[ Page 9 ]

The House met at 2:06 p.m.

Prayers.

Hon. U. Dosanjh: Hon. Speaker, I'd like the Legislature to join me this afternoon in welcoming 28 grade 6 students from Tecumseh Elementary School in my constituency. They are here with their teacher, Ms. Debbie Rolandi, and with some of the parents. Would the House please make them feel welcome.

Hon. D. Zirnhelt: I'd like the House to welcome Jeannine and Don Martel from Canim Lake in my constituency of Cariboo South. Please make them welcome.

K. Whittred: Seated in the gallery this afternoon are 23 grade 7 students and their teachers from Norgate Community Elementary in my riding of North Vancouver-Lonsdale. I ask the House to please join me in making them welcome.

H. Lali: Visiting in the gallery are three friends of mine; they are also constituents. Mr. Eric Larman is a director of the Squamish-Lillooet regional district and lives in Gold Bridge. Mr. Don Olds is a director on the Skagit Environmental Endowment Commission, and his wife, Joyce, is a retired nurse. They are happily retired and residing in the beautiful community of Hope. Would the House please join me in making them welcome.

The Speaker: The Minister of Forests.

Hon. D. Streifel: Hon. Speaker, I was. [Laughter.] My motto was if you need a tree, come see me.

The Speaker: I'm sorry -- the Minister of Social Services. I must point out that I have an out-of-date list before me, minister.

Hon. D. Streifel: Actually, you made my heart go pitter-patter.

Interjections.

Hon. D. Streifel: They do that, don't they?

Hon. Speaker, I'd like to introduce -- in the gallery for the first time this session -- my wife, Linda. Would you please make her welcome.

J. Pullinger: It gives me a great deal of pleasure to introduce a very good friend of mine, Norma Strachan. Norma Strachan is also the executive director of Workstreams, a community-based trainer, and president of ASPECT, which is the collective for community-based trainers. I would ask all my colleagues to help make Norma welcome.

G. Campbell: Mr. Speaker, I can't tell you how nice it is to look down there and see people actually cheering on this side. I also can't tell you how much I would have preferred to be on that side, but that's the way it goes.

My question is to the Premier. We're all aware of the serious situation which currently exists at the W.A.C. Bennett Dam. Putting aside the fact that the sinkhole was discovered by a tourist, I wonder if the Premier has any idea of how much we will lose in terms of revenue and what those revenue losses may be as a result of the sinkhole and the water spill that's currently taking place.

Hon. D. Miller: With respect to quantification on the economic side, no, that information is not available. But I would like to thank members of the opposition. I did have my staff -- and I spoke to the leader of the Reform Party and ensured that the Liberal Opposition House Leader was fully briefed, as well as the mayors of the two communities in that area.... I think the handling of the situation has gone very well. Hydro continues to investigate in a very careful way to ascertain the reasons behind the sinkhole, and once that's been ascertained, then remedial action will take place. But it seems to me that all -- particularly the people in the area -- have cooperated very, very well, and it's gone very well to date.

G. Campbell: I'd like to ask the Premier again. When the Premier was responsible for B.C. Hydro, Hydro's debt went up by over $800 million, and almost half of that was the result of the government demanding more in dividends from Hydro than in fact Hydro had in cash to pay those dividends.

The question I have for the Premier is: why does the government think it's a good idea to use Hydro -- to create a debt problem for Hydro -- to fill the government's debt sinkhole at a time in British Columbia's history and in Hydro's history when they are clearly in need of significant capital improvements to infrastructure across the province?

Hon. D. Miller: Hon. Speaker, the question did appear somewhat rhetorical, but....

Interjections.

Hon. D. Miller: You may wonder why I'm standing. But I do think that there are broader issues that British Columbians need to consider -- and certainly the government and Hydro need to consider -- with respect to its role as a Crown monopoly, given some of the significant changes that have taken place in the North American energy markets. That certainly is an issue that we will be addressing.

G. Campbell: Well, I think the fact of the matter is, hon. Speaker, that they have sucked Hydro dry of its financial power at a time when they shouldn't have, simply so they could fill the government sinkhole.

