading of it leads me to understand that a following year's grant is going to be based on a previous year's grant, not necessarily on the number of people living within the municipality at the appropriate measurement time.
With those few words, I will take my seat and look forward to participating in this debate in committee stage.
L. Fox: I am pleased to stand and talk on Bill 20. In her opening statements the Minister of Finance suggested that this had the support of the UBCM and that there had been ongoing dialogue between the UBCM and her ministry. It comes as no surprise to me that the UBCM would support this, because there have been so many unknowns over the course of the last two and a half years under this government with respect to grants. I'm sure they would grasp onto anything that provides some kind of certainty for the future. However, when we look at the history of why revenue-sharing grants, as they used to be called, were created, it's very clear to me -- as I'm sure it is to municipal politicians -- that the government and municipalities of the day came up with the previous formula, and particularly the term revenue-sharing, so that the municipalities would share in the good and bad economic times of British Columbia, and the trigger of that would be the population growth and population shift throughout the province.
In the very early eighties, municipalities had some difficulties dealing with both the downward and upward shifts in the economy; there would be good and bad years. Three, or perhaps four, members of this Legislature were part of the UBCM initiative to create a reserve that would look after those peaks and valleys, and that they would be able to draw on, triggered by the need of the day. This government nixed that reserve in one of its very first actions after coming into power. Revenue-sharing grants were just that: they were attached to and driven by the revenue received by the province, and they were allocated on a per capita basis -- particularly the unconditional grants. It is my understanding that some considerations were given with respect to the conditional grants as well.
Now we no longer have what was called a revenue-sharing grant; we have local government grants. That seems to indicate to me that it could very well be the sitting government that determines whether or not grants will be levied. There's some question in this bill as to that role and what automatic payment would be made under the conditional grants. It seems to me that it would be entirely at the whim of the government as to whether or not they wanted to put anything into the conditional grants section of this bill.
I'm extremely concerned, because this bill limits the opportunities for municipalities to become self-sufficient and to deal with the revenue base on a year-to-year basis. Back in the mid-eighties the UBCM convinced its membership that they should not accept all the revenue due to them because of an increase in revenues to the province; they should set it aside, so that they could manage their future without knocking on the government's door. To me,
[ Page 10463 ]
that was a very good and credible process for the municipalities to look at, and it was fiscally responsible. I think that municipalities have shown the way over the years in terms of how to be fiscally responsible. They are not getting a lot of help from this government in terms of meeting those demands. There is no question in my mind that the UBCM and the municipalities would support this bill, because it does provide them a degree of certainty which they have not enjoyed from this government over the last two and a half years.
The fact that this bill is called the Local Government Grants Act instead of the Revenue Sharing Act is significant. I'm very concerned about the future, given this government's actions over the course of the last two and a half years, when it passed on much of the burden to local taxpayers and municipalities. Now we see another initiative in this legislation that will allow them to enhance that in the future. I look forward to committee stage of this bill in order to explore some of my concerns and concerns that I think will be identified by municipalities in the province.
Hon. D. Marzari: Bill 20 repeals the Revenue Sharing Act of '78 for a reason. Very shortly after 1978, the whole notion of revenue-sharing between the province and municipalities disappeared into a cloud of smoke and mirrors. The intent of the act, which was to share revenue from the natural resources of this province with the municipalities, basically disappeared. Consequently, if we were to track what has happened to the formula that was established back in '78, we would be looking at a major deficit situation in that fund today -- a fund which would have tripled or quadrupled in value and gone to municipalities. I must say that that would have been more than useful for municipalities throughout this province.
[10:30]
But we are not looking at a situation that in the last two and a half years has reached proportions that municipalities could not cash in on; we are looking at a situation where a smoke-and-mirrors fund was in operation for quite a number of years -- since the early eighties. This province has taken a stand with the municipalities to seek stability, predictability and some form of credible relationship between the provincial government and the municipalities we attempt to serve and service.
The former system of revenue-sharing was therefore completely ineffective almost from the day it was brought into being, and completely unaffordable by the early eighties. It was ineffective because it simply didn't deliver certainty and predictability that local governments desperately need by January 1 of each year. It was unaffordable because the input side of the program was fixed by statute at an unrealistically high level. This resulted in annual increases that far outstripped governments' ability to pay, reductions on the output side of the program and a ballooning but completely illusionary fund balance. The surplus never existed, except on paper. The financial review conducted in 1993 by Peat Marwick Thorne pointed out that the theoretical surplus fund was not backed up by cash or any other assets. The revenue-sharing fund was a special account; as such, it was a part of the consolidated revenue fund.
The special account, including the so-called accumulated surplus, is completely discontinued by Bill 20. The new act replaces the smoke and mirrors and this notion of revenue-sharing with an honest and forthright bill that basically gives municipalities what they have been asking for for quite a number of years -- plus, for the first time in legislation, this bill includes an innovative consultation clause that commits the provincial government to review the municipal general grant formula every five years. It responds to a major criticism of the old act, whose formula has been in place since '78 without ever being formally reviewed. In fact, municipalities and the province lived for all those years with a whimsical situation, where there was an annual last-minute situation of: "Let's forge some kind of budget here." Bill 20 finally brings predictability, plus a legislated guarantee of consultation.
The review of local government transfers, which we completed in September 1993 with a joint provincial-UBCM working group, led to the development of this new act. Bill 20 is an example of the kind of successful collaboration that is possible when two levels of government sit down and try with certainty, stability and predictability to give municipalities exactly what they are asking for in their relationship with the provincial government.
What does it look like, and what does the bill provide that local government can buy into it so easily -- or not so easily, but after a period of consultation and some hard bargaining? It buys accountability. Under Bill 20, police and health equalization grants will move to their appropriate ministries. All the other programs will remain under one funding umbrella: namely, the Local Government Grants Act. Thanks to the elimination of this bogus surplus, it will be very clear where provincial funds have been allocated.
It also provides predictability. Under the old system, local governments had no certainty because of the increasing affordability gap between the input and output sides of the program. By establishing a base level for the grant plus a formula-driven adjustment, there is finally some predictability.
How does the formula work? Beginning next fiscal year, the total amount of the municipal general grant will be adjusted up or down according to a two-part formula. The total will vary with the percentage change in the province's GDP for the year within a plus or minus 2 percent range, but the rate of increase will not be higher than the percentage change in B.C. government spending as a whole.
In terms of the distribution framework of the moneys allocated to municipalities, there will be no change in how the grant is divided. This is a reasonably well-established principle in regulation, I believe, as to how the dollars actually get allocated among municipalities. Generally, it's done early in the year so that municipalities have a good idea as to what they can expect out of the overall pie. This is generally driven by a per capita grant formula.
The third thing it provides the municipalities is some compatibility with multi-year commitments. The new act assures future-year payment of prior years' commitments. This includes debt-based infrastructure grants from previous acts. It's also responsive. The new act permits adjustment to municipal general grant levels according to fluctuations in the provincial gross domestic product.
The opposition critic for Finance suggested that these numbers could be played like violins. I would suggest that notwithstanding what we all may think of economists, there is, generally speaking, a reasonably recognized GDP figure for the province of B.C. That figure is one which is generally respected by financial institutions and governments across this land. At a certain point, we have to agree on certain numbers. Knowing that British Columbia is one of the fastest-growing provinces in the country, and knowing that we have seen 3 percent growth rates over each of the last few years, we can expect that the GDP is not going to decline. To the extent that the new local grants initiative does respond to the GDP in a gross way, if I may say, the grant levels will rise
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and fall -- hopefully rise and continue to rise -- with the GDP.
Fairness is another component and value which this government holds dear, and I must say, so does the UBCM. The equalization component of the municipal general grant is being maintained. The floor supplement once again ensures that no municipality will experience a drop of more than 4 percent in this budget year on the final divvying-up of the pie.
Program coordination. Police and health equalization grants will now move to their appropriate ministries, as I suggested before. Hopefully, this will improve the coordination of what we can deliver in terms of police and health programs, and might lead -- in consultation once again with the UBCM -- to a better use of that money, some better guarantees and some updating of the regulatory framework around police and health equalization grants. All the other programs will remain under the funding umbrella of the act itself.
Both levels of government will make important gains from the legislation. Local government receives a formula-based municipal general grant and statutory consultation with the minister responsible for the new act. The provincial government gets a local government grants program that is affordable and which comes within the framework of sound fiscal management in a way that does away with the surplus fund, sets local government grants on a sustainable foundation well into the future, removes the element of whimsy and lobbying, and introduces elements of partnership, proper negotiation and consultation around the very special relationship this province has with the municipalities it serves.
For all these reasons, I speak to the passing of Bill 20 in this second reading stage.
G. Campbell: It's a pleasure to stand and speak to Bill 20 and to hear the Minister of Municipal Affairs describe its many attributes. It would be difficult to find anything wrong with it if you didn't know the history of the Revenue Sharing Act. I think a number of things are wrong with this initiative, the first being that we have moved away from what I believe should be the direction that government should take at the provincial level -- and that is to give more responsibility and revenue to the local level, where they will spend it far more acutely and with far more accountability than we currently see.
I think the minister's brief history of the Revenue Sharing Act leaves a great deal to be desired. Indeed, when it was first broached by this particular government that the revenue-sharing formula was not affordable.... One of the major errors that the successive provincial governments made was that they really just did not live up to the legislated commitment they had made to municipalities across this province when the Revenue Sharing Act was first put in place.
In this government's first budget they reduced the unconditional grant from $135 million to $120 million, without using the emergency fund set aside by municipalities to ensure that that kind of dramatic reduction would not take place overnight. Unfortunately, it did take place. We now have in legislation the announcement from the government that $120 million evidently is the right amount, the only amount and the amount that all the municipalities in the province should stand up and cheer about. I certainly can't do that. I don't believe that it really is in any way a justifiable contribution to the municipal infrastructure and municipal services that people across this province have expected and to the unconditional grant fund which has been made available to municipalities in the past.
The initial revenue-sharing formula -- which included 1 percent of both the provincial personal and corporate income taxes, 6 percent of provincial social services taxes and 6 percent of renewable and non-renewable resource revenues -- was really a formula. Yes, it did have some uncertainty in it. But if the funds generated by that formula had been used as they were intended to be used by legislation, not only would the services have been affordable to the government, but the funds would have provided the kinds of services at the local level that people deserve to expect.
We understand that the provincial government is passing a number of unfunded mandates down to the local level of government. When the provincial government decides that they are not going to deal with a problem, they simply pass legislation and say to local councils: "You deal with it." The revenue-sharing fund was a way for local governments to try to meet some of the requirements that exist at the local level.
The unfortunate tag that said that this was unaffordable shows an appalling lack of understanding about what happens with provincial revenues. The fund is established by legislation. We've heard in this House lately that when you establish something by legislation, nothing will change it. The fact of the matter is that it does change. The reason people are concerned about accountability is that the government changes it at will. The problem we have when a fund of this sort is set up is that it is not used for the purpose for which it was established. Instead, successive governments followed their legislative requirements by putting it on the books, but they decided not to use that fund to provide the services that people rightfully deserve to expect.
