[ Page 6969 ]

The House met at 2:04 p.m.

Prayers.

Hon. D. Streifel: Touring the precincts today are some French immersion students from Edwin S. Richards Elementary School in Mission. They are accompanied by their teacher Ms. Marie-Hèléne Gauthier. I believe they may have some exchange students from the province of Quebec with them. I wish them well. I had a very enjoyable morning touring their class a couple of weeks ago, listening to their plans for Canada. I appreciate their input; they're bright young folks. Would the House please make them welcome.

Hon. A. Petter: This is Volunteer Week, and because of that I'm very pleased to see that several volunteers who work in my community office have come to join us in the House today. I'd like to welcome Beth Rutherford, Sheila Dogue, Rebecca Sober and Angela Fischer. They're accompanied by my constituency assistant, Mara Armstrong. I'd like the House to make them and all other volunteers very, very welcome.

S. Hawkins: Hon. Speaker, in the gallery today are hepatitis C victims and their families. Earlier today we saw them on the steps of the Legislature, and they really hope their voices will be heard here. We have Ms. Tina Johnson, Mr. David Smith, Ms. Peggy Daisley and the Hubbard family -- Helen, Floyd, Kelly and Charlotte -- and I would ask the House to make them all welcome.

Hon. M. Farnworth: In the members' gallery and visiting the House today is Peter Maier-Oswald, the consul general of Germany. Would the House please make him welcome.

P. Calendino: Today in the members' gallery we have some special guests from Italy. It is with great honour that I'd like to introduce to the House His Excellency Andrea Negrotto Cambiaso, the Ambassador of Italy to Canada. He is accompanied by Dr. Arnaldo Abeti, the consul general of Italy in Vancouver; and by Yolanda McKimmie, the honorary consul of Italy in Victoria.

This afternoon, in the presence of the Minister of Education, the ambassador will be witnessing the signing of the approval of the Italian language curriculum and integrated resource packages for British Columbia schools, grades 5 to 12. Would the House please give them a warm welcome.

J. Wilson: I would like to take the opportunity today to welcome two good friends of mine from the Cariboo. Bill and Shirley Love have come to Victoria to visit friends and relatives for a few days. I ask that the House make them welcome.

E. Walsh: I am very pleased to ask the House to make a crew member from HMCS Yellowknife welcome to the House today. I had the honour of attending the commissioning of HMCS Yellowknife on the weekend here in Esquimalt. Mike Wolff, who was a crew member of HMCS Yellowknife -- who now happens to be a crew member of HMCS Whitehorse, which was also commissioned on Friday -- has joined us in the House and I would ask the House to please make him welcome.

Hon. P. Priddy: In the gallery today are 43 students from Tamanawis Secondary School, along with three teachers: Ms. Marianne McKee, Mr. James Johnson and Mr. Darrell Fast. This group of secondary students holds the rather dubious honour of coming from the high school that has the greatest number of portables in Surrey. But in a year and a half and with a new school, I will say their portables will be gone, and it's because of their and their parents' voices, which have been so strong.

G. Janssen: Visiting us today from the beautiful Alberni Valley is Rosenda Racoma. With her is her mother Ruperta and her sons Anthony, 18, and Christopher, 14. They are here with her sister, Sister Leonisa, a nun visiting us from the Philippines. I ask the House to make them welcome.

E. Gillespie: I'd ask the House to join me in welcoming today 26 grade 5 students from Miracle Beach Elementary School, who are visiting the precincts with their teacher Ms. Woodburn and a number of parents. Please join me in welcoming them.

E. Conroy: I'd like to recognize the group that's here today from Victoria in recognition of hepatitis C, a disease that afflicts many Canadians and one with which I'm all too familiar. Would the House please make these people welcome.

Oral Questions

APPOINTMENT OF COMMISSIONER OF INQUIRY
INTO LEAKY CONDOS

My question is to the Minister of Municipal Affairs. Will she fire Dave Barrett today and replace him with a commissioner who is seen to be expert, who is seen to be fair and who will be looking for solutions for these families that are in jeopardy, instead of making a political circus?

Hon. J. Kwan: Hon. Speaker, the former Premier of the province is highly respected. He comes with over 40 years of government experience both at the provincial level and at the federal level. He is known to be a fighter for the people who need representation, and that is what we need in this inquiry.

The member opposite, the Leader of the Opposition, may not understand this. Respect in this province is a great thing, and it's something that the commissioner has earned by serving the public for the last 40 years. Perhaps the member opposite will never know what it is like. I don't believe the member opposite will ever achieve the goal of getting to be the Premier of the province.

The Speaker: The Leader of the Official Opposition on a supplementary.

G. Campbell: Unfortunately, Mr. Barrett is known first and foremost as a partisan and as someone who will try to score political points as opposed to someone who will try and find solutions to this incredible problem.

On Thursday we introduced the minister to a report that was prepared in January 1996 with regard to this issue and

[ Page 6970 ]

Hon. J. Kwan: Indeed, the commissioner is partisan for the people of British Columbia. His job is to get down and make sure that the people who are responsible for this disaster are accountable and to find the options that we need to make them accountable. Unlike the opposition leader. . . . I wonder who he got his support from during the last three years in terms of his campaign. Who does he get his support from? Perhaps he's partisan in different ways.

With respect to the report that has been done, a number of reports have been done, and I've reviewed many of those reports. We're taking further action to ensure that there is protection for future homeowners and that the current problem that exists today is being dealt with in an effective manner.

[2:15]

G. Campbell: Hon. Speaker, there are families whose livelihoods are in jeopardy, whose savings are in jeopardy and whose children are in jeopardy because of this government's inaction. I asked this minister to answer the question. There are 13 recommendations in this report; not one has been carried out by this government. There are five recommendations in this report; not one has been carried out by this government. Therefore thousands of British Columbia families are now in jeopardy, and thousands of British Columbia children are looking at health problems. The issue for the minister is to say that she will appoint someone to the commissioner's position who will look for the truth, look for solutions and look for financial options that will allow these people to build a future again in the province of British Columbia. Will the minister commit to carrying out these recommendations, to eliminating Mr. Barrett as a commissioner and to providing financial options to people so they can get on with their lives?

Hon. J. Kwan: In case the Leader of the Opposition has forgotten, when those leaky condos were being built, he was the mayor of Vancouver. A lot of the problems came from the city of Vancouver.

But what is the Liberal plan for dealing with the issue? His plan is to ensure that the taxpayers pay; his plan is to ensure that the homeowners who are now suffering pay. Why not call the people who are accountable and seek the answers to make sure that the people who are accountable pay? Who is he trying to defend?

Interjections.

The Speaker: Order, hon. members.

GOVERNMENT INACTION ON LEAKY CONDOS

Hon. Speaker, my question is to. . .

Interjections.

The Speaker: Order, hon. members.

G. Farrell-Collins: . . .the Minister of Municipal Affairs. There was a report introduced. . . .

Interjections.

The Speaker: Order, hon. members.

G. Farrell-Collins: Hon. Speaker, if the Minister of Northern Development wants to partake, he's more than welcome to do that.

My question is to the Minister of Municipal Affairs. The CMHC tabled a report with a whole bunch of recommendations. They highlighted the problem, with clear recommendations. The report we gave you on Thursday highlighted the problem, with clear recommendations. Can the minister tell us how Dave Barrett is going to improve on the recommendations that were made two and a half years ago? Why has her government done nothing in two and a half years to implement these recommendations?

Hon. J. Kwan: When we mentioned all the reports and the recommendations that have been made. . . . Yes, a number of recommendations have been made. Do you know what the government has been working on? We've been trying to get the friends of the opposition across the floor to come to the table and work on these solutions. You know what? On all of these recommendations, we cannot come to an agreement on how to move forward. They say, "Yes, bring in a mandatory home warranty," and then they say: "Only three years for water penetration." Consumers say that maybe five years is more appropriate. But what they say to me is this: "If you don't do what we ask you to do, then don't do anything at all." That's what they said to me. But what I said to them is: "This is not good enough, and I am going to appoint an inquiry." I've appointed Commissioner Barrett to get to the bottom of this and to make the people accountable so that we can find those answers for the people who want them.

The Speaker: On his first supplementary, the Opposition House Leader.

G. Farrell-Collins: What this minister has done is take the role of the commissioner, with vast powers, and appoint the most highly partisan NDP supporter to ever grace this continent -- not someone who is independent, not someone who is impartial. If this minister and this government were so intent on solving this problem instead of creating a political circus, can the minister tell me why the city of Vancouver implemented the new building code in 1985 and why this government has not? Can the minister also explain why her government has disbanded the building standards branch?

Hon. J. Kwan: The city of Vancouver did indeed, and continues to, have its own building codes. I want to know why the opposition leader, when he was mayor, did not bring in stronger measures to protect Vancouver residents on the leaky-condo issue.

I have appointed a commissioner to get to the bottom of this, to look at every option, to ensure that there is protection

[ Page 6971 ]

A question was asked about the standards branch. The standards branch's work is continuously being done. . . .

An Hon. Member: Sit down. You're not answering the question.

The Speaker: Order, hon. member. I hear the minister responding to part of the question.

Hon. J. Kwan: On the building standards branch issue, the work is continuously being done. The government has worked hard to find efficiency within the government and to ensure that the work within the branch is still being delivered. That is what we're doing.

APPOINTMENT OF COMMISSIONER OF INQUIRY
INTO LEAKY CONDOS

The only thing that appears to qualify Mr. Barrett to be commissioner on this issue is that he's an NDP hack. The only thing that appears to qualify him to collect $720 a day is that he's an NDP hack, while people are struggling to make their mortgage payments and can't afford to fix their homes. To add insult to injury, Dave Barrett is also collecting his MLA pension. Can the minister tell me what she is going to do about Dave Barrett's MLA pension while he collects his $720 a day on top of that?

Hon. J. Kwan: Actually, if the member opposite knew what she was talking about, she would know that in British Columbia. . . . In fact, across the country most provinces do adopt the national standards. I have the standards right here in front of me. One piece within the building code clearly says that the responsibility in terms of water prevention and protection on leaky-condo issues rests with the people who design them. It rests with all the people who are going to construct it to make sure that the product does not leak. Notwithstanding that, if the inquiry comes forward to say that more work needs to be done, we will indeed act on that. In the meantime, there's a consortium of people who have been working on the building code safety system, and will be bringing forward those recommendations this fall.

With respect to the commissioner's pension, it is my understanding that the commissioner intends to donate his portion of the employer's pension to a charitable organization of his choice -- not that that is an issue. But the commissioner has made a commitment to the public to ensure that he can get the work done on behalf of British Columbians and to ensure that he will also support charitable organizations in British Columbia.

The Speaker: I recognize the member for Port Moody-Burnaby Mountain on her first supplementary.

C. Clark: No matter how the minister wants to dress it up, Dave Barrett is still the consummate NDP hack. It is an insult that he would be appointed to look into this issue. It is an insult to all those first-time homebuyers. It is an insult to all those retirees who have invested their life savings in crumbling homes to appoint Dave Barrett to this position.

I want to ask the minister why she couldn't find a single qualified person in British Columbia who knew something about the building code, who knew something about the crumbling-condo issue. She had to appoint instead an NDP political fixer to do the job.

Hon. J. Kwan: It just makes a person wonder. The members opposite say, in their plan, who they want. . . . Who do they want to look at this issue? Who do they want to pay for these problems? They want the taxpayers to pay. They want the little guys, who are now faced with the problems, to pay. The opposition leader says that the homeowners who are stuck with the problem should pay for the lion's share of the problem. Nowhere does this plan call for accountability from the people who caused the problem. I want to know who they are trying to protect. Why don't we make sure that the inquiry does its job? Let him get on with his work, which is to say who needs to be made accountable. They need to own up to their responsibility to the people of British Columbia.

Petitions

Leave granted.

F. Gingell: I have a petition signed by 629 citizens concerning referendums related to Indian land claims issues in Delta.

Orders of the Day

The Speaker: We'll take a few moments before we begin second reading debate, while members find their way to their committee meetings.

C. Clark: Hon. Speaker, I seek leave to make an introduction.

Leave granted.

C. Clark: In the precincts today is a group from Coquitlam, in my riding: the New Life Home School. They are visiting us in the Legislature to learn about how politics works. They're with their coordinator, Ms. K. Barnes. I hope the House will make them welcome.

BUDGET MEASURES
IMPLEMENTATION ACT, 1998
(second reading)

[ Page 6972 ]

[2:30]

Bill 2 also increases the threshold, above which financial institutions are required to pay the 3 percent surtax, to $1 billion of net paid-up capital from $750 million. Increasing the high-rate threshold will encourage growth in locally based financial institutions and protect jobs in this province.

Bill 2 repeals part 6 of the Financial Administration Act to eliminate the provincial treasury operations special account, which is no longer required. Beginning in '98-99, provincial treasury operations will be funded from a $1,000 subvote in the Ministry of Finance and Corporate Relations ministry operations vote. The elimination of the account is in keeping with the government's goal of simplifying the estimates by reducing, wherever possible, the number of special accounts.

The Insurance Premium Tax Act and the Fire Services Act are amended to simplify and rationalize the tax structure that applies to insurance premiums paid by insurance companies. The 1 percent tax currently payable on property insurance premiums under the Fire Services Act is repealed. It is being replaced with the 1 percent increase in the rate of tax payable under the Insurance Premium Tax Act on premiums which are currently taxable at 3 percent. This change will not increase premium taxes on life, automobile or property insurance. The act is also amended to extend the filing due date to March 31 to facilitate the filing of returns. This is the filing due date for insurers' annual statements under the Financial Institutions Act.

The International Financial Business (Tax Refund) Act is amended to require that all corporations that register under this act be members of the International Financial Centre in Vancouver. This will improve IFC Vancouver's ability to self-fund, since corporations will be required to pay a membership fee in order to qualify for a tax refund. Increased self-funding will allow IFC Vancouver to be more independent of government and, as such, represent its members more effectively as an industrial association.

The International Financial Business (Tax Refund) Act is also amended to allow international captive insurance and export-financing companies to be eligible to claim corporate income tax refunds generated by international business activity. This will expand IFC Vancouver's membership and help to build the international financial base of the city of Vancouver.

Bill 2 amends the Motor Fuel Tax Act to provide bona fide farmers with a tax exemption on coloured fuel purchased for use in farming operations. This tax exemption will save British Columbia farmers about $3 million in fuel costs and improve their competitiveness. Farmers producing field crops will benefit the most.

The Property Transfer Tax Act is amended to relax the mortgage pay-down provision for the first-time homebuyers exemption program and clarify the intent of various exemptions. The effective date for this amendment is retroactive one year to March 31, 1997, to ensure that the benefit is available immediately to all first-time buyers currently subject to the pay-down limitation.

The remainder of the amendments to the Property Transfer Tax Act clarify existing exemptions. The maximum value of a recreational property eligible for exemption when transferred between related individuals is clarified to apply to the value of the entire property rather than to an interest in the property, and the maximum value is increased to $275,000 from the current $200,000. The exemption for transfers of family farms, principal residences and recreational residences between related individuals is clarified to exclude transfers where the transferor is a trustee. This will benefit the use of two separate and discrete exemptions in combination to transfer property between unrelated persons exempt from the tax. The existing exemptions for transfers from trustees of a deceased estate or an inter vivos trust are continued. The exemption for transfers from a settlor to a trustee is clarified to apply only where the settlor is the registered owner of the property immediately before the transfer. This will ensure that the exemption cannot be used to purchase property tax-free from third parties. Finally, a definition of the term "settlor" is provided to remove any uncertainty regarding the appropriate meaning of the term for the purposes of various exemptions under the act.

Bill 2 amends the Securities Act to provide for a one-time transfer to the consolidated revenue fund during 1998-99 of up to $12 million of the approximately $17 million surplus generated by the B.C. Securities Commission. These funds will be used to help pay for tax reduction measures that benefit small businesses and others. The amount of the transfer has been determined in consultation with the commission to ensure that it will have sufficient resources to carry out its regulatory mandate efficiently and effectively.

The Social Service Tax Act is amended to provide exemptions for software source code and tangible personal property incorporated into copies or prototypes for testing purposes. These two amendments will help to encourage the growth and development of the high-technology sector in British Columbia by facilitating the purchase of source code by British Columbia-based software developers and reducing the cost of developing and testing software and other high-technology prototypes.

Chemicals used to make chlorine dioxide and sodium hydrosulphite for use in the pulp and paper industry are exempted. These compounds have replaced the use of chlorine in the pulp production process in recent years because they are less harmful to the environment. The exemption will ensure that these more environmentally friendly compounds are eligible for the same tax preference previously provided to the more harmful chemicals that they replaced.

The 1993 budget included a transitional provision to provide a refund of 1 percent of provincial sales tax paid for goods ordered prior to the 1993 tax rate increase to 7 percent from 6 percent but received after the rate increase. This provision is amended to ensure that the refund is only available to purchasers who are obligated to acquire a specific quantity of

[ Page 6973 ]

The following minor amendments are also made to the Social Service Tax Act to enhance fairness, clarify the application of the tax and protect provincial revenue. First, the timing for the payment of the $1.50-per-day passenger vehicle rental tax is clarified to be the earlier of the date the lease price is paid or becomes payable, to make it consistent with the timing for the payment of tax on leases generally under the act. Secondly, the period during which a proportional refund of tax may be obtained on the buyback of a defective motor vehicle is extended in cases where the buyback is awarded through an impartial, independent, third-party dispute resolution process. Next, the application of the tax to vehicles leased from out-of-province lessors for use in British Columbia is clarified.

The exemption for energy conservation equipment is clarified to exclude generic parts purchased to make or build such equipment, and the act generally is clarified to exclude from exemption tangible personal property used to make exempt tangible personal property. A provision is introduced to clarify that tax is payable where goods acquired exempt by reason of their use are subsequently transferred to a taxable use. The definition of purchase price is clarified to ensure that consideration in the form of royalty payments and licence fees relating to the use of tangible personal property or knowledge required to use tangible personal property is included in the definition for tax purposes. And the exemption for purchases of fertilizer is restricted to fertilizers purchased for an agricultural purpose unless purchased by an individual or for an exempt use under the act.

The System Act is amended to allow for the orderly windup of the British Columbia Systems Corporation. The amendments permit the transfer of B.C. Systems Corporation assets and liabilities to the province along with specific debts.

The Tobacco Tax Act is amended to change the way tobacco sticks are taxed by defining tobacco sticks as cigarettes and taxing them accordingly. The tax on tobacco sticks is increased to 11 cents per stick from the equivalent of about 7.2 cents per stick. The only reason tobacco sticks were developed by tobacco manufacturers was to avoid the tobacco tax. Government is concerned that the tobacco tax base could be eroded by smokers switching from cigarettes to the lower-priced and lower-taxed tobacco sticks as more tobacco sticks requiring less to assemble come onto the market. The Tobacco Tax Act is also amended to simplify the cigar tax rate structure and increase the maximum tax payable to $5 from $2.50 per cigar. All cigars will be taxed at 77 percent of retail price, with the highest tax constrained to $5. The seven tax rates for cigars priced less than 50 cents each are eliminated.

G. Farrell-Collins: Bill 2 does all of those things, as the minister states. Some of them are minor technical issues; others are far more sweeping and broad. I want to address in second reading debate, for the most part, some of the principles that lie behind this bill, and we will obviously be taking a much closer approach to the various sections as the committee debate takes place.

Right at the start, one of the anchor points of this piece of legislation is the government's much lauded reduction of the corporate capital tax -- a fairly small reduction, I might say. This is one of the tax cuts that this government brought in with this budget to kick-start the economy, we've been told, in an attempt to give businesses a chance to do what they do best, which is create jobs and opportunities for the people of British Columbia. But the change in the corporate capital tax is so small and so incremental that it will have next to no impact, provincewide, on kick-starting this economy. It will have virtually no impact in changing the way business has gone on in this province for the last number of years and indeed in the last number of months.

British Columbia is in a virtual recession. British Columbia's economy is the slowest in Canada. British Columbia's economy is producing -- and in fact, in the last couple of months has actually lost jobs. . . . British Columbia's economy does indeed need a kick-start, but it needs a significant kick-start, and it needs it now. If you look at the corporate capital tax provisions, none of them take place until next year.

Here's a government that's bringing in a piece of legislation at the end of March -- now into April -- in what they say is an attempt to allow business to do what business does best, in an attempt to kick-start the economy. And not one of those provisions. . . . Well, one of them does, and I'll come back to that in a minute. But for the most part, none of these provisions take place until January 1 next year. Who knows what state the economy is going to be in in January next year?

[2:45]

The corporate capital tax changes for small business are minuscule in the scheme of things. This government brought in this tax and has brought in hundreds and hundreds of millions of dollars in revenue from small and medium-sized businesses -- billions of dollars, quite frankly, if you were to add it all up -- since they brought this tax in in 1992. And now they are giving a tiny incremental break to some of the very smaller businesses. It is going to do nothing to change what has been put in place over the last number of years.

But let's look at what the government has done for at least one large financial institution in this province. As of the day the budget was brought in, it immediately made a change to the corporate capital tax threshold for financial institutions to save on the spot. . .at least one financial institution in this province $8 million. They don't have to wait until January next year; they get it today.

Hon. Speaker, I don't know about you, but I remember the last election. I remember the television ads that this gov-

[ Page 6974 ]

The minister won't even tell us what other financial institutions are going to benefit from this change. We don't know if other credit unions or other banks are going to benefit, because she refuses to tell us. She refuses to tell the public how many people are going to be affected by this tax break. She refuses to tell the taxpayers how many financial institutions are going to receive the same $8 million tax break.

Then she has the nerve and the gall to hide that fact in the budget reports. It's not even there. In the budget reports the minister goes out of her way to hide the fact that there's going to be a multimillion-dollar tax break given to at least one -- but possibly others -- major financial institution in British Columbia. If that isn't the height of hypocrisy, the height of sneakiness, the height of despicableness, I don't know what is. You would think that the government, if they were going to change their attitude and change their tack, would at least be honest about it, at least be willing to stand up and let people know that it was happening. You would think that they'd at least be honest with the people of British Columbia. But they're not. And to this day, three weeks later, we still don't have the truth. We still don't know how many banks, how many financial institutions are going to get this deal -- or, quite frankly, already got this deal as of April 1.

So why the difference? Why the need for the government to be so secretive on this one and laud the other one from the treetops? Why the need to be so quiet about this tax change and the desire to rant and rave in public -- to run TV ads, to put out newspaper ads and to put out brochures telling everybody about that tiny incremental tax break they're going to give to small and medium-sized businesses next year, which is really going to accomplish next to nothing? I think the omission of that, in itself, should be an indication to the people of this province whose side that government is on.

In talking about the tax break for small- and medium-sized businesses -- the corporation tax threshold for small businesses -- the minister used these words, and I found it interesting. She said it was going to encourage small businesses to create jobs. Well, I guess the converse is true: if you put a $400 million or $300 million tax on small and medium-sized businesses, it's very likely to discourage businesses from creating jobs.

All along for the last six or seven years, the former Finance ministers -- one of whom is now the Premier of the province -- must have been misinformed, or at least they misinformed us. They used to tell us that this corporate capital tax wouldn't cost one job, that it wasn't keeping investment from taking place in British Columbia, that all it was doing was making people pay their fair share. That's what the government told us.

Well, now the truth's out, because the Minister of Finance has just told us today that by reducing it even that small amount of the hundreds of millions of dollars they increased it in 1992, they're going to encourage small businesses to create jobs. Well, how many thousands or tens of thousands or hundreds of thousands of new jobs would have been created in this province from 1992 to 1998 had the government not introduced that corporate capital tax on businesses in 1992? How many? Very likely thousands and thousands.

So I think the minister should think about. . . . You know, if she's going to do it, I understand that. I don't agree with it, but I understand. But the minister and the government should at least be forthright and honest with people and tell them what it is they're doing and not try to hide behind the speechwriters, not try to hide behind the ad agencies and not try to hide behind their communications experts. They should at least be upfront and honest with the taxpayers of British Columbia and tell them precisely what they're doing this year, what they're going to do next year and, more importantly, the damage they've caused the economy for the last six years with their capital tax on small and medium-sized businesses.

There are a couple of other items in Bill 2 that I want to talk about. I know the member for Delta South is going to speak on one of them at more length. It's the $12 million that the government is taking from the Securities Commission -- more cash for the government, more ways of getting cash. Let's find as many places for revenue as we can, and let's put it into the hopper and find something to spend it on. The minister says that the $12 million that she gets from the Securities Commission is going to be used for tax breaks. Well, they get the $12 million this year, but the tax breaks don't even add up to $12 million for small businesses, and they don't get them until next year. Again, if the government is going to do it, at least be honest and upfront about it. Tell us exactly what it is: it's a cash grab. But don't try to make it seem like you're going to turn around and use that money to give tax breaks to small and medium-sized businesses and allow them to create jobs. It's just not the case; that's not what it's about. It's about the government going out and trying to find another source of revenue, another source of cash that they can put in the hopper and spend on other things.