I do have a question, though, for the minister. I know the minister will be aware that the government and Hydro, under his auspices, drained a lake by mistake. It's not surprising, then, that people in Mackenzie are very concerned about the situation with regard to Williston Lake and the level that it will be kept at. There are two mills that require water from Williston Lake; they require that Williston be kept at 2,150 feet. There are hundreds of jobs that are involved. I wonder if the minister can tell us about the fail-safe mechanisms he's put in place to assure those hundreds of families that count on 

[ Page 10 ]

Williston Lake, to make sure they have their jobs, and to make sure those jobs are year-round jobs for them throughout the period of time of this trouble.

Hon. D. Miller: I would caution the Leader of the Opposition to consider what he says with respect to linking Downton Lake and the current situation in the Peace River, because they're clearly not linked. I would also suggest, Mr. Speaker, that the primary issues that Hydro must deal with -- and certainly the Leader of the Opposition should agree or, I would think, would agree -- would be the integrity of the dam and proceeding with all due haste to ascertain the reasons for the sinkhole, and taking remedial action.

The issue of water release and the volume of water that was released was jointly determined between B.C. Hydro and the water resources branch. Again, all participants in the Peace River were fully informed about that, and that was a prudent measure. There were two issues at stake. One was the very high rain levels -- the precipitation that's taken place in the area; the second was that Hydro had planned to release on Monday a certain volume of water that was increased somewhat as a result of those discussions.

Interjections.

The Speaker: I think, minister, that the issue has been canvassed now.

Hon. D. Miller: And I would be very pleased, hon. Speaker, to deal with the issue of Downton Lake if the Leader of the Opposition had any specific questions.

The Speaker: At another opportunity, perhaps.

[2:15]

Some Hon. Members: Shame!

T. Nebbeling: Shame!

Mr. Speaker, this will shut down a number of mills. My question to the Premier is: why is it that the Premier does one thing in May and something else in June?

Hon. D. Miller: It does appear to me that the members of the opposition want to have it both ways: on the one hand, registering concern about the sinkhole in the dam, the release of water that is necessary in the view of both Hydro and the water resources branch; and on the other hand, rushing to deal with the issue of if those water levels go below a certain level and the impact on the forestry communities.

Certainly the issue of the water level and the impact on forestry communities is one that's been addressed in the past in this House. It's not a simple matter to deal with. But to put the two together seems to me to be somewhat irresponsible. Surely, the first and only concern of the members of the opposition in this regard should be the integrity of the dam and the safety of the people in the Peace River.

T. Nebbeling: I agree that safety is the main issue, and it is only because the lake has been drained today because the Premier today and B.C. Hydro walked away from the responsibility of having the safety of the Bennett Dam....

Interjections.

T. Nebbeling: It is that lack of management that leads to the members of the community of Mackenzie today facing the situation that job losses will be prevalent in the coming fall and winter. Mr. Speaker, I have to ask you: why is the Premier breaking his promise to the community of Mackenzie?

Hon. D. Miller: Perhaps the member could repeat the last part of the question. I didn't quite hear it.

T. Nebbeling: I will happily speak a little bit louder. The letter is very clear that promises were made to the community of Mackenzie in order to make sure that no jobs would be lost because of the fault at the dam. We now have a situation where there is a potential loss of hundreds of jobs. I am asking: why is the Premier changing his promise to the community of Mackenzie as far as jobs are concerned, under the dam?

Hon. D. Miller: Hon. Speaker, as I attempted, in one of the previous questions, to deal with.... The members opposite, it seems to me, have to make a decision. What is their first preference: to deal with the economic consequences and the impact on the forest sector in that area? Or is their first preference to deal with the integrity of the dam, the controlled release of water and the safety of people in that area? I challenge the opposition to make up their minds as to which side of that question they are on.

The Speaker: My apologies to the member. Normally, if a minister isn't here, one doesn't direct a question to....

Interjections.

The Speaker: My apologies -- the minister of economic development.

Hon. D. Miller: It is certainly premature to make any decisions with respect to alternative sources. Again, I would assume that members of the opposition, being fiscally responsible, would want the government and B.C. Hydro to make the very best decisions with respect to that fiscal responsibility. . .

