1995 Legislative Session: 4th Session, 35th Parliament HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
(Hansard)
TUESDAY, MARCH 28, 1995
Morning Sitting
Volume 18, Number 6
[ Page 13071 ]
The House met at 10:07 a.m.
Prayers.
D. Mitchell: I rise to raise a point of privilege, of which I have given notice to the Chair under practice recommendation No. 7. I refer specifically to the cloud, the newest cloud, hanging over the government, its appointees and even our public service this morning as a result of this latest leak of information concerning the provincial budget. I do not ask for the minister's resignation at this time. I don't think that would be appropriate simply because of the story in this morning's Victoria Times-Colonist newspaper. But I do believe that the rights and privileges of members of this House have been affected as a result of this leak of budgetary information.
By tradition, the budget is not released to the public prior to the Minister of Finance delivering her speech in this House. The fact that major details of this budget have apparently been released already to the media constitutes a prima facie case of privilege. There is no evidence yet to suggest that this leak of information has affected financial markets, nor is there any evidence yet to suggest that any individual has profited from the early release of details of the budget. However, confidence in the budgetary process and in the government has been seriously undermined.
In order that this matter can be reviewed in detail by members of this assembly, whose privileges have been violated by this leak, the matter should be referred to a special committee on privileges for a determination of whether or not this constitutes a breach of privileges of this assembly. This committee should be empowered to inquire into all aspects of this budgetary leak and the consequences of this most serious breach of privilege. If the Chair agrees, I'm prepared to move the necessary motion, which I will now tender to you, hon. Speaker, along with a copy of my statement relating to this question of privilege and a copy of the offending newspaper article.
Hon. G. Clark: I'm a bit surprised that the member, with his knowledge of the rules, would move a motion of privilege, because having had occasion in recent hours to review the matter in great detail, it is very clear in parliamentary practice that this is absolutely not a question of privilege. I draw members' attention to Mr. MacMinn's learned journal, page 233, which refers to case after case where allegations of budget secrecy have been made and where the Speaker or others have ruled that this is not a question of privilege. In particular, there is the text by Mr. M.N. Kaul and S.L. Shakdher entitled Practice and Procedure of Parliament, second edition, 1972, at page 601, where Mr. Speaker Dhillon has ruled. I quote from that ruling:
"So far as I can gather, only two cases occurred in which the House of Commons in the United Kingdom...took notice of the leakage of the budget proposals. In neither of these cases was the leakage treated as a breach of privilege of the House nor were the cases sent to the Committee of Privileges for inquiry. The prevailing view is that until the financial proposals are placed before the House, they are an official secret. A reference of the present leakage to the Committee of Privilege does not therefore arise."
Finally, just to refer as well to Madam Speaker's ruling with respect to a leak by then -- Finance minister Wilson, she refers again to previous precedents and, in particular, to one by the then Speaker in 1981, which says:
"These two important precedents which I took from the records of the United Kingdom convince me, and I hope the House, and give me the authority to say that a breach of budget secrecy cannot be dealt with as a matter of privilege."
I could go on. There is simply no privilege here; it's simply grandstanding by the member opposite.
J. Tyabji: The matter here is not the budget leak so much as that in the last two months there have been a series of confidential memos. We had the legislative agenda provided prior to the members sitting. A number of items of government business have been in the hands of people who are not elected members of this assembly prior to the members of this assembly having any notice or information on it. This motion is not on the budget leak per se. It's really on the functioning of government being compromised by people, whom we assume to be the senior civil service, acting against a code of ethics that we would assume they should be living within. That's what this motion of privilege is about.
The Speaker: Thank you, hon. member. I appreciate the submissions by the hon. members. The Chair, in deference to the members' concerns about this unfortunate situation, has allowed them to present their submissions.
But I certainly concur with the present submission by the hon. Government House Leader. I just add one final authority from Beauchesne's parliamentary Rules and Forms, sixth edition, which further confirms the position taken by the hon. Government House Leader. "Budget secrecy is a political convention, and if breached, the minister may be attacked" -- if that's required -- "through a substantive motion, but not through a question of privilege" -- as this is a state document and does not qualify for that particular avenue. I would therefore rule that the motion is out of order.
G. Farrell-Collins: Under standing order 35, I rise to move adjournment of the House to discuss a matter of definite and urgent public importance, namely the total lack of government security surrounding confidential information and the resulting crisis in the confidence in this government. I have given the Speaker notice under practice recommendation No. 8 of this motion, and I would like to move that. There is a lack of confidence in this government with regard to members of this Legislature as well as the people of the province. Advance notice has been given.
We have no idea how far this leak has gone or the number of people who may have received it. There's a very real possibility that one or more people came into possession of the budget information and were able to make use of it for their own private gain in various stock markets and other financial institutions. The issue of the government's deficit or surplus would be of very great interest to members speculating in the financial markets, and those are issues that need to be addressed. This would amount to government-facilitated insider trading and would spark a crisis in the confidence of the government in money markets and institutions. Taken with other recent security breaches, this leak demonstrates a total collapse of confidence in this government by their own civil service.
Finally, the Premier himself has ordered a police investigation into this very serious affair and is treating it as a criminal matter, as it should be. This amounts to admission by the Premier that his government is out of control and that the Premier himself has lost confidence in his own administration. A loss of control this profound cannot be considered anything
[ Page 13072 ]
other than an emergency, a situation which threatens the continued operation of this government, and which is certainly a matter of urgent public importance.
[10:15]
On their own merits, each one of these arguments merits debate under standing order 35. Taken together, they clearly constitute an emergency of urgent and public importance. I call on the Speaker to recognize this indisputable fact and to grant the motion for emergency debate. Further, I move a formal motion that this House adjourn awaiting the ruling of the Speaker, rather than the tradition which has happened in this House, I think inappropriately, that we wait 24 to 48 hours for a ruling of the Speaker on an urgent public matter.
Hon. G. Clark: I want to draw the Speaker's attention to standing order 35, which the member referred to. Subsection (6) states: "If leave has been obtained, the motion may stand over until 4:30 p.m. on that day, or Mr. Speaker may direct that the motion be set down for consideration on the following sitting day at an hour specified by him."
