[ Page 9149 ]

The House met at 2:06 p.m.

Prayers.

Hon. U. Dosanjh: I am pleased to be able to ask the House to welcome a very close friend of mine from India who is a very senior journalist in Chandigarh, which is the capital of Punjab. Herkawaljit Singh is here in the gallery with his spouse Amarjit Kaur and their beautiful young daughter Harleen Kaur Singh, who I love very much. Would the House please make them welcome.

The Speaker: I recognize the member for New Westminster.

Hon. U. Dosanjh: Hon. Speaker. . . ?

The Speaker: Oh, just a moment. The Attorney General hasn't finished yet.

Hon. U. Dosanjh: I think I would not be allowed into my home tonight. . . . [Laughter.]

It's one of those rare occasions -- one of three or four occasions -- that my wife Raminder has been here. Without her, I wouldn't be here today doing what I'm doing. I want to make sure she knows that I want the House to join me in welcoming her here.

G. Bowbrick: Joining us in the gallery today is Theresa McManus, who is a reporter with the Royal City Record in New Westminster. The Record is one of my hometown newspapers. Theresa is here for the day to see what New Westminster's MLA does over here in the Legislature. I'd ask all members to join me in making her welcome.

Hon. L. Boone: In the gallery today are two good friends from the wonderful community of Savona. They are Bernice and George Craggy, noted as being the sister and brother-in-law of a very important and very special person in Prince George, Mr. Fred Bagg. Would the House please make them welcome.

B. McKinnon: I'm pleased to introduce to the House today a friend and constituent, Judy Carey, and her nephew Robert Jackman. Robert is a student at Semiahmoo Secondary School in White Rock. He is here to listen to question period because he's very interested in politics, and he wants to see how ministers answer the questions that we ask them.

I would also like to introduce to the House another constituent of mine, Steve Oakley, who I met with this morning. I ask the House to please make them all welcome.

K. Whittred: With the 1998 legislative internship program coming to an end, I'd like to recognize the work of the four interns who worked with the official opposition: Elizabeth Harrington, Kristin Patten, Brad Smith and Cynthia Yoo. These four bright individuals have been a tremendous help to us. We thank them for their assistance and enthusiasm, and we wish them the best of luck in the future. I ask that everyone join me in congratulating them on a job well done.

J. Smallwood: I have two introductions to make today. The first guest in the gallery is Graham Steel, who has travelled from coast to coast to be with us in Victoria. Graham is the NDP caucus research director for the newly elected official opposition in Nova Scotia. He is here getting tips on how to form the government caucus. . .

Interjections.

J. Smallwood: It's not practice to heckle during introductions.

. . .as they all anticipate forming the government in the next election. I'd like the House to make Graham welcome.

My second introduction is to welcome 55 adult ESL students. We can see them around the gallery today. Most members. . . . I think we need to take a moment and acknowledge the new faces in Surrey. Surrey is a changing community, and this ESL class is reflective of the welcoming that our community has for a very diverse group. It would seem that we have representation from just about every nation in the world. Joining the adult ESL students is my good friend Ms. Andrea Eaton. I would like the House to make them all very welcome.

Hon. C. Evans: It's an odd contradiction, but in the last ten years the person who has come closest to defeating me in an election is actually a New Democrat. I would like to say to Wayne Peppard, who is here visiting us, that it warms the cockles of my heart that we might both work here at the same time. Would the House please make him welcome.

Hon. H. Lali: I too would like to join the member for Surrey-Whalley in welcoming the ESL students. I'll just say that in Punjabi. [Punjabi spoken.]

B. Penner: It is my pleasure today to introduce Mrs. Myrna Bennett, who is visiting us from the riding of Vancouver-Quilchena. I got to know Mrs. Bennett after becoming good friends with her daughter Jennifer, who I met a number of years ago in Bangkok, Thailand. Would the House please make Myrna welcome.

P. Calendino: I'd like to join my colleagues the member for Surrey-Whalley and the member for Yale-Lillooet in welcoming the ESL students in two other languages. Vorrei chiedere alla camera di dare un caloroso benvenuto agli studenti di lingua inglese in visita a questo parlamento e spero che avranno una buona esperienza. Y ahora en español por todos los estudiantes de lingua española que estudian el inglés me gustaria pedir a todos los deputados de dar un muy caliente "bienvenido" a todos esos estudiantes. Bienvenidos.

Hon. J. Kwan: Following the tradition of the House in welcoming the ESL students, I'll welcome them in my mother tongue, the Chinese language. [Thank you all for coming to attend the B.C. Legislature today. Thank you.]

[Translation provided by J. Kwan.]

The Speaker: I recognize the member for Esquimalt-Metchosin.

Interjections.

[ Page 9150 ]

[2:15]

Introduction of Bills

ENVIRONMENT MANAGEMENT
AMENDMENT ACT, 1998

Hon. C. McGregor: I move that the bill be introduced and read a first time now.

Motion approved.

Hon. C. McGregor: Hon Speaker, these amendments to the Environment Management Act will ensure better environmental stewardship of a wide range of products and packaging, through greater industry responsibility and accountability. This legislation confirms and builds on B.C.'s past and ongoing success with industry stewardship and enables us to further encourage this approach to environmental protection.

Stewardship agencies provide industry, consumers, communities and the public with the opportunity to have an enhanced role in the protection of the environment. These groups and people are active participants in managing stewardship initiatives. These amendments provide them with the authorities to take responsibility for environmental stewardship.

Hon. Speaker, I move that Bill 40 be placed on orders of the day for second reading at the next sitting of the House after today.

Bill 40 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

SCHOOL TRUSTEES AND
EDUCATION AGREEMENT-IN-COMMITTEE

Interjections.

The Speaker: Members, members. The question has not been put yet.

M. de Jong: As he prepares to table legislation dictating the terms of a settlement he has concocted with the BCTF, my question to the minister is: would he explain to British Columbians why they should even bother electing school trustees and school boards, after he's demonstrated his willingness to yank the jurisdictional rug out from under their feet?

Hon. P. Ramsey: I think that this House has followed closely the negotiations with the teachers of the province and the school trustees over the last few months. One part of the member's statement is accurate, and that is that trustees were involved in negotiations with the BCTF for some months. In fact, ever since the first provincial agreement was signed in 1996, they've been preparing for the second round of bargaining and then engaged in it, starting when school commenced last fall. Regrettably, those negotiations went nowhere, and indeed in February, government first facilitated discussions between the BCTF and the trustees. When that did not work, government stepped in directly to strike a deal which will enhance education in our classrooms, put 1,200 more teachers into schools to help kids learn better, and improve education for our children.

The Speaker: First supplementary, the member for Matsqui.

M. de Jong: What he stepped in with was a slush fund -- $150 million that he wouldn't make available to the school trustees whose job it is to negotiate this contract in the first place. That's what he did.

Why doesn't the minister tell us what he's really thinking? That's all we want to ask him today. Why doesn't he tell us that he thinks he's smarter than all of the hundreds of school trustees who are trying to manage public education in this province in the face of his government's woeful mismanagement? They're trying to manage it in their communities. Why doesn't he just stand up and say to those school trustees whom British Columbians have elected that he doesn't care what they think, because he knows best?

Hon. P. Ramsey: I will be pleased to tell the member and the chamber what I'm thinking. I'm thinking that the teachers of this province have done a service for the children that they serve by agreeing to put their wage demands on hold for two years so that we can enhance education in the classroom. I'm thinking that any opposition that actually supported public education would be applauding an initiative to reduce class size in kindergarten-to-grade-3 and to get kids better attention. And I'm thinking that this government is committed to seeing those resources start to flow into our classrooms this fall. We'll be taking action, whatever it may be, to ensure that.

FOREST SERVICE RECREATION CAMPSITES

[ Page 9151 ]

The Speaker: First supplementary, the member for Shuswap.

G. Abbott: Only an NDP government would make 1,500 campsites the centrepiece of a budget and then turn around and abandon 1,400 others. Who else could possibly do that? This government would like us to think that British Columbians, when they go camping this year, are going to have more campsites to choose from. The fact is that there's going to be fewer. In fact, when this government announced their 1,500 new campsites, they said it would be an impetus to the commitment to youth, environmental protection and job creation. Will the Minister of Environment explain how closing 800 recreation campsites will create jobs and protect the environment?

Hon. C. McGregor: I'm proud of this government and the legacy we've created in park creation since being elected in 1991. It is this government that made the commitment to double the parks in the province of British Columbia. It is this government that made a commitment to protect the biodiversity of our province. It is this government that made a commitment to extend the opportunity for recreation through provincial campsites with the addition of 1,500. In fact, we have more than 2.7 million visitors annually to our B.C. parks.

The member opposite. . .

The Speaker: Minister, wind up.

Hon. C. McGregor: . . .spoke also to the matter of youth. We do indeed, in this ministry, take that matter seriously, as well, through the efforts we're making in environmental youth teams and the employment opportunities we're providing for young people. . .

The Speaker: Minister. . . .

Hon. C. McGregor: . . .who would otherwise not have those opportunities.

The Speaker: Thank you, minister.

Hon. C. McGregor: If I am asked any subsequent questions, hon. Speaker, I can expand.

The Speaker: Second supplementary, the member for Shuswap.

G. Abbott: The two things that this government specializes in are hypocrisy and doubletalk. We know that this government could find $168,000 for a jobs accord advocate. We know that they could find close to a million dollars for the accord advocate's office. We know they could find $2.2 million to force the unionization of silviculture workers in this province. When is this government going to wake up and realize it has to live up to its existing responsibilities to the people of British Columbia?

The Speaker: Hon. member, I'm sorry, but I didn't hear the minister to whom your question was addressed.

G. Abbott: Hon. Speaker, I'd be delighted if any of them could answer this question. But let the Minister of Environment try.

Hon. C. McGregor: Our record in park creation and the maintenance of biodiversity in this province is, bar none, the best in North America. There is no government in British Columbia that has lived up more to the commitments that we in this ministry have made to British Columbians.

Interjections.

The Speaker: Members, come to order.

C. Clark: The Minister of Environment promised that she would create 1,500 new campsites in British Columbia. The Minister of Forests is shutting down 700 campsites. I have a math question for the minister. If there are 1,500 new ones being created and 700 old ones being shut down, how many new campsites need to be created to meet the government's target? Is she considering maybe a campsite jobs accord, a campsite advocate? Or has the promise that they made been misinterpreted: it's really just a target, and they never said they were going to create the campsites? Will she just admit that this campsite promise is another promise that's going to evaporate, just like every other NDP promise has evaporated in the last year?

Interjections.

The Speaker: Order, hon. members.

Hon. C. McGregor: I'd be very happy to offer the member opposite a complete list of all 500 that are scheduled for this year and the other parks that are being considered for year 2.

The Speaker: First supplementary, the member for Port Moody-Burnaby Mountain.

C. Clark: The list that I would like from this minister is the list of campsites that they are going to be closing this year. The fact is that there are going to be fewer campsites this year than there were last year, despite the government's promises. Summer holidays start at the end of the week. There will be hundreds of British Columbia families and tourists getting in their cars and travelling down the road to find that at the end of the road, there isn't a campsite left to go to. When was the minister and when was this government planning to let British Columbians know that they are shutting down half of the forest recreation sites in British Columbia?

Hon. C. McGregor: As I mentioned earlier, there are more than 645 provincial parks in British Columbia, many of which are on the campground reservation system. I would urge the member opposite, if she doesn't have a place to stay, to give them a call.

Interjections.

[ Page 9152 ]

R. Thorpe: The sad truth is that the NDP cannot manage a thing in this province, including the parks. We know that the minister responsible, the Minister of Environment, has seen a decrease of 1.4 million visits to parks in the last three years.

My question is to the Minister of Tourism. What explanation does he have for this decrease. . .

Interjections.

The Speaker: Order, members.

[2:30]

Hon. I. Waddell: I'm tempted to say that nobody talks that way to the member for Vancouver-Fraserview. [Laughter.]

Interjections.

The Speaker: Members!

Hon. I. Waddell: But I don't know what the consequences would be.