Interjections.

Hon. D. Miller: . . .environmental concerns -- and we will certainly do that. As these issues become clearer, as decision points are made, I'll certainly undertake to advise the 

[ Page 11 ]

House or the official opposition as to what our plans are with respect to future generation.

C. Clark: Mr. Speaker, I'm pleased that he talks about responsibility, because what we're interested in is environmental responsibility. I'm sure that at least the Minister of Environment is aware that the air quality readings in the Fraser Valley last winter exceeded 96. He's also probably aware that when they exceed 50, senior citizens and people with respiratory problems are advised not to go outside. Clearly, operating Burrard Thermal at maximum capacity will only add to our air quality problems. I'd like to ask the Minister of Environment if he is prepared to endanger the health of senior citizens and children in our community, the Fraser Valley, by operating Burrard Thermal.

Hon. P. Ramsey: Hon. Speaker, my colleague has given the appropriate answer. Speculation on whether additional sources of power are needed and what they'll be is very premature. When we come to those decision points, I'm sure the House will be informed.

The Speaker: Supplemental, member.

C. Clark: We know that the government talks about the integrity of the dam -- and of course, integrity will be a central question of this government.

In a nutshell, during the election, this government promised that they would stop pollution at its source in their environmental charter, and today what they've said is that they can't promise that they will shut down the largest single source of greenhouse gases on the lower mainland. So I'd like to know -- and I'm not the only one who's asking: why is the NDP so prepared to say one thing and then do another?

Hon. D. Miller: Again, I'm struck by what appears to be sort of a dichotomy in the Liberal stance: on the one hand, always talking about fiscal responsibility.... I recall the Leader of the Opposition saying that he would cancel Kemano 2, on a radio station, after careful consideration after talking to Rafe Mair.

There are options available with respect to Burrard Thermal. We know the position taken by the Liberal caucus, which is to shut it down. We know there are other alternatives, responsible alternatives, supported by people in the region, and we will make a decision in due course about what is the most appropriate decision with respect to that facility.

Hon. D. Miller: I hope the member would appreciate that I cannot give a blanket yes to that question, because there are considerations that we must look at. But I do want to repeat and to stress that we have tried, both with respect to the cooperation between B.C. Hydro and the water branch, and in consultation with local people.... I specifically phoned the mayors of both Chetwynd and Hudson's Hope last week. I have talked to at least one of them again, and as I said, I have talked to the leader of the Reform Party. I want to make sure that everybody knows what's going on with respect to water release -- that we do it in the most careful way we can.

We clearly have an obligation to release water from the reservoir. We want to do that in the most responsible way we can, and will continue to work with both opposition members and local communities to mitigate against any untoward damage that might be caused as a result of that. There was an incident reported in the press, for example, about some fawns that were stranded on an island. I would hope the members would appreciate that sometimes there are unintended consequences when you're dealing with an issue of this magnitude.

Orders of the Day

Hon. A. Petter: Hon. Speaker, I move that the House at its next sitting do resolve itself for this session into a committee to consider supply to be granted to Her Majesty.

Motion approved.

Hon. A Petter moved that the said message and the estimates accompanying the same be referred to Committee of Supply.

Motion approved.

Hon. A. Petter: Hon. Speaker, I move, seconded by the hon. Minister of Health and Minister Responsible for Seniors, that the hon. Speaker do now leave the chair for the House to go into Committee of Supply.

Many of you will recall the budget introduced the day the election began, with jobs up, taxes down, the budget balanced, and health and education protected. It seems that some would prefer not to remember. I want to say that a great deal of credit for that success is due to the determination and tenacity of my predecessor, the former Finance minister, Elizabeth Cull. Elizabeth Cull is a big part of why economists and bond-rating agencies today recognize B.C. as having the strongest financial record in Canada, the top provincial credit rating, the lowest debt-servicing costs and the lowest debt per capita in the country. On behalf of the Premier, members of our caucus and, I'm sure, all members of this Legislative Assembly, let me offer my thanks to Elizabeth Cull for a job well done.