I have some questions regarding the insurance premium tax that I intend to raise with the minister when we get to it in committee. It appears that there was an exemption for medical premiums that no longer exists, but we'll canvass that at greater length when we move into committee stage.

The last item in Bill 2 that I want to deal with is section 40. Not only does section 40 do something that isn't done very often, it's almost never done. But this government seems to do it with enthusiasm. Section 40 retroactively changes a piece of legislation that the government brought in in 1993. Just so people are clear about what happened in 1993, in 1993 the government changed the provincial sales tax -- the PST we pay every time we go to the store or buy a car or whatever we do with our funds -- from 6 percent to 7 percent, which is a pretty significant tax increase when you think about it. But the government made a provision in that act for individuals, taxpayers, corporations, businesses, etc., which had contracts that extended beyond the date when the new tax rate was brought in to get a refund. They'd still have to pay the 7 percent, but after the fact they could go back and apply for a refund of that extra 1 percent. It really wasn't fair for people who had entered into a contract well before that for delivery of some service or product or goods somewhere down the line, so the government put in a provision for that.

[ Page 6975 ]

F. Gingell: Expensive, too.

G. Farrell-Collins: And expensive, the member for Delta South tells me.

In February of this year the judge made a decision against the government and in favour of the taxpayer. The government said: "So what. We don't care what the courts say; we're going to change it anyway." That isn't unheard of. Governments sometimes aren't particularly good, it seems, at drafting legislation. If it was different from what they'd intended, then they're well within their right to go and change it. That's what governments do. But they didn't change it as of the date of the court decision and change it forward for the future. They went back to 1993 and changed it retroactively. So those people who believed that they had an impartial judicial process that they could go through to get a decision, to get a ruling, and that if at that point the government needed to change it, then they could, have had that pulled out from underneath them. So all the expense, the time, the energy of going through the courts -- through the process that should be there for every citizen of British Columbia to follow -- is gone.

The government acts as though that didn't even happen. This government acts as though the courts don't have any power in this province, as though they are the law. Not only do they make the laws but now they interpret the laws. Not only do they have legislation that they bring. . . . If it doesn't work the way they want it, if they lose it, they go back over the courts -- they trample on the courts -- and they go back and bring it in the way they wanted it in the first place. What's the point of having courts in British Columbia? This is a government that continually breaks the law. Then when they get caught, they go back and they change the law, time and time again.

An Hon. Member: Gamblers.

G. Farrell-Collins: Look at the gambling.

Interjections.

G. Farrell-Collins: The Minister of Women's Equality should get her head out of the sand and realize what's been happening for the last six years in this province. Her government has been breaking the law, time and time again. Her party has been breaking the law. It shows the type of people that were elected on the government side of the House. And it shows whose side they're on, if I can quote the Premier.

If the government is going to make a mistake and then go to the courts and actually give the courts the respect that they deserve, then to go back and retroactively deal with that -- well back to 1993 -- is abhorrent. It's an abrogation of justice. It shows that this government has no respect for the rights of the individuals in this province to have access to the justice system and to have it work in their favour when the courts decide that. It just shows how far this government has sunk in the last six years. It's one example out of many.

Hon. Speaker, while Bill 2 does some things and closes loopholes, if it does anything important, it heightens the awareness of the hypocrisy of this government. It heightens the awareness of the depths to which this government will sink. It shows us once and for all, yet again, what this government is made of.

[3:00]

I want to speak specifically on the tax measures that were introduced at that time, because that is what this government has been trying to provide the business and investment community: some assurance that they have listened and have understood what the problem is. Of course, the problem is that the investment and business community recognize that it has not been a measure that they can absolutely support.

First of all, hon. Speaker, the corporation capital tax. My recollection of it being introduced in 1992, when I was in public practice as an accountant. . . . I remember the reintroduction of it in 1992, because it was in the eighties that it was removed. Many of us were glad that it was removed, because it was a job-killing and investment-killing tax. We saw what it did to the small business community, and we were very concerned at that time. When it was removed, there was much applause at the time. And when it was reintroduced in 1992, there was much groaning, of course, from the business and investment community, because it was reintroduced to hurt the small business community -- one that we have said, time and time again, is the engine of our economy.

What happened in 1992 was that a number of small businesses had to consider whether they were going to expand, whether they were going to reinvest, whether they were going to hire people, because in doing so, in trying to increase their volume, increase their market share and compete globally, they had to spend dollars. They had a corresponding liability, but of course that wasn't always taken into account when calculating what taxes were due. I know that there are a number of constituents of mine, and some in adjoining ridings, who have contacted me and said that over the last five years they have not seen a profit on their bottom line. They have only taken home wages, yet they have paid out corporation capital tax -- some to the extent of $20,000 or $25,000 a year -- purely because they wanted to expand and be innovative and diversify their businesses. When business is paying from $20,000 to $25,000 out, that removes the ability for them to hire one or one and a half additional people to fill that job market, so it is a job-killing tax.

I also recollect that this tax was to have been removed on small businesses in 1995 -- that it would only remain on financial institutions. That announcement was made by the former Premier, Mike Harcourt. At that time, the business and investment communities were quite anxious. They were quite pleased that there was a recognition of what this tax was

[ Page 6976 ]

It was not with any foresight that this Premier and this government, back in 1996 and now in 1998, attempted to revitalize the economy -- an economy where we so very much need to boost up our credit rating, which is another subject that I'll leave for another time. The corporation capital tax was expanded in 1992 to incorporate small businesses, and it was promised that it would be eliminated for those small businesses in 1995. All we have now is a shifting of the targets; it is now just a tax that has a threshold increase. Although that might help some small businesses, there are many businesses which will still not take advantage of this because they're not sure what the next step is going to be. If we have another change of Premiers, that could change the whole scheme of things again. Small businesses want some assurance. They want to know that they can plan five and ten years in advance, especially when it comes to expansion, especially when they plan to create more jobs in their community -- especially in a community that has been devastated and requires more diversity. No one will be putting those kinds of dollars into their business if there can be no assurance that this government is listening, which it has not done.

The corporation capital tax change is too little, too late. What was alarming was the fact that while there were some minor changes for the small business community in terms of the threshold limit, there was a substantial change for the financial institutions, something that had never been spoken about. Nothing had been mentioned about those kinds of changes. Changes to the threshold for the financial institutions was never mentioned by the former Premier, and it was something that was understood would stay there. So why has this government suddenly turned again -- 180 degrees, or even 90 degrees -- to accept that there should be this kind of change for financial institutions? It has long been accepted that financial institutions should be required to pay corporation capital tax.

The next item I'd like to speak about in regard to Bill 2 relates to the personal and corporation income taxes. Once again, personal income tax changes have provided little relief, as we've heard in the budget speech responses. Many average taxpayers claiming their basic individual tax credits will see very little change in their pockets when they go to file their tax returns for the year 1999 in the year 2000, because it has been deferred for some nine months. That was not a positive step this government introduced either, because we were looking for something more substantial. Even if the government was not able to make it more substantial, why did they not make it immediate? That would have given some assurance to the average taxpayer that this government had in fact been listening.

Since 1991 or 1992, personal income tax rates have increased. Having done a number of tax returns for individuals. . . . Every year those individuals would come in and say to me: "Why is it that I'm making the same amount?" Some of those individuals have not seen increases in their paycheques, because the economy has been doing so poorly. Yet they saw a drain on their paycheques because of the taxation and some of the surtaxes that were imposed. Some of these people were not making large sums of money. It's just that they had a large family to support.

The other final tax I want to speak about is the corporation income tax. The corporation income tax is being changed here, and again this government is attempting to take some degree of credit for it. I would have to remind the minister that in 1991, I recall the small business tax rate being 9 percent. In 1992, or shortly thereafter when they became government, that rate was increased immediately to 10 percent. Last year it was decreased back to 9 percent, and we do see that some reduction will be occurring, but, again, it is going to be occurring some nine months later.

That's a shame, because the small business community has been saying time and time again that they require some immediate tax relief. They have been hit with, in their minds, a recession, where the disposable income of taxpayers has declined. In order for these businesses to stay afloat, they were looking for some immediate tax cuts. The small business tax rate -- as you may or may not know, hon. Speaker -- is based on some $200,000 of income in a small corporation. At 1 percent for a whole year, that would mean a total of $2,000, and at 0.5 percent, that's only $1,000. So again, as I mentioned in my budget speech response, it provides very little incentive for a small business to be able to hire an additional staffperson if they were to expand or increase. Surely, if we were able to assist small businesses so that they can move on and invest and so that they are not going to be paying everything in taxes, they would be able to use those aftertax dollars to hire more people. In turn, that would generate more taxes -- whether it be through a payroll tax or an additional corporation income tax -- because the business is doing better. But where we have a tax such as the corporation capital tax, which has no correlation, I guess, to the net income of a business, we have a business that cannot expand appropriately.

So while there are many sections throughout Bill 2 that I would like to ask the minister questions on, I will leave that to the committee stage. Suffice it to say that Bill 2 does enact those parts of the budget speech which we do oppose and which, as my colleague said, do not bode well with the opposition.

F. Gingell: My colleagues have both spoken of the abhorrence of retroactive legislation. I think that this particular subject deserves to be mentioned once again. We as a legislative body enact legislation and expect it to be obeyed by our citizens, and we expect government, through their administration, to ensure that it is administered fairly. For this government to come back, having lost their court case, and bring in legislation not just to deal with the issue from this point forward, which I would find acceptable or understandable, but to deal with the matter retroactively so that the decisions of the courts have been reversed or found to be of no value, I find to be abhorrent in the worst case.

The only other issue that I wish to touch on in second reading debate of Bill 2 is the issue of broken promises. This is a government that has broken promise after promise after promise. When the now Premier appointed Mr. Matkin as a one-man commission -- now, there's a thought -- they took somebody who had lots of experience in government, who'd been a very senior bureaucrat but had in fact not played any part in partisan politics, and appointed him to an important commission. Maybe that's an example they should follow more often.

They appointed Mr. Matkin to look into issues dealing with the Vancouver Stock Exchange and the British Columbia

[ Page 6977 ]

Interjection.

F. Gingell: Thank you, ex-Finance minister, for doing that.

The commitment was there that the government would allow the surpluses that may be generated in the Securities Commission -- because they are a self-funding organization -- to be used for the further development of the technology and administration of that commission.

They have a lot of important things to do. They are just coming to the end -- I think it will be in August of this year -- of a three-year experiment in having a special fraud office with the RCMP. Quite honestly, we don't have to wait till August. It's been an absolute and dismal failure, not because of the British Columbia Securities Commission but because of the inability of the RCMP to hire the type of people with the necessary skills and to allocate those resources to the detection and prosecution of criminal fraud within the securities industry. It's a subject and a concern that we share on both sides of this House. It's something that we all want to see done better. It was encouraging when this government gave the Securities Commission the right, the ability and the autonomy to enter into those kinds of arrangements. And it having failed, the Securities Commission has sufficient funds to move forward on the criminal fraud issue.

[3:15]

The Securities Commission has problems because of lack of resources in being able to look after their responsibility in the new virtual national securities regulation or regulators. As members know, there has been a concerted effort in the past two to three years to come to some agreement about national securities regulation. That hasn't happened, because of political issues in provinces other than British Columbia -- British Columbia to an extent. But it's important that the Securities Commission have the resources necessary to be able to respond to its responsibilities to ensure that securities regulation happens effectively, efficiently and with due speed. For some years the Securities Commission has been trying to bring forward a process through which we can have what we call continual disclosure, so that there is, through an Internet-type arrangement, an ability for investors and people in the industry to quickly be updated as to the news releases and the filings of various publicly funded corporations which come under the jurisdiction of the commission.

So why have none of these things happened when the Securities Commission is reasonably well off? It has the financial resources. Well, contrary to the promises made by this government, the government has continued to put restraints onto the Securities Commission with respect to the number of full-time employees and the salaries that are paid. You can appreciate that the securities industry is very, very competitive from an employment-reward viewpoint. If the Securities Commission doesn't have the ability to pay competitive salaries, it won't get people who are capable of and competent in doing their work. The only reason, I would suggest, that the Securities Commission has this large -- relatively, for the Securities Commission -- surplus is because it has been restrained from being able to do its job properly by restraints placed by this government.

Madam Speaker, it's all a broken promise again. This government, when portions of the Matkin commission report were accepted and adopted, agreed that the Securities Commission would be an independent Crown agency. We even went through the exercise of passing special legislation in this House to ensure that that would happen. I will go back to the committee debate and look up many of the commitments made by previous Ministers of Finance. Both the previous member for Oak Bay-Gordon Head and the member for Saanich South made commitments with respect to the independence and autonomy of the commission. So this is an issue that we will come back to, and I hope at that time the Minister of Finance will be prepared to give some more satisfactory answers and commitments than she has done to this point relative to the ongoing autonomy of the Securities Commission.

G. Wilson: Hon. Speaker, rising to speak on the second reading of Bill 2 gives us an opportunity to outline in principle where each of the parties represented in this House come from on some of the budget measures that are being discussed under this bill. It being an omnibus bill with many issues in it, I'm going to try to limit my remarks more specifically to matters of the corporate capital tax, although I will touch on one or two other issues.

The government tried to make a great deal out of the fact that this budget, which has just been tabled in this Legislative Assembly this year, was going to provide some relief with respect to the corporate capital tax and that that relief was to be an enhancer to small business investment. I think we have to look at two issues here. First, there is a matter of principle. Do we, as a matter of principle, support the corporate capital tax as a measure of taxation? Is it a fair, sensible and good public policy to put in place? Secondly, does this government do what it says it's doing in terms of the kind of tax relief that it is providing?

Let's deal with the second issue first, because I think we can dismiss that fairly quickly. If we look at the estimated revenues in the budget that was tabled last year, the revised forecast of 1997-98 said that the corporate capital tax will bring $410 million into the treasury. This year, with these great changes that have been announced, it's going to bring $409 million into the treasury. Clearly, by their own figures and by their own admission, and looking straight at the data without putting any kind of editorial spin on it, this government is not making substantive changes with respect to corporate capital tax collection in this fiscal year.

That's really all we can deal with in this discussion and this debate today. There will be another budget next year, presumably, and that can take whatever is tabled in this bill and change it again for next year and for the subsequent years. Just because there is a promise -- and that's all it is -- for the calendar year ending December 31, 1999, and for the calendar year ending December 31, 2000, that there are to be

[ Page 6978 ]

If we were to look, as I think the member for Vancouver-Little Mountain pointed out with respect to section 2, the $750 million to $1 billion with respect to the lending institutions and what that provides, this government really does have to account for that incredible change of heart. It is quite true that in the last campaign, they did campaign solidly against providing any kind of benefit or bonus to financial lending institutions. It's quite true that this doesn't seem to meet the mark.

That point aside, if we were to tally up all the savings that we are supposed to see in this fiscal year for small, medium-sized and big businesses in the province of British Columbia. . . . If we were to do it in the absence of any preferential political spin that we might want to put on that and do it as an accountant might do it. . . . I'm not an accountant so I don't pretend to be one, but I've certainly dealt with those who are able to crunch numbers perhaps better than I. They tell me -- and I believe it to be true, because we've cross-referenced and cross-checked -- that this government, in loan guarantees and in direct cash support of Skeena Cellulose, has provided more to one corporation than all of the benefits to all of the companies -- small, medium-sized and large -- that are contained in this budget. One corporate bailout has been given more in terms of revenue from this government than all of the other businesses in British Columbia -- whether they're small, medium-sized or large -- as a result of this budget.

That's a pretty sad affair. This was supposed to be a business-friendly budget, and we can see quite clearly that it's not. What's also interesting about that is that we would argue, I think, the numbers. If this was to try and put in place some kind of benefit, we might have seen some kind of investment opportunities that companies doing business in British Columbia would have been able to take advantage of, if they were to take the profits for those few that may be making profits in the province at the moment and reinvest that in order to get benefit against this tax. Even if we were to stretch the limit on the principle of the corporate capital tax -- which I'm going to talk about in just a second -- and say, "All right, by some measure we're going to say that this is a fair and sensible way to tax," presumably one of the things the government could have done is reward those companies that decide that they are going to reinvest their profit and, through that reinvestment, through job creation and through job stimulation, find some manner of reward, which would then give them some level of exemption from the corporate capital tax.

But that's not in there; it doesn't even come close to doing that. I think we have to look at the numbers and understand that the great savings to business are not there; they're just simply not there. As much as we are trying to paint this -- the government is; certainly we on this side of the House are not -- as a business-friendly bill, when we look at the numbers and we actually start to measure them out, we can see that in fact they don't add up, that they don't provide the kind of support that's necessary.

In principle we have to ask ourselves: is the corporate capital tax a fair way to gather tax in the first place? What we're doing is amending it here to provide threshold differences within the calendar years, and we are suggesting that through those amendments we are providing some relief. I take the position -- and my party, the PDA, takes the position -- that corporate capital tax is theft, pure and simple. There is no other or better way to describe it; it's theft. It is a tax on capital, whether profit is made on that capital or not.

The example that one needs to use -- in order to explain to those who may read this in Hansard or watch this through these proceedings -- is simply that of a car dealer, because I think it's the easiest one and the best that we can use. If a car dealer goes to a bank and borrows money to go to the manufacturer to buy automobiles to sit on their lot, the government will come along, add up the value of every one of those cars and tax them on that capital value -- whether the cars are sold or not.

Now, there are three ironies in this system of taxation: (1) the car dealer doesn't own those cars, because the car dealer had to borrow money in order to pay General Motors or Ford or Chrysler to buy those vehicles and put them on the lot; (2) the overall value of those vehicles is an assessed value, which the car dealer may or may not be able to realize at sale; and (3) what it does is provide to the car dealer one alternative only, and that is to pass on the corporate capital tax to the consumer -- to those of us who are going out to buy a vehicle -- and passing it on pushes up the cost of the vehicle and makes it more difficult for us to afford.

So on all three counts, corporate capital tax is a bad tax. It's theft, pure and simple. If that dealer doesn't make any money, that dealer will still have to pay the tax on those vehicles -- whether they sell or not. As the member for Oak Bay-Gordon Head pointed out in her remarks when she talked about some of the small businesses in her own community, they are forced to pay thousands of dollars in capital tax, despite the fact they cannot net a profit.

[3:30]

Hon. Speaker, we look at this corporate capital tax, and we ask ourselves whether or not, even in principle, it is a sound and sensible way for us to be trying to generate revenue -- some $409 million worth of revenue in this budget year, $1 million less than they got last year despite all of these changes that they have made. I think that we would argue that it is not the right way to go, that we need to get rid of corporate capital tax. If we do that, then surely to goodness what we need to have in this province is a more fundamental debate about what kind of tax system really should be part of a budget measures implementation act.

[W. Hartley in the chair.]

What would we do differently if we had to come forward and if we had to table and put into this Legislative Assembly a bill that would outline how we would expend? When we get into that debate and that discussion, it seems to me that we need to really ask ourselves a very simple question: do we wish to continue to tax consumption of British Columbians as well as income, or are we finally going to say that we're going to make the choice between whether we tax income and leave consumption alone, or are we going to tax our consumption

[ Page 6979 ]

We find, even within this particular document, everything from simple things, which perhaps many who read through this wouldn't immediately look to -- a very simple little change with respect to recreational residence assessments, in terms of values and how that's going to work. . . . We also see changes with respect to property transfer tax and the financial implication that's going to be there.

Another thing we could look at is the change in definition with respect to tax provisions that this talks about in terms of the eligibility of insurance tax -- the net taxable insurance that this government quite cleverly has just pushed up by 1 percent. It's not obvious until you really read the detail of this bill. As we get into committee stage, I'm sure we will look at it in more detail. In many aspects you will find that where they've taken away the tax, they have added many other forms -- either through increased tax on services or through levies that are placed against a number of areas within this bill. Quite clearly, we do have to start to get into this discussion in principle as to whether or not we really do have to have comprehensive tax reform.

Also, as we look at the principle of the Budget Measures Implementation Act, one of the areas that we have to at some point, somewhere -- and I don't know how one does it in the constraints of this Legislative Assembly -- really start to argue, and argue carefully, is whether or not we have to have a much broader or more comprehensive amendment to the manner in which we collect our taxes. Many British Columbians question why we who raise -- and in this budget will raise -- $20 billion off the backs of some three million British Columbians will also raise and send to Ottawa an additional $19.4 billion for federal revenues, to see only about $3 billion come back.

When we look at the amount of revenue that is generated in terms of both provincial and federal revenues, three million British Columbians generate almost $40 billion a year, and most of us are now at tax levels that we cannot afford to pay. We have a tax system that is so complicated. . . . One only has to read the Budget Measures Implementation Act to see the number of acts that are affected by very simple changes, often ineffectual changes in terms of how much money we keep at home. It's a very complicated tax system, so complicated that many British Columbians -- in fact, I would argue, most British Columbians -- no longer feel comfortable doing their own taxes. They have to go to "tax experts," who charge them in order to have their taxes done.

It's sad that this government, above all -- which lauds itself as being a government of the people, the government that is trying to do what it can for the worker, for the "average British Columbian," the government that said it was going to give some kind of relief to small and medium-sized business, the government that said it had consulted broadly with the business community and was going to bring in that kind of relief -- has failed, and failed dismally, to do so. Their own numbers in this budget attest to that. One doesn't need to go beyond the simple estimated revenues and expenditure sheets within this budget to recognize that much of what was said in the text of the budget is not reflected in the actual numbers when you sit down and start to crunch them out.

So who will pay? Who will pay for the increased expenditures of this government this year? Mark my word -- and again by their own numbers you can see that the government expenditure this year has gone up, not down. . . . Despite the fact that we're now pushing $32 billion in debt, despite the fact that we have a real deficit of about $949 million -- not the $95 million that's talked of -- we see that budget expenditures are up, not down, and that the government continues to spend more money.

The question is: who will pay? British Columbians will pay, especially middle- and low-income British Columbians. People who are trying to succeed as small business entrepreneurs will pay. We will pay, and we will pay not only through income tax but through consumption taxes, through property taxes, through taxes that are assessed on virtually every necessary aspect of our lives. We will be taxed when we purchase property, when we transfer property, when we sell it. We will be taxed if we choose to consume the odd bottle of beer, if we choose to smoke the odd cigarette or if we choose, in fact, to smoke cigars now. Thank goodness I don't do that, because we've just seen a massive increase in tax on those who do smoke cigars.

We will pay through every aspect of our lives. The government fails to recognize that as they continually ratchet up the tax demand against British Columbians, as they continue to push us into greater and greater degrees of economic hardship -- as a result of the almost insatiable demand of this government for more revenue -- many British Columbians are becoming more and more economically desperate. What is the solution to this desperation in terms of additional revenue? Do we see anything in the Budget Measures Implementation Act for honest, real tax relief? No, we don't. We see the government introduce expanded gaming so that those people who are desperate can get lured in by the thought that if they can just put out the little bit they have left, somehow they may win a whole lot. But in fact the statistics tell us that they're just going to lose the little they have when they game.

This is a shameful, shameful budget. It's shameful because what it does is fail to recognize that there is diminished revenue going to British Columbians who most need it. Then the government, having seen that revenue reduced. . . . The income that most of us are earning -- in fact, our real spending power -- is falling. This government chooses to tax it even more. Notwithstanding what the language of the bill says, I challenge British Columbians to read the numbers, to look at the actual figures in the budget. Those numbers will not lie. Those numbers will tell us exactly what it is that's going on, and they are here for us to see.

In principle, I cannot support the measures that are set out in Bill 2. We're disappointed -- I think that's putting it mildly -- that this government has not taken a bolder and more progressive vision toward how we will implement real tax reform, which would change the manner through which we fund government, would provide real tax relief to British Columbians and would provide an opportunity for all British Columbians to become owners of this economy rather than tenants in it, which we are so quickly becoming.

I thank you for this opportunity to speak to this bill and look forward to committee stage.

G. Abbott: I would like to make a few brief comments in relation to second reading of Bill 2. It was just about a year ago that we spent many hours in this chamber debating another Bill 2, another budget measures implementation act. We spent many hours in here because the government had arbitrarily and unilaterally changed the Local Government Grants Act at the cost of some $100 million to municipalities across this province. This year we're debating another Bill 2, another

[ Page 6980 ]

I want to speak to this Bill 2 because the corporate capital tax has had severe consequences for small and large businesses in my riding. In combination with a whole range of ill-advised tax and regulatory policies that have been put forward by this government over the past several years, it's brought many businesses -- particularly forest businesses -- to their knees, both in the riding of Shuswap and across this province. I had the good fortune last Friday to attend the Interior Logging Association trade show in Kamloops. Of course, there's all kinds of large and small machinery that's used primarily in the logging industry. One of the largest exhibits came from the Finning corporation, which a year ago was based in British Columbia. Because of the very regressive taxation policies of this government, it has now relocated to Alberta to benefit from the more generous economic, taxation and regulatory policies associated with that province. I think it's enormously unfortunate, and I couldn't help but wonder: by this time next year, how many more of the other corporate exhibitors will have moved on to Alberta as well in response to the continually regressive policies that are put forward by this government?