Let me instead answer the member's question. You know, tourism is up in British Columbia, and the member should know that -- mainly through the efforts of Tourism B.C., which the member applauded in the estimates, and also through the efforts of all the small business people, whom I salute. They're the people that create jobs in British Columbia, and they're working hard. Tourism is up in British Columbia due to a number of reasons, but mainly because people can come and enjoy our cultural institutions and our great parks. The Minister of Environment just pointed out that we've created more than almost any other jurisdiction in North America.

The Speaker: First supplementary, the member for Okanagan-Penticton.

R. Thorpe: Tomorrow is the last day of school and the beginning of the camping season for thousands of British Columbia families. Today families don't know whether or not they will be able to use those recreational campsites on the Canada Day weekend. Will the minister commit to the families of British Columbia today that those parks will remain open all summer?

Hon. I. Waddell: To answer the question, I want to make as many parks as possible open to people in British Columbia, so that the average family as well as the tourists that come into this province can have a good time in Super, Natural British Columbia -- which we all love. But that's in other ministers' portfolios, and they have to make the proper announcement.

But I'll say this to the member: constantly during my estimates the member advocated spending more money, more money, more money. Then they get up in question period, and they say: "Balance the budget, balance the budget." The opposition's got to be consistent.

The opposition shouldn't mislead those families and campers in British Columbia. We are trying to do our best, within the financial limitations, to provide the best services for people in British Columbia, and that includes those families.

Petitions

Tabling Documents

Orders of the Day

LABOUR RELATIONS CODE
AMENDMENT ACT, 1998
(second reading continued)

The starting point for modern industrial relations in North America was in 1935, when the U.S. Congress passed the National Labor Relations Act, which is also known as the Wagner Act. For the first time in North America, the law explicitly recognized the right of employees to belong to the trade union of their choice. Secondly, it recognized the right of workers to participate in the process of collective bargaining. The rationale for this was quite interesting. I've done some reading, and what I've come across is part of the preamble to that act. It states this:

"Experience has proven that protection by law of the right of employees to organize and bargain collectively safeguards commerce. . .and promotes the flow of commerce by removing certain recognized sources of industrial strife and unrest, by encouraging practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to wages, hours or other working conditions, and by restoring equality of bargaining power between employers and employees.

"It is hereby declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection."

We followed suit in Canada sometime after the Wagner Act in the United States. In Ontario in 1943 we had the first

[ Page 9153 ]

Now, what we're trying to do with Bill 26 is ensure that those two basic principles first enunciated in the Wagner Act are applied to construction workers in British Columbia. That's all this is about. When it comes to these two basic and, I would venture to say, almost universally accepted principles, there is a problem in the construction industry in British Columbia. A worker may choose to be a member of a union in the construction industry, but in the vast majority of cases he or she never gets to engage in collective bargaining leading to a contract. The problem is that negotiating that first agreement often takes longer in the construction sector than it takes to complete the actual project. When the project is completed, the employer-employee relationship ends, and thus there is no contract reached. Thus union membership in that sector often has no meaningful outcome in the overwhelming majority of cases, because workers are unable to effectively exercise their collective bargaining rights. No other workers in British Columbia face this problem. The construction industry is unique, and that's why this bill only addresses the construction industry. The bottom line is that there is inequality in this province. In effect, construction workers do not have the same rights as other workers in British Columbia. They may have them in theory under the Labour Code, but in effect they do not.

Workers in British Columbia have been raising these concerns for some time. I've heard these concerns raised by constituents. Just yesterday I met with a plumber who lives in my riding. He's just a regular guy. He lives on Dublin Street in New Westminster, a few blocks from where I live on Dublin Street. He wants what I'm sure all of us in this chamber want: to provide for our families, pay for our mortgages and live a decent life. He wants one other thing. He wants the same rights as other workers in other sectors of the economy in British Columbia. I've spoken to other constituents like him, and as their representative, I think they make a compelling case. So do my colleagues on the government side of the House.

We didn't just concoct this bill after hearing their concerns. Last year we struck the construction industry review panel. It was charged with reviewing collective bargaining in the construction industry and making recommendations. They made a fundamentally important finding: the construction industry is unique, and it requires separate labour relations legislation to take that uniqueness into account.

There's something else that I came across in my readings, before making my remarks here today, which I think is worth reading:

"An analysis of the nature of the construction industry shows that it differs from other industries in certain basic respects and that these differences in large part account for its special labour relations patterns and problems. Accordingly, if there was any approach to unanimity in the views submitted to the commission, it was on the proposition that legislation of general application. . .is not appropriate to the requirements of the construction industry.

"An examination of the Labour Relations Act and its operation confirms the allegations that in some of its main provisions and their administration, it is not appropriate to the construction industry. Like corresponding legislation in other provinces, it was formulated against the background of operations in manufacturing, mining and transportation rather than construction. Accordingly, for its more effective operation in the construction industry, the act must take cognizance of the particular needs of this industry by special or exceptional provisions, but these need not form part of a new and separate construction labour code.

"The bargaining unit envisaged by the act is a group of regularly employed persons engaged by a single employer and working at a particular location throughout the year. Construction employment does not fit this picture. It has no stability. The worker moves from job to job and from employer to employer. The duration of his employment may range from a few days to a number of months, depending upon the size of the project.

". . .certification under the Labour Relations Act appears to envisage a single employer-single location unit. In the construction industry this means certification for the particular projects. However, the nature of construction employment being as described, project certification proceedings may prove futile because the time consumed in processing the application may be equal to or even exceed the duration of the phase of construction affected by the application.

"Area certification, recognizing that employees of an employer move from project to project in the area, overcomes some of the problems posed by certification for a particular project. I recommend that area certification should be the general rule and that the board should restrict project certification to long-range projects of a special nature and that this policy should be set out in the legislative provisions relating to the construction industry."

Here we are in 1998, debating this kind of change, with the opposition behaving as if this is the end of the world. The fact is that British Columbia is the only jurisdiction in Canada that doesn't have specialized labour legislation pertaining to the construction industry. I've got a list of provinces that have -- well, every other province. . . . Provinces that have similar models to British Columbia include Alberta, Saskatchewan, Ontario, Prince Edward Island, Nova Scotia, New Brunswick and Newfoundland. We're the only ones who don't have it.

Now I hear from the opposition: what about the secret ballot? Well, I've got something else here which I think the opposition would find interesting, because I suggest it's a facile argument that they offer. What we have in Canada is a majority of governments that do not use the secret ballot in their labour relations legislation. British Columbia is not unique. I'll list the provinces: New Brunswick, Quebec, Saskatchewan, Prince Edward Island, British Columbia -- and the federal Liberals. The federal Liberal government doesn't use a secret ballot in its labour legislation.

I would suggest that what the opposition might want to do is cross-reference the two lists that I just outlined. What they will find, I think, is that there are other jurisdictions in this country that have similar provisions relating to the construction industry and also don't have a secret ballot. This is not unique in Canada; it's not the end of the world. It's happened in other jurisdictions for some time. In the case of Ontario leading the way, they don't have the secret ballot, but

[ Page 9154 ]

I'm not going to get into more of the details of Bill 26. My colleagues have done this. I know that the minister will get into more details at committee stage. Suffice it to say, there are three things that I'd like to point out very quickly. The first is that industrial, commercial and institutional construction is covered by this act, not residential. Second, this legislation brings us into step with other provinces right across this country. Third -- I think this is very important, and I wish somebody on the other side would address it -- this gives construction workers in British Columbia equal rights with every other worker in this province. Every other worker has the right to make a choice to join a union, and then they also have the right to have an effective collective bargaining process that can lead to a first collective agreement. That's everyone in every other sector except this one, and I think there's an issue of equality here.

In closing, I have a few comments about the nature of this debate. I spent some time last night reading through the Hansard transcripts of this debate, and I have to say that I've been disappointed.

Interjection.

G. Bowbrick: I'm a bit of a masochist, staying up late, reading what the opposition has to say on this bill.

I know that there are other opposition members who have yet to speak, and I'd like to ask them to do this: try focusing debate on this bill -- not on the economy, not on everywhere else in the country. Try focusing on this bill. Talking about anything but the bill -- which is what I've heard too much of from the opposition -- portrays a lack of depth, in my view. All the members have to do is read the bill and respond to it, not avoid addressing the bill. If they avoid addressing the bill, it suggests to me that they can't find much substantively wrong with it.

I don't want to appear naïve. The truth is that the Liberal opposition wanted a war on this bill. They needed an issue. I think everyone who reads this Hansard should understand that. They're desperate for an issue; they're desperate for a confrontation; they accuse us of confrontation in this province. Here they are, desperately grasping at a labour bill which will bring us into line with every other province in the country and will ensure that all workers in this province have equal rights.

I think that all of our constituents and this House deserve better than the talking points which are continually thrown at us by the opposition members. I ask the opposition members to go and do some reading of their own to try to understand this industry and then to come back and have an informed debate -- not this ridiculous rhetoric. Do you know what I've heard in this House during this debate, hon. Speaker? I've heard terms like neosocialist. I've heard the term neo-Stalinist thrown at us. Now, I want to go back a little bit to the fact. . . .

Interjection.

G. Bowbrick: I hear "pinko Commie" coming from the member for North Vancouver-Seymour now. I'm sorry he won't take my advice, but we all deserve -- and our constituents and British Columbians -- better than that level of rhetoric. I mean, come on! I began my remarks today by pointing out that modern industrial relations are rooted in something called the Wagner Act brought in by Franklin Delano Roosevelt. Was he a neo-Stalinist? What absurd, ridiculous rhetoric! It does not serve the cause of promoting informed debate in British Columbia.

I've avoided engaging in such debate. I don't label the members opposite; I don't call them names. I don't say the equivalent of neo-Stalinist or neosocialist or that kind of nonsense. The members opposite have attacked unions. They use terms like "big union bosses," and that's a kind of nonsense. One thing I haven't done in my remarks is attack business. I don't think that's useful. I'm trying not to be confrontational. I'm asking the members opposite to extend the same courtesy.

Having said that, it's been a pleasure to speak on this, this afternoon. I simply challenge the opposition to perhaps be more thoughtful in their comments. If they disagree with me, I challenge them to dispute what I have said. That's fair enough. Let's have that kind of fair and honest debate.

In summary, I see this as being about two basic rights for workers in the construction industry. We've recognized for 50 or 60 years now on this continent the right to belong to a union and the right to engage in collective bargaining that actually has an end result, and that means effective collective bargaining. This is nothing new; it's nothing radical. The construction industry is unique and therefore requires labour legislation that recognizes this uniqueness. It was acknowledged 36 years ago in Ontario. Every other province in the country has recognized that. It's time for British Columbia to catch up.

This is a matter of substantive, effective equality for all British Columbia workers and their rights under the code, and that's why I support Bill 26. I certainly look forward to the remarks of the members on my side and the members opposite in the nature of an informed debate.

E. Gillespie: I take great pleasure today in rising to support Bill 26, a bill which will give access to meaningful collective bargaining for workers in industrial, commercial and institutional construction -- members who choose to join a craft union. Over the last couple of days, we've heard an hysterical attack about the loss of rights of employers and damage to our economy -- debate in which we've heard from the opposition some of the most vitriolic attacks on working people and on organized labour in this province.

What we've heard little about from members of the opposition is the actual substance of Bill 26, so let's talk a bit about that bill. This bill will bring labour relations certainty and stability to the craft-organized portions of industrial, commercial and institutional construction. This legislation incorporates the recommendations of Stan Lanyon and Stephen Kelleher, both experienced arbitrators and former chairs of the Labour Relations Board, and it's supported by the majority of contractors and unions affected.

The changes protect the right of workers in construction to choose between non-union, craft union or industrial union models. These changes will maintain competition and competitive prices in industrial, commercial and institutional construction and will not affect bargaining relations in areas such as residential construction or roadbuilding. The B.C. government's 1993 Labour Code changes helped to create the most stable labour relations climate in decades. This bill brings the construction industry into this modern legislative framework. With this bill, British Columbia becomes the last province in Canada to adopt specific labour legislation for construction.

It's been my experience in this House over the past couple of years to witness the consistent attacks of the opposi-

[ Page 9155 ]

The opposition would have us leave health and safety to the goodwill of employers and have us deal with workplace injuries and fatalities as a result, rather than take a preventive approach. The anti-worker, anti-union sentiment expressed in the debate on Bill 14, and now on Bill 26, serves to divide the people of British Columbia even more, at a time when the cooperation of capital and labour is required to stimulate and stabilize the provincial economy.