One of the keys that we have to look at in strengthening not just the government but the services that are provided to people across this province is to give more tools to the local levels of government so they can respond to local needs and meet a number of objectives that have been established by the provincial government. We have watched in the last successive budgets, this one being the highlight, where they have simply wiped out the surplus that was to be contributed to property tax payers across this province. We have watched the provincial government consistently brag about their ability to cut costs, when what they were really doing was cutting back on contributions to the local level of government -- to local taxpayers. They hid their cuts at the provincial level behind the additional tax bills being sent by local levels of government.
This minister and the Minister of Municipal Affairs have said that the UBCM has come and embraced this wholeheartedly. I can tell this House and I can tell you, hon. Speaker, that that is certainly not the case. While the UBCM may have accepted this as the resolution of a longstanding problem, they certainly do not embrace it. Indeed, it is moving away from the resolutions with regard to financing local governments passed by successive conventions of the Union of B.C. Municipalities and undertaken by the UBCM and the provincial government back in 1989. That was when a very significant review of local government financing took place with the Ministry of Finance, the Ministry of Municipal Affairs and a number of other government agencies.
[10:45]
As we look at this bill, I don't think it's a bill to celebrate. Yes, I understand that $120 million has been established for the time being -- until the next budget, when the government may decide that they'll cut it, as they cut $135 million two years ago. We understand that the government feels that this may not be affordable, but the crux of
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affordability has really fallen on the property tax payer in the province.
The Minister of Municipal Affairs also mentioned the police and health grants. Once again, those grants do not suffer any kind of rational distribution across the province; they have become simply political choices made by the government of the day. They are doled out to the constituency that seems to offer the government the best return for that investment.
In the long term, I believe that the key to a revenue-sharing program between the province and municipalities is to provide unfettered, unrestrained municipal grants, so municipal councils can make the choices they deem to be most appropriate. That is something we should be increasing and enhancing as opposed to decreasing, shrinking and constraining, as does the act that is before us today. In the long term, we will have to re-examine how we supply additional funds from provincial revenues to the local levels of government, so people feel a true sense of accountability, affordability and accessibility to the services in their communities that are required to maintain and enhance their quality of life.
The Local Government Grants Act simply moves back. I can recall that in 1974, I think it was, I visited the office of the then-Premier, Mr. Barrett. He pointed out that the nice thing about local government grants was that he could look in the mirror in the morning and there was at least one decision he could make that he didn't really have to think too much about; he could just do what he felt like. Local governments are far beyond that in terms of the kinds of services they provide. We should be looking at them as one of the primary providers of services in this province -- one of the primary tools we have to provide for the kind of accountable and affordable services that we need to ensure that we enhance the quality of life of every community of the province.
The Local Government Grants Act shrinks the commitment the province has had to local communities in the past. I can assure you that this has nothing to do with affordability to the provincial government. It has to do with choices that successive provincial governments have made that said local communities and local taxpayers are not important. I don't believe that we should celebrate the thrust and direction of this act. I think it is an admission of failure by this government, and I look forward to a more detailed review of the bill in the next stage.
L. Hanson: I rise to speak against Bill 20. I don't think that we've heard the motivation for Bill 20 today. I think we heard it at the UBCM convention last year, when the Minister of Municipal Affairs got up and said that we can no longer afford the revenue-sharing program that we have in place. Then comes the question of what we can and cannot afford. Obviously, in the minds of this government, they can't afford to share with the municipalities the revenue that the province takes in.
The minister suggested that the UBCM was quite happy with the new bill and the new process of sharing. While I can appreciate the minister's suggestion that there is some stability in the $120 million and the basis that they're talking about for revenue sharing, if the minister were sincere about the consultation process with local government, the question could have been put to last year's or this year's UBCM convention: "Do you like this system better than you liked the old system?" I suspect that it might have been close to a unanimous vote at the convention that they would sooner stay where they are.
The Minister of Municipal Affairs suggested that it was a game of smoke and mirrors. I suppose some political objectives have been met with the various allocations over the last few years, particularly in the last couple of years. But if the minister were really concerned about that, why not bring in some changes to the Revenue Sharing Act? The simplest change in the world is to say that all of the money that goes into the funds would have to be distributed to the municipalities on an annual basis. There would no longer be any smoke and mirrors, or any opportunity to have smoke and mirrors, as the minister is suggesting. I think the reasons for presenting Bill 20 are really smoke and mirrors, as opposed to the suggestion about the old process.
The minister has obviously not had much experience in business or in any of the other government entities in the world today, particularly in Canada. The minister should talk to a chartered accountant firm and see how many reserve accounts in any business have actual cash money sitting in a nice little account that says: "I've got a reserve for this. There's the money sitting there." It's just not true. When you talk about government reserve accounts, they are liabilities. I guess the smoke-and-mirrors issue is more in the minister's mind than in fact.
A question that will be asked later, as we get to committee stage, will be: what happened to the $250 million that was already in reserve and has been wiped out by this act? Depending on the way it is handled, it could be considered a reduction in this year's deficit, or a reduction in the accumulated deficit of government. It will be interesting to see how the minister is going to handle that issue when we come to committee stage.
The minister was very proud of the consultation process. Again, I mention the fact that this government has a reputation for consultation, meaning that they'll decide what they want to do and then go out and find the right answers to the questions they know are going to be asked so that it will prove that what they want to do is the result of that discussion and consultation process.
The bill deals with unconditional grants, but it doesn't deal with conditional grants. It sets up a process where the minister may, through the generosity of the Finance ministry, provide conditional grants to municipalities. At least with the revenue-sharing program that was in place before, there was an obligation on the part of government to recognize that that money belonged to municipalities. Even though it may not have been paid out in any fiscal year, there was a responsibility and probably a dedication to provide some conditional grants to municipalities for infrastructure works.
As I read this act, the government has, subject to their budgeting process, the right to provide or not provide conditional grants. I suspect that most of the money this year has gone into the tripartite sharing program for infrastructure with the federal government, even though, according to federal rules, the money contributed was supposed to be new money. I suspect that is where the conditional grants have gone this year. While it does provide some financing to municipalities and other government levels for renewal of their infrastructure, it isn't really what the federal fund was originally intended to do. In my understanding of it, there was still a requirement for the provincial governments or authorities to provide those conditional grants just as they had in the past, and if they wanted to subscribe to this federal infrastructure-sharing project, it was supposed to be new money. I suspect that is where most of the old revenue-sharing program grants are going.
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I look forward to committee stage, because it will be interesting to see some of the smoke and mirrors that are going to come forward as to the reasons for doing various things. We will, I'm sure, spend some time analyzing those things. If consultation is a major interest of the Minister of Municipal Affairs and the Minister of Finance, they should hold this bill up, go talk to members of the UBCM and see what they say about it.
G. Wilson: I, like many others in this House, have come into provincial politics through municipal levels of politics. Therefore this bill has a particular relevance to those of us who have been privileged enough to serve the public at a municipal or regional level of government.
As we get into second reading and deal with the principle of this bill, I think there are three areas that need to be addressed and discussed. Quite clearly, the move away from the Revenue Sharing Act and towards annual unconditional grants to municipalities raises a series of questions with respect to the general financing of activities conducted and regulated by municipalities through local bylaws. It also, I think, addresses in principle what the relationship should be between the provincial level of government and municipal levels of government, recognizing that municipal levels will vary depending upon the size of the community and the extent to which the community interacts with a larger regional district.
It seems to me that the proposition the federal government has put forward also has to be looked at, in the second analysis, with respect to moneys that are made available from the federal government, through or in conjunction with the provincial government, to the municipalities with respect to a tripartite agreement for municipal infrastructure. I would also like to talk a bit about that, on principle, with respect to the grant provisions of Bill 20. The third area I would like to talk about has largely to do with the cost and layering of government and what that means to the people who are ultimately going to be supporting the initiatives that are entertained in Bill 20 -- the taxpayers of British Columbia, of course. They are ultimately going to have to finance not only the municipal level of government but also the provincial and federal levels.
As I start off addressing the principle of this particular bill, let me say that the manner in which the provincial government assists or finances municipal infrastructure or municipal governments must be of critical concern to the taxpayer, because it locks us into a financing strategy that in the first analysis might have major benefits to local communities but in the final analysis may in fact incur long-term debt liabilities by one level of government that are ultimately going to have to be financed by a second, or possibly a third, level of government. Nowhere is that more clearly seen than with respect to the degradation of infrastructure systems in major municipal areas, such as Vancouver, New Westminster and some of the older municipal centres in the interior. We end up with a situation where the taxpayers are dependent upon infrastructures like water and sewer and other regional infrastructures that the municipal governments may be liable or responsible for, which might even be something as simple as sidewalks, street lighting or other services. Ultimately, once these infrastructures are financed and constructed, a level of service that must be maintained is created within that community.
[11:00]
While we look at the expanding tax bases of some communities, we have to recognize that others are shrinking; nevertheless, once implemented, those infrastructures must be serviced, and we end up with what I think is a very difficult proposition for the taxpayer to grapple with: the understanding of how either conditional or unconditional grants to the municipalities from the provincial government may in fact affect or alter the amount of money they're going to have to pay through their property tax assessments, through the mill rates -- which may in fact be changed -- and, ultimately, through the income tax that is going to be apportioned as part of their income, or through taxes or service costs that may be assigned by the provincial government.
[D. Lovick in the chair.]
Let's not fool ourselves when we're tinkering with the system in which grants may be provided to municipal governments. We're simply talking about ways to divide and distribute the pie from a single source: the taxpayers of British Columbia. The reason I think it's important, under Bill 20, for us to enter into this discussion is that we have to understand that the services being provided by municipalities.... I heard the new Leader of the Official Opposition saying that municipalities should expand to provide more and more services. I think we have to be extremely cautious about that, because the greater the service allocation -- the more those services are put into communities -- the greater the overall cost to the single taxpayer for the long-term maintenance of those services once we create the expectation that they are going to be delivered.
Quite clearly, the municipal and provincial tax infrastructures are escalating beyond a point that British Columbians can afford to pay. We are going to expand beyond the means of long-term financing. So if our only capacity to generate that money is going to be through a long-term borrowing strategy, we have to recognize that a bill such as Bill 20, which is for the provision of unconditional grants to municipalities and the authorization of additional grants to municipalities, is in the final analysis going to increase the long-term debt. We have to be absolutely clear about that.
As politicians, we often find ourselves in the situation where members of communities come to us and say that they have to have additional water lines or sewer lines, or the sewer lines and septic systems they've got have to be converted to a municipal sewer, and that it is a desirable move to make. But let us be very clear that once we take that step, once we put those provisions into place, we have created a long-term liability. That long-term liability, if convention has its way, will be picked up and maintained by local government, and the proportion of tax that the local government demands will necessarily have to be increased.
Dealing with the general principles of local government grants from the provincial government, I think there must be a move to reduce or limit the layering of government that we currently have in British Columbia. We need to focus on moving toward the larger, regional delivery of government services and less on the small, isolated and divided municipal delivery of services. I say that because we are looking at a situation now where British Columbians are becoming overgoverned, overregulated and, as a necessary result of that, overtaxed.
If I take issue in principle with anything at all in this bill, it is that we have not addressed the grants to authorities other than the traditional municipal authorities. I refer specifically to the Islands Trust, which needs to be given greater priority with respect to the maintenance and
[ Page 10467 ]
protection of the islands under its authority. As populations expand, we also have to look at those regions that are either within the Islands Trust or adjacent to it -- I refer specifically to the Broughton Archipelago, an area just north of the riding of the hon. Deputy Speaker -- in terms of not just the existing population that resides there on an annual basis but also the demand that area is now starting to create with respect to use of its tremendous recreational resources by British Columbians and, more specifically, people from offshore and from Alberta.