[ Page 12 ]

Last April the Premier made a commitment that an NDP government would reintroduce the April budget and make it law. Equally, he made the commitment during his campaign that he would act on the concerns raised by ordinary British Columbians. Today I'm pleased to announce that we are meeting our commitments. We are reintroducing the budget. We are protecting health care and education. We are creating and protecting jobs. We are cutting taxes for middle-class families and small business. We will be responding to people's concerns with concrete measures to reduce government spending and debt. Our budget ensures that resources are targeted to where they are most needed. It ensures that services are protected and prosperity shared throughout the cities, towns and regions across this province.

[2:30]

The centrepiece of our budget is a tax cut for all British Columbians. On July 1, Canada Day, the first phase of this personal income tax cut takes effect. The tax cut is a modest one, a reduction of one point. But it will be followed by a further one-point income tax reduction in 1997, and it will be supported by a freeze on all other taxes for individuals and families until the year 2000. In other words, no tax increases and no new taxes. The budget also freezes B.C. Hydro rates, ICBC premiums, and college and university fees.

Together these measures demonstrate whose side this government is on. We're on the side of middle-class working people and their families. The average family will save up to $500, thanks to these tax cuts and rate freezes. Working families with modest incomes will benefit further from the B.C. Family Bonus. As a result of all these measures, a single parent with two young children and an annual income of $30,000 will be better off by up to $700 a year.

The budget also includes good news for homeowners and first-time homebuyers. We've increased the homeowner grant threshold to ensure that 96 percent of B.C. homeowners receive the full grant, and we're raising the property transfer tax threshold so that more first-time homebuyers will be exempt from the tax. That will mean savings of up to $3,500 on the purchase of their home.

This budget also recognizes the important role of small business in our provincial economy. Dynamic and diverse, small business is central to our continued prosperity. Effective this Monday, July 1, the small business income tax rate will be reduced 10 percent. In addition, a two-year income tax holiday will be introduced for eligible new small business. The combined effect of these measures will save small business $29 million a year. That's good news for the small businesses in this province creating new jobs and good news for the working people who are filling those jobs.

Our commitment, clearly, is to listen to the people of B.C. We have promised to act on their priorities, to be guided by their concerns and to respond to their needs. This budget demonstrates the depth and breadth of that commitment. Specifically, it makes our communities safer by giving police new resources to fight violent crime. It protects and creates jobs. In addition to the small business tax breaks, we're investing in new training and job opportunities for young people. Based on these actions and our strong economy, we're forecasting 40,000 new jobs in B.C. this year alone.

This budget protects health care. We're increasing funding for hospitals by 2.5 percent to ensure quality services that all British Columbia families and seniors can count on. A five-year health care funding guarantee means that health care spending will keep pace with population growth and cost pressures. Hon. Speaker, this is a stronger commitment to protect health care than is being made by any other government in Canada. We have also proposed a new B.C. health care scholarship that each year will help 300 health care workers upgrade their skills.

Our budget also protects education. We're increasing funding in the kindergarten-to-grade-12 system to fully fund enrolment growth. This will ensure good-quality education to our children, leading to an economic future in which all can participate. In colleges and universities, we're adding 7,000 spaces in the upcoming academic year. This will guarantee a space for every qualified post-secondary student. We also recognize that accessible education must be affordable education. Acting on concerns that post-secondary education remain available to those in every walk of life, we're making education more affordable by extending our tuition freeze to two full years.

And our budget accomplishes all this, hon. Speaker, while projecting a surplus of $87 million and a reduction in total government debt of $99 million. Indeed, that's the other side of the equation -- a government that protects service through prudent use of its financial resources. Our commitment is to maintain B.C.'s number-one financial ranking in Canada. Through wise and judicious financial management, we will retain the top provincial credit rating, the lowest debt service costs and the lowest per capita debt in the country.

Hon. Speaker, we will do this despite the unfair and arbitrary cuts in transfer payments from Ottawa. In this fiscal year, we will lose $435 million in support for health care, post-secondary education and social services, and next year the cuts will total $731 million. Yet we will not let B.C. health care and education systems suffer from Ottawa's misplaced priorities. Rather, we have chosen to protect our services by reducing the size and cost of government.