This government committed, in its budget address, to help business create jobs by reducing taxes and cutting red tape. That has been and is being done. Taxes on small business are down; the baseline for payment of the corporate capital tax is moving up. We're witnessing single-window opportunities for permitting in the mining sector and in the oil and gas sector. And now for the balance: an addition to the Labour Code that includes the special circumstances of the construction industry, an inclusion which has been seen to be necessary for over 11 years. What was the response to this long-awaited legislation? The opposition voted against first reading -- their first opportunity to see the bill in its final form. They didn't even want to hear it.

Now let's look at the response to another controversial bill, the bill on pension rights for gay spouses. The member for Richmond-Steveston said this: "Well, I think it's important that you look at a bill -- frankly, to make sure that that's in fact what it's about. I'm intending to look at this bill and, you know, decide what I think the principles are and then make up my mind." Hon. Speaker, I submit that that's a very reasoned response on first hearing of a bill. Perhaps that courtesy might also have been extended to Bill 26.

[3:00]

A little look at the history behind this bill. . . . As I said, for over 11 years there has been seen to be a need for bringing in an amendment that included the construction industry. In 1987, after conducting public hearings, the then Minister of Labour, Lyall Hanson, stated that the unique problems of the construction industry should be referred to an industrial inquiry commission. In 1992 a committee of special advisers was appointed to make recommendations on changes to the Labour Relations Code, including a separate legislative provision for collective bargaining in construction. In 1995 the Minister of Labour appointed a two-person construction industry review panel to review that industry in particular. That legislation came forward last year in Bill 44 and was withdrawn in order to clarify the interests of the construction industry. The final report of the construction industry review panel of February 1998 rejected the sectoral bargaining and proposed a more limited and flexible approach. This is exactly what is coming forward in Bill 26.

Construction is a complex and unique industry, as the member for New Westminster has already remarked on today. It's an industry with a labour relations environment that needs unique solutions. Two of the dominant features of the construction industry are its project nature and the specialized competitive framework within which it operates. For the individual worker, the project nature means that they usually have a short involvement in any particular project and that they work for a number of employers over a short period of time. Construction workers must be very flexible and mobile to maintain full-time work. A typical project requires an array of skilled workers who may be active on the project for only a short duration. The construction contractor must quickly adapt to new materials and techniques in order to remain competitive. This industry changes quickly, unlike many sectors where large capital investments and the weight of past practices may slow the introduction of change.

No two construction projects will be exactly alike. Every project is as unique as the location, the materials utilized and the design required. This makes the construction industry highly competitive and subject to constant change. Although there are a few large general contractors in the industry, most contractors are small and highly specialized. Many contractors may be dormant for long periods of time and have only a few employees when they are operating.

The construction industry panel recommendations on the bargaining structure are very clear. We've heard much in this debate about the effect on residential construction of the wall-to-wall union sector. It's very clear what we have right here: no change in residential construction; no change in power line construction; no change in pipeline construction; no changes recommended for water and sewers; no changes for road construction; for the non-union contractors -- no changes recommended; for the contractors with the industrial-style unions -- no change. The small area within which there is change is contractors with craft unions, who will have the opportunity not only to join those craft unions but to then actually achieve a first collective agreement.

People form and join unions because they want a collective agreement with their employer. But it's interesting to note that for some parts of construction, only one out of five certifications results in first agreements, largely because it takes longer to reach a first agreement than it does to complete a project.

Making fair and incremental change to our labour laws is not about union versus business; it's about building a stable and productive labour relations climate. The debate that we've heard here, which attempts to divide labour and capital, is a debate in which members of the opposition fail to recognize that labour and capital rely on each other, that one could not exist or prosper without the other. We have only to look at the example of the community of Campbell River in my constituency, where there was an extended strike with CEP -- a strike which was supported by and large by the community and which greatly affected the business environment of the community. Only now, some months after the end of that strike, is the business community beginning to see a little bit of a bounce-back in terms of its activity. So we see very clearly how success for labour also means success for business.

Hon. Speaker, I commend this bill to the Legislature.

[ Page 9156 ]

This bill is not about labour relations; it is about rewarding your friends at a time when the economy cannot stand it. The story that I just told tells us about the nature of our labour force. It tells us that we have, first of all, a very well-educated and skilled labour force. It tells us that we have people who are very eager to work. Contrary to some myths, we don't have people sitting around collecting the dole. What we don't have is enough jobs.

I can only conclude, then, that the reason the government introduced this bill had to do with reasons other than wanting to do the best for the economy. In my mind, this is brinkmanship at its worst; it is playing Russian roulette with the economy of the province. It is bad legislation, brought in at the wrong time by a government that says to its citizens: "Let them eat cake."

"Ah shucks," says the Labour minister, " 't'weren't nothing." He would have us believe that this legislation is simply a subset of a subset of a subset of an extremely complex group of circumstances and that it really doesn't make any difference. He says: "The reality of the modern economy is that it functions to a huge degree on perception as much as anything else. If there is an impact, I suggest it will be because enough people, opinion-makers and others, say that it will have an impact." Well, surely to goodness, he knew what the perception of those people would be, and he knew that their perception would be that this is bad legislation.

The minister seems to have ignored the importance of perception in creating history. We are told by the historians that when the workers -- the common people, I should say -- of France stormed the Bastille in 1789, there was in fact hardly anybody in the Bastille. And yet perception started a revolution which we know today, of course, as the French Revolution. Historians tell us that on Black Tuesday -- October 29, 1929 -- there really wasn't anything that happened that hadn't happened in the week or two before. But for whatever reasons, it caused the stock market to crash and ushered in the Great Depression. We are told of the "shot heard round the world," which launched the American Revolution. All of these have to do with perception and show us the power of perception in our lives.

I suggest that the minister knew from the very beginning that this bill was going to create those perceptions in the opinion-makers of this province, and therefore it was mischievous, at the very least, to introduce this legislation. I repeat that this is the equivalent of the minister saying to the people: "Let them eat cake."

It is ironic to me that the Minister of Finance recognized this in her budget, and in fact the government recognized this in their throne speech. In the budget, there is much talk about supporting small business. I was encouraged that maybe at last this government had got it; they had actually finally got it that small business is the engine that runs our economy.

So the perception was there by the government, and they ignored their own instincts. Who do they think the contractors are if they are not small business men? They talked in the budget about creating a positive business climate. Now, I don't know what you have to do to create a positive business climate, other than to make businesses feel valued -- to feel that the sacrifice that small business men make when they mortgage their houses to start a small business, when they work long hours without a paycheque. . . . What you have to do is something other than giving them one more indication that: "Hey, we don't really appreciate very much what you do."

I looked at the throne speech, and I think I counted at least a dozen times that the word "consult" was mentioned. It was all over the place, talking about consultation. And yet in this instance, the government didn't even bother to do an economic study. It also didn't bother to listen to its own people when they said that timing was everything in terms of introducing this. So perception was something that the government ignored.

[3:15]

So why are we dealing with Bill 26? Well, I think we're dealing with Bill 26 because the government just couldn't resist rewarding its friends. They ignored their own instincts. Small business creates jobs. They said: "We're going to eliminate red tape." And what did they do? They turned around and introduced a bill that is going to add countless levels of bureaucracy into looking after workplace safety. They accuse us of being opposed to workplace safety. No, we are simply opposed to the red tape. They talk about nurturing the business climate. This bill does nothing to nurture the business climate.

One of my constituents is a small contractor. In talking with him about this bill, he said: "It stinks." The reason is because it could very well put him out of business. Now, how does that nurture small business? How does it help the economy -- to take a small business and put it out of business?

It was not very long ago that the Premier stood shoulder to shoulder with leaders of some of the biggest businesses in B.C. and declared for the whole province that the NDP was changing its tune. Well, it's the same old song. There he was, on the front page of the Vancouver Sun, standing shoulder to shoulder with people like Jimmy Pattison, trying to give us the perception that he was on the side of business.

The second message that the Premier sort of let out, which was given to the Premier by the business community, was that changes to the Labour Code would erode the economy. Did they listen? No.

In recent days, as this debate has progressed, we have heard much from members opposite about the history and the role of labour unions. We have been taken right back into the days of Dickens. One had the feeling that we were once again fighting child labour. I'm afraid we are past that age. We had a

[ Page 9157 ]

We have now progressed, and we have something called the silicon chip. I was astounded to hear the member for New Westminster bring up the Wagner Act and talk about the rights of workers to organize. We aren't arguing that point, but I would like to point out to the House that he was talking, for heaven's sake, about 1935. He then went on to talk about a royal commission in Ontario in 1962.

Hon. D. Lovick: The same principle.

K. Whittred: The principle is not the same. I keep hearing the minister across saying: "Same principle, same principle." Technology has changed. When I started teaching in the early sixties -- right around the date he's talking about -- we mimeographed on what was called a hectograph -- a jelly-pad, for heaven's sake. Now I'm quite sure the government offices have very fancy computerized photocopiers. Things are not the same. In our shop that I mentioned earlier, we have a computerized machine that automatically cuts things according to what you program into the computer. That is not the same as the worker who worked in 1962.

Last Sunday I had the pleasure -- and I will acknowledge it was a pleasure. . . . It was quite accidental, by the way, but my husband and I have a practice of going to the Lonsdale Quay each Sunday morning, and we have breakfast. On Sunday morning they were launching the new ferry -- and a beautiful ship it is; I will acknowledge that. I have had, again, the pleasure of touring several plants where that ferry was constructed, one of them being Vancouver Shipyards, which is in my riding. One of the things that I was told they are very proud of, and which has contributed to this vessel, is a flexible contract. What they are talking about is that technology changes. I also was in a profession in a school that pioneered a new technology. We pioneered a whole new outlook toward educating secondary students. That does not come easily. What I heard when I went to Vancouver Shipyards was not that different. Technology is a great equalizer. You deal with, number one, a more educated workforce, number two, a younger workforce. You deal with a gender-mixed workforce -- all sorts of those things -- but it is not the same kind of workforce that it was in 1962.

I'll give you an example. In Vancouver Shipyards there is this huge, impressive cutting machine. Again, it works entirely on computerized technology that cuts the aluminum. What this workforce has acknowledged -- and what we all have to acknowledge if we are going to be competitive in the next millennium -- is that we have to be competitive and efficient. What they mean by a flexible contract is that when the fella who is doing the cutting is finished and the sweeper is busy, the guy who is the cutter is not above picking up a broom and cleaning up the chips so he can get on with his job. If that industry worked under old union type of rules, that industry could not even begin to be competitive.

I think that the minister opposite. . . .

Interjection.

K. Whittred: I know they are union.

Hon. D. Lovick: Those tradesmen up there are shaking their heads; they can't believe you're talking such nonsense. These are people who work in the industry, asking: "What are you saying?"

The Speaker: Minister. . . .

K. Whittred: This is not nonsense whatsoever.

Interjections.

K. Whittred: Times have changed, hon. Speaker. The other night one of the members made a note of the learned men around the chamber. I cannot help but note that these learned men -- who are supposed to be, I guess, Aristotle, Socrates and the other fellows -- were all men. This is not 1962 anymore. Things have changed, and the models have changed. The models for labour have changed.

I would like to talk a little bit about my own riding of North Vancouver-Lonsdale. It has been pointed out by many members that this contract applies only to the industrial, commercial and institutional sectors. In my riding there is, at this time, a huge amount of redevelopment going on. The entire lower Lonsdale section of my riding is being redeveloped. Virtually every single building is a mixed building. There are apartments above and commercial below. Only a portion of those buildings fall into what is ICI. It's my understanding that each one of these projects will have to be hammered out before the Labour Relations Board, project by project. It seems to me that that is putting up more and more roadblocks in terms of job creation, it is entrenching more inefficiencies, and it is introducing incredible uncertainty into project development in that area.

Let's spend a moment reviewing this government's record of economic destruction, just reminding ourselves why this mischievous legislation, introduced into a fragile economy, is so dangerous. Before 1991 -- that is, before seven years of NDP government -- B.C. was number one in economic growth. Now we are number ten. In terms of per-capita growth, the amount that each person had in their pocket to spend on things they needed was greater than it is today. British Columbians are getting poorer every year; they're working harder but getting poorer.