This year's Bill 2 is a broken-promises act because it's contrary to what this government said when the corporation capital tax was brought in back in 1992. The Premier of the day claimed that this was going to be a temporary measure for non-financial institutions. This government never admitted, never claimed, that the corporation capital tax was going to be something that was going to stay on indefinitely. In fact, the original corporation capital tax, as I think everyone knows, was something that was brought in, I believe, in 1987 by the former Social Credit government. It involved the taxation of financial institutions alone. This NDP government expanded that corporation capital tax to include businesses large and small across this province which were non-financial in nature.

In the last provincial election I think everyone on this side of the House, and probably everybody on the other side, heard a remarkably consistent tune from NDP candidates about the corporation capital tax. For the NDP then. . . . Certainly this was the case with the candidate opposing me. Every night he talked about the corporation capital tax that the big bad Liberals were going to take away, and so on. Our position was entirely misrepresented, and obviously their position was misrepresented at that time too, because we see some change from what was advanced in the '96 election. Obviously during the '96 election, when the central theme was big bad business and a kind of class-war rhetoric, the maintenance of the corporation capital tax as it existed was consistent with this government's rhetoric and plans. Now we see some slight changes to it. Regrettably, we see those modest changes to it come far too little, far too late. This government and its dangerous, rabid rhetoric has done incalculable damage to this province's economy in the past several years. The impact of that is going to last for a long time into the future. The result, of course, is going to be more lost jobs and lost investment as a consequence of this government's very dangerous rhetoric.

[3:45]

This government, of course, thinks that business is going to be profoundly grateful for this modest change to the corporation capital tax. Well, I'm afraid not. This government has done far too much damage over the past several years to the business sector. This government takes away dollars from business, from individuals, and they return a few pennies and expect us to be profoundly grateful for doing that. Clearly we need much more substantial changes to see business confidence restored in this province.

This government's policies, whether they are in forests or any other sector of the economy, have done incalculable damage to the economy and to the investment climate. The minor tax relief associated with this bill will do nothing to reactivate the economy or to restore investment confidence. Frankly, there is only one measure that this government could undertake which would result in a prompt restoration of investor confidence and the creation of new jobs in this province, and that one measure would be the resignation of this government -- that's the only thing. The resignation of this government would be the only thing at this point that would restore investor confidence in this province. They've done far too much damage in every area that they've touched. This is certainly a classic example. The pittance that they're returning through this bill is going to be insufficient to turn things around.

Deputy Speaker: Thank you, members. I recognize the Minister of Finance and Corporate Relations, to close debate.

Hon. J. MacPhail: I move that the bill be referred to the Committee of the Whole House to be considered at the next sitting after today.

Motion approved.

Bill 2, Budget Measures Implementation Act, 1998, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. J. MacPhail: I call second reading of Bill 3.

INCOME TAX AMENDMENT ACT, 1998
(second reading)

The tax cut will be the fourth consecutive reduction in British Columbia personal income tax since 1995, for a total reduction of 6 percent for the majority of British Columbians. The reduction in personal income tax will be accomplished by reducing the provincial tax rate by one percentage point, to 49.5 percent from 50.5 percent effective January 1, 1999.

[ Page 6981 ]

However, British Columbia will continue to have a very progressive tax system. Even with this reduction, the top 4 percent of tax filers will pay over 28 percent of the total provincial income tax. The first stage of this reduction will take place in 1999 by reducing the British Columbia high-income surtax rate to 19 percent from 26 percent. This will reduce the top marginal rate by 1.5 percent to 52.7 percent. These measures will put an additional $37 million in taxpayer pockets in this fiscal year and $152 million when the reduction is fully implemented.

Bill 3 also provides tax relief for small businesses by reducing the small business corporate income tax rate from 9 percent to 8.5 percent effective January 1, 1999, and to 8 percent effective January 1, 2000. The opposition spoke to this in second reading of the previous bill, but it is contained in this bill.

The government recognizes the importance of small businesses to the British Columbia economy. Small businesses have been instrumental in creating new jobs in recent years. To sustain this momentum, the government is reducing the small business corporate income tax rate to the lowest rate in British Columbia since 1986. This will assist approximately 40,000 small businesses and support additional job creation in this sector.

A general anti-avoidance rule is also being introduced effective March 31, 1998. This rule, which is similar to the federal anti-avoidance provisions, will grant the authority to challenge abusive tax avoidance arrangements and protect income tax revenue.

Lastly, Bill 3 introduces Film Incentive B.C., which provides a refundable corporate income tax credit for qualifying film and television productions, with principal photography commencing after March 31, 1998.

The government has worked extensively with the film industry over the past year to develop Film Incentive B.C., a program that will increase British Columbia-owned and operated activity, encourage further investment and job creation in the industry and expand training for workers and people entering the industry. It will pursue regional expansion and will enhance British Columbia's position as a preferred shooting location for film. Key features of Film Incentive B.C. include a base tax credit of 20 percent of qualifying British Columbia labour expenditures for B.C.-controlled productions, a regional tax credit offering 12.5 percent of qualifying British Columbia labour expenditures for shoots outside of Vancouver and a training tax credit offering up to 3 percent of qualifying British Columbia labour expenditures for providing training opportunities for workers. The introduction of Film Incentive B.C. will ensure that this province remains Canada's most attractive movie location and one of the leading centres of film production in North America.

The tax reductions in Bill 3 are evidence that the government has listened to and acted upon the concerns expressed by business and by individuals. These personal and corporate income tax reductions implement part of the government's plan to improve competitiveness, stimulate investment and create jobs. I invite all members to support this bill.

G. Farrell-Collins: Bill 3 essentially does two main things as far as the public interest is concerned. The first part is the tax cuts for individuals and small businesses, and the second part is the incentives to the film and television industry in British Columbia. I want to be on the record for the opposition as saying that we do indeed support the plans for incentives to the film and television industry which put us on a competitive basis with other jurisdictions, particularly Ontario, which has been fairly aggressive in offering this type of incentive for the film industry to either stay in Ontario or move to Ontario. Unfortunately, in order to compete, we have to respond in kind.

But the first part of the bill is the one that really has an impact on British Columbians. I think that the first part. . . .

Interjection.

G. Farrell-Collins: The minister is mumbling. If she wants to get up, she gets a chance today at the end to close debate, and she can do that.

The first part of the bill is the income tax changes for individuals and small businesses. It shouldn't be called the Income Tax Amendment Act, 1998; it should be called the Too Little Too Late Act, because that's what it is. It's way, way too little, and it sure as heck is way too late.

As I talked about in Bill 2, we in this province have an economy that under the guidance -- the esteemed and wisdom-full guidance -- of the members opposite has sunk from No. 1 in Canada for economic growth to No. 10 out of ten. We lag behind every other jurisdiction in Canada in economic growth this year. That is something that British Columbians can't be proud of. It is something that this government certainly shouldn't be proud of, although they seem to be proud of it. The income tax that British Columbians will pay once these changes are brought in will still be amongst the highest in Canada and right up there at the top as far as western Canada goes. This government is reducing the income tax for individuals from 50.5 percent of the federal rate to 49.5 percent of the federal rate. But again, they're not doing it today, when British Columbians are looking for tax relief. They're not doing it today to help those British Columbians that need to have more money in their pocket at the end of the month to pay their bills and take care of their kids. They're not doing it today, like they did for the big financial institutions in Bill 2. They're not doing it today; they're doing it nine months from now. They're doing it way down there on January 1, 1999.

G. Wilson: Maybe.

G. Farrell-Collins: The member for Powell River-Sunshine Coast says maybe. We know what happens. The government brings in another budget next year, and they'll change back all the stuff they've promised this year. It certainly wouldn't be the first time we've seen that. We know how that happens from time to time.

So at a time when the people of this province are looking for some relief, are looking to be competitive with the people in Manitoba and Saskatchewan and Alberta, the government says: "Well, come and see me in nine months. Take two

[ Page 6982 ]

The income tax changes for next year for individuals will amount to a $25 million tax cut -- or reduction in revenue for the government; let me put it that way. We don't know the exact dollar figure that people are going to see themselves. There are other provisions in this act which increase the amount of money people have to pay for taxes. The calculation that was done by the people who do these kinds of things -- those accountants and the people who are good with the numbers -- shows that for the average family it's enough to buy dinner for two.

So here are the people of British Columbia carrying this huge burden that people in the other provinces don't carry. They've got this backpack full of stones. They're carrying this huge burden, trying to get by on a day-to-day basis, trying to pay their bills, trying to take care of their kids. The government comes along and says: "Hey, I'll buy you dinner for two on me." The people of British Columbia need a better tax break than that. The people in a province as wealthy as we have deserve to be competitive when it comes to income taxes. They shouldn't have to pay more than other jurisdictions in this country. We have a wealthy province, a rich province -- rich in resources, rich in people, rich in talent. And there's no way that we should be burdened with a government that says: "Here's your tax break; go out and buy yourself a pizza."

[4:00]

It is way, way too little. The tax cuts in this budget and in this bill will do nothing to kick-start the economy of British Columbia, absolutely nothing. The Leader of the Opposition was talking with me about this bill today, and I don't know if he's speaking this afternoon, so I'll steal his analysis. He said: "It's sort of like taking an AAA-cell battery and saying that you're going to get the shuttle to the moon with it." There is nothing in this incremental tiny tax cut that is going to do anything to turn the economy around for nine months, and even in nine months it will not be nearly enough to do anything to turn the economy around.

The government should be honest about that. They should tell British Columbians what they're really doing. What they're really doing -- like they did in Bill 2 -- is making the smallest possible cut they can that will still allow them to say that they're giving people a tax break. That will allow them to write the press release, have the Premier do a press conference and run television, radio and newspaper ads saying that they're addressing British Columbians' taxation level. They don't tell them that every other province in Canada is reducing taxes faster than this government is. Nova Scotia, New Brunswick, Manitoba, Saskatchewan -- even P.E.I. -- are reducing overall taxes faster than this government is. There is no significant relief in this legislation or in this budget for the hard-working taxpayers of British Columbia. We remember the ads in the 1991 election about a government that was going to be as honest and hard-working as the people that were paying for it. Well, those hard-working people have been paying for it all right; they've been paying for it since 1991.

Just to give people an idea of how insignificant these tax cuts are compared to what the government has done to them in the last six years, in the first budget the Premier brought in when he was Minister of Finance in 1992, the government increased taxes by $750 million. In the second budget he brought in, the next year, he added another $850 million on top of the $750 million that he had brought in the year before -- over $1.5 billion of new taxes. We've been paying that amount each and every year since then; every year another $1.5 billion-plus is coming out of the pockets of taxpayers. So after seven years of NDP budgets -- multi-billions of dollars in taxes that we've paid -- guess what our income tax break is for next year. It's $25 million, less than one seventy-fifth of the amount of additional taxes we paid in the first two years alone, not to mention 1994, 1995, 1996 and 1997 and the billions of dollars in additional taxes that we paid then. So that puts in perspective just how minuscule this tax cut is.

One of the other tax cuts that's in here is a change in the marginal tax rate -- a change in the amount of the additional dollar earned that those individuals in the upper tax range will pay in taxes. The reason that's important is because most of the people at the high end are there for a number of reasons. They are there because they are highly educated, highly skilled and are producing a lot of value-added to our economy. That's why they get paid so much. We do want a progressive tax system -- nobody will argue against that. But you have to look at what's happened to British Columbia as a result of having the highest marginal income tax rate in North America. You have to understand. . . .

I know that I've stood up in this House and said it before in years past; I know other members have said it in years past in this House. What having the highest, by far in some cases, marginal income tax rate in North America does is drive the most highly educated and highly skilled people out of British Columbia. They go elsewhere. They move to Alberta; they move to Ontario; they move to Washington State; they move to Georgia; they move to New York. They don't stay here. They move to London, England.

The reason we need to be mindful of our top marginal tax rate is because those are the people who have the new ideas. They're the highly skilled. They're the brain trust of our province. They're the people that are driving the economy in new directions. They're the people that are out there diversifying our economy. They're the people that are creating the high-tech jobs. They're the people that are creating the innovations that we can turn around and sell worldwide. They are the people that are preparing British Columbia for the economy in the next millennium, and we can't afford to lose them. The minister and the Premier have now accepted that logic.

[ Page 6983 ]

This somehow came as a revelation to the Premier during his consultations with the business groups. The business groups and the tech industries have been telling the government that for years. I know that, because they've been telling us that. This is nothing new. This is nothing revolutionary. This is fact. And if it's a fact this year, it was a fact last year and the year before and the year before that.

If you look at Washington State and Oregon and what those two states, both with economies and populations comparable in size to British Columbia's have done to diversify their economy in the last decade and then look at what British Columbia has done, we are more than a decade behind them. Those economies in Washington State and Oregon have been affected by the Asian flu, just as British Columbia has, but they are way better prepared. They've been prepared for a downturn in the forest sector. They are prepared for a downturn in the mining sector. They are prepared for a downturn in the fishing sector. Washington State and Oregon don't rely just on resource-based economies for their livelihood anymore. They have spent the last ten years -- in some cases longer than that -- preparing for the new economy, preparing for the next century, preparing for the next thousand years. They have moved away from relying on forestry and mining and fishing and have turned to relying on brain power, on inventiveness, on creativeness, on high technologies.

That's where the new economy is going. That's where the good jobs are. That's where the good family-supporting, high-paying, highly skilled, high-revenue, good-livelihood jobs are. British Columbia is being left behind, and one of the key reasons we're being left behind is because of the size and rate of our marginal income tax. You can talk to high-tech firm after high-tech firm, talk to their CEOs, talk to their workers, talk to the individuals and talk to your constituents. There are literally hundreds of high-tech companies and high-tech individuals who have picked up and gone south of the border because of the marginal income tax rate. They can go south of the border, pay a substantially lower level of income tax and have a better standard of living than they can in British Columbia.

What happens is that these small, high-tech companies -- sometimes starting with one or two people -- grow to a point where they can't recruit new people, where they can't keep the people they've already got here in British Columbia because the economies and the businesses that are thriving in Washington State and Oregon are coming up here and stealing them. They're coming up here and recruiting them to go down there, and one of the main reasons they go is because they have a better standard of living down there. These companies reach a certain size, and then they realize that they can't grow any further. They end up selling their technology or moving their company south of the border, and we lose that diversity in our economy. We lose those individuals, we lose their creativity and we lose their input into our new economy.

We've got a lot of work to do. When the government bashes the rich people with the highest marginal rate. . . . These are people who are earning anything over $80,000. That's a lot of money to a lot of people, but to people in that industry with those marketable skills and those abilities, that's peanuts. When they have to turn around and start paying 54 percent marginal income tax on any additional dollars they earn, they go elsewhere. They take all that opportunity -- all that spinoff, all the future opportunity for our people in our universities and colleges -- with them. The people aren't able to find those jobs here; we're not able to create those jobs here. As a result, our economy is far less diversified than it should be right now. We are affected more greatly by the Asian flu, by a downturn in the resource sector, than those other economies are. So while they're booming, British Columbia is losing, and that's unfortunate.

Let's look at one of the other tax cuts here. It's a tax cut for small and medium-sized businesses, a small business income tax cut. Once again, it doesn't take place until next year; it starts January 1, 1999 -- if they don't change it between now and then. It may disappear by then. This small tax cut takes place on January 1, 1999. All those small businesses that the Premier refused to meet with in preparation for this budget. . . . He met with all the big guys, but he didn't meet with the little guys. He didn't meet with the people who really produced the jobs, as the Minister of Finance said in her speech moments ago. He didn't meet with those people. Those people, the small and medium-sized businesses -- which are the ones creating the new jobs in the high-tech sector, the retail sector, the tourism industry, all those jobs providing great opportunities for our new people entering the work force, our young people -- get a tiny tax break in January and nothing now.

One big financial institution got $8 million three weeks ago. Guess how much all the small and medium-sized businesses in British Columbia get on January 1 of next year. If you take all the thousands of mom-and-pop stores, the thousands of dry cleaners, the thousands of restaurants, the thousands of hotels, the fishing lodges, the high-tech industries, the TV studios, the theatres, you name it, if you add up all those people, if you take all those businesses and put them together in one place, guess how much of a tax break they get on January 1 to split up amongst themselves. It's $5 million.

That's the relief for the job-creating engine of British Columbia. The businesses that are supposed to be out there creating jobs for young people in this province get a $5 million tax break. After paying billions and billions and billions of increased taxes for the last seven years, this minister and this Premier have the gall to say to them what a wonderful thing they're doing for them by cutting their taxes by $5 million. That should be called the whoop-de-doo tax cut, because it's going to make no difference.

[4:15]

This taxation revenue we're discussing right now will impact their lives and will determine whether or not they have the opportunities that their parents had when they grew up in British Columbia. It is a disgrace that with an 18 percent youth unemployment rate, this government would have the gall to offer those small and medium-sized businesses in British Columbia, the ones the minister herself says create the jobs for young people, a $5 million tax cut to divide amongst themselves when one large financial institution in British

[ Page 6984 ]

That shows where the government's priorities are. They probably spent more than $5 million last month advertising their new Jobs-for-Youth program. They probably spent more than that on television ads, and yet the tax break for small businesses, the ones that create the jobs, is $5 million. If I was a young person -- if I was 16, 17, 18, up to 25 -- with that 18 percent unemployment rate, I'd be phoning the Premier's 1-800 youth hotline for sure.

I'd be phoning him all right, and I'd be telling him that what they're doing for small businesses in this province is a disgrace. They're providing no opportunity for the new sector, no opportunity for high technology, no opportunity for the tourism sector, no opportunity for small businesses, the ones that should be out there creating the jobs for young people in this province. That's what young people should be doing with that 1-800 number. They should be phoning the Premier and telling him what they think about his plan to create jobs for young people, because it's simply inadequate.

We will continue, after this tax cut for small businesses, to have one of the highest income tax rates for small businesses in western Canada. We're still right up there at the top. So while 19,000 jobs left British Columbia and went to Alberta in January alone, this government has done nothing in this piece of legislation to turn that around -- not one thing. If the government was really going to bring in, in this budget and in these pieces of legislation that implement that budget, significant tax cuts -- as the Premier liked to say in his press conferences and in his media interviews -- they should have done it.

If they were going to bring in paltry, insignificant, ineffective, marginal, teeny tax cuts that will have absolutely no impact at all and will not even come into force for another nine months, why didn't he say that? Why don't we see the TV ads with the Premier saying: "Look at the teeny, tiny, insignificant, totally inefficient, totally ineffective tax cuts we've brought in that won't create one new job for young people. Phone 1-800 and tell me what you think about it"? Why can't he at least be honest with the young people of this province and tell them what he isn't doing for them? Why can't he be honest with the young people of this province and show them what Alberta, Manitoba and Saskatchewan are doing for young people? They have an unemployment rate for young people that's half what British Columbia's is. Why doesn't he show what the people and the governments in those provinces are doing for young people, and then show them what this government isn't doing for young people. Then he says: "Phone 1-800 and tell me what you think of that." Does he think young people, young voters are so gullible that they don't know what this government is doing to them -- that they don't know the effect this government has on them?

The minister and the Premier talk about their tuition freeze. Well, the tuition is wonderful, but I know that when I went to college and to university, what was really important to me was whether or not I had a job to pay my tuition. My parents couldn't pay it for me, my friends couldn't pay it for me and my relatives couldn't pay it for me. I raised the money. I went out there and worked. I bused tables, I washed dishes and I served tables. I did all sorts of stuff to make enough money to go to college and to university. That's what's important: can young people afford to get a job to send themselves to university? Or are they going to end up like many people do, coming out of university or out of college with $45,000, $50,000 or $60,000 in student loans?

It's just not practical anymore for people to pay all their living expenses, to leave town. . . . You've got to get a car or a bus pass, you've got to pay for your books, pay for your tuition and pay for your clothes. You've got to pay all your living expenses, of which tuition is a very small part, and do it with student loans. You've got to go out there and get a job. You've got to go out there and pay your way. It's the only way you can get there. So what does the Premier have to say on that 1-800 number when those young people phone and ask him? What does he say about the 18 percent unemployment rate?

An Hon. Member: "All operators are busy."

G. Farrell-Collins: Yeah: "All operators are busy," or "Press 1 for more lies."

An Hon. Member: It's 1-800-tough-luck.

G. Farrell-Collins: Yeah: "1-800-tough-luck."

The young people of this province need an opportunity. They deserve an opportunity. They deserve a government that's going to listen to them and that's going to listen to the world, a government that's going to pay attention to what's going on out there and create an economic environment in this province for them to pay their way, to work hard, to get ahead and to build a future for themselves -- hopefully, some day, for their families, the same way their parents did.

Those people deserve that. It is the height of hypocrisy and deception for a government to bring in a $5 million tax cut for small businesses and then run ads and send out mail and run radio advertisements telling young people that the government is listening to them and is creating opportunity for them. That is way too little and it's way too late. This economy is already on the skids. We're losing jobs. We're bleeding jobs to Alberta and Washington State, and nothing in here is going to do anything to turn that around.

This government missed the mark, and I think they missed the mark deliberately. They are more concerned with getting more money in their pockets. They are more concerned with more revenue than they are with more opportunity. They will talk about it. They'll run ads. They'll put it in their speeches. They'll put it in their brochures -- they'll do all of that. They'll stand up in their local communities and talk about the great things they're doing for young people in British Columbia, but the facts speak for themselves.

We have the highest unemployment rate west of Quebec -- twice the unemployment rate of the young people of Alberta. There are no summer job opportunities. The government has to get its head around that. They have to bring in significant changes to the tax system; they've got to get off the backs of small businesses and let them do what the minister said they do best, which is create jobs. Nothing in this bill is going to do any of that. It falls way, way too short, and it's way too little.

I. Chong: I'm pleased to rise again to offer second reading comments on Bill 3. I know I was overzealous in my earlier comments. I jumped into some income tax changes. I do have some comments to make on the income tax changes, and in fact they'll be different than the ones I made previously. But first I do want to mention that there is one section of this

[ Page 6985 ]

All of us know that we don't want any taxpayer to gain an unfair advantage over other taxpayers who are paying their fair share of tax. If, in fact, section 6 does adjust any tax affects of a transaction whose primary purpose is to avoid tax, then it will be a good thing. The minister stated that it is to deal with abusive tax avoidance practices. I hope, when we get into committee stage and discuss this a bit further, that there are measures to ensure that we are dealing with abusive tax avoidance practices and not aggressive tax planning measures and practices. Obviously, we know that there are people who are in the profession of providing advice on aggressive tax planning. I am looking forward to asking the minister in committee stage what measures she has in place -- whether through an appeal or some form of cooperation with the federal government -- to ensure that where the federal government does not view it as anti-avoidance, the provincial government in its part does not become overzealous and proceed in that way -- so that we will have some commonality in anti-avoidance rules.

That is offering some measure of positiveness on this Bill 3. Now the members can say that we have offered some positive comments.

I would like to talk about the income tax amendment as well. As I mentioned earlier, the income tax changes provide too little too late. What I would like to do is go back to the income taxes in the 1990-91 years, before this NDP government came into power. Back in 1990, the British Columbia provincial income tax rate as a proportion of the federal income tax was 51.5 percent. There was no surtax at that time. In 1991, before the government took its place in administering changes to legislation, the previous government left the basic provincial tax rate at 51.5 percent, but it introduced a surtax on the higher-income earners -- the surtax being 10 percent of the provincial tax in excess of $9,000. That was fine because it did deal with some higher surtax rates. I think a majority of people felt that it was fair: it was not substantive, and those who made those kinds of incomes and had provincial taxes of $9,000 perhaps could pay a little more and basically provide more to our social safety net.

But in 1992, when the NDP government that had been elected in the fall of 1991 came into being and the then Minister of Finance -- now Premier -- was able to bring in his budget, he introduced some changes. So for 1992, our 51.5 percent tax as a percentage of federal tax was increased to 52 percent, and the surtax was expanded. There again we have a word that this government uses quite freely. It doesn't introduce anything new, but it expands on what is currently there. The expansion was to have a 10 percent surtax on those provincial taxes in excess of $5,300 as well as the 10 percent surtax on those dollars in excess of $9,000. I know it sounds quite confusing to some members, but believe me, when you start to add this up, it gets to be quite substantial.