I draw that to the Speaker's attention, because I would prefer not to make a submission on standing order 35. I ask the Speaker to make a ruling in light of this submission from members opposite. But should the Speaker find that standing order 35 should be followed, and therefore that there should be an emergency debate held as per the standing order, I would ask that it be held after the budget is tabled in this House.
The budget presentation will be coming forthwith, as all members know. It is appropriate and important that members of the House hear that budget deliberation. It is, of course, an outstanding budget which we look forward to hearing from the Minister of Finance. On standing order 35, therefore, should you decide that there is grounds for such a debate, it should occur at a time after the budget debate at a time set by your honour, Mr. Speaker.
J. Weisgerber: I certainly understand the motivation and the concern behind the motion we have on the floor. There's a growing lack of confidence in this government across British Columbia. It's pretty apparent that that's spreading through the public service. We've seen these growing leaks and a lack of security, which I think undermines real confidence in this government's ability to perform. Indeed, I think morale in the public service is at an all-time low. People see political or patronage appointments throughout the system, and they are uncomfortable with that concept.
I don't for a moment condone the leak or the actions of the person who leaked this information yesterday, and I support the government in its intent to pursue and prosecute, where appropriate, the person responsible. I think it's also critically important under these circumstances that the actual details of the budget be tabled now and made available to British Columbians. I would, therefore, not support the motion we have.
G. Wilson: I would support the words from the Leader of the Third Party with respect to the need to get this budget tabled, to get the documents out for all British Columbians to share and to make sure that the information they have is, indeed, accurate. I think we need to take at face value often what is read and reported in the newspapers, especially from leaks. I do think, however, that in light of the motion before us right now, there is a need for debate with respect to this material.
I find it curious that day after day after day we hear from the members of the official opposition leaked confidential government documents which were freely used by the opposition to gain political points when necessary. The point is that in the minds of some, this budget, which is a similar kind of breach, now transgresses a line that shouldn't be drawn.
The other point that I think is necessary in such a debate is with respect to the manner in which the Times-Colonist selected to print that document. The Times-Colonist was under no obligation to the public to print that information. In fact, in light of the fact that there was a set time at which the budget could be available to all British Columbians, it is questionable whether the Times-Colonist should have printed that information knowing that that information was privileged, knowing that it had come from a leaked source. I think there is an ethical question that needs to be addressed as to whether or not the Times-Colonist should have even printed the information, knowing its source.
Indeed, there is a very real debate to take place in this House with respect to both the ethical procedures of members of the civil service and the procedures of the members of the media who find stolen information and freely and openly publish it, knowing full well that that might breach some very serious privileges.
The Speaker: The Chair has listened to submissions and is prepared to respond.
Hon. member for Fort Langley-Aldergrove, you have had an opportunity to present your motion. Is there a matter of...?
G. Farrell-Collins: The timing of the motion is what I wish to speak about.
The Speaker: Take your seat, please. The case has, I think, been made quite clearly that the motion should qualify, that indeed this is a matter of urgency.
Interjections.
The Speaker: Order, please. Yes, the hon. member for....
F. Garden: I see someone up in the gallery with a huge camera taking pictures down into this Legislature.
The Speaker: Thank you. We will have that matter looked into by the Sergeant-at-Arms.
Interjection.
The Speaker: Order, please. We have a motion under standing order 35, which I believe qualifies, indeed, as an urgent matter. This is borne out by the fact that the timing of the budget speech has been accelerated, and we are here earlier than had been anticipated. The question of when the debate should take place I am not in a position to decide at the moment, but I would hope that the Government House Leader, the Opposition House Leader and others could review this. It should certainly be undertaken as soon as possible; if not right after the budget, at some time in the very, very foreseeable future -- perhaps later today.
Hon. G. Clark: Budget debate, hon. Speaker.
Hon. E. Cull: Hon. Speaker, I move that the House at its next sitting resolve itself into a committee to consider supply to be granted to Her Majesty.
[ Page 13073 ]
Motion approved.
Hon. E. Cull tabled the comptroller general's report of interim financial statements for the ten-month period ending January 31, 1995.
ESTIMATES OF SUMS REQUIRED FOR THE SERVICE OF THE PROVINCE
Hon. E. Cull presented a message from His Honour the Lieutenant-Governor: Estimates of Sums Required for the Service of the Province for the fiscal year ending March 31, 1996, and a supplement to the estimates for the fiscal year ending March 31, 1996, recommending the same to the Legislative Assembly.
Hon. E. Cull moved that the said message and the estimates accompanying the same be referred to Committee of Supply.
Motion approved.
Hon. E. Cull: I move, seconded by the hon. Minister of Education, that the hon. Speaker do now leave the chair of the House and go into Committee of Supply.
Hon. E. Cull: Not surprisingly, I plan to depart somewhat from the usual budget speech to explain to this House the extraordinary events that took place overnight, and to take the earliest opportunity to advise members of the House of these events.
Early last evening, a member of the press gallery informed a member of the Premier's staff that someone had phoned him and read to him what was purported to be a budget document, revealing some of the contents of today's budget. By the time staff had confirmed that these facts were likely to be true, the House had adjourned for the day. The story did not reach the public immediately, as it did in a similar such incident with the 1989 federal budget, because the information was received by the Times-Colonist, which did not print until early this morning. Very early this morning, other members of the press gallery learned of the story.
The premature release of details of the budget appears to have resulted from a breach of trust, an act against which there can be no certain security. Upon learning about this event, I immediately contacted my officials and was advised that this violation could not result from lack of proper security arrangements for the budget document. The budget documents are prepared under strict security by my ministry, and all procedures, strictly followed, were the same as in previous years. Final budget documents are kept under strict security. Printing of the document is done by Queen's Printer -- again, under strict security. When someone determines to leak documents in their possession on the basis of trust, however, there is no absolute way to prevent this.
I had to consider two essential issues underlying budget secrecy: the need to ensure that a person does not profit or otherwise gain advantage from advance knowledge of the contents of the budget, and the principle that members of this House should learn the details of the budget before it is released to others. Under the circumstances, with the House adjourned until this morning and the newspaper being in circulation early this morning, it was not possible to recall the House before the information became public.
On the first matter -- ensuring that no one profits or benefits from early information on the budget -- I considered taking the action taken by the federal Finance minister in 1989: releasing the budget immediately, outside the House. After carefully reviewing the matter -- the information in the hands of the media -- and the precedents, I decided against this course of action. The document leaked contains no information about tax changes which could provide financial advantage.