Let us be very clear that if we are moving toward a regional concept of municipal financing, then the Islands Trust should be given greater predominance. We should start to enhance the Islands Trust's capacity not only to maintain its own jurisdiction but to look toward the inclusion of other areas that are currently outside the Islands Trust. The Broughton Archipelago is one area that needs to be given serious consideration.
With respect to the consultation process, which is dealt with here in the provision of grants, it is incumbent upon municipalities, regional districts and the Islands Trust to commence to work together. They must make sure that moneys are being allocated to those regions in a manner that provides maximum benefits to the regions themselves, rather than being isolated and used in the municipalities in a manner that does not look toward regional well-being. Similarly, we have to recognize that if we provide authority and jurisdiction to municipalities for the provision of greater services, implementing those greater services will ultimately create a demand for greater revenues. That means expanded tax revenue, and that means more costs to the taxpayer.
As I bring those three points together and conclude my remarks, it is important, in looking at the principles of Bill 20, to move away from the general question of grants and get rid of the Revenue Sharing Act, and look beyond a new conduit through which moneys can go from one level of government to another. We have to recognize that there is only one taxpayer. What is really essential here is that we provide maximum benefits with the tax dollars collected. In order to do that, we should be looking at a new regional infrastructure that will bring municipalities together into one regional fiscal entity. If there isn't a willingness on the part of most municipalities -- although I believe there would be a willingness -- we should force that concept to come into play. Areas must make decisions on a regional basis so we can start to put an infrastructure in place that can be sustained by the tax base in British Columbia.
In conjunction with municipal demands that are going to continue to escalate, failure to address that concern will only create long-term debt implications for the provincial government. You can't offload services, you can't simply provide grant provisions to municipalities, and you can't expect municipalities to put more and more of the services being demanded by their constituents in place without recognizing our finite limit to generate that from the tax base. Therefore we must move toward long-term debt-financing costs and debt-servicing costs.
In reading this, we are not opposed in principle to the idea that we are going to move from the Revenue Sharing Act toward a new and unconditional grant provision to municipalities. We understand that there are many different ways for the provincial government to provide finances and to assist the municipal levels of government. We are concerned and would like to see the root cause of the problem in this act changed: that is, that the duplication of services in some instances, the system incompatibility between municipalities in certain regions, the long-term provision of services and the long-term debt implications of those services do not take into account the finite capacity of people in the province to actually pay for and maintain those services.
We can approve of and accept that Bill 20 is one way to go. We are interested and would be most anxious at committee stage to actually get into the details of some of the provisions that are included in the details of this bill -- in particular about how the unconditional grant is going to work with respect to fixed amounts to municipalities and regional districts. Many, many questions are going to come in with respect to those fixed amounts and annual expenditures provided for in this bill. I would like to get into that in some detail.
In conclusion, let us say this: yes, at the moment provincial governments are forced into a situation where grants to municipal governments are required. Is there a long-term capability and capacity for the taxpayers of British Columbia to have an ever-escalating demand? The answer is no. Should there be a better system for us to be able to provide services at the municipal level, so there is less duplication, greater integration and a greater return for the dollars invested? The answer is yes, there should be. Is that reflected in this bill? No, it is not. Was that the intention of the bill? Perhaps not.
But perhaps it should have been -- hopefully, this bill will be -- the first step of a move toward regionalization of services, so that in that regionalization concept we can bring municipalities together, provide integrated service delivery and have a provision therefore to get a greater return for the dollar invested -- respecting that there is only one taxpayer and that that one taxpayer has to finance all levels of government. The more levels we have, the more expensive it is. It will not matter how we distribute the pie. There is a limited amount of ingredients -- read tax dollars -- to put into that pie in the first place. We must be respectful of the fact that we are already well beyond the limits of paying.
The Alliance members certainly look forward to getting into this bill in committee stage. We will be asking some detailed questions in committee stage, and we look forward to that aspect of this debate.
J. Tyabji: I want to keep my comments brief, as the leader has already covered most of the points. The one concern that comes up, that obviously can be addressed better in committee stage.... But in principle, when one reviews this bill and we talk about conditional grants and some of the situations in which conditional grants are justified, the concern that would come up is that if partisan politics or turf battles break out between the various levels of government, there would be an opportunity for conditional grants to be awarded -- or the reverse -- on the basis on some sort of partisan favouring. For example, if we had a provincial government and there was a good relationship with one municipality, then there could be a conditional grant and the justification as set out under section 4.
I think we have to look at the fact that only a limited amount of money is coming in. With the unconditional grants, it does seem to me that this bill could lay the groundwork -- and it talks about regulations to follow the bill -- for a very dramatic change from the way the relationship between the provincial and municipal governments has developed over the years.
I think a question that should be debated in this House at some point is: where is this government going with regard to regional districts and municipalities in terms of the growth of the province? What is the long-term vision of this government and this minister? Perhaps in the minister's
[ Page 10468 ]
closing comment she can address that, particularly from the point of view of future governments' relationships with local governments. How would this bill affect them? The regulations aren't before us yet. That's where there are some alarms about where this government is going, which can obviously be canvassed better in committee stage. Through this bill, what opportunities is this government providing for future governments that might have very different intentions? That's where I have a concern. With that, I conclude my comments.
C. Tanner: I rise today to speak to Bill 20, Local Government Grants Act. Having listened to all the members on this side and both ministers speak, one can't help but draw the conclusion that there is a very basic difference of opinion on funding municipal governments between that side and this side of the House.
The Minister of Municipal Affairs proudly stands up and says: "We have a negotiation with the municipalities through the UBCM." A negotiation normally is between equal partners. When one of the partners is the provincial government and is providing the funds, there's no form of equality in that sort of negotiation. It's a bit like two people sitting down to have a game of cards in which one of them says: "I'll hold the cards, I'll deal and I'll tell you when you've won." That isn't fair; that's not the way it's played.
[11:15]
When I phoned the UBCM and asked them what their impression of this bill was, they reluctantly said: "It's a salvage job. It's the best we can do in the circumstances, after two and a half years of not knowing where we stand and having an act that didn't work that well in previous years." I admit to that fact, but this is not necessarily the resolution of a very major problem in municipal funding.
The municipalities cannot negotiate when they know that the people on the other side of the table are going to say: "Unless we come to an agreement, this is what you're going to get." When so much of their income is dependent on what the provincial government says to them, neither can they genuinely say: "This is our point of view. Would you respect it?" And it hasn't been respected in this bill.
There is no doubt at all that somewhere down the line, whether it's on paper or in the bank.... And it isn't in the bank; $250 million in the reserve fund has disappeared. If you're in business, it's a bit like saying, "I have retained earnings," and someone comes up and says: "Well, show me where the money is." The retained earnings aren't in the bank; they are on the books. Somehow the provincial government has managed to foist that $250 million and has taken advantage of the municipalities in that respect.
All of that apart, this bill is going the wrong way. It is essential in this province -- in this country, in fact -- that if we're going to get some sort of common sense and find some solution to the taxing problem, we've got to bring the taxing authority as near as possible to the deliverer of services. In my view, and I think in the view of the leader of this party, that should be the municipalities. I would suggest that in the long run we should be talking to the federal government and saying that we need to overhaul the taxation process in this country. There needs to be some recognition, as there is in other countries, of how taxing is done in Japan or in Europe, for example.
I'd like to quote from an address given by Mr. Richard Gilbert to the Ontario municipalities association last August. Mr. Gilbert is the president of the Canadian Urban Institute. In an effort to shake up the municipalities and maybe even make the Ontario provincial government wake up, he is making some drastic suggestions. Let me read some of the thoughts he had last October:
"...a vibrant municipal government that is the manifestation of government in its community needs a sure income based on ability to pay, and not necessarily only what the residents of the community can pay. It needs a guaranteed share of a larger pool, which means, for example, an unalterable percentage of income taxes. Japan does this; local governments there are entitled to 32 percent of nationally collected income taxes, as well as 24 percent of sales taxes and fixed percentages of other taxes. Many countries in continental Europe have similar arrangements."
He goes on to describe what happened in Japan when they tried to change it. There was an uprising by all the municipalities, and the federal government realized that they couldn't make a change, because the repercussions would be too devastating to the municipalities. That is the sort of radical change in taxation that we should be addressing in this country.
The provincial government in British Columbia seems to have a paternal attitude toward the municipalities. It is personified in the consolidated edition of the Municipal Act, which now runs to 555 pages. Why do we need an act with this much language to tell the municipalities, which are delivering service to a local authority, that these are the rules they've got to work by? Why can't we trust those municipal politicians to make the same decisions that many of you in this House today were making when you came through that process? You think you can make those decisions now that you're sitting in this House, and you don't think that the friends you've left behind in the municipalities can make them there. I think you're wrong. Both ministers are wrong, and I think this government is wrong. They've got to give that trust back to where it should be administered.
When we get into the details of the act in committee stage, this side of the House will be talking about various parts of the bill. Suffice it to say that the theory of the bill is wrong. It salvages a problem that this government has had with the municipalities, and it coats it over. It takes into consideration a negotiation which was unfair and unequal. It doesn't really solve the problem of municipal financing, because in the long run any act of this House can be changed by this House -- as has been proven by this government, which over the last two and a half years has changed its tune and direction with every change of minister.
We look forward to examining the details of this bill when we get to the clause-by-clause discussion, and we will have things to say then.
Deputy Speaker: The minister closes debate on second reading.
Hon. E. Cull: I was particularly interested in the opening remarks of the member for Saanich North and the Islands, because he said that there was a difference of opinion on each side of the House when it comes to the funding of local governments. I agree with him; there is a difference of opinion. It's not the difference that he points out; the difference is that those of us who sit on the government benches have to deal with the reality of the entire financial situation of the province, not just pick things apart one at a time. We also have to be consistent when it comes to the arguments we make with respect to funding.
Members on the other side of the House have been calling for a reduction in government spending. I have to assume that means all government spending, and they're not saying: "Reduce provincial government spending, but increase grants to local governments." If they're going to be honest about the comments that they have been making to us, that
[ Page 10469 ]
spending has to be brought down -- as we have consistently.... Spending has come down from 12 percent in 1991-92 to under 6 percent in the year we've just completed, and from 3.5 percent in this budget year to 2 percent in the next two.
Interjection.
Hon. E. Cull: It's interesting that as I give those figures, I hear one of the members say: "That's not a cut in spending; that's a growth in spending." The member is right. The rate of growth in spending has come down, but there is still a growth in spending, which represents the fact that 80,000 people moved to British Columbia last year, and those people require additional services.
The members opposite -- not all of them, but certainly the official opposition -- appear to think that that is not a relevant argument in this case and want to see even deeper cuts to spending. I have to ask you to be consistent: if you're going to ask for cuts in spending for provincial government overall, then don't stand up here and say that you didn't mean that for local government, education or the highway system in your riding. That's where the difference comes about.