In 1993, the 52 percent became 52.5 percent, and in 1994 and 1995 it was maintained at 52.5 percent. In 1993, we went back again to the surtax. Instead of 10 percent of the dollars in excess of $5,300, it increased to 20 percent for those dollars in excess of $5,300. In 1994 that surtax, again, went to 30 percent, in excess of $5,300. So what we see happening is some taxation occurring at the surtax levels, which in a sense affects what this government would call high-income earners. But in some cases, they are not high-income earners; they are the only income earner in a family who is supporting two or three dependent children, because they only get basic tax credits applied to their high level of income. I have seen this, because I have done returns. If the Minister of Finance doesn't want to believe it, I would suggest that she prepare some more tax returns. I certainly have seen my share over the years.

What we learned in the budget speech and in the budget reports this year is that a person making around $50,000 employment income and claiming basic tax credits would see $89 in tax savings next year. I've done some calculations here, and based on that same $50,000 of employment income, what this government did when it increased its rate in 1991 from 51.5 percent to 52 percent for that $50,000 of income was that it grabbed $44.50 more. When it increased it another 0.5 percent in 1993, we saw the full $89 come into play. That same $89 was another tax grab for '94, '95 and '96. So what we see is that the government has in fact been taking this $89 for the last four years, and only next year will we see them giving it back. Again, we don't know how long that could be for, but it's taking four years of tax grabs out of one pocket and trying to move them over into the other.

The problem with deferred tax savings is that we don't know what is going to happen between now and January 1, 1999. Will that person have a job? Will they be at that level of income where they will get back the tax grab that was there for them in 1993 and 1994?

[4:30]

The other thing I want to touch on, which my colleague the member for Vancouver-Little Mountain mentioned, is the 19,000 jobs that we've lost to Alberta. That has a huge impact on our tax revenues. If each and every one of those 19,000 jobs was contributing even $1,000 to our provincial tax base, that would be $19 million. That is one of the reasons that we on this side of the House are concerned about jobs; we want to see measures put in place to encourage the economy, to stimulate the economy, to have a good investment climate and to create those jobs. In the end, those jobs will provide tax revenues. That is something that this government doesn't seem to understand. When you reduce taxes, you can in fact stimulate the economy. When you provide a break and an investment climate that will attract more jobs, people will be paying taxes. We can keep those people in our communities, and we will have the tax revenues that are needed for the social safety net.

If those 19,000 workers made a substantially smaller salary -- even if they made the minimum wage -- we would still be looking at substantial dollars; we would still be looking at

[ Page 6986 ]

We have lost an opportunity. I am very disappointed by that, and I hope that we are able to encourage the investment climate that we currently have to stay in this province until things can change more substantially for them. When they are able to invest in our communities, they are able to provide those jobs. We will get our tax revenues back in place. We will not only have corporate income taxes that will cover off the tax cut measures that we would be able to introduce. . . . We would have payroll taxes that would be able to make up for any tax losses that the government supposes would occur. With that, hon. Speaker, I find this bill, as well, an offence, because it enacts a budget which we have said time and time again is just too little too late.

G. Wilson: In speaking to second reading of Bill 3, I find that there are two primary sections of this act that people who are observing need to be aware of. Part 5, which is the film and television tax credit section, is a very substantive section. It is a new and very important section with respect to the film and television industry. I think it is one that warrants a great deal of careful scrutiny in committee stage, because there are many questions that need to be addressed here. There is much language in here that is somewhat contradictory and somewhat confusing.

In principle, I certainly can -- and I know my party does -- support the film and television tax credit as a means of trying to attract and secure that industry in British Columbia. We have an enormous amount to offer in terms of making both films and television programs here, and I think there is a tremendous opportunity for British Columbians to benefit in the expansion of that industry. So with part 5, I applaud the government's efforts. There are some areas where some of the language is somewhat contradictory and somewhat confusing, and I look forward to having those particular sections clarified. But generally speaking, I would be in support of it.

The other thrust of the bill has already been spoken to by two members of the Liberal opposition, and I'm not going to repeat some of what has been said. But I do want to accent some of my concerns. If anybody watching wants to be confused about any debate in politics, one only has to get into debating the income tax system in Canada. You'll be thoroughly and totally confused -- unless, of course, you are an accountant who is not confused. They tend to know more about the regulations than anybody else. For myself -- and let me speak only for myself, in case there is a large number of British Columbians out there who thoroughly understand both the federal and the provincial taxes -- I find it complex. I find it enormously cumbersome to try and sort out, and I find that there is virtually trap after trap after trap to capture whatever tiny little bit of money that you might be able to find to try and shelter. It's very much like the government has tax-collecting bloodhounds that will sniff out whatever profit is there, and they'll somehow grab it one way or the other.

What I think we have to say in principle about the Income Tax Amendment Act is that the government is in large measure constrained as a result of the federal income tax provisions that exist in the province of British Columbia. What we're really talking about here is a B.C. portion of a tax that is, in the lion's share, collected federally. That's where I want to make my first comment. As those who have heard me in this House before will know -- and as I've travelled around this province -- I believe that if we are to seriously address amendments to the income tax system, we have to find a way in which we can do three things. We have to find a way in which we can make the income tax system far less complex and far more fair in its application.

Secondly, I think we have to address the inequities that currently exist within the federal and provincial tax system, particularly in light of the fact that, by the constitution, income tax falls to the province and not to the federal government -- something that we have acquiesced to over the years. I believe we should take it back.

Thirdly -- and I think this is very important -- is that we have to recognize that there are inequities in the provision of income tax, in the way that we apply surtax, given that we have a system that is very much driven by the percentage of federal tax in B.C. I think we have to change that and move toward a single tax. What we are looking at here, and I think the important numbers for British Columbians to understand in the debate of this bill and as to whether this bill is going to have any effect at all. . . .

Let me suggest to British Columbians who are listening to this debate what we are likely to see with respect to the provisions of this act for this year. It says under section 2: ". . . (f) for the 1998 taxation year, (i) 30% of the amount by which that tax exceeds $5 300, and (ii) 26% of the amount by which that tax exceeds $8 600. . . ." Now, that is precisely the same as the current act. Nothing changes. In fact, I could read it out in the current statute, and you would find that it is word for word. So anybody who thinks that in this tax year there is going to be any benefit -- that is, up until the first of January 1999 -- is wishing for something that just isn't going to materialize.

The second thing that's important to note is that there is then a promise for next year. I think, as we look at the promise for next year, we have to go back. You know, it's funny how you pull out old newspaper columns and clippings from past governments, at least back as far as 1992, where we had the promise: "The deficit is now under control, and we will be able to take a serious effort at reducing income tax." That didn't quite happen. Mr. Harcourt said: "The government can't afford to cut the corporate capital tax this year." However, with many representations, we would find that those taxes could be reduced in subsequent years." Well, that hasn't happened.

We look at this promise of taxation. . . . And we can go back. I'm not going to go through them all, because what's the point? You only need one or two. But let me tell you that there were many, many promises made about how both the corporate capital tax and income tax were going to be addressed for British Columbians -- only to find that it didn't. . . .

The pertinent numbers that we want to look at, before British Columbians get altogether too excited about what's been going on, are. . . . Let's take a look at what the surtax has been under this government. It was alluded to by the member for Oak Bay-Gordon Head. I'm just going to very quickly point to two numbers. For the taxation year 1992, the amount was 10 percent on the amount of tax which exceeds $5,300 and $9,000. They've increased that, to the year 1998, to 30 percent of the amount by which it exceeds $5,300, reduced the amount to $8,600 and kept it to 26 percent. So you've gone from 10

[ Page 6987 ]

Having said that, having made that point, let me say that I think it would be wrong for me to stand here and try to suggest that this government has the latitude that we would like it to have with respect to bringing in the kind of reductions that most Canadians, I think, would like to see. Part of the reason for that is because, over subsequent years, we have relinquished authority on income tax to the federal government.

I don't know -- and I've been asking this question of various members of the government opposite, especially those in cabinet, past Finance ministers, the current Finance minister and anybody else over there who might listen -- why British Columbia doesn't follow the lead of Quebec. Why do we not do what has been done in the province of Quebec and is now being discussed in other provinces? Say to the federal government that we are now going to exercise our constitutional authority over income tax and move to have a tax collection system that allows the province to collect income tax. And we will remit our fair share, as good Canadians, to Ottawa. If we took control of our income tax, which is our constitutional right and is within our authority to do, it would seem to me that we would have an opportunity at that point to bring in meaningful tax reform measures. For example, we could bring in a graduated single tax. We could bring in a much simpler tax collection system, where there would be one single tax, not proportions of one against the other. We would also be able to drive tax policy. The rates could be set in accordance with British Columbia's needs. We could make sure that we tax our people in this province equitably so we get the revenue that's needed to provide government programs, and we can, as good Canadians, then share with other Canadians that are less fortunate.

It would also provide us with an opportunity to bring in real income tax amendment measures -- for example, the allowance to deduct the interest paid on the first mortgage of a primary residence. That wouldn't bring in tiny, minuscule little savings, which this does, but would in fact put back into the pockets of the average homebuyer in British Columbia somewhere between $5,000 and $7,000 in non-inflated capital which could then be spent in their communities to help their communities develop and thrive. Now, income tax deductions on the interest on first mortgages is not new. It's done in many, many jurisdictions around the world, because it is understood that one of the primary needs that a family has is affordable housing. It is also understood that the more people can afford housing, the more there's an opportunity to purchase housing and the more people will buy them and build them. Therefore there will be a stimulation of the domestic economy, especially of our forest industry, which right now is in the bucket. Can you imagine, hon. Speaker, if we had that kind of non-inflated stimulus to get home construction going in British Columbia? How wonderful that would be to our forest sector, which would be able to find not only that there are domestic markets that they can use to offset the downturn when we suffer from the problems in Asia or in the United States but that we would be able to secure long-term domestic market potential here.

Those are the kinds of tax measures that we want to see in British Columbia, not this tinkering with a very outdated, extremely inefficient engine. I mean, what this act is. . . . If I can use the analogy of an engine, it's like changing the spark plugs in an engine that needs new rings, has a leaky gasket and burns fuel at a ridiculously inefficient rate. It simply doesn't make any difference; it's still going to be a very inefficient engine.

[4:45]

Imagine, hon. Speaker, if we took control over our taxation. Imagine how much greater a proportion of the $40 billion we generate out of this province a year, half of which we clearly send to Ottawa. . . . We would be able to compensate people like those who are infected with hepatitis C -- when this government says that it doesn't have any money. Imagine what we would be able to do for poverty-stricken British Columbians -- those people who are on fixed incomes, low incomes, and the working poor. Imagine what we would be able to do if we had serious tax reform that put greater revenue into this province and therefore allowed us to be much more in control of the fiscal directions that governments take. All of those things could be done, should be done and would be done if we had a government with any vision and the guts to say: "We are now going to start to take our constitutional authority seriously, we are going to take our role and our responsibilities to the British Columbia people seriously, and we're going to start to put people first. For the first time we're now going to turn around and put British Columbians first."

These are the kinds of amendments we wanted to see, and regrettably, we haven't seen any of them in this little tinkering with an act -- a tinkering that, frankly, isn't going to amount to a hill of beans when we finally look at the moneys that will be returned to British Columbians. What a sad statement about the vision of a government -- when they come up with something that they laud as being wonderful for British Columbians but that's going to amount to literally pennies in their pockets at the end of the day. That's for those who are still earning enough to pay the tax at all.

We have two sections of Bill 3 -- one that deals with film and television, which we can support wholeheartedly and congratulate this government on for its efforts. I think that we do need that industry, and the measures taken in this section of the bill are worthwhile. But then we have the first section, which deals with income tax amendment. Sadly, it has no vision for a future province that is going to be strong and be able to stand independent in terms of its ability to raise dollars from its citizens and put in place a fair and more equitable system of tax collection. For that, I think this government will be held accountable, if not by the members in this Legislative Assembly, then by the people of British Columbia, who frankly are taxed too much and have had enough and have decided now that they're going to take action to correct it.

F. Gingell: In the six and a half or seven years that I've been in this House, both sides of this chamber have continually talked about jobs. We all recognize that family-supporting jobs are critically important to the quality of life and the standard of living of all British Columbians. We live in

[ Page 6988 ]

We have a unique opportunity in British Columbia, being located on the Pacific Rim and with a wonderful environment. We live with wonderful geographic and natural beauty, but that alone is not enough. That hasn't kept Finning in British Columbia. Other than for local supply, Finning has moved to Alberta. My own daughter and her family now live in Edmonton, and when the opportunity came for them to move back to British Columbia or to some other province, her husband made a job change that would keep him in Alberta. They find the education of their children to be most satisfactory. They find the provision of health care in St. Albert to be satisfactory. And most of all, they find that their incomes go a lot further.

British Columbia's government has to recognize that we have to make a special effort to get economic growth here. Their job creation record is atrocious when considered and compared with other parts of Canada and the Pacific coast. We have a unique opportunity, and this government should be taking advantage of every natural opportunity and advantage that we have to encourage job creation. The top rate of income tax -- the marginal rate, as it's referred to -- is a critically important part of that initiative.

[The Speaker in the chair.]

It is my belief -- and I don't come from supply-side economics -- that reductions in the top rate of tax, which will encourage entrepreneurs to locate in British Columbia, will quickly be made up by growth in the middle income ranges, which is so important to the quality of life of British Columbians.

When we look back from 1998 to 1991, I think that the record of this government has been a dismal failure. The unfortunate thing is that it isn't the members of the Legislature that suffer the consequences of that. It's the folks and the families that live in our resource towns and our resource communities that bear the brunt of the mismanagement and incompetence of this government. So I will take my seat. I have just repeated things I have said on many occasions before, but there's none so deaf as those that will not listen. This is a government that doesn't listen. This is a government that hasn't taken the right actions. This is a government that has to bear the responsibility for the dramatic increase in unemployment and the dramatic reduction in the quality of life in British Columbia's communities.

The Speaker: Seeing no further speakers, I recognize the Minister of Education on behalf of the Minister of Finance.

Hon. P. Ramsey: On behalf of the Minister of Finance, I move second reading of Bill 3.

Motion approved.

Bill 3, Income Tax Amendment Act, 1998, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. P. Ramsey: I call second reading of Bill 5.

BC-ALCAN NORTHERN
DEVELOPMENT FUND ACT
(second reading)

Hon. Speaker, that's the technicality of why we have this act before us. But let me say that the act's importance is far more than the establishment of a fund. What we have here is implementation of a landmark agreement that really shows the benefits that can be gained by focusing on solutions and working together with business to create economic opportunity. That's what this government is committed to, and that's what this act delivers.

In 1995, government was faced with the need to reject the Kemano completion project -- to say no to a project that would have threatened the Nechako River and the stocks of fish in it. That was not an easy decision to make for this government or for Alcan. As all members know, Alcan took the government to court, claiming damages of $535 million which they had invested in the project. We had a choice. We could have proceeded to fight it out in court, to prolong what had been a very public, protracted debate over the Kemano completion project. We chose a different route. We reached a negotiated agreement with Alcan in August last year that resolved all the outstanding issues relating to the cancellation of the Kemano completion project. It said clearly that the Kemano completion project was cancelled. It said that the legal claims by Alcan against the province were ended. It said, most significantly, that government and Alcan would work together for economic opportunity, for Kitimat and for other communities in the northwest. The government agreed to replace the power that Alcan would have obtained from the Kemano project, but to replace it when -- and only when -- Alcan completed its new smelter at Kitimat. It enabled us to use B.C.'s hydroelectric advantage to create jobs here in British Columbia.

There have been various criticisms of this agreement. There have been those that have said that it is simply not real, that Alcan and the province have no intent of moving ahead on their joint initiatives. And we need to say here, not even a year after the agreement has been signed, that the benefits are already starting to be evident. Alcan committed, at the time it signed that agreement, to return its existing aluminum smelter to full operating capacity, and it is has done so. That's a huge opportunity to stabilize employment in Kitimat.

Alcan said it was dead serious about exploring the opportunity to build a $1.2 billion smelter expansion in Kitimat. They have now named an experienced engineering team that is working on the feasibility study for the new smelter. They're working closely with our government's environmental assessment office to ensure that all the environmental expectations are met. They've committed to an allocation -- internal to Alcan -- of over $10 million to complete the work so they can move ahead on a very exciting opportunity to expand smelting capacity in the northwest.

[ Page 6989 ]

[5:00]

We're debating here today another significant component of that sweeping agreement with Alcan -- the creation of a $15 million northern development fund, jointly funded by the province and by Alcan -- to create new jobs and stimulate economic activity in the northwest. There is no question that the northwestern part of British Columbia has benefited greatly from industrial development by Alcan since the 1950s, particularly in the area around Kitimat. However, there have also been communities in the northwest where economic growth has been adversely affected by the original Kemano project and by the creation of the Nechako Reservoir.

The purpose of this fund is to assist those communities in the neighbouring region to address the economic disadvantages that they have too long laboured under. I see the member for Prince George-Omineca nodding his head in agreement to this. He knows, better than most of us in the House, how much this fund means to people in his region and in the Nechako Valley. This fund will be used to support investments in new or existing business, to create jobs or to stabilize existing jobs, and to support other goals consistent with the job creation mandate.

The decisions on how the fund is going to be invested will be informed by advice from the people who actually live there, and that's very important. We've already established an advisory board of some 13 people that are at work developing recommendations for the minister responsible on where the fund should be focused, how the fund should be used, and what the general criteria should be for initiatives that the fund will support. That board is going to be consulting with other residents of northwestern British Columbia. It's also going to be using some of the outcomes of the Premier's Summit on Northern Jobs and Development, which took place in Prince George last year.

I want to encourage all residents of the northwest to get involved in this board's work and to give some good advice on the economic decisions that are going to affect their lives. I want to specifically talk to the people of the Cheslatta nation through this chamber. Regrettably, in the last few days we've seen the people of the Cheslatta band seeking a court resolution -- a legal resolution -- to some of the wrongs that they feel have been done to them. I want to say that they have every right to do that, but I think it's more important now that we move on and seek negotiated ways of assisting in economic development. There is a place at this advisory board for the people of the Cheslatta to have their voices heard, and I would urge the leaders of the Cheslatta to take that opportunity.

The northern development fund and the potential for a new $1.2 billion smelter in Kitimat -- both of these and much else are part of the agreement between government and Alcan. It sets the stage for new jobs, it sets the stage for environmental enhancement, and it sends a clear message that we are interested in working together in a way that will bring benefits to the people of British Columbia. If we can do it here with a longstanding issue that has divided people in the north and in this province for years, and if we can bring that sort of longstanding dispute to conclusion in a way that is a win for both parties and for the people of all parts of the region, then surely we deserve to celebrate that. We'll continue to work hard and bargain hard to create other economic opportunities in our province.

R. Neufeld: I rise to respond to Bill 5 and the Minister of Education's remarks that we just heard in regard to the B.C.-Alcan Northern Development Fund Act. In general principle, the Liberal opposition supports this bill and supports the intent of the bill. But we should go back, probably a while ago, to find out what caused the development of this act and the $15 million that will be put toward job creation -- specifically in the northwest. It was the result of the cancellation of the Kemano completion project by the NDP government. There was, shall I say, lots of talk about litigation by Alcan, which had already invested some $500 million-plus in the project before it was cancelled. In fact, I believe Alcan and the government of British Columbia were close to the doors of the courthouse when finally cooler heads prevailed on both sides, and an agreement was drawn up.

We should also not forget that it was the leader of the B.C. Liberal Party who announced, prior to the government making their decision -- and prompted them a bit -- to cancel the Kemano completion project. Again, we have a government that has difficulty leading but seems to come from behind once in a while and pick up the pieces and stand in the House and talk about what a good deal they made.

There are parts of the agreement that were made with Alcan. . . . A press release was put out last August in regards to the agreement and what would take place. I'm pleased that Alcan has been able to restart the idle production at its existing Kitimat smelter and bring it to full capacity. That's good for jobs in the northwest. Being a northerner, I always talk about jobs and economic activity that we can create in the north -- and whether it's the northeast or the northwest, that's all very well. The provision for Alcan to look at the feasibility of an additional $1.2 billion at their aluminum smelter is also good news.

One issue that I guess the Minister of Education didn't touch on -- he just touched on it very briefly, in fact -- was the commitment by Alcan and the federal and provincial government to bring into play a $50 million fund for a water release facility or alternative enhancements of the Nechako watershed environment. I think that's a major part of the agreement that was signed back in August of last year and a part of the agreement that would have been great to see in this legislation. But obviously, there are some difficulties that the government is having negotiating at the present time with either of the other partners -- or maybe it's the province itself; we're not sure. But I look forward to seeing what's going to happen with that.

Probably the greatest fear, however. . . . There's the advisory board that was already appointed, I believe, back in January of this year. It has 13 individuals who are mandated to go out and meet with people and with groups and organizations in the affected area where this money is to be spent -- the $15 million in total over three years -- and come back with some recommendations for the minister responsible, who will be the Minister of Energy and Mines and Northern Develop-

[ Page 6990 ]

The difficulty that we have is the fact that throughout the whole bill we see the minister and cabinet having all the power of regulation and all the power of deciding where and when money should be spent and in what fashion. Again, it brings me back to issues in the north where people feel that for far too long they've been dictated to by people in the south who, although well-meaning, may not understand the implications of the difficulties they are having in their particular areas. Having lived in the north most of my life and worked there pretty well all my life, I can quite well relate to that. That's some of the fear the people in the Nechako have -- the people who over time are going to see the benefits of this money. All too often what we've seen with the government that we have today is that, in many cases, it's not always the will of that group of individuals that is met; it's more the desire of the government of the day.

That may be a bit of a hard thing to say, but it is in fact the truth. We've seen it in many instances in the last number of years where this government has dictated issues that actually had a negative effect on people who live in the north, work in the north, make their livelihood in the north and raise their families in the north. I hope that the government and the minister will be serious about receiving the recommendations from this 13-member board and actually enact or carry out the wishes of that board in the best interests of northerners. I state that in the best interests of northerners.

Before I close, I just want to remind the minister of one sentence that I highlighted out of the closing remarks that the Premier made at the northern summit in Prince George. This has to do -- maybe I should say a little bit more about it -- with a commission to develop things in the north for northerners and was something that came out of that northern summit. It says: "It cannot be bureaucratic. It has to be designed by northerners, driven by northerners, located, directed and managed in the north." That's a very good sentence and one that all of us should remember. I hope that the minister remembers that quote from his leader, from the Premier of the province, and that over the three years this money is actually put to good use in the north -- to create employment for northerners, or economic activity that will actually benefit all British Columbians in the end but more the northern part of B.C.

Hon. D. Miller: I don't want to take too much of the members' time, but I did want to speak on this bill. The advisory board will be reporting to me, as the Minister Responsible for Northern Development. I've had one meeting with the person who was to be the chair of that. I understand that there may be some changes coming up. I was very pleased by the individual's grasp of the issues that need to be worked out. I want to talk a little bit about the fund and perhaps deal, as my colleague from Prince George North did to some degree. . .by reinforcing what he said with respect to the Cheslatta -- and also reinforcing that the purpose of the fund is clearly to deal with areas that were adversely impacted by the original Alcan development.

[5:15]

Really, going back, it's clear that the issue of the cancellation of the Kemano completion project was a very divisive issue in this province -- a very tough one, actually. These are challenging issues for all political parties, and I certainly want to acknowledge that the Liberal Party, on October 11, 1994, did issue a release in which they took the first position and said that the project should be abandoned, that it should not be allowed to be carried on and completed. I've got a copy of their release from that date, and I think they should be given credit for taking that position and doing it early. I think there was probably some internal risk to the Liberal Party in doing that. The leader, at the time, even talked about some of the business interests that were unhappy, but they took that position.

Now, with respect to my hon. friend from Peace River North, I want to go on. . . . It's not a "you said, we said" kind of thing, but surely the record ought to be clear. The Liberals, in taking that position on October 11, 1994, in the release that they issued on that day, did not say one word about the people of northern B.C. -- not one. All they did say was: "We have to provide compensation for Alcan." They didn't talk about the fact that areas of the north had been impacted adversely by the original decision. They didn't talk about negotiating with Alcan to try to redress the cold-water flow issue that my colleague talked about. No, on that October 11 they said two things, really: the project should be scrapped, and Alcan should be compensated. And they said the federal government had a responsibility there as well.

Their exact words from the release were: "In dealing with the Kemano completion project," the Leader of the Opposition said -- I can't repeat his name in this House, although I do repeat it in other places, particularly in northern B.C. -- "the NDP government should open negotiations with Alcan to achieve a fair settlement with the company." In another background piece put out under the heading of a paper entitled "Background to the B.C. Liberal Caucus Kemano Decision," October 11, 1994, they go on about a bunch of things. But they also say: "B.C. Liberals believe that the provincial government should enter into negotiations with both Alcan and the federal government of Canada to determine what compensation is due to the company. There is no question that the federal government should contribute to any compensation settlement." Fair enough. But not one word about northerners -- not one word. And to have my friend from Peace River North be somewhat chastising in his remarks about the government and its commitment to the north, it just struck. . . .