Ironically, the media stories on the leaked document show a government practising sound fiscal management. The stories show a balanced budget, a long-range plan to reduce debt levels, streamlining of government operations, and spending focused on those areas which support job creation and the protection of medicare. Accordingly, I concluded that the prudent course was to present the budget at the earliest possible opportunity, as I am now doing.
I regret that this course of action was necessary. I regret that the wilful action of an individual has denied the right of members to hear all parts of the budget presented in this House before it's presented elsewhere. But under the circumstances, I believe that continuing now with the rest of the details of the budget is the best course to take.
I assume that the individual who did this did so for personal or political reasons which I cannot understand. This is not the way any of us in this House would have liked to see this day unfold. But this action touches more than the government; it touches the public service.
As many members in this House know, I was a member of this public service for 13 years. During that time I did not agree with the political party of the day or the direction it was taking. I did not vote for them. In fact, it was their policies that led me to seek political office. But never in my 13 years of public service to this government did I or any of the people I worked with ever consider breaking our oath of office and violating the trust that is placed in all of us. This action places a cloud over the employees in my ministry -- people whom I know to be dedicated, hardworking and honest -- and I regret this as much as anything.
Now that the House has the information on the breach of trust, let me carry out my public responsibility and provide the complete budget to the assembly and to the public.
G. Farrell-Collins: Point of order.
Some Hon. Members: Shame!
The Speaker: Order, hon. members.
[10:30]
G. Farrell-Collins: I'm more than happy to have the minister continue, but I noticed that the first part of her speech was more ministerial statement than budget speech. Perhaps there's an opportunity for members to respond after the speech. Hon. Speaker, if there's an opportunity for members to respond afterwards, I think that would be appropriate.
The Speaker: Thank you, hon. member. There will probably be an opportunity to respond. Inasmuch as there is agreement under standing order 35, every member will be given an opportunity to speak at a later time.
Hon. E. Cull: I'm pleased to present the fourth budget of this New Democrat administration.
When our government assumed office three and a half years ago, we had one overriding priority: jobs and prosperity for ordinary British Columbians.
[ Page 13074 ]
We were faced with three big challenges. The first was to put the province's financial house in order. That meant eliminating the deficit and getting debt under control. Failure to meet this challenge would result in more British Columbia tax dollars going to pay interest to banks, with less available to provide badly needed services.
The second challenge was to make our economy the strongest in Canada by making the right investments -- affordable investments -- to ensure long-term growth and jobs; by investing in people -- in job training and new skills for working British Columbians; by investing in our natural resources and the communities that depend on them; and by building the infrastructure necessary for new business investment and job creation. Failure to meet this challenge would undermine our longer-term economic potential and prevent ordinary British Columbians from sharing in these benefits.
Our third challenge was to protect the essential public services British Columbians rely on. One service in particular -- our medicare system -- makes British Columbia and Canada different. Universal access to health care is a key part of our economic productivity, our security and our social fabric. Failure to meet this challenge would mean regressing to an American-style system where access to health care depends not on what you need but on what you earn.
Our first three budgets met these challenges. We have put British Columbia's financial house in order. We came into office facing a budget deficit of $2.4 billion and cut it by over 80 percent in our first three budgets. We brought down real government spending per person, which was growing at 4 percent per year in 1991-92, to a real reduction in spending per person of 1 percent last year.
As a result of sound financial management, we were able to freeze taxes for three years. By setting clear priorities and cutting waste, we were able to protect essential medicare and public education in the face of declining federal government support. We have maintained the lowest level of debt as a percentage of gross domestic product in Canada, and we have the highest credit rating of any province.
This sound financial management has produced results. When this government took office in 1991, the provincial economy was weak. Each year since, it has grown steadily. The British Columbia economy has created 139,000 new jobs since 1991, over 40 percent of all the new jobs in Canada. Our economy grew last year by 4.3 percent, an achievement British Columbians can be proud of.
When we took office, we inherited a backlog of urgent demand for infrastructure -- for schools and hospitals; and transportation, sewer and water systems. We addressed these needs to ensure long-term economic growth and jobs in all of British Columbia's regions.
Our forest industry in 1991 was suffering from decades of neglect. We took action to renew British Columbia's forests and the communities that depend on them. Now, thanks to the efforts of all British Columbians, our economy is growing, investment is at its highest level in seven years and we continue to lead Canada in job creation.
Against this positive background, we began to prepare our budget for 1995-96. I began to consult the people of British Columbia about this budget six months ago. Thousands of people offered me their views, and more than a hundred groups submitted reports.
Most said that the government was on the right track. They were pleased that we had cut the deficit. They supported the steps we have taken to reduce government spending, and they strongly supported the three-year tax freeze, and they were often surprised to learn that B.C. had the lowest debt and the highest credit rating of any province. They gave high priority to jobs and investment, and they agreed that health and education must be protected in the face of limited tax dollars.
But they told us to do more, to go further and finish the job. We listened, and we have acted. With this year's budget, we have completed a key part of the job we started when we took office. There will be no budget deficit for the government of British Columbia this year. With this 1995 budget, we balanced the budget a full year ahead of our promise to the people of British Columbia, and we have done it while maintaining our commitment to freeze taxes.
People also told me: "Control debt." This budget caps the cost of debt at a rate lower than any other province. This budget introduces a debt management plan to make sure British Columbia's debt levels remain the lowest in Canada.
People also said: "Cut the cost of government." This budget cuts administrative overhead, chops spending for services like advertising and consultants, and delivers existing programs more efficiently. As a result, real government spending...
Interjections.
The Speaker: Order, please.
Interjection.
The Speaker: Order, hon. members.
Please proceed, hon. minister.
Hon. E. Cull: ...per person will decline 2.3 percent this year -- the third decrease in spending in a row.
Important as it is, British Columbians are looking for more than just sound financial management. They want a government with a vision of the future and a commitment to keeping our economy the strongest in Canada. This budget continues to make investments which are essential to job creation -- investments in our people, natural resources and infrastructure. It continues our Skills Now initiative to give students, workers and unemployed British Columbians the training they need for new jobs in our changing economy. It continues to invest in the wise use of our land base, renewal of our forests and the health of the communities that depend on them. It ensures a strong fiscal foundation while making the affordable investments essential to the future of British Columbia.