Let's look at after-tax income. It declined by nearly 2 percent in 1996, and it declined by 2.3 percent in 1997. NDP policies like this bill are helping that along. What about job loss? I've already talked about the number of people that applied for a lowly position. One has to ask: did those people go out and find jobs? I doubt it. Did they find jobs anywhere near their level of training? I doubt it.

Finally, hon. Speaker, I want to talk about the businesses that aren't coming here -- those that are simply not investing. We know that many of these businesses are going to Alberta. Well, I think that I am allowed to speak about Alberta, because I am an Albertan. I was born in Alberta, my family lives in Alberta, and I know quite a lot about Alberta. Believe me, nobody, given a real choice, would choose Alberta over B.C. I say that as an Albertan. I went to a family reunion there a couple of years ago, and they have horseflies that are as big as our hummingbirds. I mean, I swear it. They take a huge bite out of you. They don't sting; they bite you.

An Hon. Member: How big are the horses?

[ Page 9158 ]

I may have been a bit frivolous for a moment, but I wanted to make the point that when people do not invest here, I think there has to be a really, really serious reason why they would choose to go to a province other than B.C., because we know that this is God's country.

So why is this government at war with the job creators? I just can't understand that. I made the point earlier that this minister knew that the people who create jobs -- namely, the small business men; those businessmen who are represented through the small business associations, the chambers of commerce and so on -- would not be in favour of this bill.

[3:30]

My riding is an interesting riding. In the few blocks along Esplanade, the street along the waterfront, there used to be about 1,000 jobs within the three blocks between Lonsdale Avenue and the 300 block of east Esplanade. Today there are not more than a few hundred, and many of them are wondering how much longer they are going to be there. If we look along Esplanade today, there are still jobs there, and I'm happy that those jobs are there. But do you know what jobs they are, hon. Speaker? Most of them are not jobs that actually make things. There are some; I'm not denying there are some. There is my family business.

Interjection.

K. Whittred: The minister is saying: "What about this? We make things." What I'm saying is that there are only a few hundred workers employed, if that, compared to many, many more a number of years ago. What jobs are there? There are government workers in office buildings. There are health services offices. There is ICBC. While I'm not denying that we want those jobs -- they are good jobs -- I am pointing out that there is a shift in this economy away from jobs where people produce goods for sale in the marketplace to jobs that one way or the other are supported by government.

What else do we know about the B.C. economy? We know that capital spending is declining and that there are only two other provinces where this is happening: Prince Edward Island and Newfoundland. We know that this bill, among other labour laws in B.C., together with the taxes, makes it so that global investors do not want to invest here. Once again I ask: why in that climate was it so important to bring in this bill now? Why did this bill have to be brought in at this time, with this fragile business climate? I think it was unnecessary.

Finally, I would like to point out that this government also has a problem with trust. Trust in this government has been broken. So when government sometimes attempts to introduce programs, nobody listens. This legislation is simply one more example of how this government is betraying the people of the province.

Bill 26 is doing nothing. As I said at the beginning, it is a bill that is not about labour relations; it is about rewarding your friends. By rewarding their friends with this bill, the government is saying to the people of the province: "We think that our reward is more important than the economy of the province." This government is saying to the people of B.C.: "Let them eat cake." I remind the government of the fate of Marie Antoinette.

D. Jarvis: I rise to speak, as well, about Bill 26, the Labour Relations Amendment Act, 1998. Needless to say, I shall not support this bill. I feel that it's completely out of line at this time.

I note that the members from the opposite side of the chamber are always trying to spin the perception that we on this side of the House are anti-labour. What it is, ostensibly, is a spin, or a perception on their part, that we are anti-labour. All of us have probably been. . . . I've been in several unions myself. We also look at the other end of it, the employer's side, as well. When this government and their members try to say that we are anti-labour, it's simply not true and it's not a valid argument.

I noted the member for New Westminster brought up the labour laws of the 1930s. All I can say to him is that this is not a class war that we're trying to fight here, although maybe the government is trying to create that sort of premise. We can't understand what his attitude is. This is the 1990s. Soon we'll be into a new millennium, and here we are talking about labour class actions that went on back in the thirties and twenties and all the rest of it. It's certainly not a valid argument, as far as I'm concerned on this of the House, with regard to this bill here. This bill is, ostensibly, about creating jobs and helping the economy in British Columbia. It's supposed to do that. But there's nothing in the bill that definitely states that we will receive jobs to assist our economy, which is in an ill state of repair at this moment.

I recall the Premier stating in the throne speech that he was going to focus on building the economy of British Columbia. Out of the 29 pages in the throne speech, he used adjectives such as strong, dynamic, healthy and confidence 21 times. We are now four months past the opening of the throne speech, and where is our economy today? Our economy is at the point where we're basically in a recession. Hopefully, if things don't continue on the way they are, we won't go into a really deep recession. This bill brings nothing to alleviate the situation that we have, nothing in regard to helping our economy and creating jobs.

I also noted in the bill that there is nothing being done in this chamber to help our young get work. Our young who are unemployed are mounting well into the teens now and will probably push 20 percent before the next results come out. It's a sad state of affairs. I look in today's paper and note that the Minister of Finance has made an appeal to all the people and the business folks in British Columbia to help counteract the myth out there that B.C.'s economy has a problem. I don't quite understand what the minister is thinking about. All she has to do is follow the cows around the fields for a few days, and she'll find out what is wrong with the British Columbia economy. We have a desperate problem.

We have a massive debt. At last report the debt was pushing $31 billion. Where are we now? We're probably pushing over $32 billion, when the true figures come out at the end of this year. I think I'll quote. She listed five such myths that need counter-balancing. "B.C. has the highest taxes in Canada. In fact, for most taxpayers our tax system is the second-

[ Page 9159 ]

She went on to say that our other markets remain strong. Well, oil and gas is probably the third-highest revenue producer in this province. The report came out today. At this time last year we brought in $237 million. Today we're only at $58.3 million. One-third of the revenue that came in last year from oil and gas is what we're receiving today. The minister is out there trying to spin the story to the people, to tell them that all is well in British Columbia -- when it's not. The problem is that our economy is bad due to the fact that we haven't got enough work for our skilled workers.

Public opinion has shifted again. It wasn't too long ago that the public felt that what was wrong with British Columbia. . . . The main problems were caused by health, education and environment -- and probably in that order. Now it has shifted again, and according to the latest polls, unemployment and jobs have shot back up to the top spot in the public's priority list. This is joined by their overall general concern about the provincial economy. The people out there are worried about their jobs. The two biggest issues are jobs and, as I said, the economy, and they dominate and are foremost in their minds. This is what the public agenda is all about: jobs.

We say to ourselves: "What a testimonial that is to this government's agenda." What a testimonial to a labour government's agenda, when the majority of the people are thinking jobs are the number one issue, and they are afraid of losing their own job within the next six months or so. These are the people who are now employed, the ones who are actually on the employment fronts. Their concern is that we have before us a bill, such as Bill 26, which is an amendment to the Labour Code that will create not work but, unfortunately, probably more unemployment. The businesses that create jobs are afraid that this is going to be one more nail in their coffin, that they will be unable to compete.

[3:45]

According to the polls, the people believe that the economic situation will worsen over the next year or so. Again, we have a debt which is probably about $32 billion now. How bad can we get? When will we see a change and some order to reduce the debt that we owe, so that investors in this province can see that we have our economy under control and that this would be a good place to come and invest their money -- and, accordingly, create more employment? Again, we would raise more money for operating government services such as health and welfare and education and all the rest of the social benefits that normally you get when you run a government and you call in taxes from the citizens.

As I said, it's a terrible testimonial to this socialist government, which actually represents many resource areas in this province. I wonder what those members on the government side of the House do when they go back to their resource areas and they see people out of work, doing nothing, hanging around.

Interjection.

D. Jarvis: The member across the floor made a comment just now, when I said that the workers were probably just hanging around with no work to do. I note that the member has in his area a relatively stable economy, owing to the fact that we have a large aluminum company in there that is providing jobs and has done so for years and years. In fact, the town was there because the company came in. The company came in first and created the town; they created work for the workers.

The other member from the upper Island, who will probably be on the floor any moment now. . . . I noticed the other day on the television and in the newspapers that people in Campbell River in his riding were lined up to go into a meeting to listen to people from Alberta saying: "Come to Alberta. We have jobs for you." These are people who cannot find work in British Columbia, because of this government's attitude towards creating wealth. They have no comprehension whatsoever of creating wealth.

Why people would go to Alberta, I don't know. As the member for North Vancouver-Lonsdale just finished saying, she was born in Alberta, and although she probably dearly loves it and all the rest, deep down she would much rather live in British Columbia. I have a friend who lives in Alberta, and he was telling me about that wonderful town of Calgary. I went to Calgary a little while back and saw that wonderful town and came away with the impression that it was surrounded by a wire fence with paper stuck to it. That's about what it's like in Alberta -- all it is, is wind, wind, wind.

What this bill will do to the construction industry is what the NDP government -- the socialist government -- has done to the two leading industries of mining and forestry. We have destroyed forestry. We have not quite done the same with mining, but it's almost a sunset industry right now.

The Minister for Energy and Mines told us well over a month ago that he was bringing in right-to-mine rules for this province. We had a bill -- Bill 12, I believe it was -- and when we had the debate on Bill 12, he said that we will be bringing forward the rules and regulations almost immediately; that this is a done deal and we're going ahead with it. Well to date, some two months later, we haven't seen anything happen. Even the mining industry is now beginning to wonder if they have been hornswoggled by this government once more, because back in 1997 they said the same thing. It was a different minister at that time, and they said: "We will bring in new rules and allow mining to have a little bit better footing in this province and not be so strict with them -- in the sense that we'll make the rules and regulations so that they can, if they find a mine, start producing the product from it within maybe a year to two years." Whereas before it had always been -- and is right now to this date -- at least five years before you could get a permit to go out and mine in this province.

[ Page 9160 ]

This bill will serve only to create unemployment, rather than employment, as it expands its powers for union organizers in the industrial, commercial and institutional -- or the ICI -- sectors. If we're not in a depression now, we'll be in a deep one in the near future. Bills like this do not help create wealth or employment; all they do is deepen the probability of a recession, of less work. They drive another wedge into the stability and the growth of this province. The construction industry has been one of the most stable labour environments over the last half-dozen years. Now this bill gives union organizers the ability to recruit and disrupt the non-union members in the construction industry through the back door.

As I said earlier when I got up to speak, I'm not against unions. There's a purpose for a union. There were bad days in management, if you can call it that, and business companies treated the workers badly in the old days. But this is the 1990s, and we're going into the twenty-first century. Those days are gone. We have laws. This bill will only create more laws, which will not benefit the union workers, the non-union workers or the companies. It will just create uncertainty for the construction companies with regard to making money -- which they're there for -- and they will take their businesses and move to another province.

We know that the records show -- I don't have the exact figures with me now -- that there have been hundreds and hundreds. . . . Well, maybe not hundreds and hundreds, but at least 150 to 170 businesses, construction companies, have left British Columbia and moved their head office into Alberta over the last few years. The flood of people running out of British Columbia into other jurisdictions because there's no work has almost become unstoppable. The latest figures that we had just as we started into this session of the Legislature were that there was a loss of jobs in British Columbia of around 17,000 to 19,000 people. Contrary to what the Premier said -- that he was going to create 40,000-plus jobs -- we lost 17,000 to 19,000. Alberta created 22,000 jobs. Most of those workers -- no question -- must have come from British Columbia.

I see the Speaker is going to sleep. I know I'm a little bit boring at the moment, Madam Speaker, but I've got a bad cold. Like the Labour minister, I'm all stuffed up. Hopefully, I'm not as stuffy as he is.

Residential construction, as I said, represents a major factor in all our communities throughout British Columbia, and this aspect of construction is seasonal in most areas. Workers do move back and forth from residential to commercial, so sectoral bargaining could represent residential construction, especially when ICI is mixed up with residential in a shopping mall or something along that line. We see quite a few of them being built at this time in which the first floor will be commercial and condominiums up above. The effect of this bill will certainly create higher costs for the contractors.