This legislation is designed to deal with stability and predictability, and it does that. It provides stability in grants. The one thing I got out of my prebudget consultation with the executive of the Union of B.C. Municipalities, as well as with the many mayors and councillors I met around the province, was that they wanted to see some stability, and furthermore, they wanted to know where things were going to go from year to year. They didn't ask for great increases in the grants. They recognised the realities of trying to deal with the deficit and the growing demands of the province. They said: "Give us stability and predictability."
This also deals with two other aspects: affordability and accountability. I have really canvassed the affordability issue. We cannot afford to provide large increases to local government grants at the same time as we're trying to restrain the rate of growth of spending. That is why the formula put in place deals with the economy. It says that the change in grants to municipalities should be roughly tied to the rate of growth of our economy. If our economy is getting better in British Columbia, the municipalities will share in that; if our economy is getting worse, then they will also have to share in taking on some of that responsibility. But it goes one step further and directly ties it to government spending. If next year government overall is going to spend another 2 percent, as we said, that effectively says that local government shouldn't expect to be protected from the tough decisions the government will have to make to keep spending at 2 percent. That's where the affordability comes in.
The other aspect, though, is accountability. I think this is perhaps the most important thing, because at the end of the day there's only one taxpayer. That taxpayer doesn't care whether the municipal, provincial or federal government takes the taxes out of their pocket; the taxpayer cares about whether they are paying an appropriate level of taxes and, more importantly, whether the taxes are being spent on the services they rate as the highest priority. If you ask people -- and it doesn't matter whether they're in my riding of Oak Bay, in downtown Vancouver, in northern British Columbia or anywhere else in the province -- they will tell you that the top priorities for government spending are education and health care, and those are services that are funded by the provincial government. For these members to stand up and say that they think local government expenditures are so important that they should receive a higher level of spending than overall provincial funding ignores the reality that people in the province are putting their priorities on education and health care. When it comes to where their tax dollars are being spent, that's where they'd like to see them go.
In conclusion, this bill is a good compromise. It deals with years of problems -- smoke and mirrors, as the Minister of Municipal Affairs has put it -- when municipalities knew full well that the formula that had been established in the 1970s was never going to be paid out for them. Now they have a base amount, and they have a formula with which they can calculate what they will get next year. It will make their planning much more predictable and will give them more comfort as they go into their own budgeting processes.
With that, I will move second reading of the bill.
Motion approved.
Bill 20, Local Government Grants Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.
Hon. E. Cull: Hon. Speaker, I call committee stage on Bill 19.
TAXATION STATUTES AMENDMENT ACT, 1994
The House in committee on Bill 19; F. Garden in the chair.
C. Tanner: On a point of order, Mr. Chair.
The Chair: State your point of order.
C. Tanner: Mr. Chairman, this is fairly important taxation legislation we're talking about. At the very least we should have a quorum.
The Chair: Your point is well taken, member.
On section 1.
F. Gingell: It is not possible to allow section 1 to pass without that little statement of principle I already mentioned once this morning with respect to Bill 20.
[11:30]
Over the years I have listened to the statements of the New Democratic Party on their belief in a progressive tax system. I find it hard to understand that they wish to carry on with these provisions of the homeowner grant phase-out or clawback, or whatever other term one would like to use. Without question, there is in my mind no relationship between the assessed value of your home and the ability to pay.
I have lived in my home for some 35 years. That is probably a long time by British Columbia standards, but it is a family home where my children were brought up, along with innumerable dogs. I believe this is an inappropriate way for government to deal with something such as the homeowner grant, which was originally intended -- and is still accepted in principle, I believe -- as a means by which education costs were removed from property taxes and paid out of general revenues of the province, because it was seen by government to be not appropriate to fund education from property taxes. The government has brought in a provision which brings education costs back onto the shoulders of property owners. That's what the homeowner grant was originally there to negate.
It is not based on the ability to pay. I have used many examples in the past. One that stands out in my mind is the
[ Page 10470 ]
situation of a very elderly gentleman in his late nineties, who lives in West Vancouver on property he bought in the early 1920s for their summer cottage, when the only way you could get across there was on a boat. The gentleman worked for Canadian National Railways, and he has been retired for 30 years or more. He has a pension of around $21,000. The assessed value of the property is $1.2 million; the improvements are valued at $1,800. What has that got to do with the fact that this is a property with a run-down shack on it? He will lose his homeowner grant. I would presume that the only way he would be able to stay on the property, because he doesn't have the income, would be to have his taxes loaned back to him to form a mortgage on his property.
Now that we have the advantage of a new Minister of Finance, who has gone back and made what I believe to be a lot of positive changes dealing with some of the matters that needed to be dealt with -- and in this act we will be dealing with the correction of what I believe to be past mistakes -- I would like to suggest again that if you insist on having a clawback of the homeowner grant, put it on the assessed value of the improvements only. I appreciate that you might have to bring the numbers down, but clearly, if you look around the province to where the senior high-earning people live in the various communities, you will find a much greater relationship between people's incomes and their ability to pay to the value of the improvements and not to the value of the land, because the land normally is the result of a historical association of a family with a particular residential area. I believe that is something that you really should consider if you insist on keeping a clawback. I'm pleased to see the minister making a note. When I brought it up with the previous Minister of Finance, he just laughed. I really think it's a proposal that bears consideration.
Hon. E. Cull: We could get into a long philosophical debate here on the whole question of whether or not the property tax is progressive and fair, and therefore, the role of the homeowner grant in dealing with that. I'm not going to engage in that larger debate. The amendment in Bill 19 makes sure that 95 percent of B.C. homeowners will continue to get the full effect of the reduction in their property taxes as a result of the homeowner grant.
With respect to the last suggestion of moving from land and improvements to looking at improvements only, I can tell the hon. member that I have had cases put before me where, in the opinion of the homeowner, even that method would not satisfy. Once you start getting into that, you will find as many examples in the case that can be brought from improvements as well. The criterion that has been applied here, by increasing the phase-out level from $400,000 to $450,000, is to ensure that the reduction in the homeowner grant, which was brought about in last year's budget, continues to have exactly the same impact on homeowners: 95 percent of homeowners will receive the grant and 5 percent will either not receive it or will have a reduction in it. That amendment continues that policy this year with the increase in the assessment.
Section 1 approved.
On section 2.
F. Gingell: In asking a question of the minister under section 2, it will in fact answer a series of repetitive questions further on that deal with the issue of bad debt write-offs. I'm really pleased to see that the government has recognized this problem. This particular one deals with the Hotel Room Tax Act -- I must admit I didn't go back to look at that act -- but doesn't deal with the section that is in the Motor Fuel Tax Act, the Tobacco Tax Act and the Social Service Tax Act, which says that notwithstanding the provisions of this refund section, the first moneys received under a sale are deemed to be the collection of tax. My reading of this is that that's in all the other sections. I presume it means that if you have a collector of sales tax who is remitting on a cash basis rather than on an accrued basis, you're causing them to record the sale and remit the tax as soon as they've received enough cash from the transaction to cover the amount of the tax. Should the balance of the funds not be recovered by the seller at a later date, they would then have the provision of the proportions.
But in that "notwithstanding" section -- whatever it is; 6.1 in this case -- the first moneys are deemed to be tax. I was wondering why it is missing from the Hotel Room Tax Act.
Hon. E. Cull: We just had to do a bit of a check there. The reason that that provision does not appear here but, as you correctly pointed out, appears in a number of the other statutes that are being amended to provide a similar provision, is that the Hotel Room Tax Act doesn't say that. It doesn't say that the first money collected is tax, so you don't have to have a section that says notwithstanding that section. The other acts do have that provision in them. It's simply a technicality based on what's in the acts that are being amended.
Is that clear? Okay. While I'm still on my feet, I will then say, just to make absolutely clear what the member has already indicated, that this section and some of those that follow appear several times throughout the act. I would appreciate it if we could canvass all the details here, so that when we're making the same amendment to the Social Service Tax Act, the Motor Fuel Tax Act or the Tobacco Tax Act, we would have canvassed all the questions at this point, if possible.
F. Gingell: Does the provision that deals with the "notwithstanding" mean that certain collectors are still remitting tax on a cash basis?
Hon. E. Cull: The issue we are getting a little bogged down in is the difference in the way the statutes are written. We are making the same amendment to a number of different statutes. The statutes are not absolutely the same, so all of the taxes are submitted on an accrual basis.
F. Gingell: If everyone remits on an accrual basis -- and you have now recognized the ability to allow bad debts in proportion -- why does the act need a section that says that the first money collected is deemed to be tax?
Hon. E. Cull: The sections in the act right now that deem the first money collected to be a tax are not being removed from the act. And that's what you're asking: why not just take them out? It's because they apply to more situations than just this one, and we want to make it clear that this is the exemption that is being provided for.
[11:45]
F. Gingell: Just to finish this subject, I have a rather simple question. I'm not a lawyer and I know you're not a lawyer, but I wonder about the use of the word "notwithstanding." Because I would presume that, in effect, what it says is: for the purposes of section 6.1, ignore this. "Notwithstanding" doesn't seem to be the right word to me.
Hon. E. Cull: This is really getting technical. The statutes that we were amending say that the first money collected is a tax. In the cases apart from the Hotel Room Tax Act, we want
[ Page 10471 ]
to say that notwithstanding that we'll still deal with refunds on a proportional basis. The reason that those sections have not been taken out of the acts, and will continue to be there where they have some need, is that you could have a situation where no tax was collected but should have been. Therefore you have to have that section in there to at least deem that the money that has been collected includes tax, so that you can then move on and do this.
If we want to explore it a lot more at this level of detail, we could actually have some of my experts in the tax department sit down with you and walk through it.
C. Tanner: I have just one more detail, but it's not quite as specific. How does the minister intend to inform the hotel industry of this change? It won't be in the hotel tax act for some time. Is it her department's obligation, or is it the obligation of the Minister of Tourism to let the world know what's happening?
Hon. E. Cull: We have a communication system with all registered vendors and people who collect taxes on behalf of the province. Bulletins go out regularly. A budget bulletin has gone out, and it's part of the continuing process of communication with those who collect taxes on behalf of the government.
Sections 2 to 5 inclusive approved.
On section 6.
F. Gingell: Here's another major change in the act. I'm not up to date on all these matters, but could the minister inform me whether.... At the moment, obviously, mineral taxes paid to the provincial government are not deductible for provincial income tax purposes. That's why we are amending this -- to make it so. Are provincial mineral taxes presently deductible from taxable income for the purposes of calculating federal corporation income taxes?
Hon. E. Cull: No, they're not.
F. Gingell: So that means that what we have happening now is another divergence between the calculations of taxable income for provincial purposes and for federal purposes.
Hon. E. Cull: We're providing a break on provincial corporate income tax, which we can do. Obviously, we can't provide one for federal corporate income tax.
If the federal government is interested in providing similar assistance to mining companies in British Columbia or across Canada, they're welcome to do so. We can make exceptions only to provincial taxes; we can't make exceptions to federal taxes. Corporate tax, of course, is both federal and provincial.