[ Page 6991 ]

Hon. D. Miller: And the Opposition House Leader is saying: "Get on with it." Madam Speaker, he echoes my sentiments when I watch him in question period.

I wish I could answer a few more of those questions, because I must say with respect to a commitment to the north that I was absolutely stunned this morning as I got out of bed early, groped around and put the coffee on and turned on the CBC news, which has been my wont lo these many years. I turned on the CBC news and I heard the news report -- and the most bizarre suggestion I think I've heard in all my years in politics. It was trotted forth as a suggestion by the Leader of the Opposition, wherein he suggested that we take money from northern B.C. -- take money from the north. . . .

Interjection.

Hon. D. Miller: Listen, member for Prince George-Omineca, listen to this, because this is what your leader said this morning: "Let's take that money out of the north and put it to pay the people with the leaky-condo problem." I was shocked. In fact, I am so shocked I will not be able to get over talking about this for months and months to come, particularly when I'm in northern B.C. I know I reflect the concerns of my constituents, who are not out of the woods at all. They know that they've a company which has a very tough uphill climb in front of it, and they're working hard. The people who are working in that pulp mill are pumping out -- I spoke to the manager earlier -- 1,400 tonnes a day, maximizing production, working hard for their own future, only to be betrayed by this Liberal Party opposite that said: "Take the money out of the north and deal with the leaky condos in the south."

The member for Prince George-Omineca and the member for Peace River North are part of that Liberal caucus, and they're agreeing with their leader about taking money out of northern B.C. so we can funnel it into Vancouver. And I say shame. Shame! As I said to both of those MLAs who represent northern constituents -- I think I said this in a speech last week -- there used to be pride in being a maverick in your own caucus, speaking out for your constituents, speaking out for the north. Instead, we get this silence. You can tell they don't care about the north. Why didn't that member for Prince George-Omineca insist when they took a position to scrap the Kemano completion project that there be a fund established for northerners?

Interjection.

Hon. D. Miller: He didn't. All they talked about was giving money to Alcan. It was this government that said: "We'll sit down and negotiate with Alcan on tough terms, and we'll negotiate for a deal that makes sense for northerners." We have the potential as a result of that kind of position to get another smelter in Kitimat. Because we have a fund that will total $15 million, we've got an opportunity now to look at how that fund might be used to redress some of the harm that was done, to look at opportunities, particularly in those areas that were impacted by the decision.

I want the members, particularly the northern MLAs in the Liberal caucus, to know I've made this offer in the past. It seems to have been rejected. I've been rebuffed. I said I wanted to work with northern MLAs on a bipartisan basis. I wanted to work with all northerners, including MLAs who may be of a different political stripe, for northerners on northern issues. For my thanks, Madam Speaker, you know what I've received? Both of them have written columns attacking me in the most vicious way. Do you know what they attacked me for, and do you know what they attacked my government for? Fighting to save jobs in Skeena Cellulose. It's beyond comprehension that a northern MLA would take his orders from the south and attack a fellow northern MLA for fighting for jobs in northern B.C. I don't know; it's mind-boggling.

Now that we've negotiated in a rather tough way with Alcan, not only do we now have the potential to get another smelter, and to deal with some of the fisheries issues and the impact issues that had not been dealt with, but we also have a small fund -- it's not a lot of money, $15 million -- and we have an advisory board of northerners reporting to the Minister Responsible for Northern Development to see if we can't use this fund in an intelligent way to provide business opportunities, those kinds of things. I look forward to working with the advisory group, with the MLAs. If those other northern MLAs want to turn their back a little bit on their leader, maybe say, "We don't agree that you should take money from the north and put it in the south; rather, you should be doing what you can and have a northern policy," then I'd be happy to work with them too.

An Hon. Member: Let's start with health care.

Hon. D. Miller: Well, we can talk a lot about health care, but I wouldn't want to offend the rules and start speaking about health care in the debate on a bill that provides a vehicle, an opportunity, for northerners. But I am absolutely sure of this, Madam Speaker. There will be an opportunity to have some discussion on health care. I happen to know a little bit about health care in northern B.C., and I look forward to the debate that might be joined at some point, a very useful debate around northern health care issues, because I think the member from the south may be under just a slight misapprehension of what the real issues are and how northerners feel about them. So I'll leave it at that for now.

There may indeed be other speakers who want to participate in this rather important bill for northern B.C.

H. Giesbrecht: I couldn't help but be spurred into a response, because when the member for Peace River North made some comments about the history, I was pleased to see my colleague correct the record a little bit. What did occur to me at the time, of course -- since it was my riding that was more negatively affected by the cancellation of Kemano completion -- was that there wasn't any understanding that maybe the compensation that was being demanded for Alcan would simply be used to fund some business venture in some other country. Certainly there was no link from any compensation that was being advocated to jobs in either Kitimat or the rest of British Columbia.

While it may have been quite all right for the Leader of the Opposition to suggest that Kemano completion should be cancelled and that compensation should be paid, there was certainly no benefit. So it was up to the government of the day to start negotiating with Alcan to actually come up with something that would compensate the locals in Kitimat for the loss of those construction jobs and the loss of any smelting jobs that might have occurred. It's important to understand that while the Leader of the Official Opposition, two months prior to the commission making its report, did announce that the Kemano completion should be cancelled, he didn't really offer much in the way of an alternative. In fact, it was an

[ Page 6992 ]

[5:30]

Then, of course, the second part is that there were some negative implications of the initial Alcan Kemano development. So there's an opportunity here, through this fund, to address some of those. The area that was affected by the initial development is quite large. If you're talking about the northwest, it goes from, let's say, Vanderhoof all the way over to the Terrace area. But more particularly, in Skeena it affected the Haisla, the people that live in Kitimaat Village. There were some environmental changes they experienced. They were actually also moved off the land in order to create room for the development. But they also have a hydro line running right through their small village, which of course limits the amount of land that's available for expansion. And there may even be some health risks.

So this is an important initiative. I think the challenge for the advisory board might very well be simply to apportion those funds in some fair way, so that we can in fact, by creating some environmentally and economically sustainable development, negate some of the effects of the initial Alcan development.

I think it's a good bill, and I think it's agreed that it's a good bill. But just to clear the record on what the Leader of the Official Opposition did initially, I think it is important to keep that straight. It's also important to recognize that the negative effects are not only in the Nechako area, if you like. There are some negative effects that took place specifically in terms of the Haisla and the people that live in Kitimaat Village.

G. Wilson: I rise to speak in second reading of Bill 5 more as a result of a challenge that was put out by the minister responsible when talking about northern jobs and saying how this government is committed to northern jobs. I think it's important, because I do believe there are people out there from time to time who actually watch the proceedings or read the Hansard debate, and we'd better be a little bit clear. This bill says: "The purpose of the fund is to promote sustainable economic development in Northwestern British Columbia." It talks about northwestern British Columbia. One of the things that can happen in this process is: "Without limiting subsection (1)" -- which is the promotion of sustainable economic development. . . . It says that this fund can be used for "supporting other goals that are consistent with subsection (1) and that the minister considers desirable." That's what this fund is for. This is a fund for the minister to look after jobs in northwestern British Columbia. It doesn't say anything about northern jobs.

Now, that's not to say that there aren't important jobs to be protected in northwestern British Columbia. The minister crows on about how wonderful the Skeena Cellulose deal is -- and that remains to be seen. I'd like this minister -- and I challenge the minister -- to come to Powell River, a pulp town, and explain to 500 workers laid off in the last eight months why they don't get the same level of subsidy and economic protection from this government as the members in Skeena Cellulose get. In Powell River, why don't they get the same deal that Skeena Cellulose got? Then I'm told that the decision is taken, the die is cast. Maybe the minister can tell us that in this week coming up or in the week following. . . . I'm told that the A and B lines were both going down in Skeena Cellulose and that only the A line is coming back up. They're talking about putting 850 tonnes of production out, and that means a layoff -- some 175 to 200 jobs permanently gone. If that's not true, maybe the minister can tell us how the per capita cost per tonne of pulp production can be two and a half times higher than anywhere else in the province. It can't. For it to be sustained economically when the A and B lines go down and only the A line comes up. . . . It seems to me that jobs are going to be lost. They are jobs that this minister says that he's going to protect, so maybe he can tell us how he's going to protect those jobs.

When we start to look at the detail of these bills, I think it's important that we keep the facts straight. I am not opposed to trying to help northern economies wherever we can. In fact, I think it's a good idea for us to try and find ways to diversify the northern economy so that we can in fact provide long-term sustainable jobs. I'm not going to enter into the debate as to whether or not we should try to divert Skeena Cellulose funds into a leaky condo deal. Personally, I think that the people who are responsible for building those leaky condos should pay to have those condos put together. I think we should go after those contractors who put in substandard work and make them responsible for their work. That's where that liability should be.

When the minister gets up and talks about protecting jobs, he has to realize that it isn't just jobs in northwestern British Columbia that are critical. There are jobs all over the province, and when we see the number of people laid off in Powell River. . . . They want to know why this minister doesn't care as much about the welfare of their families and the long-term sustainable economy of Powell River as he does about his own backyard. I think that when we look at this bill, we can understand that there's a lot more going on here than perhaps there should be. In committee I think we'll find out a little bit more about section 3(2)(c). Just what are these other jobs that the minister might deem worthwhile? Just how is this minister going to commit those moneys as his discretion may allow him to do?

With that, I take my chair and very much look forward to committee stage on this debate.

G. Farrell-Collins: Every once in awhile, debates break out in this House, and I just want to participate very briefly in this one as a member who isn't from the north but who has an interest in the north, as well -- as everybody in this House does. I think what we have to be careful about when we're looking at this act is a couple of things. I won't get into the debate around Skeena, but I will refer to it because the minister opposite did. I want to give people a sense of the size of the two. Here was a multi-hundreds-of-millions-of-dollars project at Kemano that was cancelled. This fund adds up to a total of $15 million, for money to go back into the northwest part of the province for economic development. The Skeena deal -- so far -- is $329 million. A pulp mill goes down and that minister gets $329 million. Alcan gets cancelled and that member get $15 million. The worst part of it is this: in this bill, the

[ Page 6993 ]

Given the comments of the member for Powell River-Sunshine Coast about what's actually going on in Skeena right now, I would think that the member for Skeena would want to protect this $15 million really carefully, because I expect what's going to happen is that the $15 million in this fund is going to be renamed the Skeena Cellulose top-up fund pretty soon. The minister is going to grab hold of this $15 million -- like he did the $329 million and counting -- and put the money that's in this fund into northwest economic development. Under subsection (3), the purpose, it would certainly qualify for further prop-up of the Skeena Cellulose mill in this minister's riding.

All I would do is caution the members opposite, who believe that there are some real plans for this fund to do some positive things in the northwest of this province, that whatever they do, keep it away from the member from Prince Rupert and his deep pockets. Keep it away from the member for North Coast, because he's like a cash magnet. If he walks through the Finance minister's office, he walks out trailing these dollar bills and iron filings of coins off his shoes. He's a cash magnet.

He's fighting to save jobs, hon. Speaker. Well, if he was fighting to save jobs, why isn't he fighting to save the jobs in Powell River-Sunshine Coast? Why wasn't he fighting to get a forest practices code that wouldn't drive the forest sector of this province into the ground? Why wasn't he fighting for tax breaks for small and medium-sized businesses that wouldn't drive them into the ground? If this minister is out there fighting for jobs in the northwest sector -- what this bill is all about -- then why hasn't he been doing it for anyone else? Why hasn't he been doing it for the member for Cariboo North? Why hasn't he been doing it for the member for Bulkley Valley-Stikine? How come he hasn't been doing it in the Forests debates, in the Finance debates and in the other estimates?

All I want to do around Bill 5 is caution the member for Skeena that whatever he does, he should take this bill when it's passed and before the ink is dry, run to his safety deposit box, put it in there, walk to the ocean and throw the key into the ocean. Otherwise, the magnet from North Coast will suck onto that key. He'll walk into your safety deposit box, and he'll have it open and will put this money into Skeena Cellulose before you have the chance to say anything about it. I just caution the members opposite to be aware of the member for North Coast.

Hon. P. Ramsey: We've had a vigorous little debate here, with a variety of issues and points of view being expressed. I've got to say, though, in response to the Opposition House Leader in his last point, that if we did take his advice -- if we did lock this $15 million in a vault and then threw the key into the ocean -- then we would indeed have a position on this fund. It would be the Liberal position on this fund, that cares nothing about the north and doesn't want to give any money to the north.

In this debate we seem to have some clear lines of division across this House. The Liberal Party says that the solution to the cancellation of the Kemano completion project was to compensate Alcan and do nothing for the people of the north -- absolutely nothing. I've heard nothing, frankly, from the opposite side that shows any acknowledgment that that position was wrong or any desire to move forward the way we have in order to get a new deal with Alcan, to invest in the north and create jobs in the northwest part of the province. We've seen here that the Liberals still don't quite understand the true magnitude of the deal we have with Alcan. This deal with Alcan is not about a $15 million economic fund, though that is surely important. It's about making possible a $1.2 billion expansion of the Alcan smelter capacity in Kitimat -- $1.2 billion, with the creation of over 2,000 direct and indirect jobs. That's of real benefit to the people of the northwest.

It has been a pleasure to participate in this debate, hon. Speaker. I now want to close debate and move second reading of Bill 5, the BC-Alcan Northern Development Fund Act.

Motion approved.

[5:45]

Hon. P. Ramsey: Hon. Speaker, on behalf of the Minister of Finance, I call second reading of Bill 4.

CAPITAL FINANCING AUTHORITY REPEAL
AND DEBT RESTRUCTURING ACT
(second reading)

Hon. Speaker, the auditor general has indicated that he supports winding up the two financing authorities, replacing the fiscal agency loans with prepaid capital advances as assets of the consolidated revenue fund and replacing the amortization period for these advances as a means of addressing the qualification for the loans.

This new legislation will also improve efficiency in the financing of capital projects in the public education sector by simplifying debt transactions and reducing the associated paper flow. This legislation will have no impact on the capital project approval process.

I now move second reading of Bill 4.

F. Gingell: Madam Speaker, we give this bill our unqualified support.

I. Chong: I do want to make some brief comments at second reading of Bill 4, Capital Financing Authority Repeal

[ Page 6994 ]

At present we have the B.C. Educational Institutions Capital Financing Authority, which is recording debt and liability information pertaining to its universities, its colleges and various vocational and technical institutes. This debt and liability information does represent government debt and rightfully belongs on the books of the government.

Next, there are the financial statements of these educational institutions, where again there is an asset that reported as a loan receivable which is really an allocation that is due from government; that is, it is the government's funding to that institution for its capital projects. In order to balance off this asset, the educational institutions record a liability owing back to the authority. So now the authority has its loan receivable asset and, of course, its offsetting liability, which is the debt that is owed to government, as I mentioned earlier.

That leaves one more set of financial statements, the government's financial statements. On those financial statements we have again another asset and a liability that's being recorded. First of all, we have the asset which was formerly the fiscal agency loans, now being called the prepaid capital advance, which is in effect the authority's liability owing back to government. We then have a liability that is reported -- which is, of course, the debt -- which, as I mentioned earlier, is shown on the authority's balance sheet but should in fact be on the government's financial statements. That is why it is so confusing. I even had to write it down to make sure I could follow those transactions, looking at three sets of financial statements.

So it's obvious that these transactions that were being reported on three different sets of financial statements were confusing and yielded a very convoluted approach when it came to reporting government debt. Since Bill 4 seeks to make these transactions more transparent and more understandable, we would have to agree that this government is taking the correct measures toward enhancing accountability.

Similarly, there is an identical problem with the reporting of school district debts. I won't go into that in detail, because to do so would just repeat what I said earlier. It's important to recognize that the same asset and liability figures were being shown several times -- three times, in fact. If Bill 4 does seek to eliminate the duplication, that is why, in principle, it certainly is supportable.

The reporting entity under which this bill was drafted has been discussed at great length in the Select Standing Committee on Public Accounts, on which a number of members served. The members who served on that committee were advised through PSAAB -- the Public Sector Accounting and Auditing Board -- that there was a definition that referred to two tests of determination on whether an organization should be included in the government reporting entity, which is what will be happening after Bill 4 passes. Those two tests were the test of accountability and the test of ownership or control. To some degree, then, this bill is beginning to acknowledge that we should take a second look at the relationship of the SUCH sector -- that is, the schools, universities, colleges and hospitals. . . . There should be more inclusion within the government reporting entity of the relationships of the SUCH sector with government. So that does give me a glimmer of hope. It makes me feel that the discussions that we had in the Public Accounts Committee have proven fruitful in a sense. I am hopeful that with the removal of some of this duplication that was being recorded, there will also be some administrative cost savings.

In closing, I wish to state that I am also pleased to see that the Ministry of Finance is working with the office of the auditor general to make some very good changes to our government reporting system, to remove the confusion and to move ahead to, in fact, show that we can lead other provinces as a reporting entity.

The Speaker: I recognize now the Minister of Education on behalf of the Minister of Finance.

Hon. P. Ramsey: It's always good to end the day with such widespread acceptance of another good piece of legislation. I now move second reading of Bill 4.

Motion approved.

Bill 4, Capital Financing Authority Repeal and Debt Restructuring Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Committee of Supply A, having reported progress, was granted leave to sit again.

Hon. P. Ramsey moved adjournment of the House.

Motion approved.

The House adjourned at 5:52 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 2:41 p.m.

ESTIMATES: MINISTRY OF
AGRICULTURE AND FOOD

B. Barisoff: Hon. Chair, congratulations on your new appointment to committee room A. I'd just like to start off with a brief statement -- being new to Agriculture. I'm pleased to be able to participate in the Agriculture estimates today. I'm looking forward to discussing the issues with the minister and, hopefully, enjoying a constructive debate.

[ Page 6995 ]

I would also like to ask the minister's patience, as I'm new to this job. Moving from Aboriginal Affairs to Agriculture is quite a step in the last couple of months. Although I've grown up in an agriculture-based community, I'm confident that the learning curve will be steep. The agriculture and food industry is very diverse, and I'm amazed at the variety of commodities, as well as at the continuing and changing technology.

It's an exciting time to be involved, but it's also a time of unique challenges, especially in light of the financial restrictions facing government. How do we spend those dollars wisely and in a way that will get the most return for the taxpayers' dollars?

The riding of Okanagan-Boundary, which I'm the member for, covers an area that's very wide and with over 15 different rural communities. In the Boundary country we have a number of ranches and dairies. The latest thing is the growing of hemp, and that probably extends into the minister's area also. In the Similkameen area there are orchards, beekeepers, ground crops, fruit stands, hay and grapes -- to name a few. I was impressed to learn of the number of farmers in the Similkameen who are interested in the certified organic program and who have worked very hard to achieve that end. Over in the Crofton area we have a lot of people growing in the organic area. In the Okanagan Valley especially the wine and grape-growing industry is expanding with new markets and with very exciting results on the world stage in regards to awards for their wine production.

As diverse as my riding is, it represents only a fraction of the industry that is out there in this province -- everything from ground crops to dairy and meat production, from mushroom farms to ostrich farms, from ginseng to garlic and other alternative crops. We have small farmers growing herbs and taking it right through to the manufacturing of teas. A number of cottage and home-based industries are getting involved in the specialty items for a growing consumer market.

Buy B.C. has been a positive program for encouraging the production and marketing of B.C. products. Whether we are dealing with the wheat farmers or the ranchers of the north, the orchardists or the wine producers in the Okanagan, the dairy or mushroom farmers, or the dairy or flour producers; or whether it's a food processing plant in the Fraser Valley a herb farm on the Sunshine Coast, a struggling co-op in Grand Forks fighting to grow hemp -- a crop with potential but not without a lot of controversy -- or whether it's a chicken or farmer, ground crops, greenhouses, food manufacturing plants. . . . Whatever it is and wherever it is in this province, many of our farmers and producers are dealing with common challenges and similar issues.

I would like to briefly touch on some of the important issues that I expect we will be debating over the course of our meetings. Last year was a difficult year for many of the farmers due to crop losses, flooding, etc. I would like to thank the minister for responding to some of those concerns.

In particular, we heard a great deal of complaining about the crop insurance program and its failure to address the problems. The jury is still out on the whole farm insurance program, but I would like to acknowledge the ministry for its efforts in trying to address the industry's concerns. Hopefully, we will have a chance to discuss both the crop insurance programs and any proposed policy changes and program costs, as well as the new farm assistance program now underway. We heard many concerns expressed last year as a result of the ministry's program cutbacks. This resulted in downsizing of the ministry, closure of the field offices and removal of resources and personnel and site services. It will be important to review the results and impact of these decisions.

[2:45]

The issue of cattle inspection will be addressed. I expect that my colleague from the Cariboo, John Wilson, will be here to share some concerns and possible solutions in this regard. I know that we will be discussing the issue of hemp production as the new commodity for the Grand Forks area. Manure management opens all sorts of possibilities for discussion, but I expect that the hon. members on the government side of the House would be experts in this field by now.

I will be interested in following the ministry's plans for commodity-specific programs in its new direction, delivery of services. Some of the other issues brought to the minister's attention during the last session included mushroom farming and composting, weed control, marketing boards, study of municipal bylaws relating to agriculture, the Roberts Bank backup lands, right-to-farm legislation and WCB standards, to name a few.

One of the most important issues in this province in terms of agriculture right now is the fear that exists over the Six Mile Ranch issue. There are two important points regarding this. I know that most of the members of the House have received letters or calls from constituents regarding their concerns and their opposition to removing the Six Mile Ranch from the ALR. Regardless of the decision, certainly there is no excuse for any open-season approach to releasing the agricultural land. However, it is extremely important for this government to offer reassurance to British Columbians by establishing a specific provincial interest policy. Really, this should have been done in the first place.

Also, there are many in this province, and I am one of them, who are concerned about the need for increased support for our agriculture industry. Simply put, it means that if we tie the farmers' hands with respect to land use and the ALR, then we should be prepared to support the farmer. B.C. has a notable reputation in the western world for providing the fewest subsidy support programs for the farmers in the agriculture industry. Why?

[ Page 6996 ]

In closing, I would like to say that I am looking forward to learning and hopefully securing some of the answers relating to the issues that I have mentioned. I know that most people associated with farming or agriculture are just genuine, nice people, so I'm anxious to work with the minister not only in addressing the industry's concerns but in discussing possible solutions.

Hon. C. Evans: Thank you, hon. member. That was a good list of issues for us to talk about. I'll run through a few of my observations about the year we've been though since we gathered here last, starting with my agreement with you that your predecessor was quite a fine person to work with and my hope that you and I will develop the same kind of relationship. Unfortunately, there won't be a meeting in Quebec this year, so I can't offer to take you to Quebec. But I definitely think that this whole thing works a lot better when we get along.

Hon. Chair, 1997-98 started as a difficult year and tended to proceed in that same fashion. There were significant budget reductions when we gathered in this room this time last year, and then we went into the main legislative hall and changed the laws to allow a downsized and reorganized ministry. Then we made staffing adjustments to reduce FTEs to match the budget.

We transferred livestock identification and inspection services to a cattle industry organization, Ownership Identification Inc. We changed the way milk quality standards are managed by moving previous government-managed activities for inspection to the agricultural sector itself. We implemented a two-tier crop insurance program, basically to attempt to raise participation above its historical rate, which was running at 28 percent takeup in 1996, to something like 55 percent in 1997.

Later in the year, it didn't get any easier. We added -- some say -- the biggest El Niño this century to the budget reductions, and grain producers in the Peace faced their second year in a row of poor seeding and impossible harvests. We had hail the size of golf balls in areas just 50 miles north of the member's constituency. We had the second bad year in a row for the Vancouver Island and lower mainland potato producers. All in all, it's estimated that the industry in B.C. probably lost $70 million due to weather.

There were significant responses to these weather-related failures. We literally invented -- thanks to the quite wonderful work of staff here and in the regions and to an advisory group of farmers who met with us in several towns around the province -- the whole farm insurance program, with a $10 million uplift to the budget. We created $4.5 million in loan guaranties and then backdated them to last year's crop. We paid out $16 million in crop insurance last year. I think that was the first time ever that the private sector reinsurers actually had to pay. We secured the future of the sterile insect release program with a $2 million payment. We provided an additional $1 million a year, for seven years, to the grazing enhancement program in order to keep our commitment to the land use plan.

The agricultural industry is the third-largest resource industry in the province. I want to say on the record -- so that all those researchers in the bowels of this building can check and see if I'm right -- that I think it's actually the only resource industry in the province that increases, year over year, the number of jobs it offers the people. We contributed $2.2 billion in gross domestic product in 1996. The food and beverage industry employs one in seven British Columbians; that's a quarter of a million jobs.