Housing starts are falling rapidly and have been doing so for almost four years now. The changes in the Labour Code will only exacerbate the potential for crisis in our economy. Housing is somewhat at the top of the food chain. When you consider that residential housing employs every trade you can possibly think of, and uses all the materials that are known, it certainly is at the top of the food chain. Every local business in every community virtually exists from the industry's involvement. Why would we want to curtail this industry to a point where we would create more unemployment? It's hard to realize, but that is the philosophy of this socialist government. They have an agenda. They have a duty that they owe to the B.C. Federation of Labour, and they are going to pursue it -- and damn the torpedoes, it appears.

The problem that is seen with the introduction of this bill, as I said, is that any labour law amendment at this time would be bad for business. There is no question of that. Any change to the labour laws that would seem to favour unions is just going to be a direct signal to investors to stay away from British Columbia. It would be bad for business and bad for jobs. It could only serve to harm our already delicate economy.

We can't understand why this NDP government -- at this time, when there's a great, great need for balanced public policy -- would put forward their own interests ahead of the whole province. This is the time that our economy needs, at the very least, to be balanced, to show investors that we can create jobs, that we have created stability and that there is confidence in our economy. It doesn't appear that we're going to go that way, if this bill is to pass. We know that it will not strike confidence into the investors and developers that would want to come into British Columbia. Those that are presently working in British Columbia would have to consider maybe even leaving the province if they want to make a nickel or a dime, and that's what they're there for. They're in business to make money, and as a result of that, they create jobs and employ more people. When people pooh-pooh the fact that these companies would think of picking up stakes and moving. . . . It's a matter of survival on their part.

The government is obviously out of touch with reality. They don't realize what adverse labour laws will say to these people -- to those who create jobs in British Columbia and those who would come to B.C. to create jobs. Changes such as those in Bill 26 will drive business out of this province and, as I said, further erode confidence in British Columbia. We hear and see on the news every night about some company that leaves British Columbia or that people who are desperate for work have to go to other jurisdictions to get work. That is the crime which is occurring in this province as a result of this socialist government, this labour government. People cannot find jobs with a labour government in this province. It's hard to comprehend.

[4:00]

They say they have. There's one from up-Island who has a bed-and-breakfast. Well, fortunately, the province doesn't exist on revenue from bed-and-breakfasts. We're talking about real jobs and real businesses. No one on that side has ever been in business. They ostensibly come from the labour end of it or from the academic field. There are a few that have followed a couple of horses through the bush every once in a while and pulled a log out here and there. But other than that, very few of them ever actually had to meet a big payroll and create jobs that men and women work at.

[ Page 9161 ]

D. Jarvis: I'm being heckled here and there. They're desperate, because they're hearing the truth for a change.

To say that this is not intrusive legislation, and that sectoral bargaining only affects the ICI sector of the construction industry, is hard to accept. It is well known that a great deal of the mixed-use projects will definitely be affected. I have several in my own riding at the moment. This sector of the industry operates efficiently now. Labour peace means more work; labour disruption means fewer jobs. For the life of me, I cannot see how the Minister of Labour cannot see that labour disruption means a loss of work and a loss of jobs. Here we have a construction industry which currently operates efficiently, with very little disruption, in a peaceful labour climate. Now this government wants to risk unrest -- the loss of work, the loss of more jobs and further disruption of the economy.

Here we have, as I said before, an economy that is in desperate need of some kind of infusion to get it going. It doesn't need something to inject itself into it and disrupt it. We are in a desperate situation here. This bill will only cause employees not to come into the province or, worse yet, to pick up stakes and leave it. A recent report indicated that if changes to the labour laws resulted in higher costs, many developers would just leave and move their operations out of this province. This report covered a cross-section of companies that employ non-union and union workers. Capital and jobs will flow out of this province if Bill 26 is passed.

The essence of Bill 26 is that there is only one labour contract for every project that is to be built in the ICI sector of the construction industry. It will impose a non-union contract, a one-size-fits-all contract for any ICI job. This is another nail in the coffin of an industry that desperately needs openness and flexibility in order to compete. In this model, sectoral bargaining does not provide solutions to the problems that are now facing our construction industry.

I can see by the clock that I don't have much time left. I just thought I would mention a little article in the paper a few weeks ago, back in. . . . Oh, the Minister of Labour is here. It's good to see you, sir. It was an article that was talking about how the NDP can collapse an economy in several easy steps. With your permission, I would like to read a few of the items in it. It said: "In a time of slow economic activity the NDP will blame the existing government" -- this is comparing it to Ontario -- "and big business and banks for all the economic woes."

[W. Hartley in the chair.]

Hon. D. Lovick: Somebody read that yesterday.

D. Jarvis: Did they?

It said: "They'll promise that, if elected, they will stop the erosion of services and create employment." Well, this bill certainly won't do that; we know that. It went on to say that the provincial debt and the cost of servicing that it'll create will cripple and restrict the province for decades to come. We know that. We're now at $32 billion and rising, and we pay $6,740,000 a day on the debt-service ratio.

Deputy Speaker: Member, your time has expired.

D. Jarvis: Thank you, Mr. Speaker. I appreciate the time. I just want to reiterate that with regards to second reading of Bill 26, somehow I can't feel myself in favour of it in order to vote for it. So I will be voting against it.

G. Robertson: Hon. Speaker, you'll take note that I'm going to start my alarm clock so that I don't go over the half-hour that is allotted.

I'm really pleased to be here and have an opportunity to speak to Bill 26. I think it's really important legislation that recognizes the specific issues around the industrial, commercial and institutional sections in the construction industry. I've listened for a number of days to the opposition speak on this bill and voice their opposition. I haven't really heard that much on specifics in particular as related to Bill 26. I've heard a lot about the economy. I've heard a lot about labour issues that are not specific to this bill. I'm going to focus today on the economy, a little bit on labour issues and more specifically on Bill 26 and its importance to the construction industry in British Columbia.

I'd like to talk a little about the Labour Code we have in this province. Some of these thoughts were also spoken well by the construction industry review panel that did extensive consultation within our province for a number of months. The primary purpose of the code is to encourage the practice and procedure of collective bargaining between employers and trade unions, as the freely chosen representatives of employees. Other purposes, of course, include: encouraging cooperative participation between employers and unions during the life of the collective agreement; minimizing the effects of labour disputes on those not involved in the disputes; protecting the public interest; promoting conditions favourable to the orderly, constructive and expeditious settlement of disputes; and encouraging the use of mediation as a dispute resolution process or mechanism.

These purposes form the core of the code and reflect the social consensus that collective bargaining is desirable. And I think it is very desirable. If you go back over the course of the last six or seven years in British Columbia, we've had labour peace and a very cooperative climate for both labour and business in this province. I think a lot of that can be attributed to the very progressive and good legislation we have in British Columbia's Labour Code.

The social consensus that collective bargaining is desirable is reflected in international conventions, federal legislation and the laws of every province, including British Columbia. The consensus in public policy is also reflected in public opinion. Research reveals strong public support for the legitimacy of unions and their value to society as a whole. In public opinion research, over two-thirds of the public believe that unions play an important role in balancing social and economic interests, and almost three-quarters disagreed with the statement that unions are bad for business.

Hon. Speaker, it's no secret that unions have played an integral and important role in the history of British Columbia, shaping this province into what it is today: an absolutely magnificent province to live in. Anybody that's travelled throughout our country or travelled the globe will tell you that this is the best province in the world to live in today. I'm really proud of that.

With regards to some of the things that trade unions have done, I've heard talk here this afternoon about child labour. A lot of our people involved in trade unionism in British Columbia are involved globally, fighting child labour and bringing democracy to various countries. Child labour is a problem --

[ Page 9162 ]

I can remember talking to Tom Barnett, who was an NDP MP. He told me of the work that the IWA did in Alberni in the forties, where there was discrimination against native women. They had their own washroom, and they were paid a special rate that was a lot lower than everybody else because they were native. The IWA found out and drove pay equality back. Fifty years ago they recognized there was a problem, when everyone else was sitting around and doing nothing. That's an example of what trade unions in this province have done over the course of the last 50 years, and it's an example of the work they are going to be doing for the next 50 or 100 years. I'm proud of that.

Despite the evidence of public policy and public opinion, the Liberal opposition both explicitly and implicitly have questioned the relevancy of collective bargaining in British Columbia. They have challenged the view that there is a social consensus in support of collective bargaining. To me this is very concerning and suggests that the Liberal opposition is elitist and removed from public opinion in this province.

A little bit about Bill 26. The construction industry, I believe, needs separate rules for bargaining. Every jurisdiction in this country, except British Columbia, has recognized that until now. Bill 26 matches many of the provisions already in place in Alberta and Ontario. Here are some words from our Labour minister: ". . .the legislation will protect the freedom of workers to choose among non-union, craft union or industrial union options. A stable, competitive market and the protection of workers' rights are mutually compatible -- in fact, they are interdependent."

I believe that Bill 26 is quite modest. It's important legislation in that it gives the industrial, commercial and institutional sector construction workers greater choice of fairness and gives employees the stability they need to compete effectively. It also provides flexibility, since the work that has already been bid on by the contractors would be eligible for bridging agreements at the end of the project -- which I think is great.

Many of the suggestions that business offered to the construction industry review panel are reflected in Bill 26. For example, the recommendations from the Coalition of B.C. Businesses are incorporated in Bill 26. The coalition recommended that B.C. labour laws allow for different forms of trade union representation in the construction industry and that sectoral bargaining schemes of any sort be rejected -- which they have done. Both these recommendations have been captured in Bill 26. We also did some great work in regard to training, the other part of the component, which was done in the last legislative session.

There's no doubt that the construction industry is unique, and I'll talk a little bit about why it is. For the individual worker, the nature of projects in the construction industry means that they usually have a short involvement in any particular project. Many work for a number of employers over a short period of time. Construction workers must be very flexible and mobile in order to maintain full-time employment. A typical project requires an array of skilled workers who may only be active on the project for a very short duration. The construction industry contractor must quickly adapt to new materials and techniques in order to remain competitive, and the industry changes very quickly -- unlike many sectors, where large capital investments and the weight of past practices may slow the introduction of change.

[4:15]

Construction -- and I recognize this -- is a highly competitive field, in which all companies, unionized or not, are subject to the same bidding process and the same market forces. Ensuring stable and productive labour relations in construction will have no net impact on the costs of projects.

Bill 26 is not unique. I mean, if you look at the rest of our nation, every Canadian jurisdiction, except British Columbia, has specialized labour legislation pertaining to the construction industry at this present time.

Interjection.

G. Robertson: I'm going to talk about some of your comments actually, hon. member, in a little while.

Alberta, Saskatchewan, Ontario, Prince Edward Island, Nova Scotia, New Brunswick and Newfoundland each has a compulsory accreditation model of employee representation within the construction industry, under which a newly certified employer will be required to accept the industry's standard collective agreement. It's absolutely no different at all. This is great legislation -- and, actually, long overdue. We talked about this in the Legislature back in '87 with the then Labour minister. Unlike the opposition, we've talked long enough, and we're doing something progressive and proactive now. I'm really proud of that.

Ontario and Newfoundland have mandatory provincewide bargaining for their ICI sector. The Newfoundland legislation, which is going to be proclaimed, requires multi-trade bargaining within this sector. In Quebec, membership in one of the five construction trade unions is mandatory. A decree system allows for the extension of the negotiated construction industry agreements across the entire industry. So that's a fact, and I think that's what we should deal with.

I've heard a lot from the opposition over the course of the last week and a half, I guess, talking not so much about Bill 26 but about labour, the men and women in this province that work in labour. That goes to back to Bill 14 too. I'll talk a little bit about that. The member for Vancouver-Quilchena stated in the Province in October '97: "You know, we right now have a Labour Code that is balanced in favour of trade unions." The Leader of the Opposition in the Province of May 27, 1996: "B.C. Liberals believe it is essential to return to a balanced Labour Code. Small business in particular must have the option of hiring replacement workers during a strike to protect their viability."

An Hon. Member: Scabs.

G. Robertson: I think I heard that word in the House, hon. Speaker, and I think that's what organized labour calls it: the right-to-scab legislation. That's what workers call it. In other words, when you go on strike and you're fighting for a collective agreement, the employer and the police bring in

[ Page 9163 ]

An Hon. Member: It happened in Yellowknife.