F. Gingell: Thank you, minister. It used to be the position of the federal government that they would allow the deduction of certain provincial charges if they saw them clearly in the field of royalties or stumpage -- i.e., a payment to the landowner for the mineral or property that has been extracted or the tree that has been cut down and sold. Clearly, in this case the value of the ore that the company has a licence to extract, mill, grind and sell belongs to the residents and citizens of the province. Is any work being done by the minister's department with the federal government to get some reasonable understanding and agreement on these issues? If the mineral tax is similar to stumpage or royalty, it should be deductible for federal income taxes exactly the same way that you have made it deductible for provincial income taxes. If it is a tax that is not based on that but is simply a tax on cash flow or income, then it shouldn't be deductible. Can the minister advise what is happening in the area of provincial-federal relations on these matters?
Hon. E. Cull: We do review the whole question of federal-provincial taxation on a regular basis with our federal counterparts. Right now in British Columbia we are engaged in the Premier's Forum on Mining, which I mentioned yesterday in second reading debate. It is probably more important, and may result in some further initiatives at the federal level. The Premier has established a forum to discuss mining issues with members of the mining industry, and that has resulted in this legislation. It has also resulted in some other initiatives that have been taken through the spending decisions of the Ministry of Energy, Mines and Petroleum Resources. As that work proceeds it may result in other recommendations about taxation. The objective of the initiative is to identify things that can be done to assist the mining industry and help it maintain its competitiveness.
F. Gingell: Is there any other way in which we could make minor changes to the Mineral Tax Act that would then make it qualify for deduction under federal income tax regulations?
Hon. E. Cull: The simple answer to that is no; we can't do anything that would affect the federal situation. There certainly may be things that we would want to explore with them as we continue the process currently underway.
Sections 6 and 7 approved.
On section 8.
F. Gingell: This is really quite a change, isn't it? Is Section 8 as big a change as I believe it to be? Instead of the tax rate now being set by legislation in the Motor Fuel Tax Act, you're putting in a provision that says that it will be 5 cents a litre -- which is unchanged -- or such lesser amount as we shall determine by regulation. That is a pretty unique change in legislation, is it not?
Hon. E. Cull: The essence of what the member said is correct. The jet fuel tax is reduced from 5 cents to 4 cents a litre. When we get to Section 14, I believe -- I'm just looking at my officials to see if I've got the correct section -- we do provide regulations for other specific circumstances which reflect the budget decisions that were made this year.
F. Gingell: Searching my memory, those budget changes were just the 1 cent per litre reduction for jets in international flights? Is that correct?
Hon. E. Cull: And the proportional exemption of jet fuel tax for international cargo flights.
F. Gingell: Is the circumstance at the moment that the regulations to effect those changes have been made by the Lieutenant-Governor-in-Council, and we're now playing catch-up with the legislation that will permit it?
Hon. E. Cull: The effective date is July 1 in any event. But we do need the act before regulations can be passed.
L. Fox: Last year the jet tax was increased by 1 cent a litre, as I recall. Can the minister tell us why she found it necessary to bring in this section of the act now? Was it because the revenue they hoped to derive from the tax increase last year was not there, and instead there was
[ Page 10472 ]
actually a decrease in the jet tax revenue because of the implementation of that increase?
Hon. E. Cull: Obviously I wasn't the minister last year, but I think I'm correct when I say that the increase was in '92, not in '93. The change made last year was the exemption for international cargo.
The question you've asked is: why the change now? Vancouver International Airport made a very persuasive case for their role as the gateway to both travel and cargo flights from the Asia-Pacific region. In reviewing their case and the competing jurisdictions that might also be looking to entice this business into other airports, and also bearing in mind that the Vancouver Airport expansion will be open in 1996, we are making these changes to support their development as the gateway to Asia-Pacific travel.
L. Fox: I think there's an important lesson to be learned. The reason I'm trying to search out the answers is that I would like to know -- as I'm sure many British Columbians would -- if the effect of that new tax was to drive the purchase of gas outside British Columbia, and therefore the net revenue to the provincial coffers actually decreased, because more taxes were placed on the product being sold in British Columbia than in other jurisdictions.
Hon. E. Cull: I don't believe there was any impact such as the member is suggesting. In fact, if you look at the other obstacles with respect to Vancouver's role as a gateway, perhaps the more important ones are the need for bilateral agreements -- which have not yet been reached -- to allow travel into the United States from various Canadian airports, and the expansion of the airport itself to be able to carry the additional load that would be coming in.
[12:00]
L. Fox: I have just one follow-up. Is the minister saying that this did not hurt the competitive edge the Vancouver Airport had, and that it did not drive some of the flights to be sourced out of U.S. airports versus Vancouver Airport? Does she deny that this had any effect on that move for people to fly to international destinations from U.S. airports versus Vancouver Airport?
Hon. E. Cull: Mr. Chair, given the hour, I'll suggest that we.... Are we close to passing section 8? Everyone is nodding, so maybe I will answer this, and we'll get section 8 through. Then we can all go and have lunch.
I don't have any evidence from our tax revenue to show that what the member is suggesting has happened. The airline situation is very complex. As I said, I had an excellent presentation from the airline industry and Vancouver International Airport, setting out the obstacles that they are systematically trying to address as they position themselves to be the gateway for this burgeoning traffic. Part of it is the bilateral agreements that are needed between Canada and the United States to allow flights from Canadian cities to a wider range of American cities. Some of it has to do with the airport itself.
Clearly, we were interested in ensuring that from an international competition point of view, jet fuel taxes were competitive with the other possibilities -- Seattle particularly. That's why we have moved on all of these fronts to address the issue.
F. Gingell: We will be happy to join with you right now in support of section 8 and pass it right away, as long as you will agree with us that you've been given this terrible task of going back and cleaning up the mess created by the actions of your predecessor that were shortsighted, unwise, not properly thought through and foolish.
With that, Mr. Chairman -- not expecting any response -- I'd be pleased to call the question on section 8.
L. Fox: I do have one or two more questions that I'd like to ask, but I will respect the hour and 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.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. E. Cull moved adjournment of the House.
Motion approved.
The House adjourned at 12:03 p.m.
The House in Committee of Supply A; H. Giesbrecht in the chair.
The committee met at 10:11 a.m.
ESTIMATES: MINISTRY OF ABORIGINAL AFFAIRS
(continued)
On vote 9: minister's office, $319,041 (continued).
A. Warnke: As I pointed out in my initial statement, there are essentially four themes, the last dealing with health care, social services and education as they apply to aboriginal affairs. There are a lot of questions that I think may be more appropriately put to the ministers involved. Given what we have already discussed in terms of the possibility of future changes with regard to aboriginal self-government, it may also mean that aboriginal people will be in a position -- or should be in a position -- to have more control over their health care, social services and education.
There seems to be some public appetite for that, recognizing, as has the federal government, that aboriginal peoples are in a better position to organize these aspects involving health, education and social services, rather than relying on the benevolence of the federal government or any other agencies.
In this context, I would like the minister to give a brief rundown on the ministry's involvement in these three areas where health care is being promoted. In particular, there has been some mention of equitable service to the aboriginal peoples. I have been looking at the New Directions process. If we could get a status report on that, recognizing that there need to be some changes with regard to education.... Has the ministry developed any strategy in that regard?
[10:15]
[ Page 10473 ]
Hon. J. Cashore: The ministry definitely does have a responsibility in these areas. As I said before, as an agent of change to ensure that a new ethic is pervasive in all aspects of government, it is our role to ensure that this ethic is present within the line ministries that deliver those services. We are vitally concerned with the concept of developing healthy communities. Therefore, where Directions in health care is involved, our ministry works with the Ministry of Health to ensure that the most sensitive and appropriate representations are taken where these relate to first nations people.
With regard to appointing first nations people to boards and committees involved with the delivery of those programs, we take a very hands-on interest in helping to identify persons who are able to work with them in ensuring that those services are delivered effectively. There are specific examples around the province that show the uniqueness. For instance, if we went up into the Nass Valley, we'd find a health care unit where Nisga'a people have very real and direct input, through the board, into the way in which the unit functions in that fairly well-defined geographical area. Since we have joint policy tables with the Union of B.C. Indian Chiefs and the summit, we are able to discuss issues of mutual concern in that context. As I've said before, this will be broadened to include tables where we can discuss these issues on a government-to-government basis. We are also establishing tables to recognize the importance of the first nations people living in the urban community.
A. Warnke: One part of any community that has a special burden with regard to health care, social services and education is, of course, women. Dealing with this particular subject, the issue has been raised several times by native women that certain kinds of their concerns and interests have not been taken into consideration by band councils or even chiefs themselves. Therefore a short question to the minister is: what assurances has the minister extended through the ministry to address native women's concerns about their access to benefits and basic rights, especially in the context of adequate health care, social services and education for their children?
Hon. J. Cashore: That's a very good point. When there is the social dysfunction that often results because of poverty, more often than not it is women who have to deal with the impact. I think there is a tremendous resource among first nations women, which is very important in addressing problem-solving and in moving forward to a new, more hopeful future. So this is a very important point.
At the same time, in seeking to address that point, we recognize the importance of self-determination of and by aboriginal people as they develop their own institutions and processes for dealing with their issues. Also, there are the traditional aspects with regard to matrilineal societies in some cases. Different aspects of that issue go back many generations with regard to the role of women in native society.
I have met with several women's groups and heard the same concern expressed. Generally there is a recognition that this concern will not be resolved by government interfering, but by government facilitating or making support programs available, and where that can be useful, that should happen. At the same time, I am aware of an emerging reality that shows up, for instance, in the Aboriginal Women's Business Chamber and other organizations. These first nations women are giving notice that they intend to be present in representing and providing leadership for their people. But if you look at the gender of people at key tables at the present time, the reality is that a significant percentage of women are not involved at those tables. I think we are in a time of change, and we are going to see some changes there over time.
A. Warnke: I have a follow-up here, and it's a very specific question that concerns the Vancouver Aboriginal Child and Family Services Society. I understand that its budget has been cut back, or it has lost its entire budget. What I'd like to explore here is the criteria by which groups such as this receive grants. Some have argued, as in this particular case, that they're too high. That may be the ministry's position; I'd like to hear from him on that and, by the same token, on the criteria for allocating funds to such groups.
Hon. J. Cashore: It is true that standards need to be high and appropriate in delivering services to all people in British Columbia, but in this particular case they must be culturally appropriate. It is my understanding that there is a joint review with regard to this contract, and again it's the line ministry that has the lead role. But our ministry is also vitally involved in that, and we are in close consultation.
C. Serwa: By agreement with the critic for the official opposition, we have an opportunity to ask three or four questions, and we rotate around. So I'll use my prerogative, and I thank the critic for the official opposition.
One thing I learned while working with the Premier's Committee on Native Heritage, Culture and Language was the esteem that band elders have traditionally been held in. But when I look at the individuals involved in the negotiations, I see very few, if any, elders. Traditionally they represent the enduring interests of the people. I see a great many native and non-native bureaucrats involved in the negotiation process, and it seems to me that there is some question of whether this process is being negotiated in self-interest or in the interests of the native people. Perhaps the minister would respond to that.
Hon. J. Cashore: I appreciate the point. I would have to say, though, that in my seven months as the minister, my observation in the vast majority of meetings in which I've been involved is that the elders have been held in very high regard, and I see an ever-stronger movement in that direction. A good example is in the negotiating of the Clayoquot interim measures agreement. The elders were very prominent in virtually every aspect of that, all the way from negotiations to celebration at the conclusion of the signing of the agreement. Being present in the room, one becomes more and more aware of this and of the way in which the voice of the elders is there. It's not always there in terms of speaking at the table, although that happens frequently, but it's there in the consultation that goes on between those who are speaking at the table and the elders. In a variety of situations I've been involved in -- whether they're negotiations involving the Union of B.C. Indian Chiefs or the summit -- it has been my experience that the elders are always recognized in a formal way at the beginning and ending of meetings and in the opening and closing prayers. I've seen a situation turn around because of the elders having made an intervention. I have seen that happen in a variety of circumstances.