In this budget, as we announced in April, we are eliminating more than 2,200 positions from the public service this year, saving more than $210 million annually. We have cut the number of ministries from 18 to 15 -- the smallest number in over 35 years. We're reducing real per capita spending by 2.2 percent this year, continuing the trend of the last three budgets, which also saw reductions in per capita spending. We're cutting spending in two-thirds of government ministries to focus our resources on what British Columbians consider priorities, such as health care and education. We're eliminating two Crown corporations -- B.C. Systems Corporation and B.C. Trade -- saving taxpayers $71 million a year. We've ended the MLA pension plan that was out of line with other public and private sector plans.

We've stopped a historic and costly growth in welfare caseloads by tightening eligibility, reducing fraud and helping people move from welfare to work. Figures from May indicate that caseloads are down by 12,000 cases from the same time last year.

We're keeping public sector wage costs down, with no wage increase this year for government employees. Since April, agreements have been concluded between nurses and hospitals and teachers and school boards. These agreements ensure continuing, stable, quality health services and education while keeping wage costs down. Indeed, across the entire economy, time lost to work stoppages continues to decline, reflecting the better relationships between labour and management under this government. Last year marked the third straight year that time lost to work stoppages dropped from the previous year.

[ Page 13 ]

Our government is cutting the size and cost of government while protecting services and targeting priorities. That's what we're all about.

Having provided highlights of the budget, hon. Speaker, I will not go into as much depth in providing the details as was done in April. I would like, however, to elaborate on one key area identified by the people of British Columbia. That is the issue of jobs -- the number one priority of British Columbians and of this government. We've worked hard in B.C. to have the best record of job growth in the country over the past five years, and that record continues. According to Statistics Canada, 34,000 new jobs have been created in B.C. just since December.

Over the past few months the Premier has announced a number of new employment initiatives. These initiatives will mean thousands of new jobs for working men and women. In March he set the target of 21,000 more forest sector jobs through a jobs and timber accord in partnership with industry. In April he launched a plan to expand B.C.'s value-added wood manufacturing sector that will help keep this target. The purpose of that initiative is to ensure that we get more value and more jobs from every tree cut in British Columbia. The Premier also announced initiatives to create new jobs in the energy sector, in environmental technologies and in tourism.

Much of the Premier's and the government's attention in recent months has been on the crisis in the salmon fishery. We have to find ways to protect our fish resource as well as the workers in communities that rely upon that resource. We have to maximize the number of B.C. jobs from each fish caught. We're working with everyone in the industry to do exactly that. But Ottawa, rather than contributing to a solution, has been worsening the problem. The Mifflin plan makes no sense. It kills jobs. It does nothing to conserve the resource. We took that message to Ottawa. We used plain, strong language; we made it clear that British Columbians want a larger say in the fisheries. We made it clear that we would accept nothing less than action to conserve the resource and protect the communities and jobs that depend upon it. We need a strategy designed by British Columbians for British Columbians so we can conserve fish, protect jobs and protect fishing communities, and we intend on doing exactly that as we work to develop such a strategy in the months ahead.

We will also introduce a comprehensive jobs plan for British Columbia, bringing together business, working people, communities and government. Its goal is building on B.C.'s success in protecting and creating jobs to ensure that there are good family-supporting jobs today and tomorrow.

Expanding job and education opportunities for youth is a central part of that strategy, and we have taken an important first step in that direction with the Guarantee for Youth -- the most ambitious jobs and training initiative in the province's history. After just a few short months, we are already seeing the results. Through the Guarantee, we have already created more than 3,000 jobs through our student summer, environmental, and science and technology initiatives. Another 800 young people have participated in our workshops for young entrepreneurs, and hundreds more have applied to take part in the next stage. Two hundred jobs have already been created through the Opportunities '96 program.

I know that some private sector employers feel that there was inadequate consultation on this initiative, so I want to assure members of this Legislature that we are determined to step up our efforts to work with business to connect young people with jobs. I also know that British Columbia businesses, and all members of this Legislature, want these initiatives to succeed. I believe that we have the confidence, the know-how and the determination to ensure that more jobs are created for our young people in the years ahead.