People also want a government that is prepared to stand up for them, to protect medicare and public education and other vital services they value so highly. This budget makes health care a priority. We will take action to expand cancer clinics, shorten surgery waiting lists, move health care closer to home and spend our health dollars more effectively.
Balancing these goals is what sets British Columbia apart. A number of other provinces have reduced or eliminated their budget deficits. Some have done it through drastic cuts in essential services, and ordinary people are paying the price. We will not do that in British Columbia. We will balance our budget, but we have chosen a different way, a better way, a made-in-B.C. way. By listening to the people, we have developed a budget that reflects their priorities, a budget that paves the way for continued job creation and a prosperous future.
Let me now review British Columbia's economic performance over the last year and our prospects for the coming
[ Page 13075 ]
year. B.C.'s economy recorded another impressive gain in 1994 -- greater than expected. Our real gross domestic product grew by 4.3 percent, the highest rate of growth in seven years. By most indicators, British Columbia has one of the strongest economies in North America. Retail sales increased by almost 10 percent in 1994, exports were up by 20 percent, and non-residential capital expenditure was up by over 23 percent.
Last year 67,000 new jobs were created in British Columbia -- one out of every four jobs created in Canada. Growth is expected to moderate somewhat in 1995, but the economy will still show a solid 3 percent increase. New jobs will continue to be created at an impressive rate: 43,000 in 1995.
Ensuring jobs and prosperity over the longer term requires sound government finances. To ensure a strong fiscal foundation we must do three things. First, we must eliminate the deficit and begin to pay down debt created by previous deficits. A situation in which a government continues to spend more than it brings in is both unacceptable and unsustainable. Second, we must ensure that our debt levels remain affordable over the long term. Excessive debt levels reduce government's ability to maintain public services demanded by a growing population. Third, we must reduce the cost of government and make it more efficient by eliminating waste and duplication. With our tax freeze in place it becomes essential to cut the cost of government, improve efficiency and find savings in order to fund the services British Columbians require.
When this administration took office three and a half years ago, government spending exceeded its revenues by $2.4 billion. And it could have gotten worse: an independent audit showed that the deficit would soar to $3.3 billion if no action was taken. The Premier pledged to bring the deficit down and eliminate it, and to do so in a balanced and deliberate way without damaging our economy or making drastic cuts to medicare, public education or vital services. In our first three budgets we've made steady progress towards eliminating the deficit.
[10:45]
Let me outline the results for '94-95, the year just ending. I'm pleased to announce that the government spending for the fiscal year 1994-95 will be on target at $19.6 billion. Because our economy was even stronger than expected, revenue will exceed $19.2 billion -- $524 million higher than estimated. Every penny of this additional revenue has been used to reduce the deficit and hold down the debt. As a result, the 1994-95 deficit will be $370 million -- well under half the $898 million targeted in last year's budget. This faster progress in eliminating the deficit means that the amount of new taxpayer-supported debt incurred in 1994-95 was also one-half of the level projected in last year's budget. In total, the first three budgets of this administration cut the deficit by over $2 billion -- a decline of 80 percent.
Let me turn now to 1995-96. British Columbia's deficit is gone. Strong economic growth will generate $20.3 billion, while expenditures will be $20.2 billion. The resulting budget surplus will be $114 million.
Interjections.
Hon. E. Cull: I hear the heckling from the other side. Over the last six years there has been much public debate about the reporting of B.C.'s budget deficit. The public accounts of British Columbia contain two financial presentations. One, the consolidated revenue fund, covers all expenditures made directly by the government. This approach has been used by B.C.'s provincial governments to report budget deficits or surpluses since Confederation. The other, called the summary financial statements, is more comprehensive in that it also includes financial results of all provincial government agencies and enterprises, including some that are outside the direct financial control of the provincial government.
The auditor general favours the use of the summary financial statements and has recommended that we report the surplus or deficit on that basis. Starting in 1995-96, the budget documents will present the financial deficit or surplus using both results. I'm happy to announce that, whether you use the summary financial statements or the consolidated revenue fund approach, British Columbia has a surplus budget in 1995-96.
Eliminating the deficit is only the first step in meeting a larger long-term challenge. This government is committed to ensuring balanced or surplus budgets in future years so that we can pay down the debt accumulated from decades of operating deficits. This challenge is made more difficult by Ottawa off-loading its responsibilities onto the provinces. For more than a decade the federal government has unilaterally cut back funding for medicare, post-secondary education and our social safety net. Off-loading by successive federal administrations is costing B.C. about $2 billion a year -- money that could have been used to eliminate the deficit and pay down debt.
We have overcome these cutbacks and achieved a balanced budget for the coming year. But the recent federal budget announced new funding cuts to the provinces for medicare and post-secondary education -- cuts that are going to hurt ordinary people and their families. We will continue to stress to Ottawa the damage caused by these actions, and we will look at new ways to protect vital services within our financial means. But I must stress that this will be no easy task.
Last year we introduced a three-year tax freeze. During my consultations across the province some people suggested we go further this year. Rather than just freeze taxes they suggested we cut them. We believe taxes should be lower, and it would have been easy to boost this government's popularity with new tax cuts. However, many people told us that it was much more important for British Columbia's long-term economic future to keep the budget balanced, repay debt and preserve vital services. We agree with this view. There will be no major tax cuts in the budget, and the three-year tax freeze will continue.
Over the last several months there has been considerable debate on British Columbia's debt. I'm a community planner; I'm not an economist or an accountant. So I look at what the financial experts -- those whose job is to assess creditworthiness -- have to say about the province's financial situation.
Moody's Investors Service Inc. states: "Debt levels remain the lowest of any Canadian province." Investment dealer Wood Gundy also supports this assessment, concluding: "...the government's commitment to balance the budget by freezing taxes and cutting the rate of expenditures underscores the market's view of B.C. as a top-notch credit." Investment dealer Nesbitt Burns concludes: "B.C. is in the best financial shape of all the provinces...the province has taken action to keep the debt growth on a downward path." Investment dealer Goldman Sachs says: "B.C.'s high double-A credit ratings and stable outlook are based on the province's improving fiscal profile, moderate debt burden and strong economic performance." I could continue, but I think the picture is clear.