The public out there are tremendously supportive of B.C. agriculture -- largely to the credit, I think, of all those people who invented the Buy B.C. program and who have made it work. Polls show that 90 percent of British Columbians believe that we should produce as much of the food we consume as is possible; 80 percent believe that agriculture and food industries are important as a way of life in British Columbia; 66 percent believe that the best way to keep food prices affordable is to make sure the industry is thriving and not to become too dependent on other countries for food; and 90 percent believe that the provincial government should limit urban development to protect farmers and farmlands. So the hon. member's comments about the need to give assurances that farmland will be protected is certainly backed up by the voting public.

We also succeeded last year in obtaining matching federal support for several initiatives. To their credit, they came across with funding for the sterile insect release program. They provided funding of $1.2 million for regional development in Peace River and $540,000 for value-added initiatives, and they provided $2 million for road and rail infrastructure in the Peace area.

Last year we kicked off a program we call B.C. Sharing, which I'm quite proud of, and I'd love it if we had some questions on the program. It essentially allows the Buy B.C. program and traditional food banks to marry through the good offices of the retail stores around the province. Last year citizens -- consumers walking through check out counters -- bought $400,000 worth of coupons for B.C. food, which went straight to food banks and allowed the food banks to redeem them for items like perishables and meats and dairy protein items that food banks usually can't otherwise get. That provided $400,000 worth of purchasing power for B.C. producers.

I hope that the program will be greatly enhanced in years to come. I recently met with representatives of all the major chains and unions and producers and the food bank system. I had the experience -- fairly unique in this line of work -- of having everybody in the room agreeing that something we were doing was what they wanted to continue doing and that their experience in working with government that year had been quite positive.

Another thing happened that I think we can point to with some pride -- another event. In Victoria a couple of months ago, just across the street there was the largest direct farm marketing conference in the history of Canada. People from all over this continent came to talk about how to sell food -- essentially off the farm -- to talk about agritourism and to talk about farmers' markets and a whole new parallel distribution system for food.

I was very pleased to meet people from Tennessee, New Mexico, Quebec, Ontario and California who came to B.C. to

[ Page 6997 ]

We were pleased this year when the animal health lab was recognized as one of the best in North America, especially given the funding constraints those folks work under. I was really pleased with the ability to reinstate weed control grants late in the year, especially in Creston.

Last year, with the former critic, I enjoyed getting to actually see if the right-to-farm legislation worked when Langley's bylaw review ran into government's objectives in the mushroom industry. I'm very pleased that we're now solving those problems through the good offices of my staff and the hon. member for Abbotsford.

We were pleased to be able to work with the Cloverdale Lettuce and Vegetable Cooperative recently to see to it that they could continue to operate. We were very pleased to celebrate the twenty-fifth anniversary of the Agricultural Land Commission -- a quarter of a century, something those folks in Tennessee and New Mexico really wish they had where they live. We celebrated the anniversary by initiating a process, largely to the credit of the deputy, to see if we can actually return some of the Roberts Bank backup lands to private farm ownership within the term of this government.

[3:00]

Members will know that the new funding, $21 million, is going directly to the farm safety net program, allowing folks to run their businesses with logical risk management systems, with a $2 million increase to crop insurance, $10 million to whole-farm insurance and $2.15 million to the farm distress operating loan guarantee program. There's another $3 million increase in farmers' net income resulting from the tax of the elimination on farm fuel, effective June 1. Raising the lid on the corporate capital tax is good news for the processing sector, as is eliminating the social service tax on the boilers.

This year we certainly have our work cut out for us. We're engaged in a review of the regulated marketing system, aimed to finish this fall. It's a complete review -- and a private review, I might add -- of the crop insurance program to make sure that the bugs are worked out of the things that we're going to debate. We're evaluating the effectiveness of the whole farm disaster insurance pilot program, even as we roll it out. We're working with other provinces and with the federal government to implement a new multi-year safety net agreement.

We are engaged with the processing sector, retail sector, unions, primary producers and restaurants in developing an agrifood policy which we hope to finish by Christmas. It's perhaps the most exciting activity that I've been engaged in in this job. We kicked it off the other day with a really historic moment. All of agriculture -- the Agriculture Council -- and the Minister of Environment and myself signed a ten-point program saying that environmental initiatives that impact on agriculture will take place at one table. We will work to develop a partnership relationship, rather than the sort of combative relationship that has been in place in recent years. I intend to do everything I can to make it work. I hope that a year from now the mining industry, forest industry, outdoor recreation industry, fishing industry and just about everybody else in British Columbia will be looking at us as the example of how to look after the land and stay in business at the same time -- because of our new relationship with the Ministry of Environment.

Having said all that, I look forward to this debate, especially because of the civility that we bring to bear. There are other ministries and other critics who do it a different way, but I think everybody who participates will enjoy this because of the respectfulness which usually goes on. Any digressions are my fault. We'll all do the best we can.

B. Barisoff: I think that probably has to do with all of us having a little bit of farmer at heart. As I mentioned in my response to the Speech from the Throne, I think that a farmer could probably do a better job of running government. If we all had that farmer at heart, we could probably all do a better job.

I just want to start on some of the B.C. marketing boards. My understanding is that there are 11 marketing boards and commissions established under the natural products marketing board. These boards and commissions regulate the marketing and production of the following products: eggs, chickens, broilers, hatching eggs, turkey, milk, vegetables, mushrooms, cranberries, hogs, grapes and tree fruits. The Minister of Agriculture directed that the chair of the B.C. Marketing Board conduct a review of the regulating marketing system. The objective of this review is to provide the minister with recommendations on how to improve the system to enable it to meet the challenges of the changing trade and marketplace. Could the minister tell me what the outcome of this review has been so far?

Hon. C. Evans: The review is just in process. I don't think it will wrap up until fall. I guess step 1 has been that, for the first time -- at least for myself -- we've got all the marketing boards in one room, and we're beginning to have a dialogue. There is a group of working papers being created now to discuss issues like exports, organics and how to make sure that the marketing boards serve orderly marketing rather than restrict marketing opportunities. Those working papers will be distributed to all the marketing boards for their response, and then the second part of the discussion will begin.

B. Barisoff: Has the minister made any changes to any of the marketing boards in the past year?

Hon. C. Evans: I wonder if the hon. member means personnel changes or regulatory changes.

B. Barisoff: What I was referring to was the challenges in the changing marketplace -- whether the ministry has put forward any direction for the marketing boards in general terms of what they should be doing with respect to the new challenges of the marketplace today.

Hon. C. Evans: The review is intended to kind of kick-start that process. I have met with representatives of various marketing boards on various issues, and I have communicated in writing with them. I'll just give the hon. member some examples.

There are people who think that some of the marketing boards may not serve enough of a function to justify their

[ Page 6998 ]

There are people who think that the move to organics, such as in the member's constituency -- which is actually taking place all over the province -- is creating the need for marketing boards to grapple with how organic products, especially those that are supply-managed, will get into the marketplace. How will you get eggs or milk into the marketplace if it's organic? Will that be under the supply-managed system, or will the supply-managed system stop short of organics?

With chickens, like with Lilydale, as the hon. member knows, there's a question of regional quota distribution. Should quota move back and forth to the mainland at will? If so, at what price? If not, how will you ensure that the industry can exist in each region of the province?

There's another issue that I raised with them -- that is, their need to communicate. Supply management, I would submit, is an idea of a generation who no longer works here. They aren't in government anymore; they don't run the media anymore. They are mostly retired. I said to all the boards: "I actually think that half of your job, for a little while, has got to be to explain to people what you do -- explain to the consumers why you should exist; explain to the politicians what your role is. You cannot continue to exist simply because once upon a time you were a good idea. You have to be a good idea to every generation."

B. Barisoff: The minister answered some of the questions on roles and responsibilities of boards. Talking about price and moving quotas, could you elaborate on what happens when you move quotas around the province and what you mean by prices? Is there a different price for a quota on Vancouver Island compared to Abbotsford or the Okanagan?

Hon. C. Evans: I think that the only commodity with a regional designation is chicken-for-meat production, and I think there are three jurisdictions: one is the Island, one is the lower mainland, and the interior is the third. As for the value of quota. . . . In the other supply-managed industries -- eggs, milk, turkeys -- there is one value for the province. In chickens, there is a value for the Island, a value for the lower mainland and a value for the interior, and that's because the value of the quota in every area is a market-determined price. It isn't set by the Milk Board or the government or something. It is: what would the market pay for that quota? In chickens, of course, it's based on the viability and the price of operating in the three different regions, so there would be three price differentials.

B. Barisoff: Why would there be a difference in the price in the Okanagan versus the price in the Fraser Valley? I can see why for Vancouver Island, but I wonder why there would be a difference in prices of quotas for the rest of the province. And why are we only dealing with chickens? Wouldn't it have the same effect, if it's on the Island, with milk or turkeys or whatever else?

Hon. C. Evans: I'm not sure what the price is in the Fraser Valley, so I'm not sure that there is a price differential. The hon. member's second question about why meat production is the only commodity for which there is a regional restriction. . . . I'm not sure of the answer to that question, and I'm not sure if there should be a regional restriction. And if there is, I'm not sure if it should be expanded. Those are the kinds of questions we're putting to the marketing board system in the review itself. So there will be a historical reason: someone once decided that was a good idea. I am not sure whether or not that continues to be true, and I hope the review will address the question.

B. Barisoff: Are there any means that the minister can see or that the ministry can see for making these boards more effective? Could marketing boards become more effective with the system that they're under right now?

[3:15]

B. Barisoff: The original intention, from what I'm led to believe, was that marketing boards were there to protect the small family farms. Yet the marketplace in today's day and age is pushing us to the larger, more efficient farms and whatever. I'm just wondering whether the minister has any direction from the ministry on how they are going to protect the family farm, the smaller farmers that are out there, if there is a way.

Hon. C. Evans: There are kind of two answers. The first one is. . . . You're right -- that certainly is the function of supply management. The marketing boards were created to give power in the marketplace, assuming that the marketplace is a fairly unbalanced playing field. The family farm is a singular unit, whereas the dairy selling a brand item or the store selling many brand items are much more powerful marketing units. Supply management was invented so that the primary producer had a fair chance for survival in the market.

I think that the success of that initiative is huge and grand, and I would like to be able to present you with data to prove it. Perhaps when the review is over we'll have part of that. Anecdotal evidence would suggest that if you travel in Oregon, Washington and California, you can find industries that don't exist at all or that are controlled only by the corporate sector, but which here in British Columbia are still run as family farms.

The member probably knows that we're the only province in the country where the number of family farms has actually increased over the course of this decade. Some of that, of course, is due to lifestyle decisions or even to bureaucratic ones about what is designated as a farm but some of it is to the credit of supply management. We have succeeded in maintaining family ownership rather than corporate control in all of the commodities. Part of what we ought to do in engaging in this review is to celebrate the success of what Canadians invented in supply management.

But there's a whole other answer to your question -- that is, does the ministry have ideas to make sure that the family

[ Page 6999 ]

Actually, what we want is the family farm, as a small business, to drive the provincial economy. That means you have to have a safety net that works. You have to have an investment policy that leads toward change. You have to have access to the markets for the farm's producing unit. You have to have supply management where it makes sense. You have to stop or control corporate buying that gives no way in to the farm unit. You have to have relationships between all government ministries, and municipal and federal governments, that are at least cordial, if not beneficial, to being in business. It's pretty much like logging or running a gravel business.

I don't want to be part of a system that simply tries to save something because it's a good idea. I don't actually think that's a very creative starting place. I think what we want is to drive change that leads to economic strength at the farm unit. And supply management is one of many tools to do that. Sometimes institutions, like supply management get used to doing business in an established way. Suppose supply management got in the way of production for export. Suppose limiting supply to match the domestic demand, which is how you keep the price high, then limited the availability of product to sell to another country. That would be supply management acting against the interests of the family farm; then we have to change the way that it works.

B. Barisoff: I could debate this all day. Maybe the minister could explain to me. . . . If they weren't born into a milk quota or a chicken quota or a turkey quota or something like that, and wanted to be a farmer, how could young entrepreneurs that wanted to go into the farming business enter the business without having a large amount of capital to try to buy somebody else out?

Hon. C. Evans: I think all of the -- I shouldn't say all. . . . I think all -- certainly most -- of the supply-managed commodities have a "quota building program" built right into their system so that first -- say, as the population expands -- that expansion in the marketplace is aimed at new entrants to the business. We can get the hon. member data on the success of those programs. But it's also true that if you want to go logging or buy a logging truck, you pretty much have to go get a job, save up the down payment and then go to a bank and get some money and get a logging truck. It's pretty much the same if you wanted a gravel truck, a corner store or a gas station. Even doctors sell their businesses -- their client groups -- to other doctors. There is no business that you can get into without first having to get a job -- maybe an education and then a job -- save up some money and go buy it. Agriculture is like everything else. The investment is very high, but so is the investment in trying to be in the trucking business or any other business you might want to be in.

In a way, that's a good thing, because it keeps sort of casual investors out of the marketplace and means that people who buy a dairy quota are serious about getting up every day and milking cows and the like.

B. Barisoff: In some of the other industries. . . . I happen to be part of the committee, along with the Chair herself, that went around the province and looked at the deregulation of the trucking industry and the motor carrier industry, and we found that in most cases people wanted out of the regulation part of it. But I can see the merits on both sides of. My concern -- and maybe the minister knows this -- still lies with the fact that. . . . Maybe the minister could get me the data on all the marketing boards and how many new entrants they actually allow, or whether they're adding quota to the existing quota to meet the increased demand of the increased population of British Columbia -- the ones that haven't moved to Alberta. Is that quota going to new entrants, or is that quota actually going to people that are already in the business and they're just adding on to their quota?

Hon. C. Evans: I'll commit to getting you the data. My anecdotal evidence would be that each year that I participate in the Young Farmer of the Year award program, there are always supply-managed farmers receiving those awards. Their moms and dads didn't give them to them. They're buying in, so my observation. . . . Last year at those ceremonies we gave runner-up, I think, to a dairy producer who decided to get into a dairy goat business to feed a niche cheese market, and of course there is no quota connected with that person's business. So there are also ways in for innovative entrepreneur types who desire to be in business and do not wish to purchase quota.

The hon. member's reference to quota going to Alberta is bang on. With the ending of the Crow and the feed freight assistance program, there is, in all of those industries which we've built in B.C. based on the historical Canadian freight subsidy programs, huge pressure for those industries to now relocate as value-added industries, if you will, to the centre of the western Canadian market. That's a big part of our collective job here, and I guess it's my personal job -- grappling with the issues created by the ending of that subsidy program.

B. Barisoff: I hope the minister doesn't mind, because this is truly a learning process for me as we go through this. I guess that would lend itself to the regionalization of the chicken industry, where you would regionalize it into Vancouver Island or the Fraser Valley or the Okanagan or the interior. Maybe a regionalization would be that you regionalize it in the province of British Columbia. Has the minister ever thought of having the quotas that exist within the province stay within the province?

Hon. C. Evans: Hon. Chair, in the main that's the case, I think. I'm going to look to the hon. member to your left. I think we allow 1 percent per year to move between provinces. Is that correct?

A Voice: As far as I know at this point.

Hon. C. Evans: That's in dairy. I'm not sure what it is for turkeys and the like. In dairy we have a western pooling system. We do have B.C.-based quota systems, as each of the other provinces in supply management do.

B. Barisoff: I guess the minister can see that being a youngster growing up in the Okanagan Valley in a marketing board situation, growing up on the farm, I've seen both sides of it. And now I see, without the marketing board in the Okanagan Valley for tree fruits, what that's caused and what the difference has been. I guess there are probably some disadvantages. But there are a lot of advantages that have taken place in the small packinghouses that have started up. It's the existence of a whole new era of how things are being

[ Page 7000 ]

Like I said, I will probably sit down with you one day and just talk about marketing boards, because I'm sure I could ask you another 30 or 40 questions. It's probably not the time and place. I think they've only given me two or three weeks to get through my estimates. I would want to make sure that we're done within that period of time.

I just want to touch a little bit on the replant program in the Okanagan Valley, which to me, Mr. Minister, is probably one of the most important things that have taken place in the last number of years to create the ability for the old farms to actually come to life again, to rejuvenate them. I know for 1998-99 there's been an allotment for, I think, 650 acres. I'm wondering whether, from your data, this is enough or whether there have been more applications. Where are we at with that?

[3:30]

The difficult thing is that you could assist somebody to replant at $10 an acre and aim for 700 acres, or you could assist them to replant and give them $1,000 an acre and aim for 700 acres. What's happened with the cutbacks to the program is that we're still able to aim for, or even increase, the amount of acreage that we are going to assure gets replanted. But in fact there are probably 4,000 acres' worth of people who desire to access the program. If there was more money, I'm sure we could continue to expand it in an exponential fashion. Unfortunately, we've had to restrict the amount of pay-out. The good news is: that has assisted government to manage its books and, happily, hasn't decreased the number of people who desire to access the program at all.

B. Barisoff: Could the minister indicate to me how much we've decreased it on a per-acre basis? What were they getting in prior years on a per-acre basis, and what are we getting now? What impact has. . . ? I know you're saying that same amount of acres are still being asked to be planted, but have we now limited some of the farmers? Are we only going to an exclusive group of farmers that have been doing better, and some of the farms that are actually in dire straits of being replanted can't be because they just don't have the capital funding to do it?

Hon. C. Evans: Last year the original estimate was that 1,000 acres would be replanted. Unfortunately, only 849 acres were actually replanted. There were a couple of things that impacted there, and the hon. member's questions are well taken. I can't give the specific answers, but I will say this. The government's announcement that we would decrease funding to the program. . . . My anecdotal evidence is that that created some fear in the orchard community that if you didn't access the money then, it was going to disappear -- that government was losing interest in replanting. So you had a situation where a lot of people who might not have been ready to replant applied in excess of expectations, believing that whatever money there was, they had better get it then. The result of that was more people applied for the program than nurseries could supply the stock to replant the land.

I'll get the hon. member the information that he's looking for about the historical acreage -- say, over the last five years. Suffice it to say that the Okanagan Valley Tree Fruit Authority, while it is winding up its business and will not last forever, has seen no decrease in desire to access the replant program. I really think it is working as a change agent in two ways. One is to move people to varieties with higher density per acre so that they're more competitive with Europe and the United States. But it's also to empower more progressive and younger growers.

There are people who have just got a whole bunch of Macs out there and have been there for 20 years and don't really feel like farming too much. Under the old FII system, they could just take a certain tonnage off there and take it to the packing house. It didn't matter if it packed out as fancy grade or cull; they were going to get paid for the cull anyway, so they could just leave the orchard there without changing it. As FII and the replant program said to people, those of you who actually want to farm the marketplace and plant Galas or Fujis, or move with changes in customer preference from variety to variety, are the people who are going to make money.

The replant program empowered those people. It continues to empower those people to get rid of the old-fashioned kind of trees with ladders and big rootstocks and move to a more rapidly changing industry, where you can actually change the variety of the graft every four years if you want to. Grow it for two years; farm it for two years. Then move on as the customers change their mind. I'm supportive of it; I hope you are. Maybe you could beat me up to see if you could make it last longer than was originally intended.

B. Barisoff: That probably begs the question. If people are applying based on the fact that they were worried, would you give the farmers the assurance that as long as you're in government -- I was going to say as long as you're minister, but you never know what happens with those kinds of things -- you will ensure that the replant program will exist at a level that will definitely make sure that the farming community in the Okanagan will be able to have that replant program and be assured that when that happens, they wouldn't have to jump the gun and say: "Well, I'm going to replant -- not because I want to do it this year. I might want to do in two years from now"?

The fact is that it's going to go away. It's been the trend to eliminate funds from the Agriculture budget. I must commend the minister. This is the first time, from what I can see in the last seven years, that the budget has actually increased. If you could give that assurance to farmers, I'm sure I could make a heck of a press release out there tomorrow to say that the minister has assured all the farmers that the replant program is going to be there for another four, five or six years, or whatever.

Hon. C. Evans: The truth is that the world doesn't work that way anymore. Not only will I not give my assurance that it'll last as long as we govern, I won't even give my assurance that it'll last as long as I have this job. I don't think that farmers should count on anything that they don't organize to achieve. Society is misguided and confused, driven by a bunch of idiots that work in the press telling them a bunch of nonsense. They think that programs like this are a subsidy. Farmers will either organize to tell a better, more truthful story, or they're never going to be able to even have the good things that they have. You can't count on me or the hon. member opposite anymore to get anything for anybody. That

[ Page 7001 ]

Farmers organize or they get nothing. They're going to have to tell the story of replant as a change agent, a progressive program for the future that makes business work. If anyone ever thinks it's a subsidy provided by a good politician or a good political party, it will die. I don't do farmers any favours, nor does the hon. member opposite, by saying: "I can guarantee anything." Every single farmer that votes should join a political party. Every single farmer that retires should run for municipal government. There should be a farm caucus in your political party, going to your conventions and beating on your head to increase their share of the budget -- and in mine. In the absence of those political activities, nothing is guaranteed. That'll make a good press release.

B. Barisoff: Well, I actually agree with the minister on the fact that that's the way things seem to work nowadays. But in all fairness, if we're getting -- I listened to your speech in the beginning -- 80 to 90 percent of the people in the province who believe in the ALR, then somehow, for the farmers' sake, we should make people believe. . . . You're right; it's not a subsidy. If we're tying the farmers' hands, if we're keeping them on the land and we want the agricultural production in this province, sometimes those are the kinds of things that have to be done. That's the direction that we have to take. I must say that it's a direction that I believe strongly in. If we're going to do this to farmers, we have to make sure that they're viable businesses. I know that we can't hold everybody's hand to the door. But we are creating some kinds of restrictions on them, so with that comes a responsibility of society in general to make sure that the farming community is looked after.

The replant program is one of the areas -- from first hand experience, just seeing it happen in the Okanagan Valley -- that has made a tremendous difference. It has probably alleviated a lot of the pressure on the ALR. If I can make money farming, I'm not worried about subdividing my land or letting somebody else push me out. I think that's an important aspect.

Just one other question on the Tree Fruit Authority: I know we've downsized to one person or something like that, and I'm just wondering whether that's enough to sustain what we need to do in that area.

Hon. C. Evans: Firstly, finishing up on the discussion about whether or not replant should continue, personally I think that it should continue past the year 2000. I hope that whoever has this job believes that when the time comes.

I also think, though, it is important for us to tell the story of the success that we have achieved, because there are many other commodities out there also looking for an opportunity, you know. The hon. member mentioned herb-growers and the like, change agents that supply initiative to that kind of entrepreneurial activity -- farming the crops of the future. We need to keep that out there as the objective of government, whether for the orchard industry or for anybody else.

But my point is that simply because it makes sense -- because the ALR suggests we should, because there's some form of moral imperative -- as the hon. member knows, that's sometimes not enough for the expenditure of public funds. People have to organize too, to tell their story.

The specific answer: yes, I think there's enough staff left at the OVTFA. The OVTFA has two more years to run and actually made some very creative employment decisions -- re-employing on a part-time basis, on a contract basis, some of the people that they'd had on full-time before, sharing an administrator and keeping the board. They did a totally wonderful, classic job that other people could look at in downsizing their administration. When their cuts came, they downsized their administration radically in order to try and maintain the money for the delivery of the program. It almost runs on a volunteer basis now rather than on an administrative basis. I think they deserve a lot of credit for that. If they can manage to continue beyond the year 2000, it will be because they have found a way to deliver a sort of virtual program rather than an institutional one.

B. Barisoff: What's the estimated budget for this year's replant program?

Hon. C. Evans: It's $3,465,000.

Hang on a second, member. I gave you the wrong answer. Hon. Chair, my apologies; I was reading from the previous year's budget. It's $1,865,504 for replant in '98.

[3:45]

Hon. C. Evans: The $3.4 million that I described from last year included $1.4 million for SIR, sterile insect release. So the actual expenditure for replant last year was about $2 million.

B. Barisoff: Every time he answers a question, Hon. Chair, it leads me to think of something else. I should be asking about the sterile insect release program and how that program's working. I know it's in my own back yard, but maybe the minister could give me an update on where they are, what kinds of expenditures there are and where they're going.

Hon. C. Evans: Firstly, I'll give you the numbers before I forget them. I believe that the sterile insect release program is intended to run for nine more years. Then it will be a maintenance program forever. But it's an expanding program for nine more years.