Hon. Speaker, everyone in this House knows that democracy is about dialogue. Democracy is about listening to the people. It's about encouraging a conversation in which all can be heard, while striking a balance amongst different viewpoints. It's about choosing goals, and it's about finding common purpose that unites our province and the people who live here.

During the election campaign, the people of B.C. spoke, and here is what this government heard. British Columbians said loudly and clearly that they want a budget that cuts taxes while protecting health care and education, and today's budget does that. British Columbians said they want their government to act to create and protect jobs, and today's budget does that too. But British Columbians also told us that they are concerned about the cost of government. They said it must come down, and they said that they expect action.

[2:45]

Some may say these are conflicting objectives, but we believe -- and I think British Columbians agree -- that we can cut the cost of government without dismantling the quality services that B.C. families value so highly. British Columbians rightly believe the province has a leadership role in health care and education, in assisting those in need, and in supporting jobs and economic growth. But British Columbians also know that we can do this in a better, less expensive way.

We do not have to fall back on the old practices in running government. Government does not always work as well as it should. Government is sometimes part of the problem, as well as being part of the solution. Government does not have to be bigger in order to be better. In other words, we can cut the cost of government without sacrificing the value of government to British Columbians.

This government is listening. In response, we are taking immediate action to deal with the public's concerns about the cost of government.

Today, I am announcing a comprehensive review of all government programs. We need to take a hard look at government and find a better way -- a smarter way -- of delivering services. We need to look at every government program and ask ourselves two questions. Do we need this? Is there a better way to do it? Through this review, we will streamline bureaucracy, increase government efficiency and cut costs. We will ensure that this government serves the public interest, not just the interest of the bureaucracy.

We will focus our resources where they are most needed and best applied. Leaner government, but not meaner government -- that's our commitment.

Hon. Speaker, British Columbians also told us very clearly that they want to see us reduce the size of the debt. Today, I am announcing new action that will do exactly that. Effective immediately, I am freezing all new capital spending. The purpose of the freeze is to undertake a review of capital spending. Those projects that are under construction or legally committed to will be allowed to continue to completion. All other capital spending is frozen.

The objectives of the review are to reduce capital spending and the related debt, while ensuring that we make the investments necessary to support British Columbians' priorities. Upon completion of the review, we will allow new capital projects to proceed, but only at a pace and level that is deemed affordable by British Columbians.

[ Page 14 ]

British Columbians understand the need to invest in schools and hospitals and the infrastructure necessary for jobs and economic growth, but they also expect government to make the tough decisions to keep debt under control. This government is listening, and today we're taking action.

Hon. Speaker, the budget I'm delivering today marks the beginning of a new mandate and an appropriate time to assess both our progress to date and our direction for the future. We spent the four and a half years of our first mandate working to eliminate the $2.4 billion deficit that previous administrations had built up. The challenge of this mandate is to turn now to lowering the debt itself, while protecting health care and education.

We do not shrink from that challenge. We welcome it. It's a challenge that is going to demand tough choices and hard work, but it's a challenge well worth pursuing. British Columbians deserve to know that their tax dollars are supporting vital services and investment in economic growth. They deserve to know that their province's finances are healthy and sound. Most of all, they deserve to know that politicians are listening to them, that the people they elect are bringing the voices of British Columbians to government -- not the other way around.

This government is listening to British Columbians, and we are responding to their priorities. We are making the choices that protect health care and education, that create and protect and jobs, that give a break to middle-class families and small businesses and that reduce the provincial debt. These are the right choices for today, but more important, they are the right choices for tomorrow.

At a time when so many provinces are slashing, at a time when Ottawa is dismantling so much of what we have built together, one province is showing all of Canada that there is another way -- our province, British Columbia. We are showing this country that we can have a sound financial base and still protect health care and education; that we can reduce the debt and still work hard to create and protect jobs; that by taking a balanced approach, by listening to the people we serve, government can make a real contribution to a better future.