The fact is that British Columbia has the highest credit rating of any province in Canada, and the lowest debt relative to gross domestic product. However, we believe that being number one is not good enough. British Columbians tell me
[ Page 13076 ]
that they are concerned about the public debt, and the government shares their concern. Failure to control debt would mean that more and more British Columbia tax dollars go to banks to pay interest instead of providing services to people, and the role of outside lenders in setting our financial and economic policies would become even larger. Therefore, managing debt is one of our highest priorities.
As of March 31, 1995, the total debt of the government of British Columbia stands at $26.9 billion. This debt is comprised of commercial debt and taxpayer-supported debt. Commercial debt is the debt of the commercial Crown corporations. It totals $8.1 billion, and is repaid by the sale of their services, not from tax dollars. Total taxpayer-supported debt is $18.8 billion: the lowest per capita debt of any province in Canada.
Taxpayer-supported debt comes from two sources: debt to fund past operating deficits and investments to build infrastructure. Debt to fund past operating deficits totals $10.2 billion -- $7.4 billion of which was incurred before this government took office. Hon. Speaker, there will be no more borrowing or adding to the debt to finance operating deficits. With this surplus budget, we can begin to pay down the debt resulting from past deficits.
The second type of taxpayer-supported debt is used to build schools, roads, health care facilities, public transit, water mains, sewer systems and other infrastructure. Debt to fund infrastructure totals $8.6 billion -- $5.9 billion of which was incurred before this government took office.
The practice of borrowing to pay for infrastructure over the long term has been followed in British Columbia for over 30 years. Successive governments have decided that the cost of such assets should be spread over their useful life rather than being paid for in advance. It's also sound business practice. British Columbia's private sector companies borrow to finance large investments in plant and equipment, and they pay the cost over many years. Without debt financing, many businesses would be unable to expand production or meet the needs of their customers.
Similarly, we would not be able to keep up with the needs of our growing province. The 700,000 new people added to our province's population over the last decade have significantly increased the demand for infrastructure. The sharp cutback in capital construction during the mid-eighties created a backlog of unfulfilled needs for basic infrastructure in many of our growing communities. Although many of these needs must still be met, we must strike a balance between what we need and what we can afford. We will borrow to make affordable investments in infrastructure, repaying the debt over the life of these investments.
Today, I am announcing the details of a comprehensive debt management plan. It will ensure that B.C.'s debt levels remain affordable, while making the necessary investments to keep British Columbia's economy the strongest in Canada. In last year's budget we put forward a fiscal plan that took the first essential step: eliminating the provincial deficit by 1996. Well, we've done it one year ahead of schedule, and we've done it while keeping taxes frozen.
The debt management plan I'm announcing today takes the next essential step. It follows extensive consultation at the Premier's summit on the economy in January and subsequent recommendations presented to us. The plan has four key goals.
The first goal will be to maintain British Columbia's credit rating as the best of any province. Major credit-rating agencies have signalled their approval of our government's record by giving us the highest credit rating of all the provinces. We intend to work to maintain that confidence.
Our second goal will be to balance the budget and use surpluses to pay down the $10.2 billion of debt incurred from decades of operating deficits. A 20-year payback period will be established, based on realistic economic and fiscal assumptions. This goal is consistent with the recommendations coming from the Premier's summit.
Our third goal will be to reduce the size of total taxpayer-supported debt as a share of provincial gross domestic product. It will be reduced from its current level of 19.1 percent to 15 percent within ten years, and to 10 percent within 20 years. This goal goes further than was recommended to us by the Premier's summit. Our taxpayer-supported debt as a percentage of provincial gross domestic product is already the lowest in Canada -- lower than Alberta at 37 percent, and certainly lower than the federal government at 73 percent -- but we are going to ensure that it is further reduced.
The fourth goal will be to ensure that B.C.'s cost of debt remains the lowest in Canada. Under the debt management plan, interest payments on taxpayer-supported debt as a percentage of government revenue will be capped at 8.5 percent. Again, this goes further than the recommendations of the Premier's summit. Currently, B.C.'s cost of taxpayer-supported debt is 7.2 percent of revenue, compared to 13 percent for Alberta and 34 percent for the federal government.
To accomplish these goals, we commit in the debt management plan to finding more innovative ways to reduce the need for borrowing in the first place. This will include better use of existing public facilities, partnerships with the private sector and the sale of non-essential assets. And, except for the allocation to the region announced by the Premier recently, all of the Columbia River downstream benefits will be used to pay down the province's debt. The debt management plan also sets out specific benchmarks which will allow objective measurements of results over time, and it ensures annual public reporting of the government's progress in achieving these benchmarks, with an independent review by the auditor general. With this debt management plan, we can move ahead, confident that we have struck the balance between what we need and what we can afford.
British Columbians want a government that lives within its means, but that does not mean drastic cuts to the services that they all value and rely on, cuts that would make everyone less healthy, less well educated and less well off. Rather, British Columbians want the province to run its affairs the way they run their own households: efficiently, and with a minimum of waste and duplication. Since taking office in 1991, we have taken action. We have cut the rate of growth of government spending every year, from the 12 percent that it was when we took office to 3.5 percent last year. In this budget we have cut it to under 3 percent, the lowest in 25 years.
[11:00]
Some have argued that we should cut deeper and faster, as some other provinces have already done. But other provinces do not have the rapidly growing population that British Columbia has experienced in the last number of years. When adjusted for our growing population and for inflation, overall government spending will decline by 2.3 percent during the coming year, and that marks the third annual decline in real per capita spending.
British Columbians expect their elected representatives and senior government officials to lead by example when it comes to keeping spending down -- and we agree. In 1992, we froze the salaries and allowances of all MLAs and cabinet ministers, and we have extended this freeze every year. In
[ Page 13077 ]
1993, the Premier implemented a 5 percent pay cut for cabinet ministers, and the salaries of deputy ministers and other senior officials were frozen. All of these freezes and reductions will be continued in the coming year, and new measures will be taken to control executive compensation in the broader public sector and end unacceptable practices. Many British Columbians have expressed concern that the pension plan for Members of the Legislative Assembly is excessive relative to those in the private sector. During this legislative session we will be bringing forward proposals to change the MLA pension plan.