We achieved that with $2 million of the provincial government's money, $2 million of the federal government's money and $1 million of municipal money going into a bank account with an annual dividend. One-ninth of the capital plus the annual dividend will be drawn down each year. What we were attempting to do was. . . . The municipal governments kept having to raise an annual tax to support sterile insect release from Creston west through the Okanagan. Their members were saying to the provincial and federal governments: "We don't want to do this, support it for five more years, have it collapse and have wasted all this money. Either it is supported through to the place where we're codling moth-free, or we want to get out now." That was their argument last spring. So we worked to get $5 million to put in the bank in order to guarantee that we'll get to the place where the wild codling moth is managed down. The word in whatever you call that profession is "crash." We're attempting to crash the population of codling moths, at which point it will then be manageable by grower contributions -- the industry itself after that point. Historically, they would have had an expenditure for insecticide; now they will have an annual expenditure on every farm for sterile insect release. That's the money part.

[ Page 7002 ]

The hon. member will remember a few years ago when there was an Alar scare in California. That was a pesticide residue which we don't use here in B.C. and which was found to be dangerous. Apple sales across the United States were depressed, as was the price. We discovered at that time that our apples, in a place where we used no Alar, were depressed, as well, in both saleability and value. There is a concomitant increase in price every year for the organic product, and there is an increase in the number of producers moving to take advantage of that organic opportunity. Our orchard industry will basically never compete with western Washington or with lots of other countries in the world on a cost-of-production basis, because they have thousand-acre orchards and free water or subsidized water and the like, and we have 20-acre orchards and expensive water and are operating right in the middle of our municipalities or on the edges of them.

So our requirement, in order to have an orchard industry, is to be able to capture that premium in the marketplace that people are willing to pay for safe, healthy food. The SIR program will eliminate the need to use Guthion. Guthion is the heaviest pesticide that we use in the industry today in British Columbia. When we stop using Guthion, beneficial insects will come back to the Creston and Similkameen and Okanagan valleys and to the north Okanagan, and the balance will be returned. Then we'll have to use less of the other pesticides that we use to control lesser bugs.

There was a prediction at the announcement that in seven years we would be pesticide-free in the orchard industry in your valley. If that happens, we will have a marketing opportunity around the world that beats every other nation that I know of in terms of food quality. And we will have technology for sale. We will be the first place in the world that will actually manage to make a sterile insect release program work. That's expertise which we can then sell to other nations that desire to repeat our performance. It seems to me to be. . . . I would hope that you and all of the people in your area would support it a lot. I mean, it's not easy to support. It means you've got to go into Mary's back yard sometimes and whack her trees down. It kind of makes them grumpy, you know. So it's tough politically. But it's good news and it's good biology and it's going to help the industry, so I think it's a good thing.

B. Barisoff: It reminds me of back in my younger days when we were dealing with the predator mites and whatever else. If you knew enough about it then, it made a huge difference.

One of the concerns I have is what kind of cooperation we've got from the American side. Not to be flippant, these codling moths don't fly up to the border and check in and say: "No, we can't go across." Have we had any kinds of agreements with the American side to see what they're doing in the same area?

Hon. C. Evans: It's a good question. We provide codling moths free to northern Washington in order to create a zone of 20 miles -- the travel distance of an adult moth. We're actually providing this biological-control technique for nothing to northern Washington in order to create the opportunity in B.C. that we're trying to accomplish.

B. Barisoff: From living right there and seeing the program go for the last number of years, if that is truly the case, it would be advisable for the ministry to make sure the local people understand that this kind of thing is taking place. From the perspective that I get. . . . I wasn't being flippant about the moths stopping. It's one of the comments that comes to me on a regular basis from constituents. . . . On your tax notice, you're part of the SIR program if you live in the Okanagan Valley. That was one of the major concerns, with people saying: "Where are their brains?" I think that a lot of people, including myself, do not know that we've got a program with the U.S. that goes 20 miles across the border, almost down to Omak and that area. I think it would be advisable for the ministry to let people know that this takes place.

Is there a way that we could get our American friends to participate in some of this to bring the cost down a little?

Hon. C. Evans: I want to put on the record that my answer is no, there isn't a way that the ministry can take on the responsibility for communicating how the program works. I think this is an excellent case where I have part of the job to tell the story, and I do it every chance I get; but municipal government has part of the job and the orchard industry itself has part of the job. The sterile insect release program has done a totally great job of their biology and a very mediocre job of their public relations.

I visited some years ago the plant in Osoyoos -- just because I was interested and I was driving by, and I wondered what was really going on in there and what a million sterile insects looked like -- and discovered to my horror that there was nobody in the outfit who spoke Portuguese, although 30 percent of the southern Okanagan producers are Portuguese speakers. There was no one who spoke Punjabi. They were basically running an English-speaking program and hopscotching the farm of anybody who wasn't also an English speaker. I discussed with them at that time the need to communicate in the language of the producer, whoever the producer was. Similarly, I think they do a lousy job of communicating to the ordinary citizen what's going on in that concrete building, and I'm not going to do it for them. The farming industry needs to tell its story, and the SIR program. . . .

The BCFGA is changing; it's changing under progressive leadership in a progressive direction. But sadly, for years they were unwilling to talk about SIR because they were afraid that if they talked about SIR and Guthion, then people would find out that we were presently using pesticides and it would have an impact on the price of their apples. It is only now that the industry itself is waking up to the fact that it is a market advantage to have a Guthion-free or pesticide-free product and is becoming willing to tell the consumer what is going on. I think they should be pushed gently and kindly in that direction, to continue to tell the story. So I don't want to take it out of their hands.

On the subject of whether we should convince our American neighbours to buy the program, well, hon. member, I'm not sure. I'm hoping that SIR will give a reason to compete in Oliver against the Columbia basin inside the United States and those huge, subsidized American orchards -- a market advantage. If we sell SIR to those same people that we're competing against, we will lose the market advantage which I think we need for the early part of the next century. It's not my call, but I'm not going to rush off and sell the program south.

B. Barisoff: I guess you're probably right to an extent. The niche market in organic growing has been very positive to a lot of farmers. Particularly in the cost scenario, they've done quite well in organic growing.

[ Page 7003 ]

Hon. C. Evans: I can't quite remember the name of that producer. I get those letters, too.

Interjection.

Hon. C. Evans: Thank you. We're working on solving the problem. The producer knows that if he wants to acquire quota, he can sell organic milk right now. The producer knows that how to solve this organic question in milk is one of the big issues on the agenda this summer for supply management generally, not just in that commodity. I met with dairy, eggs, cheese and I can't remember what-all from the Certified Organic Association of B.C. a few weeks ago, in my office. You'll be happy to know -- certainly the member for Abbotsford will be happy to know -- that there were supply management people from the organic industry in the room who want supply management in organics, because they don't want to go the way of California. They want the family farm to work, not a factory farm selling organics outside of supply management.

[4:00]

Hon. C. Evans: Well, the short answer is sure, and the long answer is: please tell your constituent to help provide us with input through the organic association as we move through the supply management review. Of course, most organics are not in supply-managed industries. You know, herbs was the example before -- or goat cheese or something. But since I know your constituent is doing so, please encourage your constituent to encourage the organic association to participate in the process.

B. Barisoff: We've pretty well touched on that industry. A lot of questions will probably come to mind, which I might just pop up later on to ask you.

I want to move into the chicken industry. All B.C. chickens are essentially grain-fed, and the feed must be made of high-quality and nutritious ingredients to ensure proper development. There has been a concern that the chicken supply for further processing on a weekly basis has not been adequate to fill the demand. Large processed-chicken contracts have been passed up due to lack of raw chicken supply. What does the minister intend to do to increase the raw chicken supply in British Columbia?

Hon. C. Evans: The simplest answer is: that's one of the issues we are engaged in addressing through the supply management review. There are also a hundred other answers, and I'd be pleased to discuss them with the hon. member if he wants to come and visit me. Any one of those other answers that I might give on the record in advance of the review is bound to skew the review. I mean, there's a whole bunch of people out there who are supposedly coming up with good ideas. If I put one on the record, then they're going to think that's what I want, and that's what the outcome of the review will be. So let's not do that.

B. Barisoff: I must say that I'm waiting with bated breath for this review, because it seems that it's going to be all-encompassing and definitely deal with a lot of problems in the agriculture industry in British Columbia. I would hope, from the perspective of being the opposition critic for Agriculture, that we make sure that this review isn't a long way away and that it's going to come to bear rather quickly. It sounds to me like a lot of good solutions are going to be coming out of this review. I'm sure that between the farmers and the marketing boards and everybody else, we can be looking forward to some great things that are going to happen.

One of the things I'd like to put on the record is to make sure that the high taxes and overregulation that are plaguing the industry are something that the minister would be looking at as part of the farming community. . . .

Hon. C. Evans: I wasn't sure if there was a question. I thought the hon. member just wanted to put his statement on the record. If it was a question, then I guess the answer would be yes.

B. Barisoff: That's exactly what I was waiting to hear -- to make sure that high taxes and overregulation will be put on the record and that it's one of the issues that is going to be dealt with.

Can the minister give me any indication of what's happening with the Lilydale plant here on Vancouver Island, which is shutting down or relocating -- what the status is and where we're at with that?

Hon. C. Evans: The Job Protection Commission office has been asked to do a review of the status. I have met with the owners, the CEO and representatives of the board. They have agreed to delay the closure of the plant until September 15 -- although I'm not sure of the date. The deputy has worked out terms of reference for the job protection commissioner's review, although there is no contractor in place to do that work. I guess the present status, in a legal sense, is that the plant will close in September. That decision has already been taken by the board of directors of Lilydale. The motion they passed at their board meeting basically says that it will close in the absence of substantive change in the operating environment of the plant. I'd take that to mean: unless it can be shown to make money by September.

B. Barisoff: I'm led to believe -- and the minister can correct me if I'm wrong -- that there has been in excess of $8 million invested in plant and equipment, to develop the chicken products of B.C. I'm wondering if the minister knows where all this money is going and why these kinds of plants had got some of this money and then all of a sudden were shutting down.

Hon. C. Evans: Does the member mean public money?

[ Page 7004 ]

Hon. C. Evans: We're not sure what the question is. If the hon. member can cite where the money is and what year he's referring to, then we'll be able to look up the information.

B. Barisoff: I'll definitely go back to my notes and see where I found that. In 1993 a niche market, especially a chicken organic program, was developed in B.C. with the introduction of 12 new growers supplying approximately 500,000 birds per year. Is this program still operating?

Hon. C. Evans: As far as we know, it is still in operation. We're not aware. . . .

B. Barisoff: I think this question leads back to some of the marketing. We probably touched on it -- it's to provide orderly marketing of chicken production. It's intention is to protect chicken producers from shutting down. However, the board does little in assisting new growers to enter the industry. I think we've kind of touched on it. I'm just wondering what have they been doing in that particular industry, the chicken business, to create new entrants.

Hon. C. Evans: I think that refers back to the earlier question, when I undertook to supply the member with information about who acquires the quota, as the population increases, to absorb that increased population. We'll supply him with that information.

J. Wilson: In the minister's opening statements I understood him to say that a committee had been struck to work with MELP and other groups to solve some of the problems that we're dealing with, or at least put them in one window or one room. Is this the case?

Hon. C. Evans: Yes, it is. Is the hon. member referring to my comments about Agriculture's issues with the Ministry of Environment? Yes. We worked out a ten-point program with the B.C. Agriculture Council, of which Cattlemen's is a member. There are, I think, seven people on the board. They brought forward the environmental issues that all segments of the industry have. It basically says that we will attempt to have one table where all environmental issues related to agriculture are thrashed out. If we manage to make that work, then we will invite municipal government and DFO to join us so that we don't have issues coming up with regional districts, municipalities or the federal government. There's a recognition that a lot of citizens just see government as government, and it really doesn't matter if it's the GVRD or DFO; they still think it's us.

J. Wilson: Then this structure will not involve any ministry except the Ministry of Environment? You're not going to include the Ministry of Forests, Transportation and Highways or any of these. It's just Ministry of Environment.

Hon. C. Evans: For starters it involves the Ministry of Agriculture and Food and the Ministry of Environment. Just this morning I was arguing with staff who think that Forests and Mines and DFO should be invited right away. I said: "No, I actually think we ought to get these three parties to agree on something before we open it up to everybody else." Whether staff wins or I win, it doesn't really matter. Within a very short period of time, all the other ministries of government will be involved, and probably the municipal level too.

J. Wilson: Within the ten points that the minister is taking in. . . . Could he give me a breakdown of the ten points this committee is working on?

Hon. C. Evans: I will send to my office for a copy, and then we'll give it to you. Then I'll hold one in my hand, and you can hold one in your hand, and you can ask me whatever questions you want about it. Okay?

[4:15]

Hon. C. Evans: We started grappling with these issues by this time last year at the Cattlemen's Association annual general meeting. They asked for a review of the way that the Forest Practices Code impacts on range. It took some months to get it up and running, but it was established by the Cattlemen's Association, myself and the hon. member for Cariboo South as Minister of Forests. It is chaired by a gentleman named Rob Menes. As a matter of fact, the review is almost finished, and at the Cattlemen's Association AGM in Kamloops at the end of May, the intention is that the report will be tabled back to the people who asked for it. I have to say that the ministries of Forests and Environment have been very forthcoming in trying to work on this committee. I hope that you will find some solace or pleasure with the recommendations when they report out.

J. Wilson: It would be nice to have them right now so we could talk about them.

The other thing I would like to bring up is that we have heard the Premier comment on the fact that there's going to be a little bit of regulatory review work, which has been so devastating to small business and investment in this province. Now, agriculture is probably one of the best examples we'll find of small business in this province, and the regulatory burden they bear is unreal. It's unrealistic to even expect them to have to carry on with this. I'm wondering what steps the Minister of Agriculture is getting involved in to get into a regulatory review process and what their goals are in the removal or the modification of a lot of these regulations.

Hon. C. Evans: The food industry generally -- retail, restaurants, unions, primary producers, cattlemen and government -- met for a couple of days last weekend to address

[ Page 7005 ]

The next step in that process will be to condense what all those folks said and then take it back out to regions, starting in the Peace. Then, over the course of the summer, we'll review that information to see whether or not we've got it right. By this time next year, I hope you'll find some of those issues addressed.

On an ongoing basis, I think we're dealing in a very progressive fashion with improvements to the operating milieu of the agriculture sector. At the Cattlemen's meeting in May, we'll be talking about ways to improve the relationship not only with the Ministry of Forests but also with the Ministry of Transportation. You're holding in your hand the ten-point program of Agriculture, generally, with Environment.

I think we're making progress on lots of fronts. I'll go back to my introductory remarks about the removal of the social service tax on boilers and fuel tax and the like. There's beginning to be considerable recognition that there is a job payoff by releasing producers and operators and processors from an unnecessary regulatory burden.

J. Wilson: When I look at this, I can't help but ask myself the question. . . . This consultative process looks like it's going to be a government-oriented, government-driven committee rather than a committee made up of the people impacted by the regulation, who probably know best what they can live with and what they should deal with. It looks like it may be a little bit lopsided in its construction. I haven't had a chance to go over each one in detail, but I'm getting there. I don't see where we're going to get any cost-benefit analysis on regulations and their impact on the industry. I wonder if the minister has done any work or has any intentions of addressing that issue.

Hon. C. Evans: I'd be happy to answer the question. Then maybe the hon. member could read them and think about them and, if he wishes, re-enter the debate after he's had time to consider it. We didn't mean to table this as late information and jam the member, so. . . . You know, we'll still be here tomorrow.

The question the hon. member is asking about the financial impact of government activities is addressed primarily in No. 5. The member will appreciate that governments have existed in B.C. for a really long time, and it would be impossible to go back to the beginning and do a cost-benefit analysis of all the decisions that governments have made. But the point was well taken by the Ag Council when they said that they don't feel that cost benefit is considered in the creation of regulations on a year-to-year basis. So point 5 is really quite radical -- quite a departure from history. It says: "The province will consider the financial impact of future environmental initiatives which affect agriculture."

Hon. member, for sure it's not going backwards, but I would submit that neither you nor I have been alive in a time when such things were ever considered before. So to start from this point and to make such a commitment is hugely to the credit of the Minister of Environment for changing the way that her agency does business.

Also, I take issue a little bit with your suggestion that this is government-driven. It wasn't my idea; it was the idea of the B.C. Agriculture Council. The ten points were negotiated with those folks. We carefully constructed the membership on the board so that the Agriculture Council would have half the people in the room. So it is neither a government-thought-up plan, nor a government agenda, nor will the government be in the majority in the room.

Besides giving credit to the Minister of Environment for agreeing to this, I want to give credit to the council for thinking it up. They basically came to us 60 to 90 days ago and said: "Minister, there are too many processes, and we as leadership can't cope. We go to the Fraser basin process and we go to the manure management process, and over there there's a Ministry of Environment process. We're burdened down with process. We agree we'd like to solve the problems, but we don't know where to make a deal. If we make a deal at one table, then it will evolve or change at another table." This plan was built as a way to address the issue that they raised, which was a request for one room for all processes related to environment. I've been here seven years. Ninety days from expression of the problem to delivery of the agreement is a pretty fast turnaround, I think.

J. Wilson: I must agree with the minister. This really is movement. It's the most movement I've seen in a long time. When I say it looks a little bit one-sided, I see at the bottom of the point that any other government agency is welcome to participate. But I didn't see where any other user group or people that are involved with other aspects of industry are welcome to participate as well. It mentions government, but not the other people who are impacted in a lot of cases. It's probably a misprint or whatever.

I had another issue, but I think I'll let it go for now and turn it back to the critic.

B. Barisoff: A few questions came to me just now from the member for Okanagan-Penticton on the grape and wine transition program. There's a six-year agreement, I'm led to believe. What year are we in of the six-year agreement?

Hon. C. Evans: We're in the fourth year.

B. Barisoff: Thank you. Could you indicate to me what the original funding was, what the funding is for this year and how it's going to flow?

Hon. C. Evans: It was originally intended to be a $500,000-a-year program, and it is now a $200,000-a-year program.

B. Barisoff: Could you indicate to me how this money is going to flow to the wine industry, if we're down to $200,000? Does the wine industry know that it's been lopped from $500,000 to $200,000?

[4:30]

B. Barisoff: The other part of that question is: how is that money going to flow? How is it being distributed?

[ Page 7006 ]

B. Barisoff: Another question from the wine industry is about the signage that indicated all the wineries, particularly affecting the Okanagan Valley. Has the minister talked to the Minister of Transportation and Highways about what kind of effect this would have on the local wine industry in the Okanagan?

Hon. C. Evans: Hon. member, the real answer is no. The member asked if I have spoken with the Minister of Transportation. Staff, however, have spoken with their counterparts. The story unfolds, and I'm not sure how the sign issue is going to roll out. In the short run, there's been a deferral of the fee system that was intended. In the long run, I'm not sure what the wine industry thinks the impacts will be. I'll ask the question.

B. Barisoff: Maybe I could get an indication of what the minister himself believes should take place and what position he would be taking forward or giving staff to take forward into this meeting.

Interjection.

B. Barisoff: I guess I'll take that as a "no comment" -- that the minister isn't prepared to go on record as contradicting the Minister of Transportation and Highways. I was the critic of that a year and a half ago, so I do know what the minister said at that point in time.

That would be all the questions that he had for me. I guess he was wondering whether it would go with Small Business, Tourism and Culture to make sure that this issue is dealt with in one way, shape or form. The minister is nodding his head; I'll assume that's a yes.

Just moving into the mushroom industry, which my colleague from Abbotsford would be well aware of. . . . The Buy B.C. program is allowing businesses to cost-share the selling of B.C. products. Money's Mushrooms has applied for a grant and received financial assistance for the last two years. It is our understanding that Money's has not applied for a grant this year and is no longer receiving any money. Is the minister still cost-sharing with Money's? And if so, why?

Hon. C. Evans: We think that there is an application in from Money's for this year, although that's not for sure. It is early in the year. We haven't made our agreements yet with the industries for expenditures for Buy B.C.

B. Barisoff: On January 15, 1998, the minister announced an advisory committee to address public concerns with mushroom farming in Langley. The committee is expected to address the mushroom-farming issues, suggest solutions and get input from the public. Can the minister explain what concerns the committee has addressed to date?

Hon. C. Evans: We are looking at a composting bylaw for the city of Langley and assisting them to work out one that fits within the right-to-farm legislation. We are assisting Money's to move to a compliance relationship with the law and with their neighbours through solving either their location problems or their technology problems, or both, in a timely manner and a cooperative fashion.

B. Barisoff: Could the minister indicate to me whether he has consulted with the public and who in the public he has consulted about this issue?

Hon. C. Evans: The good news, hon. member, is that when you work with municipalities, it isn't the job of the province to represent the public. In the municipality, the level of government closest to the ground, as it were, is the municipality itself. So we have a partnership relationship with the municipalities that are involved in this issue, and the municipalities are required, when they pass a bylaw, to go to public hearing. At that point there will be an excellent opportunity for the public to make themselves heard about how our committee has done in crafting such a bylaw.

It's also true, though, that as minister I tend to have this issue raised by the public in every form -- from personal contact at the grocery store and the gas station to radio call-in shows and mail to my office. So there are many ways that the public makes its feelings known about mushrooms and mushroom composting.

B. Barisoff: The news release states: "The township is eager to contribute to the new farm bylaw planning process." Can the minister explain this new bylaw? Is it working?

Hon. C. Evans: The bylaw isn't in place yet. We're developing it with the town of Langley. That is the process that we started last year when I invoked the Right to Farm Act, basically to require Langley to work with us. Then I went and met with the mayor. We developed a cooperative point of view, and now we are together attempting to assemble a bylaw. So no, it isn't working yet, although I would say that the relationship with Langley and surrounding communities is much improved over this time last year.

B. Barisoff: I've got here in front of me a letter from raspberry and blueberry growers in B.C. who are deeply concerned about what's taking place in their industry, and I hope that they sent one to the minister -- I'm sure they have. But the situation they're in -- and some of the questions that they put forward, that they were very concerned about in what's taking place in that industry -- is that it's almost like a Canada-versus-U.S. situation. The question I have to the minister: is this current government prepared to move the raspberry capital from Canada into the U.S.? Or are they prepared to work with these raspberry and blueberry farmers in the Fraser Valley to make sure that this industry does stay here?

Hon. C. Evans: No to the first question, and yes to the second question.

B. Barisoff: That's a good answer. I didn't figure you'd want to move it to the U.S.

I've got a number of questions that pertain to lease and crop insurance, but I'll probably deal with those at a later time. One of the questions that I do have here is. . . . The government promotes a Buy B.C. program for B.C. products when it's allowed. . . . I guess I should rephrase that. How is this government promoting the Buy B.C. program, or B.C. products, when it's allowing the influx of agricultural products from all the other countries at such a lower rate that it's hard for the locals to compete? I wonder what the minister is doing

[ Page 7007 ]

Hon. C. Evans: Would the member like me to consider restricting the import of food from outside B.C.?

B. Barisoff: Well, I have the opportunity of not answering also, so I'll leave that alone. I'll move on to just a few things in the agrifood industry.

According to the agrifood statistics and percentages, B.C.'s agrifood expenditures for the '97-98 fiscal year were 2.86 percent. This was the lowest of all provinces -- in fact, lower than Newfoundland, P.E.I. or Nova Scotia. Of the $62.5 million estimated in this year's budget, what percentage of the provincial agrifood GDP has the ministry forecasted for this year's budget?

Hon. C. Evans: I think the number for this year will be approximately 7 percent of the agriculture GDP.

[4:45]

Back to the berry farmers. According to one of the B.C. farmers, they've not received payment for the berries that they shipped in the 1997 season. Basically, they have no home for their product for 1998. I guess they tried to market their berries in Canada and Washington but can't sell them because of the ones that are being imported from Chile and Michigan at a lower cost. I'm just wondering whether the minister can commit to those people in some fashion, so that something can be done with the berry industry to help their plight. I don't know what it would be, but maybe there's something that the ministry staff can look at.

Hon. C. Evans: The question is quite loose. I'm not sure exactly who has failed to pay the producers who have communicated with the hon. member. The blueberry co-op went broke last year and may have left some unpaid debts. So if it's a blueberry issue, that may be the cause, but I'm not sure. If it's a raspberry issue, the member is right that the market in raspberries is largely destabilized by external forces. Yes, staff in the valley are working with the industry, and no, I cannot give assurances that old-fashioned tariffication, for example, or exclusion of the imported product will protect their product in future. That's pretty much the result of the GATT and the FTA and the increasing trade agreement changes -- even those that are being signed in Chile by the Prime Minister as we speak.

[E. Gillespie in the chair.]

That doesn't mean, though, that producers or sectors of the economy that experience external competition from a lower-priced country of production -- a lower-priced operating regime, or however you want to put it -- will necessarily beat our products in the marketplace. We have highly competitive products in terms of food quality -- probably the best quality in the world. I remember a bumper sticker that used to say: "If you're eating grapes from Chile, you're already sick." That bumper sticker was intended to capture the imagination of people thinking: "Yeah, that's right; we have no idea what additives are on food in other parts of the world, and given a choice, maybe we should eat the food from our own province where we have some control over what's put on it before or after harvest."