This is Canada's province of hope, and the work we do today will help ensure that our children inherit a province with opportunity and promise for all. That is the challenge that I accept with this budget. I look forward to working with the members of this Legislature, and with all British Columbians, to meet that challenge: to honour the confidence, to engage the energy, to realize the possibility that is British Columbia.

F. Gingell: Yesterday we all had the opportunity to listen to the Speech from the Throne, and today the budget speech has carried on with some of the statements made in that document. Yesterday I thought I was in never-never land. This government never, never, ever wants to deal with the issues the way they really are. They put all their focus on the political spin, on changing the way we keep the accounts, and never once dealing with the issues in a straightforward, upfront manner. This is the start of the thirty-sixth parliament, and we have new MLAs, we have a new government, we have a new minister, and I was hoping -- but it was not to happen -- that we would have had a new attitude about dealing with the government's finances.

I bring three specific issues: the claim of a balanced budget, a claim that debt is down, and claims that we have the second-lowest income taxes in Canada. All three things are false. Cabinet ministers know but don't want to discuss, I'm sure that some returning MLAs understand but don't want to talk about, and new MLAs will have an opportunity, right now, to find out about some of the basic differences between us in opposition and the government on accounting policy matters.

The big issue, as we have spoken about so often in this House, is the issue of the B.C. Transportation Financing Authority. This government continues to account for these things differently than other provinces, in a manner that is not acceptable to the Institute of Chartered Accountants and the Public Sector Accounting and Auditing Board, and in fact is contrary to their own accounting policy set by Treasury Board.

Interjections.

F. Gingell: If you don't believe that, just go to your own budget reports. Turn to page 17, where you will see that in accordance with the accounting policy of this government -- in the preparation of the summary financial statements -- all capital expenditures have been written off. And they announce this year that they are going to make a change. In future, we are going to capitalize fixed asset acquisitions -- and I think that's good. But read on: other than highway infrastructure expenditures of the B.C. Transportation Financing Authority. So even with this change in accounting practices that they have been talking about for months and months, they still know that it is improper and not right for us to capitalize highway infrastructure, for us to not pay for it as we go, and for us not to include it in the calculation of the surplus or the deficit.

Now, the second issue is the issue of debt. We always talk about tax-supported debt. This government always talks about tax-supported debt -- except that this year they don't. This year they talk about total debt and direct debt, and they leave out any real reference to tax-supported debt. Why? Because it's gone up -- even by their own numbers.

If you go back to these budget reports and look at the summary of net debt.... That is table C3, on page 24. Have you got a pencil there, Mr. Minister? For years and years any spare cash sitting in government accounts, waiting to be loaned to a fiscal agency or a Crown corporation, was treated as a deduction in calculating net debt, because these were funds on hand, money that had been borrowed but had not yet been spent. Every single year it was deducted, but not this year -- $888 million in the warehouse account. Every single previous year it has been deducted for the purpose of calculating net debt, which is good common sense, but this year it's only included in gross debt. Why? Because it was the only means by which they could make the books look -- improperly, Mr. Minister -- like the debt was coming down.

What else did you do? You got the Municipal Finance Authority to take over responsibility for $305 million of greater Vancouver sewerage and water and drainage district debt and get it off your balance sheet. It hasn't been paid off; it's still owed. The taxpayers of the greater Vancouver regional district still have to pay it, but you've used it in calculating that the debt has come down; you've used it in taking credit for it. What a load of nonsense!

All these documents, yesterday's speech and this old claim that British Columbia has the second-lowest personal income tax rate.... But that's only if you make the right calculations; that's only for two incomes; you use two-income families, and you keep the amount down. As soon as you get into high incomes -- I agree they're high, and I'm not carrying 

[ Page 15 ]

any banner for them -- we have the third-highest. Only Quebec and Newfoundland....