Wages and salaries account for just under half of the total cost of public services. When we took office in 1991, public sector wages were increasing by an average of 5.4 percent, well ahead of the private sector. Over the past three and a half years we have taken action to bring down this growth. In 1993, we established the Public Sector Employers' Council to ensure consistency and increase the overall effectiveness of collective bargaining. These actions have been successful in bringing down public sector wages increases to just 1.6 percent last year, well below the private sector increase of 2.2 percent.
Holding wage costs down helps to control government spending, but operating costs must be reduced as well. Unlike some other provinces, we have not slashed indiscriminately, but are rationally reviewing our programs to identify waste and improve efficiencies.
Last year I announced a number of measures to cut wasteful spending and improve operating efficiency within government. These included the elimination of government air services. The sale of the government's jets realized $9.7 million in 1994 -- money that was used to pay down debt. In addition, using the private sector to provide air services will cut costs by 30 percent, for an ongoing saving of $2.4 million annually.
During the last year we also implemented a number of initiatives to reduce the costs of welfare, to ensure that the benefits are paid to those who are truly in need. Measures included recovering income assistance payments made while recipients are waiting for unemployment insurance payments, for a saving of $20 million, and cooperating with other provinces to identify fraudulent claims, which will save another $5 million.
This is not enough, however. We will continue to take a hard look at operating expenses, and this year we have cut them across government to achieve overall savings of $40 million. Advertising is cut by 15 percent, for a saving of $3.6 million. Consulting budgets have been cut by $26.5 million. Travel costs are cut by $2.4 million. Spending on information systems and equipment has been cut by $9.1 million. And furniture budgets have been cut by $800,000. Seven ministries will spend less this year than last year, and six will cut staffing levels.
Let me outline some of the specific actions we're taking to cut waste and improve efficiencies over the coming year. Administration in the Ministry of Transportation and Highways will be cut by almost $12 million. Administration in the Ministry of Health will be cut by $19 million. Delivery of the Pharmacare program will be streamlined to save $37 million. The cost of delivering student financial assistance will be reduced by $16 million, with no impact on students. Two hundred Ministry of Forests employees will be moved from headquarters and administrative functions to direct front-line program delivery. Fourteen hundred Ministry of Health employees will be moved to regional health boards. Funding for Education administration has been reduced again, for a saving of $7 million. Eliminating duplication of financial management functions across government will save $850,000. Policy functions in the Ministry of Employment and Investment and in Environment, Lands and Parks have been streamlined, for a saving of $1.45 million. Taken together, the above measures total over $100 million.
We must continue, though, to identify ways to bring down the cost of government. B.C. Hydro, for example, has recently announced the elimination of 500 positions in order to improve its cost-effectiveness. Over the next year we will undertake a major new initiative to improve public sector efficiency and cut unnecessary bureaucracy. Assisted by members of the business community, we will streamline organizational structures within government. The review will emphasize the fair and equitable treatment of affected employees, and its goal is to reduce the number of supervisory positions by 450.
Up until now, I have been talking about British Columbia's fiscal situation. Balancing the budget and ensuring a strong fiscal foundation is vital, but it is not an end in itself. One of the most important challenges facing us today is to secure prosperity and jobs for working people over the longer term. Our economy has been the strongest in Canada over the last three years, but we cannot take our continued prosperity for granted. We must make the right investments -- affordable investments -- to ensure long-term economic opportunity and jobs. We must invest in people, in our natural resources and in key infrastructure; and we must ensure that ordinary British Columbians benefit from the province's economic success.
We live in an economy that is changing rapidly -- an economy where success is based on the quality of our workforce and no longer on the quality of our natural resources. The single most important investment we can make is in training and skills, and we have made this a top priority of our government. Over the last three years we have provided the necessary funding to protect the quality of our schools and universities in the face of scarce resources, and we've made an unprecedented investment in the skills that British Columbians need to compete in the real world.
When we took office in 1991, British Columbia's schools and post-secondary institutions were bursting at the seams. School children faced crowded classrooms and a proliferation of portables, and universities and colleges were turning away young people because of a lack of space. Over the last three years we have taken action to start to reduce the backlog of requirements for new facilities. We made capital investments of $1.2 billion in schools and a further $700 million in post-secondary institutions, including the new University of Northern British Columbia. This year we will invest over $550 million to continue building and expanding schools and post-secondary facilities.
Over the last three years we have increased the funding grant for primary and secondary education by $425 million -- an average increase of 4.8 percent per year. Last year we froze administrative spending to ensure that the increased education grant was targeted to kids in classrooms. In this budget the operating grant for education will be $3.4 billion, an increase of 4.4 percent over the previous year. Again, resources will be directed to maintaining quality education in the classroom. This year's education grant does not include funding for salary increases for teachers, and it cuts school administration.
Over the last three years we have increased funding to create 15,000 new spaces in colleges, universities and other post-secondary institutes. Last year the Premier announced
[ Page 13078 ]
the Skills Now initiative. It invests $200 million over two years to give British Columbians the skills they need in a changing economy. Skills Now goes beyond the traditional education system; it targets training to those most in need: students, workers and unemployed British Columbians.
Priorities for the coming year include increasing apprenticeship and work-related training in high schools, strengthening technical education at the post-secondary level, forming partnerships to retrain workers in their communities, opening new skills centres across the province and helping those on income assistance to acquire the skills they need to get back into the workforce. During the coming fiscal year we are providing $106 million to meet these priorities.
Ensuring that young people make a successful transition from adolescence to economic independence is a particularly important challenge. Too many young people are not acquiring the skills and training they need to make this transition in the modern economy. Too often they become discouraged, and they turn to welfare for support. This government does not believe that young people are best served by long-term income assistance from the taxpayer. During the coming year we will take steps to move young people off welfare and into jobs and job training. This budget transfers $40 million in income assistance for students to the Ministry of Skills, Training and Labour, and this assistance will be focused on achieving economic independence for young people.
This government believes that the public sector has a vital role to play in creating the climate for economic growth in British Columbia's regions. Protecting jobs and ensuring prosperity in communities across British Columbia requires getting the greatest benefit from our natural resources. That means resolving disputes over the use of our forest land base. Over the last three years we've put in place a better way of making local land use decisions, ending the valley-by-valley conflicts and bringing greater stability to forest-based communities.