C. Serwa: I'm pleased to hear that, because if negotiations and the decisions reached are going to be meaningful, the elders have to have a very strong continuing voice in the whole process.
[ Page 10474 ]
I have several questions with respect to fish and wildlife. I don't know if the matter has been broached, but it's certainly part of the negotiation process. At the present time, status natives are approximately 3 percent of the B.C. population and non-status natives are approximately 2 percent, a total of 5 percent. In the salmon harvest, approximately 4 percent to 5 percent of the catch is taken through the river systems for the native food fishery. Commercial native fishermen account for another 12 percent of the total harvest so, at the present time, approximately 17 percent of the salmon harvested in the ocean and B.C. rivers is harvested by native people. In the negotiation process, are we looking at expanding that harvest? Is there going to be representation closer to the population of the province? Obviously the 17 percent is really out of sync with the population numbers at the present time. There are substantial concerns about increasing the allocation of the commercial fishery as well as the sport fishery without any type of governance whatsoever. The disappearance of large numbers of sockeye going up the Fraser River to the spawning channels is evidence of that concern. Perhaps the minister can expand on that area.
Hon. J. Cashore: First of all, the allocation of fish is primarily a federal issue when it comes to the salmon stocks. Having said that, obviously we have an interest in all aspects of commerce and in what is happening in the province. The percentages the hon. member cites are pretty close.
However, there are two separate things there. If we look at the food fishery and the amount that's based on population, I accept -- without having primary figures on that -- the stats the hon. member brings forward. When it comes to commercial activity being lumped in with food fishing and traditional activity, it's a bit of apples-and-oranges. One of the things I've heard put forward by opposition parties in these estimates is: "What is the government doing to enable first nations people to have a bigger share of the economy, whether it's forestry, fishing or whatever?"
Indeed, as I said in estimates a day or so ago, there was a time when first nations, in a sense, had 100 percent of the fishery; that was pre-contact. In the 1930s, first nations on the B.C. coast had at least 50 percent of the fishery during the early days of the fishing industry. The first nations fishers were considered to be a very important part of the burgeoning fish processing industry.
We've seen their percentage of the catch of commercial salmon decline. We've seen the adjustments when Jack Davis was the federal Minister of Fisheries, to the point that the federal government brought in the buy-back program. We've seen quite a consolidation on the coast with regard to the way in which licensing is presently handled, which is a point of concern for the ordinary person, who sometimes, being unable to acquire one of those licences, is not able to get into the field.
[10:30]
Therefore we see some efforts taking place on the part of first nations -- for instance, through the Native Fishing Association -- to acquire licences. Some of the questioning in estimates has asked what the government can do to enable a greater share of the fishery. When I look at the commercial fishery from my perspective as Minister of Aboriginal Affairs, I have a role in ensuring that people who are experiencing, in some instances, over 90 percent unemployment have better economic opportunities in the wide variety of opportunities that exist, whether in fishing or in value-added activities in forestry. So I make a separation between the percentages of the food fishery and the commercial fishery.
C. Serwa: I'll ask one more question with respect to the fishery, and then I'll turn it back to the official opposition. Subsequent to this, I'll be asking a number of questions with respect to wildlife allocations under the treaty process. So the minister is forewarned.
I recognize what the minister has said about prior to contact -- that 100 percent of the fishery was aboriginal. However, I have to advise the minister about something that he is well aware of. The technological opportunities for harvesting a larger and larger percentage of these spawning salmon have been dramatically increased with the types of nets, with the mechanization of large seiners and trawlers, and all the other technology -- even in the harvesting system in the rivers, for example. The primitive systems took only a small amount and often were not successful in catching amounts adequate to prevent starvation of that native population. So when the minister talks about 100 percent access or 50 percent access, I'm suggesting that the capacity of the actual harvest, because of technological limitations on harvesting techniques, was such that they couldn't take more than the minimum. I'm very sympathetic and understanding of the need for economic opportunities, and obviously the coastal resources -- the salmon -- are up and down the entire coast of the province as an opportunity. But if you're taking on the one hand just to give to someone on the other, and this mechanism is already there, all you're doing is creating friction and stress between the native people and the non-native people who are involved in commercial harvesting -- whether it's a buy-out or.... Again, it reflects on the taxpayer.
All British Columbians are not being created equally, and that's a continuing concern I have. In the taxation field, they get a different treatment. Not only are non-native residents of band lands taxed, but they have no voice in selecting an advisory government and no direct vote in the actual government of that area. So we have taxation without representation. Here we continue to create scenarios that will not lessen but will only increase the stress and friction. Surely the minister recognizes that there must be better ways to treat all British Columbians equally and to create that equality of opportunity through training and educational programs.
We had initiated a program with the Musqueam people that I thought was superlative, and this is the type of program I would like to see. The minister is familiar with what the Musqueam people have done with what was formerly the British Columbia boat-building area in forestry. The Musqueam people have that now. I lobbied the then-Minister of Advanced Education to provide funding that could create an opportunity for native students to come from up and down the coast and be trained in electronics required on fishboats and in becoming shipwrights to build boats, overhaul engines and all those things. This was on one arm of the Fraser River, in an environment they enjoyed and with opportunities that are relevant and that the people can relate to. That type of initiative is positive; there is a real opportunity in this. But if all one can do is take from one to give to the other, then I suggest that's a very poor course to take, and I'd like the minister's response on that.
Hon. J. Cashore: That's a good point about training, and I'm looking forward to a forthcoming announcement from the Minister of Skills, Training and Labour on this issue. I recognize the Musqueam example as a good one. When it comes to the portion of the salmon catch, one of the things we are aware of is that there has been very effective enhancement in some areas, with loss of stocks in other
[ Page 10475 ]
areas. When you look at the Babine salmon going to the Skeena River, for instance, the enhancement has been very significant and has provided real opportunity. We sometimes run into problems with the bycatch of other species when those species are caught. There is an opportunity for enhancement that should enable there to be a better situation for different people getting into the market.
V. Anderson: I'd like to talk about the First Citizens' Fund for a few moments. The minister might indicate the breakdown of the more than $2 million into the separate parts of that account, so we could start there: economic development, cultural development, student bursaries and friendship centres.
Hon. J. Cashore: I would point out that on the first day of debate, we canvassed the First Citizens' Fund quite thoroughly. But I will give the hon. member that breakdown, and I would be glad to make this information available to him. In the budget for '94-95, the friendship centre program has $845,000; the student bursary program, $103,000; the elders' transportation program, $10,000; business loan program, $1,664,250; the business loan program administration and advisory service support, $250,750; and the Native Economic Development Advisory Board, $27,000; for a total of $2.9 million.
V. Anderson: On the business development fund, a legislative committee met a year ago and brought in a report to the previous minister. Could you tell us what happened to the recommendations from that report and whether they were instituted in order to change the nature of the fund that's operating in business and economic development this year?
Hon. J. Cashore: I would point out that the information I just read in my previous answer was distributed to the hon. members prior to the briefing, so that document is already in their possession.
I have met with the Native Economic Development Advisory Board to discuss the 25 recommendations, and almost all the recommendations will be implemented. Some of these issues are confidential because they are in the Treasury Board process, but I can assure the hon. member that the vast majority of these recommendations are being implemented. Some of them have been implemented, and some of them are yet to be implemented. This is being done in very close consultation with the Native Economic Development Advisory Board. They are aware of the process we are going through, and they are updated on the progress at every one of their meetings.
V. Anderson: In the Housing estimates, there was discussion about a new focus on cooperatives and on supporting cooperative and credit union activities within ministry branches across government. In travelling with the review that was done by the legislative committee, it seemed to me that there was an appropriate place for much greater opportunity for aboriginal people in the area of cooperatives and credit for the self-development programs they might have. Having grown up in Saskatchewan and knowing the validity of these programs, I'm wondering if this has been developed further within the ministries in conjunction with aboriginal people.
Hon. J. Cashore: This is a good point. We are at a preliminary stage in discussions on how such ideas, among others, might be generated. I think the basic point, based on the hon. member's experience in Saskatchewan, is a valid one. We need to take a look at it.
When we're talking about cooperatives and credit unions with first nations, it's very important to recognize that the co-op element is absolutely fundamental, in that it's almost in the bones of those who are involved. Government can't come in and say: "Hey, we think it would be good for you to get into a co-op." It has to come up from the grass roots to be a bona fide co-op.
One example of that, going back to 1970, would be the spotty history of the Port Simpson cannery, which was a co-op in name only; it didn't work. The Port Simpson people and the Lax Kw'alaams people purchased that cannery and are operating their own operation based on their own approach. I was there four days ago, and the cannery seems to be operating well. I agree that is one very valid and worthwhile economic instrument. Wherever there is an interest, we should be right there helping to facilitate it.
V. Anderson: Following that a little further.... One or two individuals at the Aboriginal Affairs Committee had some training in the Maritimes in the co-op movement and were struggling to find others to support them in that. There was an opportunity in these programs for co-op training in colleges in Nova Scotia or Saskatchewan, where they work in underdeveloped countries around the world to develop a program, and they get some skills and knowledge of how it functions and can then adapt it to their own circumstances.
I agree wholeheartedly that it has to come out of the culture of the community. They also need some experience and knowledge in order to do that more effectively. If there was a process to facilitate this, it would be worthwhile.
Hon. J. Cashore: Again, a good point. As I understand it, if there was an opportunity to have the stimulation of going and seeing how this is working in some other settings.... This is the type of thing we could discuss in different contexts -- for example, with the economic development advisory board.
In the area of skills, I take that point as well. We are putting in place some real opportunities for skills development both through the forest renewal plan and the forthcoming announcement from the Ministry of Skills, Training and Labour. I understand that we have been approached with regard to native co-op housing and have had some input into that.
[10:45]
V. Anderson: I'd like to pursue for a minute the area of urban aboriginal people. We spend so much time talking about land claims and about those who are on reserves, but there has been a concern for years, particularly in Vancouver and Victoria. I know the minister is very aware of it from his previous experiences. What is government developing in the urban communities for them to come together and undertake responsibilities for themselves? This is a crucial issue for both the aboriginal community and non-aboriginal community as they interact.
Hon. J. Cashore: This is a very valid point. We have canvassed that issue quite extensively in estimates. Very briefly, I think that as a society we need to address this issue on a number of fronts. Again, government has a role in this, but we also have to recognize where it's important for us to play an enabling rather than a directing role. This year's budget provides the wherewithal to set up two tables with aboriginal people. One would be with off-reserve people, and that includes such groups as the United Native Nations, the Native Brotherhood of B.C.,
[ Page 10476 ]
the Native Sisterhood of B.C., the B.C. Association of Indian Friendship Centres, the Indian Homemakers' Association and the Aboriginal Women's Council. There would be another urban table.... Perhaps it's not correct to define it wholly as an urban table, but there would be an urban aspect to the table with the Metis.