[3:00]

But we're worried about jobs. This government tells us and tells the people that they're worried about jobs. What do you do to create jobs? You encourage investment and you encourage businesses to come to British Columbia. We've already got all the good things going for us: a health system that could be improved but, compared to everybody else, is pretty good; an education system that, compared to everybody else, is pretty good -- it could be improved. But this government puts in the way of entrepreneurial growth all kinds of barriers. The amount of money you collect from these highest surtaxes in no way compensates for the loss of jobs. The most important thing for British Columbians is family-supporting jobs. You know that; we know that. Why don't you think about what you need to do to create those jobs? Government doesn't create jobs. I tried to go through all the numbers for the FTEs. There were claims in your budget speech that there are 2,200 fewer jobs. That's not what the estimates say; the estimates say something completely different.

We have dealt with these three main issues only briefly, just touched the surface: balanced budget -- not balanced; debt down -- it's not down; the second-lowest tax in Canada -- true only if you pick the particular numbers that you want to deal with.

The sad thing is that this Minister of Finance -- new in this position, and I wish him very well, because it's an important role, an important job -- had an opportunity to move away from political spin, had an opportunity to bring integrity into the reporting of the accounts and financial affairs of this province, which it has lacked for the last five years. Statements above reproach and financial numbers that don't require adjustment would bring a sense of legitimacy to the reports that they take back east to the people they deal with in the money markets. Such change in practices would allow this minister to stand and truly make his claims of fiscal responsibility and prudent management, and make them legitimately. But it is not so. There are so many issues to deal with in this budget: a debt management plan that isn't managing debt; a budgeted increase in government revenues that doesn't seem to tie into this government's own growth projections; expense budgets that don't seem to take into account the myriad of election promises that the Premier made in the 28 days to May 28. And we shall have an opportunity to discuss them at greater length. In the meantime, I move adjournment of this debate.

F. Gingell moved adjournment of the debate.

Motion approved.

Hon. A. Petter: Hon. Speaker, these three bills implement budget measures that were announced earlier this year and again today during reintroduction of the 1996 budget. In moving first reading, I will state the primary purpose of each bill.

Bill 2, the Budget Measures Implementation Act, 1996, amends 12 provincial statutes to implement budget measures announced during the budget speech. The Home Owner Grant Act is amended to increase the assessed value at which the phase-out of the homeowner grant begins, from $475,000 to $525,000. As a result, 96 percent of homeowners will receive the full grant.

The Property Transfer Tax Act is amended to increase the maximum value of residential properties eligible for exemption under the first-time homebuyers exemption program and to prevent tax avoidance on the purchase of property by associated corporations.

The Social Service Tax Act is amended to introduce a new exemption from the provincial sales tax for tangible personal property incorporated into prototypes. This will encourage further research and development in British Columbia.

The Municipal Act is amended to exempt certain airport improvements from property taxes, to remove an impediment to the transfer of airports from the federal government to local control.

The Motor Fuel Tax Act is amended to allow the transfer of an additional 1 cent per litre of the clear fuel tax to the B.C. Transportation Financing Authority. This will not increase fuel taxes paid by drivers.

The College and Institute Act, the Institute of Technology Act, the Open Learning Agency Act and the University Act are amended to allow universities, colleges and other post-secondary institutions to pay grants in lieu of property taxes to their host municipalities.

The Special Accounts Appropriation and Control Act and the Wildlife Act are amended to establish a new habitat conservation fund trust outside of the consolidated revenue fund, to allow for increased enhancement and habitat protection initiatives. This is an important component of this government's strategy to protect fish and fish habitat.

The Industrial Development Incentive Act is amended to increase the funding cap on the industrial incentive fund from $300 million to $400 million.

Bill 3, the Tax and Consumer Rate Freeze Act, extends the current tax freeze to the year 2000 for individuals and small business corporations. It also implements the government's commitment to protect British Columbia families from rate increases in three key areas: B.C. Hydro rates, basic ICBC premiums and tuition fees levied by post-secondary institutions.

Bill 4, the Income Tax Amendment Act, reduces personal income taxes for British Columbians. Bill 4 also provides tax relief for small business through a one-point reduction in the small business corporate income tax rate and a new two-year corporate income tax holiday for eligible new small businesses incorporated on or after May 1, 1996.

Bills 2, 3 and 4 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.

[ Page 16 ]

Hon. J. MacPhail moved adjournment of the House.

Motion approved.

The House adjourned at 3:09 p.m.

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