Ensuring jobs and prosperity in British Columbia's regions also means renewing our forests and reversing years of overcutting and poor management practices. During the last legislative session we passed the new Forest Practices Code, setting better harvesting standards and more effective enforcement to ensure that we get the best value from our forests. In this budget we are providing $35 million to support this important initiative.
Last year we introduced the forest renewal plan, an unprecedented reinvestment of forestry wealth back into our forests and into the communities that created this wealth. Its goal is to renew B.C.'s forests and ensure good family-supporting jobs for the people in the communities that depend on them. Under the plan a total of $2 billion will be available for investment over a five-year period, and the investments will be paid for by the forest companies, not the B.C. taxpayer. Forest Renewal B.C. will have $430 million available from fees paid by timber companies in 1995-96.
Forest renewal priorities for the coming year include new investments in enhanced silviculture, restoring and protecting the forest environment, jobs and job training for forest workers, more jobs and value from every tree cut and strengthening our forest-based communities. As required by the BC Forest Renewal Act, the first business plan for Forest Renewal B.C. will be tabled in the Legislative Assembly during this session.
British Columbians work hard for a living. They deserve a government that understands their challenges: making ends meet and raising a family. They know that it is the private sector, particularly small and medium-sized businesses, that create the jobs that they and their children will rely on in the years to come. But the private sector requires public sector support. It requires the stability created by the sound financial management of the province's finances.
[11:15]
B.C.'s private sector also understands how crucial a strong and modern infrastructure is to attracting new business and to creating good, secure jobs. It's government's responsibility to provide that infrastructure and lay the foundation upon which jobs grow. This government is making affordable investments to ensure that future.
We are replacing the unsafe, outdated Vancouver Island Highway and unplugging traffic arteries in the lower mainland. We are undertaking an $800 million, ten-year investment to upgrade our ferry fleet. We are participating jointly with the federal and municipal governments in a $675 million upgrade to sewer and water systems. This year we will be moving forward with a new transportation plan for British Columbia. It will integrate roads, transit and ferries and emphasize environmental technologies while working in partnership with the private sector.
Over the last three years we have entered into a range of partnerships to help small and medium-sized businesses grow. We are aggressively seeking more opportunities to work in partnership with the private sector for financing, designing and building needed infrastructure. Let me give you just a few examples.
The Premier's trade missions to the Pacific Rim, Europe and the U.S. have helped hundreds of B.C. businesses by promoting value-added products and knowledge-based industries. We have established the B.C. Focus investment fund: over a hundred million dollars of joint private and public sector investment to provide capital for small and medium-sized business. We opened the B.C. Investment Office to match new private sector investments with opportunities in B.C.'s smaller communities, and we launched a $9.5 million Buy B.C. program, in partnership with the food industry, to promote B.C. products.
British Columbia's cultural industries represent a vibrant and growing sector of our economy. They account for 47,000 jobs across the province, a large portion of which are held by young people. They are an important source of small business opportunities in B.C.'s communities. They contribute to our quality of life, and they help to put B.C. on the map. In the coming year we have provided $4 million in additional funding to support new programs and new partnerships in the cultural sector. Funding will be earmarked to celebrate B.C.'s best artists, to develop new marketing strategies, to increase support for community cultural organizations and to help bring B.C. artists and performers to schools and communities throughout the province.
Many businesses have expressed concern over the often unintended impact that regulations and other governments have on competitiveness. Again, following the recommendations arising out of the Premier's summit, we will work with the business community to develop the tools to ensure that government regulations do not have unintended impacts.
While we're building a strong fiscal and economic foundation we cannot sacrifice the vital services that British Columbians depend on, and they certainly place a special value on their health care system. Universal medicare accessible to all, regardless of ability to pay, is one of the key things that make British Columbia and Canada unique. Protecting
[ Page 13079 ]
the integrity of universal health care in the face of limited resources is an important challenge, and the challenge will become more difficult as the federal government continues to cut funding for medicare.
This government has given the highest priority to funding health care to ensure that it remains accessible and affordable. Over the last three years we've increased funding for health care by $1.1 billion -- an average increase of 5.9 percent per year. And we have done it at a time when other provinces are cutting their health services. Over the coming year we will invest almost $300 million to build or expand hospitals, clinics and health care facilities. Total expenditures for health care will be $6.64 billion. That represents an increase of $252 million over the previous year.
Ensuring that medical services are there when British Columbians need them also means changing the way we provide care. That's why we introduced the New Directions initiative: to develop more cost-effective ways of delivering services in B.C.'s communities. This has been accompanied by a major decentralization of health care administration to British Columbia's regions. Beginning this year, the Ministry of Health will transfer most of the programs it currently manages to new health boards and councils across the province. This year 1,400 staff positions will be transferred from the Ministry of Health to regional health boards, and over the next few years additional positions will be transferred. Within three years, staff in the Ministry of Health headquarters will be reduced from 6,000 to 1,000. Maintaining a viable health system also means providing health care more efficiently, minimizing bureaucracy and attaining the best value for money. Measures are being taken to amalgamate some hospital support functions and to use group purchasing to lower the cost of supplies. During the coming year we'll approve the delivery of the Pharmacare program to save $37 million and reduce administration costs in the Ministry of Health to save $19 million.
Let me now sum up what this budget does. It ensures a strong fiscal foundation for British Columbia. This budget completes a key goal we set for ourselves when we took office: it eliminates the deficit. It puts forward a long-term plan to make sure our debt level remains the lowest in Canada, and it continues the three-year freeze on taxes. It makes sure that the government lives within its means by cutting wasteful spending. But budgets are not just about numbers, balance sheets and credit ratings; they're about people. People are looking for a government that spends their tax dollars wisely, but they're also looking for a government which is prepared to make the right investments to secure jobs and create new economic opportunities.
This budget does that. It makes the investments in education and skills that British Columbians need to compete in the world. It makes investments to renew British Columbia's forests and ensure good family-supporting jobs for the people in the communities who depend on them. It invests in the modern infrastructure that the private sector needs to prosper and create jobs: roads, transportation networks and communications. British Columbians are also looking for a government that's prepared to stand up for them, to protect medicare and other vital services, and this budget continues to make the preservation of universal medicare and public education our highest funding priority.
This budget is a made-in-British-Columbia solution. It ensures a strong financial foundation without cutting public services, reducing wages or lowering our social standards. It strikes a balance between the investments we need and the investments we can afford, so that our economy will remain the best in Canada.