There are issues of quality and appearance, and then there are issues of freshness. A raspberry is a very easily bruised commodity. You can imagine that if your market is primarily Vancouver, you're way more likely to be able to service that market with a fresh product from the Fraser Valley than from Chile. Then there are issues of value-added. Perhaps we can find uses for that part of the product that isn't sold fresh, which allow the producer to recapture from the marketplace a higher percentage of their costs.

What I don't want the hon. member to do is suggest that we are ever going to desire to operate in, or that I would have any pleasure of participating in -- and I don't think he would either -- an environment that actually attempted to compete with the environmental regulations, the pesticide regulations and the labour regulations of Central and South American countries that might wish to compete with us in the market. We simply don't want to live in a place where health care or education, for example, are operated at the standards of those countries or where labour costs are pennies a day. In fact, I would submit that we don't even want to operate in the labour milieu of San Diego or the maquiladora. So either we make a decision to engage in the race to the bottom -- and in food it's a deep, deep bottom -- or we have to figure out ways to get the price from the marketplace. I'm for the latter, and I hope the hon. member is too.

B. Barisoff: I do agree with the minister on the fact that we don't want to be in the race to the bottom. The concern I have is: do we, through the Ministry of Agriculture -- whether we do it together as government or whatever -- somehow create the profile so that the farmers in their state right now. . . ? Some of them believe that they've raced to the bottom already because they can't sell their product. A lady who called me from the blueberry association said that if they don't get paid. . . . They can't get the market, and they've already reached the bottom.

I'm just wondering if the minister has some ideas -- maybe an enhanced Buy B.C. program. Being the minister, you probably have more ideas than I do, being new in the portfolio, for finding ways the local farmer or British Columbia farmer or Canadian farmer can be enhanced -- so that we are not in that downward spiral of racing to the bottom -- and for maintaining something that can make sure that the farming industry is a viable operation we can live with. This is what the farmers are concerned about. Some of them are hitting the bottom. If they can't sell and they don't have anything, they've already reached the bottom. Are there any means or methods that the minister has talked about or knows about that can make some of the raspberry or other agricultural industries survive when we're importing fruit or vegetables at such a cheap price?

Hon. C. Evans: We can talk about the Buy B.C. program. That was started pre-GATT, and it intended to use market preference to create the market for B.C. products before world trade laws brought all these cheaper products into our marketplace. It's working. For sure it needs to be enhanced, but it's working already. Something like 80 percent of the population recognizes the Buy B.C. logo as indicating that it's made here. That's product identification at a pretty high rate -- 80 percent customer recognition. In politics that would be enough to get you elected ten times over. It's working.

At our meeting last weekend we talked about ways to make it evolve -- for example, with B.C. Sharing -- so that the

[ Page 7008 ]

We could, with the support of producers and the retail sector, take it to the next level and actually talk about the quality of food in terms of additives in those Chilean and Michigan imports. But I'm not going to do that as an ideological point of view of a minister. It will take the food industry to make that decision. To deal with the post-GATT operating milieu, my feeling is that the food industry is going to have to operate with one voice not in reaction to what government does, but with government -- even providing direction for government. I think that the world of the future for B.C. berry producers is actually quite a positive one, because of the movement around the whole world towards higher-quality products and a willingness to pay for higher-quality products.

I was on a blueberry farm some time ago, and the owner of that particular establishment told me that the only reason he was able to be in business was because he was in Canada, where there was a labour climate that allowed him to handpick his blueberries. His competition in the United States is all machine picked, which means that the product when it actually gets in the store is more bruised, less cared for. There's less perfection in the picking process. His pickers, picking by hand, bruise the fruit less, and pick only the ripe fruit, and he has a higher-quality item going into the marketplace. Therefore he's selling 100 percent of his product into the United States -- the very country you're talking about that's dumping its product into ours.

That's not an anomaly. The greenhouse producers in Delta and Surrey are selling pesticide-free tomatoes in San Francisco and Boston -- into the American market -- because they have a higher-quality product. They're receiving the premium that they require to do business in Delta from the marketplace -- even from the United States marketplace.

So I think it can be doable. It isn't simply a matter of putting the walls back up at the border or cutting, cutting, cutting our input costs. We think there's a high price for labour, and I guess there is. But there's also a high quality of labour in the Fraser Valley that isn't available 20 miles south.

B. Barisoff: Maybe another area we could look at which the minister might consider is the regulation and red tape that seems to come to bear all the way down to the WCB. When you listen to farmers, you have it from them about the regulations, the red tape, the WCB and whatever else. Are there any means the minister could see where some of these areas could be alleviated for the farming community, where they would get some breaks in these areas? I'm not looking at subsidies but at better ways of competing in the global market, so they can actually make a living at it.

Hon. C. Evans: Staff brings to my attention an environmental ten-point program. Item No. 6 says: "The province is committed to reducing red tape and to streamlining processes and will ask the joint working committee to identify areas where environmental processes can be reduced or eliminated, while still protecting the environment." That's on the environmental side, and on the weekend we discussed all the other kinds of areas -- like labour and the WCB and the like -- with the producer community itself.

[5:00]

B. Barisoff: I don't think I was asking the minister to bring us down to that level, but I think you did hit the nail on the head when you said it's the paperwork and it's the burden that goes along with some of these rules and regulations that seem to. . . . When you have to go through four or five people to get an answer, or when things are going in that direction, that is what causes frustration -- particularly on family farms, when they don't have either the expertise or the people that can make the phone calls or fill the forms in or do whatever. I appreciate the fact that the minister is looking at cutting a lot of these things. I must admit that this is the first time I've seen this ten-point action plan, and I am trying to read it in the process of asking questions. But there seem to be a number of good ideas there.

Moving on to other items, based on StatsCan information, B.C. has the lowest growth of food-processing shipments in Canada for the years from 1993 to '96. Growth rates in three other western provinces were more than double that of B.C., and B.C. witnessed a mass exodus of food-processing jobs. Can the minister explain why B.C., given its strategic position as an exporter, continues to fall behind other provinces in the food and beverage industry?

Hon. C. Evans: The hon. member highlights a real predicament for the latter part of this century for the people of B.C. We have seen the ending of the Crow rate and the ending of feed freight assistance, and the creation of western pooling and a free trade agreement.

The largest food processor in my constituency is a brewery, and I really like those people. They are just about our largest employer, and I talk to them all the time. I have said to them: "Will you please explain to me how it happens to be that the brewing industry becomes increasingly centralized in Saskatchewan and Manitoba?" Their management has explained to me that post-free trade -- now that countries and jurisdictions can no longer manage their market -- they have to make a profit. What they have to do is manage their inventory, and for every industry it becomes more profitable to manage the inventory from the centre of the market, equidistant from the eastern and western edges of their distribution network. Because their margin is small, where their inventory is in the marketplace -- in the sort of just-in-time era of marketing -- is the question of profitability.

At the same moment, we are struggling with the ending of the Crow rate. If you've got a rail car loaded full of grain, there are a couple of things you can do with it. You can put it on the railroad and pay full cost to the coast and then sell it to the world, or you can feed it to animals and then ship the

[ Page 7009 ]

When Nalley's closed, a third operating factor was brought to bear. I met with the owners of Nalley's before they left for Oregon, and they told me some fascinating things. They told me that prior to the Free Trade Agreement, there were eight people making potato chips in Canada; post-free trade, there's one left -- and that was them. They told me that when they made the decision to move to Oregon, or to think about moving to Oregon, they did a cost-benefit analysis of being here or in Portland. They found the land prices were the same, the labour costs were the same, the environmental regulatory regime was the same, and the taxes were the same. It's a wash, where you put your plant. However, post-free trade they have product being dumped into Canada by their competitors, both of whom are from Texas, at less than the cost of production. So staying in Canada as a Canadian company, they cannot continue to exist. Their only solution was to move into the operating milieu of their competition and sell into their competition's operating milieu.

When the operating cost is a wash either way, two years of rain in Delta tips the balance and they go south. That's a third competitive problem that British Columbians have. We are operating on a myth, hon. member, and that myth is that location decisions are a function of labour costs or taxation. When you go and actually talk to the producers themselves, they will give you a different answer.

Now it's time that we have to fight back, because we can't afford to move all those jobs. We need capital to fight back, we need government and labour to fight back, so that we can maintain a B.C. processing industry. That's largely what we were talking about on the weekend: what does the fight-back campaign look like? How can we use proximity to market as a hook to bring some of that industry back or to keep it here -- because, of course, we are the only province in western Canada with an ever-increasing market? How can we use proximity to export as a way to bring it here? This is the market to the world. Never mind the Asian slump; this is the place. Vancouver is the place you want to be if you're selling that chicken to Asia or down the west coast to California. How can we use proximity to export as our market advantage?

This is also a place where the labour component and the technology are among the best in the world. Lilydale's board was talking about their Port Coquitlam processing facility as the best in Canada and maybe the best on this continent. They put it in British Columbia. Why? Because the labour, environmental and taxation issues are a wash; they are irrelevant. They put it here to capture that export opportunity.

I have here a letter to the Premier from an Alberta company that I'll read into the record. No, actually, maybe I won't, unless you ask me another question about it. Suffice it to say, if you wish to follow this debate about why they are leaving, I'd be pleased to argue the case that British Columbia has at least as positive a business environment as our sisters to the east.

The much more fascinating question to me is: what are we going to do about it, and what will we use as our natural advantage? We have to admit -- British Columbia generally and Vancouver Island even more than that -- that we can't have the Crow back. If we pretend we're living in the era when the cost of grain transportation was subsidized, we will build industries in British Columbia which can't stand on their own feet, based on a time that is past. I don't think we ought to do that; I think we ought to build industries that want to be here because of the market opportunities, because of the excellence of the labour opportunity and because of the opportunity for export.

B. Barisoff: I appreciate what the minister is saying, but when I look in today's Vancouver Sun, it says that the cost of doing business here is higher than anywhere else. I look down this list, and I see these food-processing plants: November '97, Nalley's potato chips, a loss of 75 jobs, 150 in the high season; November 1997, Puritan-Lipton Foods meat plant moved to Quebec, 75 jobs lost; 1996, Intercontinental Packers closed, 350 jobs; December 1996, Dairyworld ice cream closed, 68 employees; November 1996, Lucerne ice cream, 17 employees; September '96, Canada Safeway announced it was shutting its jam and jelly plant in Burnaby, eight employees laid off; August '96, Safeway closed its Langley plant; May 1996, a Foremost plant shut down. This goes on and on. Then I read in today's paper again where the cost of doing business here is higher than elsewhere.

I've got to question what the minister is saying about the fact that we're on this level playing field and that everybody is the same whether we're going to Washington State or Alberta, yet we see business after business after business in the agrifood industry leaving the province. I've got to wonder whether there is something else happening here. Is there some confidence or is everybody wrong? I don't like to take a lot of things out of the Vancouver Sun, but when I see it in today's headlines, "B.C. Food Plant Exodus to Alberta a 'Great Concern'. . . ." It's a real concern to me, Mr. Minister. Being the critic for Agriculture and reading down this list. . . . I only went halfway down. I didn't add up the number of jobs, but I'm sure I got close to a thousand in a hurry, and I wasn't that far down the page. I'm sure that I don't have all of them on the list.

I guess I've got to ask the minister: what is the Ministry of Agriculture doing to attract these businesses back to B.C.? I don't think we're on the same level playing field, because if we were, all of these businesses wouldn't be leaving. We seem to be losing them on a daily basis. When it becomes headlines in the newspaper, you've got to wonder what's happening. I think that for the agrifood industry there's got to be something else here that I'm missing. Maybe the minister can set me straight and tell the people in the agrifood industry what's going wrong and why these industries are leaving and going to Alberta.

Hon. C. Evans: I am not going to use this occasion to have an ideological argument with you. I am not sure what you're suggesting, hon. member. I am not from the political party that decided a free trade agreement would be a really neat thing to do. I am not from the political party that decided that we couldn't afford the Crow anymore, hon. member. Do you want to make eye contact? Do you remember who it was?

I am responsible for managing this ministry in the wake of the business decisions that gentlemen and ladies on your side have visited upon Canada in this decade. I am proud to take responsibility for dealing with it. I don't want to get busted for it, though, hon. member, by a gentleman from your side.

[5:15]

[ Page 7010 ]

I was visited last week by two companies from northern Alberta asking if we could assist them to move to Dawson Creek to meet export opportunities in value-added by processing in the Dawson Creek area. We did not get into an ideological argument or discussion, saying whether British Columbia or Alberta was the better place to do business; we just talked about how to make it work.

I would like to have that relationship with you. I've got all kinds of thoughts about the people who are driving the trade posse in our country today and all kinds of questions about how you reconcile your position with those folks. But it's irrelevant. Our job is to do business in B.C., not to decide who's right and wrong.

The Chair: Might I remind members on both sides to speak through the Chair, please.

B. Barisoff: My intention was to bring forward what's taking place in B.C. with the agrifood industry. My intention to attack the minister on a personal basis. My intention was to bring forward the fact that we are losing this industry. It is leaving, and when we lose the agrifood industry, it puts a great strain upon the farming industry itself. If you lost the packinghouse in Creston, I'm sure it would have a great impact on the fruitgrowers of the Creston area. If you lost the packinghouse in Oliver, it would have an impact on the fruitgrowers in the Oliver area. If you lose the agrifood industry and some of the dairy and ice cream producers in the Fraser Valley, it has an impact on the farmers that produce the milk for the ice cream.

I don't think that my intention. . . . It wasn't a personal attack on the minister himself. My attack was on the system itself, which seems to be failing the farmer. And the farmer himself is the one that ultimately suffers. I must say that growing up on the farm, being a farm boy, you understand what takes place. If you believe that I was attacking you, I wasn't. I was trying to send a message or a direction through to the ministry that I would be here to cooperate at any given time. I know that on a number of occasions the member for Abbotsford spoke highly of you and what you try to do. I think together we have to do some things to make sure that I can't stand in opposition and read off a list of agrifood industries that have left this area. With them go the jobs.

So I take a little exception to the minister getting angry with me for bringing the issue forward. It is a real concern that these kinds of things are happening in our province, and jointly we must work together to make sure that this doesn't happen in the future. I will do my utmost to work with you to have these things happen. But the reality of it is it's happening. They're leaving B.C., and whether they're going to Alberta or to Washington State, we've got to do something. Whether we do it together or whatever, I just want to make sure that it comes forward and we understand what's happening.

I think what I'll do is read some of the crop insurance questions for tomorrow. You got me wound up a little bit too. Maybe we'll just do some budget questions; those are a little easier. They're not quite so philosophical, and they're easier answers that we can get the ministry to do. Can the minister break down the $21 million promise to farmers for the farm safety net programs? The figures released by the NDP don't seem to add up. Could you go through those figures?

Hon. C. Evans: I think the number that the hon. member is referring to is actually a percentage increase, not millions of dollars. I'm not sure where the $21 million figure comes from, but I'll tell you what the increases are that I understand. The 1997-98 estimates of this ministry were expenditures of $56.015 million; in '98-99, $62.488 million. I think both of those numbers are without fish. The increase between the $56.015 million and the $62.488 million breaks down into: $10 million to the disaster program -- whole farm insurance; $2.15 million for a loan guarantee program; $1 million extra for SIR; $2 million for crop insurance; another million for grazing enhancement; and then a series of reductions in administrative programs. The rest of the ministry is pretty much a saw-off, a little bit more or less. But those are the major increases: $10 million, $2 million, $1 million, $2 million and $1 million -- for $16 million.

B. Barisoff: I guess the figure that I had was the $21 million that was going into the farm safety net programs. That's the breakdown that I wanted. Apparently there was $21 million going into that particular area. I just wanted to see what the breakdown of that was.

Hon. C. Evans: I'm not sure what piece of paper the hon. member is operating from, but I misunderstood the question and thought he was talking about increases.

The safety net program basically breaks down like this -- and it doesn't come to $23 million: crop insurance, $5.25 million; loan guarantee program, $2.15 million; whole farm insurance, $10 million; NISA, $3 million.

As I understand it, that's what the safety net program looks like. However, hon. member, the federal government participates in each one of those programs, except the whole farm insurance for last year. So the figure that you're quoting may have a federal component in it.

B. Barisoff: If you could get the exact breakdown of that farm safety net program and where it's all going, that kind of thing, and whether there's some that's federal or not. . . .

The minister announced that there was going to be a 23 percent increase in the Agriculture budget. I must say that from the farming community's standpoint, they're probably ecstatic. Could you just indicate to me where this extra funding is going and how it's going to be disbursed?

Hon. C. Evans: The money is going to a $10 million increase for whole farm insurance, $2.15 million for loan guarantees, $1 million for sterile insect release, $2 million to basic crop insurance and $1 million to grazing enhancement. That makes $16 million, which is 23 percent of $62.488 million, I think.

B. Barisoff: That $21 million was in a news release of March 31, 1998, and that's the one that just said: ". . . $21 million direct to farmers for farm safety net programs, a return to the 1990-91 level." Like I said, somehow it just doesn't seem bad, from where this is supposed to be going. . . . So if the minister could get me those exact figures.

Hon. C. Evans: The press release of March 31 talks about $21 million as the base budget for agricultural safety net programs. I believe that that breaks down at $5,250,400 for crop insurance, $2.5 million for loan guarantees, $10 million for whole farm insurance and $3 million for NISA, for a total of $20.9 million. Of that, $5 million in the loan guarantee

[ Page 7011 ]

B. Barisoff: I trust the minister has those figures right, and we'll go over them.

Can the minister indicate to me what percentage of the budget will be going into marketing board programs?

Hon. C. Evans: I don't know about the percentage, but that would be $925,000 out of $62 million -- so one sixty-second, and you can figure that out.

[5:30]

Can the minister re-explain to me the total base budget for the safety net program? What's the base budget of that entire program? Is that that $21 million, or. . . ?

Hon. C. Evans: Yes, the safety net program is, as I've described. . . . The way NISA works, producers may or may not contribute, and our contribution goes up or down according to how much producers contribute. The way crop insurance works is that in a bad year you may have a high drawdown and in a good year you may have less than a $10 million drawdown. What I described to you is the money that we budget for all the various kinds of risk management that we have responsibility for. It isn't necessarily that that much will be charged out in any given year.

B. Barisoff: This year's budget reflects the first budget increase since '91. When the government's debt is increasing, how is it possible for this ministry to enjoy an increase of $6.5 million? I guess I'm wondering how, when everything else is going down, the Ministry of Agriculture has been able to increase the budget by 23 percent.

Hon. C. Evans: Brilliance. The present increase is actually to no credit of my own. It is because a couple of years of bad weather proved beyond a shadow of a doubt to everybody that the risk management system had been reduced to the place where it was dysfunctional. Because it's really a form of insurance, once it became dysfunctional, we couldn't market the insurance. As I said in my introductory remarks, in 1995-96, there were only 23 percent of producers buying the insurance, because it had been reduced in its pay-out to the point where it didn't make sense to put your money there as a risk management tool. Consequently, in '96-97 people didn't buy it, and the terrible weather came and they couldn't be paid.

[E. Walsh in the chair.]

We received delegations from everywhere, from many commodities, especially for berries, potatoes, grain and fruit, arguing that enough money had to be put back into the risk management part of the portfolio that there would be enough people buying the insurance that the contributions would make the program work. So the real answer to your question is that the producers themselves convinced the government that it had been reduced to the point where it was dysfunctional and had to be increased to make it work. Otherwise there was no real sense in even pretending we had a crop insurance program.

B. Barisoff: Of the $10 million that the ministry is putting into the whole farm insurance program, can the minister indicate to me how much will be going into the farmers' pockets and how much will be going into administration?

Hon. C. Evans: Hon. member, the total administrative fees for running the program -- crop insurance in all of its ramifications -- are about $700,000 or $800,000. However, we charge for the delivery of a good many services. Reducing the budgeted component of administration to $300,000. . . . Depending on our delivery mechanism, the percentage figure you're looking for that is actually getting to farmers may get as high as 98 percent, with 2 percent going to administration. The worst case looks like about $300,000 of $10 million being consumed for administration.

B. Barisoff: So then it would be fair to say that we wouldn't exceed, that we would be looking. . . . Out of the $10 million, $9.7 million would be getting into the farmers' pockets in one fashion or another?

The minister is nodding yes.

In the budget backgrounder attached to the March 31 news release, it states that the annual investment in B.C.'s food-producing industries rose more than 50 percent, from $209 million in 1991 to $316 million in 1996. Can the minister explain where the bulk of the increase in investment came from?

Hon. C. Evans: StatsCan didn't provide a breakdown, and staff advise that we will get that breakdown in future. Would the hon. member like me to guess, or. . . ?

B. Barisoff: It's entirely up to you.

Hon. C. Evans: There have been some very fast-growing sectors of the industry, as the member knows, like greenhouses or wineries. My guess would be that those sectors, mostly in the Horticultural Coalition -- flowers, greenhouse tomatoes, mushrooms, VQA wines, agritourism activities -- would be the largest growth sectors. As I say, that's purely anecdotal or subjective. We'll get the data later.

B. Barisoff: According to the NDP polling done last year, 66 percent of those polled believe the best way to keep food prices affordable is to make sure that B.C. has a thriving agriculture industry and that it never becomes too dependent on other countries for food. How does the minister intend to keep prices affordable when the industry is hampered by overtaxation and overregulation?

Hon. C. Evans: I think food is so affordable that it would be actually in everybody's interest if prices went up and British Columbians contributed more like the North American or European average of disposable income on food. We have inexpensive food. As a percentage of our disposable income, food is almost insignificant. I would like to encourage it to go in the opposite direction from what the hon. member is suggesting and to find ways to get more price out of the marketplace rather than less.

B. Barisoff: It would behoove me not to go back to some of the figures that have taken place over the years in the budgets for Agriculture. When I did go back. . . . Not being involved in this but being involved for the first time, I went

[ Page 7012 ]

My question to the minister would be this. In that period of time when we dropped by almost by 50 percent, to say that we've increased by 23 percent of last year's budget is probably 100 percent true. But looking back over the years, Agriculture has taken a serious hit. I'm just wondering whether the minister would be looking to maintain this increase or where he plans to go with the Agriculture budget in the future, considering that we've basically lost 50 percent of where we were in 1991.

It's probably indicative of what we're seeing in the farming community throughout the province, where people are struggling so hard. It's all fair and well to say that it's priorities. I'm sure that I know the minister's answer; I'd just like him to repeat it.

Hon. C. Evans: It would be my wish that the percentage of the provincial budget expended on agriculture returned to historical averages. However, my wish is pretty irrelevant in the world in which we're operating. Also, I don't really wish to return to -- nor do I think it would be a good thing to promise producers that we could return to -- historical ways of distributing those funds. The high levels -- the historical levels from the early eighties that the member was just talking about -- had distribution in them for funding various ways of paying people to produce, primarily FII. I don't think we're going to return to those levels, to those programs. I don't think it would assist farmers.

However, I would be very supportive of green programs, non-GATTable programs, to assist the producing community with land investments, environmental investments, manure management investments, and all those things that we ask farmers to do in the interest of society -- for example, damage to crops by wildfowl and elk and the like. I think there are many ways we could assist producers with societal problems rather than paying them to produce food.

There are also ways that we could promote R and D, an investment in trying to lead the world in the quality of our industry. Then there are those kinds of change agents, like replant in the wine industry and the orchard industry that we discussed earlier, which again are not subsidies but agents of progressive change. I'd like to see money for all that.

Making that happen will require that agriculture. . . . We can't expect and don't want to see El Niño continue to drive people to drive tractors down here and park on the front lawn. We don't wish to see the kind of political activity of last year repeated -- with the farm community assisting themselves to build this budget. But it would be a really good idea if agriculture organized, as they have in previous eras, to articulate their needs the way other sectors of society do to build their. . . . You know, there are interest groups in health and education, and even in transportation, that are really good at saying what they need to all of us, on all sides of the House, and in the civil service and in the public at large and on the TV news. Agriculture is not too good at it.

[5:45]

B. Barisoff: The problem with farmers is that they are the hard-working people of the land, and they seem to take it on the chin -- the last person on the totem pole. They seem to be working the hardest and getting the least for what they do. I guess we're both defending the farming community and probably coming from the same direction in a lot of cases. It's just that some of the issues from my perspective that I will bring forward and have to bring forward, in essence to show my concern to the farmers. . . . I appreciate your answer and the fact that it's something that we all have to work on together, but until we start to work together, they seem to get the least amount of all. That's because they're down-to-earth citizens of British Columbia.

Moving on to some of the information that you provided me in the brief. . . .

An Hon. Member: Noting the hour.

B. Barisoff: Well, noting the hour, rather than starting on a new section, adjournment would be in order, Madam Chair.

Hon. C. Evans: I've actually got the words here. I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 5:47 p.m.

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