G. Robertson: Yes, we've seen examples of that -- Gainers in Alberta. They keep talking about Alberta. When I look at Alberta and the labour strife they have there and the way they degrade workers and families in Alberta with their legislation, that's really concerning. But that's what the Leader of the Opposition said.

Interjections.

G. Robertson: Hon. Speaker, we're getting a great reaction from the Liberals here, and I think that's good.

The Leader of the Opposition stated on March 4, 1994: "The great advance of the secret ballot is to allow people to go in and make their individual choice. No employer and no union gets to tell them what to do, and they don't feel threatened one way or the other. They have strength." On the other hand, what the Leader of the Opposition says is: let's take that strength away, because we need balance. This is what was said on June 28, 1993, in the Kimberley Daily Bulletin. The Leader of the Opposition called the elimination of the secret ballot on union ratification an example of the gradual erosion of human rights.

So on the one hand, the Leader of the Opposition suggests that by having a secret ballot, it's fair and people get to make a choice, just like you do in a provincial or a federal election or anything else. On the other hand, he's saying: "Yes, but we don't want that. Better yet, we're going to take it away." He looks to a secret ballot -- and a gradual erosion of our human rights. That's an interesting thought, but I think it says a lot.

The member for Oak Bay-Gordon Head said: "We cannot allow a union collective agreement to intervene and override workplace safety when it disagrees with management's disciplinary actions towards employees." Trade unions in this province have worked for industrial health and safety in this province for 50 years. If you go back in time to ten or 20 years ago -- not 50 years ago -- you can look at some of the issues surrounding occupational health and safety in this province today and the way that workers are taken advantage of and the fatalities and maimings in industry. Most of those. . . .

I talked about that when we talked about Bill 14. The previous Forests critic in the Liberal opposition asked: "How does Bill 14 affect the forest industry?" What Bill 14 did. . . . It's an amendment to the WCB act. It basically said that smaller employers, those with 20 or more people working for them, had to have an industrial health and occupational safety committee to talk over safety. That went on and showed that the fatalities in the lumber industry, the logging industry in this province. . . . There are ten times more fatalities in non-union operations than in union, and that's strictly because of the fact that workers are not trained. Bill 14 would allow that, yet the former Forests critic asked: "How does that apply to the forest industry?" He doesn't understand that there are a lot of small contractors that work in the forest industry that don't care and don't understand about workers' health. So the unions have done a lot of good, proactive work in protecting our workers in this province, and I'm really proud of that -- particularly when those people come home to their families at night, their wives and their kids, and they're in good health and get to enjoy their retirement because they're in good health. I think that's important.

The Leader of the Opposition said, on June 17, 1998: "In Alberta they have workplace democracy. They have a secret ballot. They have double-breasting." The member for Vancouver-Quilchena: "We would eliminate the fair-wage act, because what it's doing is forcing all employers in this province that do any kind of government work to pay the same levels as trade unions are paying to their members." The member for West Vancouver-Capilano: "The fair-wage policy has feathered the nests of unions at the expense of taxpayers." The member for Kamloops-North Thompson: "The way good managers deal with conduct problems is called progressive discipline. You whack them once. If they do it again, you whack them again. Eventually you turf them right out." Well, I don't know. That may be the way the member deals with issues and possibly brings resolution to them, but I would suggest that that type of dialogue with employees -- or employers -- is not very progressive. If it were applied broadly over this province, I would suggest that it would probably bring a lot of conflict. As a matter of fact, if it were applied in a family environment, it would be even more concerning.

Hon. D. Lovick: It's scary when you think about it, isn't it?

G. Robertson: Yes, it is.

The member for Richmond East said that companies may choose to unionize or not around a number of delivery models, and so she believes that the companies should choose whether they should be unionized or not.

Hon. D. Lovick: Sort of like feudalism, I guess.

G. Robertson: Yes, it's quite interesting.

There was a lot of talk over the course of the last week about support for business. I think that we as government have done some good things over the course of the last budget particularly. One of the things we've done is that 10,000 small businesses will save $46 million a year in taxes when the corporate capital tax exemption is raised to $5 million from $1.5 million over the next three years, which is really good. I've had a lot of small businesses and machine shops and other businesses say that it's good for them. They will no longer pay corporate capital tax; they're quite pleased. There's a two-year tax holiday on corporate capital tax for new investment, and 40,000 new small businesses will pay less income tax. For small business, corporate income tax is cut by 11 percent over two years. There's a two-year tax holiday from the small business corporate income tax for eligible new small businesses. Small business customers will get a hydro rebate of 2 percent of last year's bill. Other commercial ventures will get a 1 percent rebate. Farm families will save an average of $300 a year by eliminating the tax on coloured fuel used on farms, and some will save a heck of a lot more than that, depending on the farm.

I travel in and out of the airport in Vancouver a lot, and I just notice how it's growing and it's booming and people are coming in from all over the place. I think a lot of that is due, obviously, to the airport. It's a great airport, and people are coming to B.C. The jet fuel tax on international flights is being cut in half over two years. It's made Vancouver Airport a very, very competitive airport. That's right. I'm very pleased about

[ Page 9164 ]

Interjection.

G. Robertson: I think all these initiatives together are good news, and I see the member over there is really excited about it too, so I'm pleased about that. We like to get him excited -- but not too excited.

Well, I think I've said a few things about the Liberal opposition's thoughts on organized labour, and that's the general context of what I'll be talking about today.

Getting on with the economy, B.C.'s oil and gas sector, which employs 40,000 in this province, is being greatly assisted by a lot of initiatives. Oil and gas royalties have been cut between 20 and 40 percent to double the production over the next ten years. Our new single-window regulatory agency will streamline approvals of exploration.

I heard one of the members talking just a little while ago about the oil and gas industry in Alberta, about how one of the companies was in Campbell River looking for people to go to the Alberta oil fields. I would suggest that as the price of oil is coming down, with these initiatives that we've introduced, you're going to see. . . . We met with the petroleum producers and the association, and they were absolutely elated with these changes. They see them as proactive and as good for business in British Columbia. More particularly, they made a specific point of saying: "It's good for our business."

R. Neufeld: You don't even understand. . . .

G. Robertson: So they were very pleased, and I'll be pleased too when they're drilling and exploring in northern British Columbia. I know the member opposite will be too, because that's where he's from.

The $3.1 billion mining sector that employs 58,000 is being supported with a $9 million-a-year tax credit for exploration. The approval process is being streamlined through changes in the mineral exploration code, making it faster and easier for firms to begin exploration and offering more protection from expropriation. And new mines will receive a larger tax credit to help offset startup costs.

Also, let's not forget the B.C. film industry. I'll tell you that I certainly won't. I was talking to Joan Miller, one of my constituents, who is on the B.C. Film Commission. Last year the film industry dropped $37 million in Campbell River. You couldn't get a hotel room there. There were two movies, actually. They did another one just a couple of years before, and it was the same thing. So it's getting known as the place to be in B.C. -- certainly a lot of good movies are done there.

[4:30]

I'll talk a little bit about the forest sector. I'm really pleased that the cost to the forest companies has been reduced by about $14 a cubic metre by streamlining approvals and cutting stumpage charges by 28 to 30 percent since last fall. I think the change better reflects market conditions and will, hopefully, keep our industry more competitive.

Yes, there's no doubt that we're having difficulties accessing some markets in Japan right now, but there are reasons for that. Our exports to Japan have dropped 50 percent since last year at the same time. Of the 50 percent that's remaining, there's a move away from the traditional components that we've supplied on the coast, which are large dimension lumber and baby squares, to alternative housing components. There was an interesting article in the paper last week about how an Austrian firm has taken over M&B's markets in Japan because M&B couldn't guarantee those markets two years ago. As a result, they walked in, and I think they're putting 400 million board feet a year into Japan from Austria. It used to be M&B's market. That's what is happening. Plus, the prices that they're paying in Japan have gone from a high of $980 last year down to $500.

Anyway, Tom Stephens has made some comments in regards to that as well. He says that the situation in Japan will continue to retard their progress over the next several quarters and that the biggest concern M&B has is the continued deterioration of the market for lumber in Japan. I hear the Liberal opposition talking about workers, economies and everything. I'll tell you, I've got an interesting quote here. The Liberal MLA for Okanagan-Vernon has stated outside the House, in response to government steps to discourage employers from laying off workers, that she is "angered that forest companies will have difficulties laying off employees." Interesting. That's a good one. My goodness.

We've done a lot of good stuff. The sales in B.C.'s secondary manufacturing industry are currently estimated at $2 billion. About 17,000 workers -- one-sixth of the forest industry -- are involved in the value-added wood industry. That's a rise of 20 percent from 1990. The Abbotsford centre, funded by FRBC, is the only training facility of its kind in North America. Workers learn specialized skills designed to meet or exceed those of their competitors in Europe, and that's what we have to do. That's an example of an Austrian company going in and taking market share aware by putting in a more diverse product and actually marketing their product over there, which is something our companies haven't done but are starting to do very aggressively now. That article in regards to B.C. secondary manufacturing was written by Bob Holm, president of the B.C. Wood Specialties Group in Surrey, and they're doing a lot of great stuff.

Hon. Speaker, I see I've got three minutes left here, so I'm going to wrap up with some messages with regards to labour and Bill 26. Our government's track record since 1992 on Labour Code changes is absolutely excellent. In 1993, Labour Code changes helped create the most stable labour relations climate we've had in this province in decades. This current bill brings the construction industry into the modern legislative framework -- something that's needed. The construction industry needs separate rules for collective bargaining, and that's been recognized throughout this country. Every province but B.C., until now, has recognized this fact. So this is catch-up legislation and is long overdue.

Bill 26 will bring B.C.'s labour relations framework for construction into the new Canadian mainstream. Many provisions of Bill 26 match those of Alberta. I know the members opposite will be pleased about that. They match Alberta and Ontario labour relations legislation. Bill 26 will enhance stability in the industrial, commercial and institutional sector of construction. It requires a built-in resolution to jurisdictional disputes in the standard agreement covering off craft union members and their employers, and it establishes mandatory three-year agreements in ICI construction.

[ Page 9165 ]

An Hon. Member: Both sides.

G. Robertson: Yeah, both sides respect them, and I think that's really important. I'm really pleased to speak to Bill 26 today. It's progressive legislation that is going to continue to ensure that we have good industrial relations and a good cooperative effort between labour and companies in this province.

T. Stevenson: It is my pleasure, as well, to rise today to speak in favour of Bill 26. In some ways, I wish I had spoken much earlier, because I might have had a bit of a different tone than I'll have today after listening to the horrendous attack by Liberals against unions, workers and labour leaders in this province.

It's kind of a déjà vu, though, for me. I just want to go back a ways. I grew up in West Vancouver. West Vancouver has the highest per-capita income in the province; it's a very wealthy area. Of course, throughout the sixties I heard the same rhetoric against unions, against the labour movement and against the leaders of the labour movement. That's what I heard day in and day out in West Vancouver. I heard it in the high schools; I heard it in the organizations. People hated unions; they equated unions with communism. We've kind of forgotten that, but communism and unions were somehow brought together, and anyone who was involved in the labour movement was a communist.

Well, this is the kind of rhetoric we've got all over again, although it has continued through the Socred era. The sons of Socreds on the other side have continued it until now. . . .

An Hon. Member: And daughters.

T. Stevenson: And daughters.

It's the same kind of rhetoric. And I believed the rhetoric at that time. I had no reason to do otherwise. That's what I was surrounded by. I was swimming in a sea of anti-unionism. Finally, I was able to get away and travel abroad and see the conditions in other countries: how workers were treated -- and still are in many countries -- and the kind of legislation there was against unions. Then, as a fairly young man, I came back and went to work in the forest industry. I joined a union, because one signed up when one worked in the forest industry. I was a chokerman for a while. I began. . .

Interjection.

T. Stevenson: Did you do that too?

. . .to understand some of the issues that working people were dealing with. I took a little more time. I worked in a smelter and joined another union up in Kitimat and began to see the conditions and to understand what the companies and the unions were fighting for. Then finally, I joined Air Canada. I was a passenger agent. I belonged to the Canadian Airline Employees Association. I was there for a number of years. After a time, I decided to get involved in the union. I was able to put aside some of the deep-seated anti-union feelings I had grown up with. Eventually, I became the chair of that local of the Canadian Airline Employees Association. At the same time I joined the NDP. I became involved in collective bargaining.