We've listened to ordinary British Columbians, and we've acted on their concerns. We will continue to listen and work with people in this province to ensure jobs and prosperity for British Columbia.
F. Gingell: It was quite a shock this morning to return from my walk and read the budget in the Times-Colonist. I don't want to dwell on this leak. Clearly there needs to be a thorough investigation to discover how it happened and to discover if the minister bears any responsibility for it. I suggest, Mr. Speaker, that you might like to take this book out of the library which deals with these issues. I'm sure her conscience will be her guide.
The real issue to British Columbians isn't how they learned about this budget. The real issue is what is or is not in this budget. The budget presented to this House today is what we've come to expect from the NDP -- a purely political document, all sizzle and no steak, all hat and no cattle.
Like many British Columbians, my expectations were raised by the stories I've read over the past several days, generated by official government leaks. I never expected the government to completely turn its back on its record, but I thought it might be prepared to reconsider some of its most serious errors. It has not even done that.
Sure, this budget contains a few political tokens. It promises to reduce perks and pensions for politicians. We applaud any move in that direction. There is some talk of rolling back some of the increases in staff and spending that this NDP government created in the first place. We can all agree with that. But these moves are a futile gesture when considered against the full scope of the fiscal challenge before this province.
It is clear that when this government attempted to stare the debt challenge down, it was the government who blinked. It is clear that in the battle for control that so characterizes this government in its dying days, the big spenders won. This budget does not reverse this government's fiscal decline; it does not even hold its slide. This budget merely tries to slow the NDP's headlong descent long enough to get past the next election. British Columbians do not ask a lot of this government; they've learned not to. They simply ask that governments spend their money as carefully as they spend their own. How can the government not have heard British Columbians? Just four weeks ago the government paid several hundred thousand dollars to listen to a message they could have heard in any coffee shop. When the participants in the government's town hall broke from the Struble script, they were actually doing this government a favour. There is always a danger that government leaders will become isolated from the people they represent. At the town hall, the Premier and the Minister of Finance only needed to stop and listen to hear what British Columbians want from their government. They want less spending, not more; they want less taxation, not more; they want less debt, not more. This government has failed to deliver on any of those goals.
If you want to know what's in the budget, you have to read between the lies. The NDP say taxes are frozen. The reality is that the government is taking $1.2 billion more in taxes from British Columbians. The NDP say that the budget is balanced. The reality is that the actual deficit is $473 million. The NDP say they have a plan to manage the debt. The reality is that the NDP will borrow another billion dollars this year alone.
The most shocking thing about this budget is that even if all the numbers in this budget were true, the government claims it will take 20 years to undo the damage they have
[ Page 13080 ]
created in three years. Let me repeat that: even if all the numbers in this budget were real, it would take 20 years to undo the damage of the last three. That is unacceptable. All across the province today, thousands upon thousands of people have gone to work to pay for the mistakes this budget will not address. Thanks to the skyrocketing debt load the NDP are leaving to our children, British Columbians will continue to pay for those mistakes for another 20 years. It is not fair to the people working today or to the children who will be working in the years to come. It has to stop, and when we get a chance, it will. British Columbians have probably not been hurt by this budget leak. They have been hurt by this budget.
[11:30]
I will take the opportunity to speak at greater length to this budget at some future time. With today's confusion in the government's benches, I'm not sure when that will be. Meantime, I move that we adjourn this debate.
The Speaker: Hon. member?
F. Gingell: To the next sitting after today. That's not quite right.
The Speaker: You have heard the motion. All those in favour, say aye. I believe the nays have it.
F. Gingell: I'll try and get it right this time. This government has produced four budgets, and they haven't got it right yet. But I will do my best to get this right. I move adjournment of this debate until later today.
F. Gingell moved adjournment of the debate.
Motion approved.
Hon. E. Cull presented a message from His Honour the Lieutenant-Governor: bills intituled: Budget Measures Implementation Act, 1995; Grains and Oilseeds Revenue Protection Plan Trust Fund Act; Grazing Enhancement Special Account Act; and Securities Amendment Act, 1995.
Hon. E. Cull: These four bills implement the budget measures that are contained within the budget, and in moving first reading I'll just quickly state the primary purpose of each bill.
Bill 2, the Budget Measures Implementation Act, 1995, amends seven provincial statutes. The Corporation Capital Tax Act is amended to broaden the scope of the investment allowance to allow the corporations interested in mining reclamation trust to be eligible for deduction. The Ferry Corporation Act is amended to increase the corporation's borrowing limit to finance its capital plan. The Home Owner Grant Act is amended to increase the threshold at which the grant is phased out. The Income Tax Act is amended to harmonize provincial legislation with recent federal legislative changes related to mine reclamation trusts.
The Property Transfer Tax Act is amended to exempt first-time homebuyers from certain eligibility requirements where death or divorce occurs in the first year, to exempt the Provincial Capital Commission from tax on purchases of land for park purposes, and to expand the exemptions for transfers related to bankruptcies. The School Act is amended to clarify that grants in lieu of provincial school taxes paid to municipalities must be transferred to the provincial government.
The Social Service Tax Act is amended to clarify the application of the tax on software, to extend the proportional refund for motor vehicles returned to motor vehicle dealers, to provide refunds to farmers who purchased prescribed farm equipment prior to obtaining farmland classification and to provide authority to refund the full tax paid on certain exploratory mining equipment.
Bill 3, the Grains and Oilseeds Revenue Protection Plan Trust Fund Act, creates a trust fund for the administration of moneys related to the farm income plan for grains and oilseeds.
Bill 4, the Grazing Enhancement Special Account Act, creates a special account for the implementation of projects to maintain and enhance range resources.
Bill 5, the Securities Amendment Act, 1995, establishes the British Columbia Securities Commission as a Crown agency.
Bills 2 through 5 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.
Hon. G. Clark: Hon. Speaker, we've done the best we can to ascertain consensus, and I think we are as close to that, at least, that we would have the emergency debate that was called for under standing order 35 immediately after question period -- at roughly 2:30 -- for the one-hour duration as prescribed in the standing order. With that, I move this House do now adjourn.
Hon. G. Clark moved adjournment of the House.
Motion approved.
The House adjourned at 11:35 a.m.
[ Return to: Legislative Assembly Home Page ]