V. Anderson: Thinking particularly of Vancouver at this point, we have had some concerns in some of the health and social services areas about ministries transferring funds and projects without consultation with the city of Vancouver. There's been a great deal of tension within some of these services in the city. I'm wondering what move is being taken by the ministry to negotiate on behalf of the aboriginal people with the ministries to dispel some of the uncertainties and the anger that is growing in the community, which is not helpful to the process.
Hon. J. Cashore: As I've said before, our role is to work with ministries to ensure that an ethic is present in issues relating to consultation responsibilities. Our ministry works with line ministries. We have met with representatives of the Ministry of Health on several occasions, and I had a discussion with the hon. member when we had the opportunity on the ferry one day. Subsequent to that, I've taken up with staff some of the information that came out of that discussion.
Our role is to be supportive of the line ministries in dealing appropriately with an issue such as this. It is a difficult issue; I think we all recognize that. There are different political dynamics at work among urban native people. It's the same with everybody else, so why shouldn't it be there? It is a difficult issue, but the principle of consultation is important in all settings, whether urban or rural.
V. Anderson: The other area in the city that seems very fundamental to me concerns the ministry, aboriginal home and school workers and the education system. An understanding within the educational system of the particular needs and prospects of aboriginal people is currently lacking, probably because of cutbacks and other things. In the long run, that's not very cost-effective. The results coming out of the school system are not very helpful for many aboriginal children in Vancouver. I'm wondering if there is a focus on this issue, which is so important to these young people and their whole future.
Hon. J. Cashore: I share the concern; I understand that it is being addressed. I would like to remind the hon. member that the Minister of Education has recently been involved in a bilateral agreement with the Union of B.C. Indian Chiefs, which, together with another bilateral agreement between the UBCIC and the federal government, ensures that dollars dedicated to the education of aboriginal students are not used for some other purpose. That was a major step in dealing with part of that issue.
I don't have all the information I need to address the range of issues the hon. member raises. I share his concern, and I'll get back to him with more on that.
V. Anderson: With regard to the Metis, which the hon. minister mentioned, and the round table they're going to be involved in, which I presume is underway, one of the things the Metis in B.C. have discussed for some time concerns a land base within the province. They have some historical connections with those who have moved into B.C. from Saskatchewan, Manitoba and Alberta. What is happening with regard to a land base for Metis being recognized as part of these treaty negotiations?
Hon. J. Cashore: I'll be going to Quebec City next week to meet with the federal minister and provincial counterparts to discuss this issue. Obviously there's a tripartite aspect to it with the federal government, which is very basic. This is an area where we realize that we have to move very cautiously, but we are moving. As I said, we are going to establish a table with the Metis. We have encouraged the various Metis organizations in the province to form under one secretariat so that we wouldn't.... We pointed out to them that we as a government could not, in good conscience, enter into a table with each separate entity. So they have taken steps towards establishing that secretariat, and we will begin to discuss the range of issues at that table.
There's the question of Kelly Lake, where there have been some discussions. In the case of Kelly Lake, the government's position has been more in the area of services rather than dealing with the land base question. Those issues are yet to be determined, and I think the important work right now is to put in place a format by which we can enter into those discussions.
D. Symons: I have a question or two regarding the interaction of highways, roads and what not with the aboriginal people. Over the last few years we've had some roadblocks and various occurrences on the highways. I'm wondering if the minister might tell me how many outstanding cases we have of problems with rights-of-way and Aboriginal Affairs having a conflict with the Highways ministry. I gather that a few years ago there were 500 right-of-way conflicts. I wonder how many there are today and which ones have been resolved.
Hon. J. Cashore: The member is right. There are a number of outstanding disputes with regard to highway rights-of-way, power corridor rights-of-way, etc. One of the real advantages now is having the tables with the summit and the UBCIC, where we're able to engage in these issues. This is being done on a government-to-government basis, and meetings are taking place on a regular basis to address these various issues. In terms of the actual number, I think that should be a question for the Minister of Transportation and Highways.
D. Symons: If I ask the minister, he might say that's under Aboriginal Affairs and come back full circle. I gather that approximately 250 of these right-of-way disputes have been settled -- roughly half of them. Would the Aboriginal Affairs ministry have any input into this? Can you give us just a flavour of the types of settlements? Are these dollar settlements or are compensating lands being given? How have the settlements been made?
Hon. J. Cashore: I think anyone who has been here throughout these estimates will know that I have an answer that is very consistent on this range of issues. What is the role of the Ministry of Aboriginal Affairs? We are not the line ministry dealing with this in the area where we're fostering government-to-government relationships. We are, as an agent of change, seeking to ensure that the ethic is present within all ministries of government. Whether it's Education, Health or whatever, our purpose is not to become a huge bureaucracy, such as we see in Ottawa, but to become a facilitator of change. Therefore our role is to work with the Ministry of Highways on such things as the work that is done at those policy tables, which we have done and continue to do.
[ Page 10477 ]
It's not really a matter of passing the buck; it's a legitimate question for the Minister of Transportation and Highways. Our role is to be supportive in ensuring that the appropriate consultation takes place on issues such as this.
D. Symons: I have just one final question. You mentioned that it's not a line item in your ministry. Does your ministry charge for work done on Highways issues or services you might provide to the Transportation and Highways ministry through the Aboriginal Affairs ministry? Which line would that sort of thing, where you overlap, be covered? Would you cover it in the Ministry of Transportation and Highways or in Aboriginal Affairs?
Hon. J. Cashore: The short answer is no. If you look at our organizational chart, you will see where the different departments our ministry works with have responsibilities linking them with other ministries, whether it has to do with mandates, development and the treaty negotiation process or with aboriginal relations. I'll give you an example. Recently I attended a meeting in Sechelt about a very long-standing issue around a power corridor there. In that case the assistant deputy minister of aboriginal relations was involved. Those kinds of things are broken down into line items. It will make a great deal of sense when you look at the organizational chart of the ministry, which we have made available.
If you look at the budget, you'll realize that our role of being supportive to those other line ministries happens in virtually every part of the organization of the Ministry of Aboriginal Affairs. Compared to other budgets, it's one of the smallest in the province, and I think that's a good thing. As I said before, we should not be seeing ourselves as creating an institution but as an agent of change.
D. Symons: To see if I interpreted your answer correctly, I assume that in the Ministry of Transportation and Highways there will be a line item dealing with their involvement with aboriginal claims involving highways. That's a line item in the Ministry of Transportation and Highways. Is that correct?
Hon. J. Cashore: There is an aboriginal unit within their ministry, so the answer is yes. However, I encourage you to get into the intricacies of that with the minister, because I'm sure the line item would not cover all efforts within that ministry to deal with aboriginal issues.
[11:00]
C. Serwa: My three or four questions will be with respect to wildlife allocations. I acknowledge that the allocations actually are in the Ministry of Environment. Nevertheless, in the treaty process this is obviously one of the important areas of concern to the native people as well as to the non-native people. When I address this, I'll say that there have been a series of problems.
First of all, we have no difficulty with the traditional or inherent right of access to the fish and game populations. However, in a number of sportsmen's groups, such as the B.C. Wildlife Federation, for example, there is a great deal of concern among members about what has been transpiring in the province. In this specific case, we have the right of access to wildlife not only for food uses but also for commercial purposes. There has been a substantial amount of harvest where animals have been taken and sold to obviously non-native individuals. The underlying concern is this: there is virtually no control. The enforcement branch has been pulled off, so a great deal of poaching occurs not directly for native food purposes.
An example of this is the situation on Vancouver Island with the small elk population. They are non-traditional population centres of elk. They were transported from the Olympic Peninsula to Vancouver Island. Yet, according to this particular government, the access of native people to harvest these animals appears to be an inherent right. There is virtually no control. We talk long about conservationist principles of the native people, but there appears to be a strong fallacy. The traditional conservation principles were limited by the type of technology utilized. On Vancouver Island the native people are taking the elk in winter conditions when they're clustered in dense populations. They're utilizing four-wheel drives and logging roads or public routes, and using high-powered rifles with telescopic sights. The same is happening with moose and elk populations. In the Princeton area, out-of-season animals are being taken; cows, calves or bulls and cows in calf are taken as well. No conservationism is intended; individuals are coming out of the lower mainland -- native people -- with no control by the Ministry of Environment.
In the north central part of British Columbia, the Pink Mountain bison herd was opened up. It was a non-traditional area for bison population in the province. It started out as a farming or ranching venture with bison, and then the population increased and permits were issued. The reality is that two native hunters from the Prince George area virtually slaughtered all the animals from that herd; they took cows, calves and bulls. Again, it was not with traditional techniques or with the traditional transportation systems that they used to have. They utilized the full advantages of modern technology and transportation systems, with rifles and scope sights. They simply sold the meat, yet nothing was done.
The concern is that at this point there seems to be absolutely no control. With the treaty negotiation process, it is of grave concern to the non-native residents in the province that caution be taken with respect to allocation in the treaty process. We can clearly see the abuses there. You cannot have dual governance; you have to have some fundamental authority that has the right and responsibility and the mandate to control the amount of hunting and the populations.
At the present time the Ministry of Environment appears to have the right only if the population is deemed to be in a very precarious position, almost to the point of becoming an endangered species. Then they can step in. I would like the minister's comments in respect to the allocation of hunting rights under the treaty process.
Hon. J. Cashore: It's interesting to sit here and listen to these questions in this forum and to hark back to another ministry. I'm almost feeling that I should let those estimates break out.
I'm not going to get into a wide-ranging debate on this issue. Again, consistent with what I have said, it is the responsibility of this ministry to ensure that the various line ministries are following through with their responsibilities in this area. Our role is to ensure, as an agent of change, that they are cognizant of the current position of this government with regard to first nations, the need to consult and the need to carry on the mandate of the province in various areas and to manage an important time of change in our province.
I would encourage the hon. member not to use statements in reference to the Ministry of Environment, Lands and Parks, such as: there is virtually no control. I don't believe that is accurate. During this government's tenure, at least 17 to 20 conservation officers have been added to the CO
[ Page 10478 ]
service, which is the largest increase in the number of COs in the last 30 years by any government.
The fact is that this government and this Minister of Environment are very capable of dealing with those issues and questions. The member knows that the B.C. Wildlife Federation, at its annual meeting one year ago, very wisely arranged workshops in which first nations people attended panel discussions and spoke with people about their vision on this issue. It was a very constructive discussion. It did not deny the fact that there were problems taking place, but it enabled the various parties to gain a much better understanding of the issue and to realize that there's no intent on the part of first nations to prevent non-aboriginal people from being able to participate in hunting. There was mutual agreement on the number one priority of conservation. That's very clear.
In every culture, there are those who indulge in illegal activity. I would caution the hon. member about making a statement which identifies native people in a particular way and then says that they have four-wheel drives and high-powered rifles with telescopic sights. When making a statement like that, one needs to be awfully cautious and recognize in the same statement that there are people from other groupings who have ATVs and high-powered rifles and who indulge in poaching.
When I was Minister of Environment, Lands and Parks, I brought in a regulation that outlawed the sale of bear parts in an attempt to deal with a poaching problem. It became evident, as the result of a sting operation, that there were people with connections to the drug world who were involved in this poaching activity. The public, hearing these comments about such activity, might come to the conclusion that the hon. member is singling out native people. I'm sure he doesn't intend to do that. Even though it's in the context of these estimates, we should be awfully careful with those kinds of comments. The fact is that there is a situation out there where, in many cases, cooler heads are prevailing and people are sitting down together and talking about their vision. That doesn't mean that we don't still have a problem that needs to be addressed.