An Hon. Member: Doubly cursed, from your perspective.

T. Stevenson: Doubly cursed.

Throughout all that time, I kept hearing about how terrible unions were and how these big bosses were running the whole show. Yet that wasn't my experience. I found a very democratic organization. I had to run for a position and for election and be very accountable to the members. The Liberal opposition talks about secret ballots. I joined the union secretly. Then, along with my brothers and sisters, on any given issue we knew where we stood when we made our decisions and cast our votes. We didn't have to hide. We did it collectively. The problem with the opposition is that they don't understand the difference between individualism and collectivity. We bargained as a collective and stood as a collective. Without that collectivity, we could never have achieved what we needed to achieve and did achieve.

Because of my experience with Air Canada, I was hired with the Ministry of Labour as an industrial relations officer. I was with the Labour Relations Board and the Board of Industrial Relations. I've heard members opposite talk about how small businesses have such wonderful practices, how they're so fair to their employees and how, if it was just all like that and we could get rid of unions, we'd have some kind of nirvana. I can tell you that that is not the case from my experience with the Labour Relations Board and the labour standards board. I went into many small businesses which weren't paying overtime to their employees; they didn't even keep records for their employees. Now, I'm not for a moment suggesting that that's all small businesses. People join unions because they need the protection, because they can bargain collectively. If you're an individual, you're up against pretty formidable odds, but if you're part of a union, at least you have a much better position than you would otherwise.

Small business in this province does struggle; there's no doubt. But small business everywhere struggles. Men and women are trying to create businesses and be entrepreneurial and turn back into the community. . . . And they do a very good job. But workers do that in the same way. Sometimes I wonder if the problem, for those who are anti-union, is that they feel that the unions are better in the business of doing business than they are, that they're able to bargain in a way that companies would like to bargain but are not able to because they don't have the same entrepreneurial skills, if you like.

I spent some time with the Ministry of Labour and realized just how important the labour bill was. It was at a time when there was tremendous labour strife in this province. I don't know if all the members remember how often there were major strikes throughout this province until we were elected and brought in changes to the code, which have basically brought about labour peace ever since.

[ Page 9166 ]

[4:45]

That is the same within unions. One stands for what one believes in. There's nothing sinister, nothing untoward about that. Unions are organizations that believe in their members and their members, by and large, believe in their leaders.

By the way the Liberals are fighting this particular bill, Bill 26, you would think that we were completely changing the code. You'd think this was a major change where a revolution. . . .

An Hon. Member: They haven't read it.

T. Stevenson: They haven't read it. Well, I don't know about that.

You'd think it was a major change where we were forcing every individual in British Columbia into some union or other. It's nothing of the sort. Is it a small amendment? No, it's not. We wouldn't bring in a trivial, small amendment. It's an important amendment. But is it the earthshaking change, the revolutionary change that the opposition is suggesting? No, not at all.

The Liberals have made much of the fact that they think capital is going to flee from the province. All of a sudden everybody is going to be just picking up their bags and running out. That is so much hyperbole. Today, hon. members, you should have been with me. You would have enjoyed it. I was in Vancouver for the announcement of Bombardier coming here and investing here.

Interjection.

T. Stevenson: Oh, you'll be seeing it all right. Why for one moment, hon. member, can't you say. . . ?

Deputy Speaker: Through the Chair, please, members.

T. Stevenson: Why can't they say one positive thing about anything?

This weekend I was at the launch of the ferry. Now, there's a private company that's making a great deal of money -- at the Burrard drydocks -- investing in the province and investing in the workers. But I haven't heard one member say: "Bravo." It's all: "Oh, the boat. . . ." It used to be that the boat was going to sink. Well, the boat looked like it was doing quite well, and I think Bombardier. . . . At least when I listened to the president, he sounded pretty upbeat about coming to this province, about investing in this province.

These changes we're bringing in to the legislation are similar to changes elsewhere in the country -- Alberta, Ontario and so on. I mean, this is a change that is in line with the rest of this country. I was very intrigued. . . .

Interjection.

T. Stevenson: I've already talked about secret ballots. Check Hansard. Why do you want to have a secret ballot? Have a secret ballot in here.

Interjections.

Deputy Speaker: Members, through the Chair.

T. Stevenson: I was very intrigued, hon. Chair, to listen to the member for Peace River North. It is Peace River North -- right?

Interjections.

T. Stevenson: No -- South, then. Sorry.

I was really intrigued to listen to the member for Peace River South yesterday, a man I greatly respect, actually. He gave a very good speech yesterday -- probably the best I've heard from the opposition so far on this bill. He said that he personally was not supporting the bill, but he was not supporting the bill because of timing -- not for all these other frivolous reasons, this hyperbole from the other side. He said that he felt this was the wrong time. And why was it the wrong time? He said he didn't think that the economic climate was right, right now. Well, I can tell you that that's a matter of disagreement with the government. We think the time is right. It wasn't that he didn't think we should bring in the bill. He agrees with the bill, he understood the bill. But he felt that this wasn't the right time.

Well, I beg to differ, and the government begs to differ. We will bring in the bill at this time because we know it is the right thing to do, and we believe it's the right time. It wouldn't matter when it was, for the opposition here. We could have a tremendous boom going on, and they'd say: "It's booming; it's booming; don't do anything." The opposition is exactly like the Socreds. No matter what change we bring in, it's the wrong time -- or it's not right. Anything to help workers, anything to help unions. . . . Is this government on the side of workers? Is it on the side of labour? Is it on the side of labour leaders? You bet we are -- and damn proud of it. But we're also on the side of business. That has become quite apparent, and the opposition doesn't like it. That's why Bombardier came here today.

An Hon. Member: Well, we'll see whether they'll come or not.

T. Stevenson: You want to see if they'll come or not. Well, you can count on that, hon. member.

Why are the Liberals so opposed to this?

[ Page 9167 ]

T. Stevenson: I mean, everything is negative, negative, negative. It doesn't matter. . . . Why are they so opposed? I'll tell you why they're so opposed. It's because they thought that they might find an issue where they could have a great big fight in the province and maybe bring thousands of people onto the lawn. The opposition leader could go out and try to play hero and say: "Oh, I'm leading you on." Guess what: it fizzled; it's not happening. All fair-minded people know that the changes that the opposition thinks are going to happen aren't going to happen. They know that. Read the commentaries. Now they're all upset because it's not on the front page of the paper anymore. Now they have to go through these motions of every single one of them talking. It's all the same stuff -- anti-union, anti-big bosses -- and there's no fight happening. Guess what: there's no fight.

I guess they have a bunch that bankroll them. There are those who bankroll them, and this legislation doesn't even affect them. Residential housing isn't even in this. Now, who could possibly be bankrolling the Liberals? They want to at least make sure that they've shown kind of a fight.

Interjections.

T. Stevenson: Of course the union movement backs us -- so does business. I'll bet you there's not many unions who support you, but we get support from both sides: business and personal. In my campaign I have businesses and unions. Actually, if you want to know the truth, most came from business and individuals. Isn't that interesting? I need to talk to the unions. Is anybody listening up there -- for next time?

I think that's the motivation. There's nothing more. I don't think these people really even believe what they're saying -- that's the sad part. They're going through this kind of rhetoric, they get the spin, and they read away. What I want to talk about for one moment is: what would happen if the opposition were ever to get elected? What would happen to the Labour Code? They've already promised that they would gut this part; it would go. I hope everybody in a union is listening to this -- that this would go. What else would go? What about labour standards? They don't like us raising the minimum wage. What would they do with that? Are they going to repeal that too? How far back. . . ? Do you want to get rid of holiday pay as well? I mean, let's make it so investment can really come here. Let's just get rid of it all. They'll come in. They'll put in their capital. We'll have a great day. A few guys will make a whole bunch of money, and everybody else will get less -- much less.

I am really concerned by the prospect of a Liberal government ever coming to power and touching this code. I remember being with the Ministry of Labour, and I remember what it was like in those days, when the Socreds gutted the code. I remember what they were like. I remember how threatening that was to ordinary men and women in the labour movement. I keep hearing from the opposition that the labour movement is some kind of a bad thing. It takes me right back to my West Van days. The labour movement is about ordinary men and women trying to live and to feed their families. I can tell you. . . .

Interjections.

T. Stevenson: Oh -- to Alberta. Are we back to Alberta as being the Garden of Eden? By the way, speaking of Alberta and the Garden of Eden, I don't know if anybody saw the paper, but I think they estimated that. . .

Interjection.

T. Stevenson: The mowed-down garden.

. . .they got $1.3 billion from VLTs last year. Wow -- what news! That's what the opposition likes: VLTs and $1.3 billion in Alberta.

In closing, I just want to go back a bit to where I started. I was part of an organization in West Vancouver, and I remember very well two janitors who wanted to certify. They wanted to become part of the union. This organization got to work and very quickly had all its members there. I can tell you that they turfed these guys out faster than your head could spin, and I think that's exactly what the opposition agrees with and would like. I go back to your member for Kamloops-North Thompson and his way of dealing with labour relations. Maybe it applies to all of you; I don't know: "The way good managers deal with conduct problems is called progressive discipline. You whack them once. If they do it again, you whack them again. Eventually you turf them right out."

That's exactly what they did in this organization in West Vancouver: they whacked these guys once, twice and then turfed them out. Thank God we changed our Labour Code so that they can no longer be whacked and turfed out.

This bill is a moderate bill. It's in line with other jurisdictions in this country. It's a progressive bill. It's a bill that's needed by the unions. I'm happy to be part of the government that is bringing in this bill, and I urge all the House to vote for Bill 26.

J. Wilson: It's a pleasure to stand here today and speak on this bill -- the bill of bills, we may call it. It's quite interesting to hear the government's side -- this bill is innocuous; it's not designed to cause a problem in the province today -- when the economic climate here is just hanging on by a thread. The economy is in terrible shape, and we hear the members on the other side stand up, one after the other, and give us their line of propaganda as to why this bill will not affect the economy of this province.

[5:00]

Let's look at this bill a little bit and see if it will measure up to the expectations of the majority of people in this province. When you bring a bill into the House, it should meet certain criteria.

An Hon. Member: Speak up a little bit.

J. Wilson: If the member opposite can't hear me, perhaps he should invest in a hearing aid.

A bill must be necessary for the maintenance or the enhancement of the public health, education, order or safety. This bill doesn't fit that category at all. A bill must be neces-

[ Page 9168 ]

There are certain objectives that should be met when you introduce legislation into this House. The needs of individuals and small business, in order to prosper, grow and create employment, should be a primary objective of any bill, because in the province of British Columbia small business is the generator of the economy, wealth and jobs. This government didn't even consider small business when it introduced this legislation.

This bill should be provincial in scope, but it should also allow for regional or local decision-making. What it does is take that away from that sector of the trade unions, the construction industry -- it's one-size-fits-all. We all know that the industry has been deviating from that policy for a number of years in order to stay alive and healthy.

The views and concerns of British Columbians affected by a bill should be a primary measurement focus. What has happened here? Well, to me and to many other people out there, those that were consulted and talked to were only the people who were the backers of this government and who needed this piece of legislation. They didn't go out and consult. They've only pretended to consult. Many people out there today have been completely left out.

We have a bill here that is really not going to correct any problem, so why would we bring it in? There's no problem there. Why create a problem where one does not exist? It seems rather foolish to go out and disrupt a sector of the economy that's had a history of peace in the last few years. They're going ahead; they're doing fine. So why do we want to create a problem for them at this point?

As for the public interest, I would have to say no, this bill does nothing for the public. What would happen if we didn't pass this bill? Well, I'll tell you. The economy of this province would be better off for it. The construction industry would be able to function better, more efficiently. The cost associated with building would remain relatively constant. They wouldn't escalate like they will when this bill is passed.