I suggest that one of the reasons for the survival of first nations culture has been adaptability. I don't think we would argue, for instance, that northern native people should not have participated in the fur trade, even though the trade had not been part of their activity in pre-history in the way it became when they managed to access European markets and make a livelihood. At the same time, if a herd located in one place happens to wander into another location, I don't think we should necessarily say they should not have access to it. Adaptability has been one of the reasons first nations people have been able to maintain their culture, by being able to adapt to varying circumstances on the landscape.
The high-road way to address this issue is to ensure that we are doing the right thing with regard to consultation and with regard to recognizing our fiduciary obligation. We must recognize the imperatives that the courts are placing upon us, which have to do with identifying a first nations interest and then consulting on how we can ensure that that interest is considered.
We had people in these debates criticizing us yesterday for the timing of the memorandum of understanding with the Nuu-chah-nulth by saying, in a critical way, that the ombudsman had a role in it. My response was to ask why that should be a criticism when we were able to respond to the helpful input of the ombudsman. We are following through on moral responsibilities and on responsibilities identified by the courts. They have said to us that we should get out there and negotiate because that's better than litigation. We are doing that. If we do not do it adequately and appropriately, the office of the ombudsman could be commenting on those activities as well.
C. Serwa: The purpose of my questions was not to single out the native population, because I'm fully aware of the number of animals that are poached in the province -- it is still probably in the 50 percent range. The purpose of my question was simply this: if a non-native poacher utilizes that type of technology, or any other type of technology, we have the due process of law and we have the conservation officers that the minister referred to. We have a process, without exception. But the current Minister of Aboriginal Affairs was the one who issued a recommendation or a policy with respect to native hunters. The reality is that they are the exception to the rule. That's my particular concern. This is a form of poaching through a traditional right using modern technology. It is condoned by the government, and this is outside of the treaty negotiations. My concern has to do with that. It seems to me that if the government accurately and effectively accepts its responsibility, as a party that espouses the democratic process and system, it should be striving for equal opportunity for all British Columbians and special privileges for none. That should be a goal of this particular government. What I continue to hear is inconsistent with my belief that all people are created equal and should have equal opportunity. I continue to hear this minister expanding on the differences. Rather than building stepping stones, I'm afraid that we seem to be building barricades or blockades simply because of this policy. That has been the fundamental concern in my line of questioning.
[11:15]
This is the last question I'll ask on this. This is an important issue. Does the government support the position that once land claims are settled, natives should have the same rights and responsibilities as all other Canadians, or does the government accept the concept of multiple classes of citizens based on their race or ancestry? This is the focus of my question. Perhaps the minister will respond.
Hon. J. Cashore: As the hon. member knows, there is due process with regard to first nations people, and first nations people have cooperated in that. A good example is the notorious case of the Salmo killing of a trophy sheep. That went through due process; the hon. member is aware of that.
With regard to the land claims, the tremendous potential that exists within the land claims process is that the negotiations will take place in the context of respect and with the recognition of historical injustice that is yet to be fulfilled with regard to the land question. As a result of those negotiations, we will see a wide variety of issues and interests addressed in a way that deals with that in the context of a just settlement. When negotiated well and effectively by the three teams, that will be a very important decision for our future. That's all I have to say.
J. Weisgerber: I assumed that we were part of an ongoing debate on estimates, so it's going to take me a moment or two to gather some material together. I would like to see a number of issues discussed, but I'll make room for my friend here, and he'll allow me to gather my thoughts.
C. Serwa: The minister responded, but he didn't respond to my specific question. The minister indicated that we will correct historical injustices. To me, this is like saying we're going to pull back the water that's gone under the bridge. We can't do it, not when we're looking at the future. What we have to do is take the situation that exists today and try to
[ Page 10479 ]
make sure that we create an environment of opportunity for all the people in British Columbia, be they native or non-native. I've talked about the focus on opportunities through skills training in traditional occupations that the native people are very comfortable in. We will continue to expand those particular areas.
The minister seems to want to focus on another area, correcting historical injustices. I suggest that there is no possibility. How are you going to make up for what transpired in residential schools in a number of cases? Much good occurred in them, but many things were not good. How are you going to correct the historical injustice of trying to anglicize a culture so that it fit in? How are you going to do that? The people that were exposed to that are gone.
We've got to be cautious here. They say that the road to hell is paved with good intentions, and I think it's important to recognize that. We're concerned about the future, and what we should be looking at is not soothing our conscience on the basis of the past; otherwise we'll continue to explore everything in the past. We'll look at Louis Riel and wonder how we can rectify what transpired. We're not partners in that particular time, and we weren't there at that time. It's pretty difficult to pronounce judgments with the advantage of 20-20 hindsight, not having the concerns or realities that prevailed at that time. I would prefer to think that the treaty negotiation process would look towards the future, not the past. The focus should be to strive to create an environment of opportunity, where pride in self is fundamental, as is pride in the very foundation of that population. Almost all of us in this room were immigrants to this land at one time, as the native people were 10,000 years ago or more. Nevertheless, we have a mother country and an opportunity for that foundation. The foundation for the native people is this country and this province.
I'm really concerned with the good intentions, but sometimes I see those good intentions made by misguided samaritans. I have concerns with respect to that. These decisions have to be made with the head more than the heart, because you definitely have a great deal of concerns to attend to. I know the sincere commitment of the minister to his mandate. He is no different as Minister of Environment than he was as Minister of Aboriginal Affairs. He has a sincere commitment, but that commitment has to be on a global basis to all citizens of this province. My question was: is it this government's intention, once everything has come together, to have multiple classes of citizens based on their race or ancestry? Or are we going to strive to create a British Columbia where all individuals are treated equally, not only in the eyes of the law, but by society collectively? Is that our goal, or are we looking at the first goal, at different classes of society where we build in racial disharmony, stress and friction and all of the other negative things that come along with it? I'm concerned about what the future is. I don't see that anyone can pull water back from under the bridge.
Hon. J. Cashore: I think the hon. member and I had this discussion about two days ago, so I don't plan to get into a lengthy answer.
Referring to my statements about setting right injustice, the hon. member suggests that we look forward and not back. Any student of history recognizes the need to look back and to learn from the past before looking forward in order to make the appropriate decisions in the present time to ensure that we have indeed learned from the past. That is entirely within the context of the approach we are taking.
There is a very important component in the process that we've entered into with the summit and with the federal government. Implicit within that is a recognition on the part of the summit -- and of the leaders of those nations that have filed statements of claim -- that the roles of federal and provincial governments are a constitutional reality. They recognize that. They are not seeking to negotiate their way out of Canada; they are seeking to negotiate their way into Canada and into British Columbia. In these negotiations they are discussing a range of issues dealing with land and governance, topics which are interconnected in the negotiation context.
In carrying out our moral obligations -- and those that have been made clear to us in court imperatives -- we believe that we are on the right track in addressing an issue that needs to be addressed. When entering into negotiations, you are not in a position to predict the future; you may have a vision of the future, but you can not predict it.
I am going to take a great deal of care in talking about some of these future-oriented questions. You may not agree with this, but I recognize the need to maintain a position that enables us to have a good mutual process among the three parties that enter into these negotiations. We have said very clearly that what we are leading to is the settling of unfinished business and that in so doing this will be negotiated in the context of respect that will lead to certainty. I've also pointed out that the province in its role and the federal government in its role have a responsibility to negotiate on behalf of all British Columbians and, indeed, of all Canadians.
The Chair: I draw to your attention that we are nearing the usual hour for breaking up.
J. Weisgerber: Perhaps the minister could give me a bit of clarification. I'm looking at his letter of April 25, the estimates schedule, which lays out a number of items to be discussed under vote 9 and then a number of items to be discussed under vote 10. I note that we came very close to reaching a conclusion on vote 9. Perhaps the minister would be the most appropriate one to clarify that there is still a considerable amount of business to be discussed under vote 10 and that we weren't considering winding up the estimates with a vote on vote 9. Or, if we have lumped the two together, then I will feel more comfortable in pursuing the questions that I have under vote 9. Could the minister give me a sense of how he sees that unfold?
Hon. J. Cashore: The letter that the hon. member refers to is an attempt, on the basis of a suggestion from the opposition, that we try to organize the topics, but, as always happens, the topics tend to go over a wide range on a day-by-day basis. It's my understanding that they would be lumped together and that the discussions on all aspects of the estimates would take place under vote 9. If that's agreeable, then once those discussions are concluded, we would take the pro forma votes.
J. Weisgerber: I guess that just confirms my first fear when we were appearing to pass vote 9. A number of items need to be discussed under these estimates. Before our break, I'd like to follow up on the minister's earlier comments about a vision shared by the various groups going into negotiations. It's important that each of the participants in negotiations of any kind, and particularly in land claims negotiations, have a vision for the future. The vision that the minister and his negotiating staff take into those negotiations has to be the vision of British Columbians -- not the vision of the current government or necessarily of the current minister, and certainly not the vision of the members of the negotiating team, but the vision that's shared by British Columbians.
[ Page 10480 ]
I raise this again because we seem to be having an enormous amount of difficulty getting the minister to share with this committee the vision that the province is taking into the land claims negotiating arena. I appeal to the minister to give us a vision, not a couple of airy-fairy comments but some hard, detailed positions that make up the vision the minister takes into those negotiations.
While I'm on the topic, I'm concerned with another comment the minister made recently in response to questions from my friend the member for Okanagan West. The minister says that the negotiators, with the federal government and the provincial negotiators, are representing Canadians and British Columbians at the negotiating table. My belief is that the federal negotiators, at least, are inhibited by their fiduciary right to aboriginal people that's been clearly defined by law. I'm not sure how you can go to a set of negotiations with a fiduciary responsibility to the party across the table from you and still believe that you are representing the other side of the table or the broader population base. It's always been my belief that the government of British Columbia and the representatives of the province in negotiations have a particular responsibility to represent all British Columbians at the negotiations.
[11:30]
With those things in mind, I think it's fair to say that the members of this committee and a far broader spectrum of British Columbians want some sense of the vision that is being portrayed and communicated to those people who are charged with negotiations not on behalf of the government but on behalf of all British Columbians. I encourage the minister and hope that his vision contains enough detail that it will take him some time to lay it out for us. I invite him to at least start before lunch.
Hon. J. Cashore: We've canvassed this very thoroughly. I've said many times that the government has a responsibility in its negotiations to represent all British Columbians. The member says that; I say that. He must think it means something different than when I say it, and that's okay.
The hon. member also said that somehow it's inappropriate for federal and provincial governments to go to a table with fiduciary responsibility when that responsibility is to the party on the other side of the table, and I cited that as a problem. I think negotiators going to any table have to identify what the reality is with regard to what the courts have said and what we have said. Of course, we have to go with that to the table; that's very transparent. I really cannot comprehend how that can be an arguable point. You go to the table with reality; you go there with the facts. The fact is there is an issue relating to fiduciary responsibility and to the courts.
Having said that, hon. Chair, I move the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 11:32 a.m.
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