Before you bring a bill to a House, you should go out and talk to everybody that it will affect. By their own admission, they haven't done that. The consultations were only with people they wanted to consult with, not with small business who are the main generators of jobs and dollars in this province. There were a lot of opposing views, but I don't hear the government bringing those opposing views to the floor of the House and actually saying: "Yes, we are taking all these things into consideration, and we're going to modify this or change it to allow for those opposing views." No, not at all -- just the opposite. They bury them. They bring this bill to the House, and the next day it's into second reading. They want to get it pushed through so fast and out of the road so they don't have to take the heat and listen to the concerns of the businesses in this province that they're going to kill.

[The Speaker in the chair.]

It's not that the government or the Minister of Labour isn't aware of the things that need to be addressed here. I have a list of things that the minister has made known, that should happen. He says: "We must ensure that British Columbia's economy is efficient and capable of competing in the national and international marketplace." Well, that's nice, but if the minister was serious, and the government was serious, we wouldn't have gone from the number one position in economic development in Canada just a short while ago to number ten, where we are today. We are not competitive in the international marketplace, and we're not competitive anywhere in any marketplace. So it would appear that they know what the problem is, but they haven't got the ability to address it. This bill does nothing to address that problem.

Another point was brought up: "We must ensure that the right of workers to join the union of their choice is respected." Well, that's nice. No one is opposed to that. We on this side of the House are certainly not opposed to it, but what we are opposed to is that they have removed the secret ballot. They have removed one of the democratic rights of workers. At the same time, they're painting it as if they're supporting the democratic rights of workers. Well, that's like calling north south or west east. It's a real problem we have with this government today. They say one thing and they mean exactly the opposite. That comes back time and time again.

Another point that the minister admits to: "We must create a climate of stability which will encourage investment and create jobs." Well, the climate in this province today is very bad. We have gone from first place to last place in Canada. Why? Because of the policies of this government, because of their actions. Part of the problem is the inflexible labour laws they have enacted in this province.

The minister says: "We must work to bring business, labour and government together to address issues of common and public concern." Those are nice words. Now, did this government go out and do an economic impact analysis on this bill? No, they didn't. They didn't even consider it. They don't want to consider it, because they know what the answer is before it would even be done. They know that it is going to have a negative economic impact on this province.

When we look at the track record of this government on economic development and investment, it has been an absolute, horrible failure. Companies are fleeing this province every day. In the last three years, we have had 300 companies leave British Columbia. They've taken jobs and future jobs with them, and they're not coming back -- not as long as this government stays in power. That is not economic development; it is anything but. And yet the government stands up day after day and says: "We are creating economic development. We are supporting everything to help build the economy." Not only have their economic policies chased companies out of this province, but we are also now seeing people flee this province so that they can find employment.

It's sad, but history has a way of repeating itself. There are examples of this in the past, where government policies have crippled provinces. In 1954, when I was a youth -- I grew up in the Maritimes, in northern Nova Scotia -- the federal government of that time enacted some policies that crippled that area of the country, and the province had absolutely no say over what happened to them. However, there was no work and no money because of this. People began to leave; families began to leave. Young people would graduate from high school, and they would try and go to university. Some of them went to universities there and others went to a university out-of-province, and when they graduated they

[ Page 9169 ]

[5:15]

When I look around British Columbia today at what's happened here, suddenly reality hits. I've seen this before; I've been there. It's only a matter of time until we will be able to pick a paper up and read a long list of properties that are up for tax sales. Already our youth, when they graduate from our universities, have to leave this province to find employment. We're lucky today if we can employ 20 percent of our youth when they graduate. The rest are going to Alberta, Saskatchewan, Ontario and all over the United States.

When you look at the movement of people from the province today. . . . We lost 3,500 people this year alone. These people aren't leaving British Columbia because they want to; they are leaving because they have been driven from this province. They have been driven from this province by the economic policies of this government and by the lack of employment here. They have to go out and find employment, so that they can feed their families. They are leaving by the hundreds. They are going to Alberta, Washington State and Saskatchewan; they are going anywhere rather than stay in British Columbia. That is something that really does alarm me, and it should alarm those members that are sitting on the opposite side of this House. They should see what is happening in this province today. They have got to do something that will stop this erosion and turn it around. There are a lot of reasons this is happening, but when you go out and talk to business, talk to people all over this province, three things come back quite consistently. First, we have a tax base in this province that is totally out of line with other jurisdictions; we are the highest-taxed jurisdiction in the country. That doesn't help to create jobs or bring investment into this province, because that's one of the things that investors look at: what the tax rate is where they're going to invest their money. They ask, "Is it advisable to go there?" and all of the indicators say no.

Not the opposition -- we don't say that. We'd like to see people invest here, but somehow we're getting the blame for all the economic woes occurring in the province today. The government says: "It's the opposition. Look at them. They're going out and saying: 'Don't come here.' " Well, that's not the case. All we're doing is pointing out the facts. After all, the government is unable to see what it's doing. Actually, that's not true; they see what they're doing, but they don't care. They've got a few friends out there they've got to take care of.

Second, look at regulations. That's another area that is driving investment from the province. Today we are faced with over 2,500 regulations in this province, and they're building every day this House is sitting. We have just passed a new bill, Bill 14, which will add a lot more regulations to the WCB. The government is standing up and saying: "We are addressing this problem of red tape and regulations. We are reducing them. We are getting rid of the red tape." Well, they forgot to cut it crosswise. They are cutting it lengthwise, and they're doubling it. That's another example -- they say one thing; they do another. When I say that you and I and the people of British Columbia understand that we cannot believe a thing this government says today. . . . This is just another example of that. We know they are not cutting regulations and not reducing red tape; we know that they are adding and adding. That's sad, because it's driving jobs out of this province every day. It's driving people out of this province.

The third reason that we hear on a regular basis for people or companies not coming to British Columbia and investing is inflexible labour laws. When you bring in a bill like Bill 26 that puts sectoral bargaining in place and allows no flexibility, you are eroding even further any economic investment or development that could possibly occur in this province. We're going to see an escalation in the number of companies and people leaving.

This government has a really good record. Just about everything they touch seems to disintegrate. For a government that's been so proud of its social policies. . . . It's what they got elected on seven years ago -- part of it.

Health care is one of the big ones today. What's happened to health care under the NDP government? Well, if you were to grade it from an A to an E, I guess they'd get an F or an E. It's bad. Our waiting lists continue to grow and grow. If you are on an emergency waiting list -- yes, a few months; three, four, five. . . . If you're not considered to be an emergency, well, it could go on for a long time. All through the province -- and I see it especially in the north -- the health care system is deteriorating by the month. Ambulance service: we used to have a good ambulance service in the interior. Now it has got to the point in some cases where you may as well not even have it. We've got bed closures everywhere we go. All of our hospitals are cut back; budgets are cut back. The hospitals cannot operate; the beds are closed. We have such a shortage of beds in the hospital in Quesnel that you can go in there at any time and find people lined up in the hallways on stretchers. This is not providing a service in the least.

But what do they do? They ignore the problems in the system, and then they come along. . . . The Minister of Labour has now created a two-tier health care system. They have put WCB cases to the front of the line to be dealt with. They have gone against everything that they said they stand for and created a two-tier system. Well, unfortunately, that's what you get when you elect a socialist government.

Education is another one. It's gone the same way as health care. If you graded that one, they would get an F too. Funding has been cut year after year. Now they're attempting to end-run the school boards and put in an agreement that the minister has negotiated with the union, rather than listen to the people. The school districts in the interior and the north have been hit really hard, much more so than they have been in the lower mainland, just in maintenance alone. When you have to drive a hundred miles to fix a leaky water faucet in a school, your costs escalate. I don't see anyone driving from Vancouver to Hope to fix a leaky faucet or repair a roof or repair a step in the school. No, they may go a few kilometres. We have maintenance staff that's on the road. In some cases, they spend more time driving than they do working. None of this is factored into the budget. It's not allowed for. So what is happening? They have eroded the education system to the point where it's not functioning. Things are deteriorating.

Look at advanced education. The unemployment rate among students is horrendous. That's not something anyone likes to see. But is something being done about it? No, it isn't. It continues to grow, and now we are approaching 19 percent. What happens when you do graduate? Well, as I explained before, you pack your bag and look for a job out of province. If

[ Page 9170 ]

Let's look at forestry. Here's an area where this government. . . . Actually, it was the past Premier of this province who stood up and said that not one job would be lost in the forest industry because of all the things that are being done by the government. Well, we see that that isn't exactly the way it went. What are we looking at today? We have lost thousands and thousands of jobs in the forest industry -- over 12,000 to be exact. Those are direct jobs too. Put those in with the indirects, and that's 24,000 jobs that are now gone in this province. What did the government do? Last year the Premier stood up and said: "We will create 22,000 new jobs in the forest industry."

As I said before, no one believes a word they tell us anymore because everything they have said has turned out to be the exact opposite. They say they're going to create jobs, and it costs us thousands of jobs. When they say that this Bill 26 will not have any effect on investment in this province and that it will not create a problem for anyone in this province, we can't believe that -- and no one does believe it. We know that it's not the case; we know it's not the truth. All we have to do is look at Alcan. They are now seriously reconsidering an expansion project, an aluminum smelter. Why? Because of the impact that this bill could have, increasing costs by 50 percent.

Hon. Speaker, I see my time is up. I have just barely got started here, so hopefully I'll be able to address this at a later date. But I thank you.

[5:30]

As I went back and looked at some of the remarks made by the NDP on Monday and Tuesday -- and I remember some of them from last week -- it's a continual barrage against the Liberal opposition: we don't like unions and workers. Nothing could be further from the truth. It's absolutely bizarre for members from the government side to stand up and make those idiotic statements.

I worked a good part of my life in non-union companies, and I didn't experience that much trouble. I suppose there were times when there may have been some labour unrest. Actually, most of the time it was how much I was going to get for my truck when I was working for someone, specifically the government. Not so much of it had to do with wages and working conditions. I seemed to be quite happy in the north working for companies that were union and non-union; I worked for both. In fact, if you go back to my record since I was elected to this House in 1991, not once have I ever said that we shouldn't have union jobs in British Columbia. In fact, you can go back where you will find that I have said on the record many times that unions have their place; they have their purpose. In many cases, what we need is good-paying union jobs -- high-paying jobs -- to keep this economy going. In fact, what we need is more jobs and more revenue coming in for this spending government that we have across the way, because they can't keep things in control. They haven't been able to keep things in control since 1991, when they were, unfortunately, first elected.

I listened carefully to the member for Victoria-Hillside last week before I left. He talked about how these amendments were nothing -- innocuous, just little housekeeping things that should have been in place a long time ago in British Columbia, because they were in place in Alberta, Saskatchewan, Manitoba and Ontario, and all across Canada, we should have them. He talked about the dark days -- the Socred days -- and said it was so terrible when they didn't have fair labour legislation. Well, if went back to the time before these wizards across the way became government, you would have found a province that was prospering. There were jobs; investment was here. According to the record, we were the number one job creator -- the province of British Columbia. We had the most per-capita investment of any province in Canada. The list goes on and on and on. People could actually stay in British Columbia and find a job. Can you believe it? And what have we got to look at today? Thousands -- absolutely thousands -- of people leaving British Columbia to look for work someplace else. It took the wizards across the way. . . .

Interjection.

R. Neufeld: The member from Prince George will get her chance to comment when the time comes to talk about how great a province this is. She can tell us how they've created all these jobs, why we're so far in debt, why we're now number ten in capital investment in all of Canada. We went from number one to number ten under the administration of that wizard over there, who's been in and out of cabinet like you wouldn't believe.

Interjection.

The Speaker: Minister, please come to order.

R. Neufeld: The economic climate in British Columbia is bad. I don't care who says it. These 30-some people over there who still believe that our economic climate is good just haven't been away, haven't looked around, haven't checked other provinces, haven't checked some of the statistics and haven't even looked at some of their own statistics, or they would obviously see -- or maybe they would see -- what many people have been saying for the last number of months.

The member for Victoria-Hillside -- and I'll get back to the member for Victoria-Hillside -- talked about how there's nothing to this legislation; we should have had it a long time ago.

Interjection.

R. Neufeld: Another member from Prince George now says: "Yeah, that's right." Well, it's an interesting concept. Both the members from Prince George who are in the House right now -- and heckling me about it -- were elected. . . . One was prior to me and one was with me in 1991. If I remember

[ Page 9171 ]

Let me ask you: where was this wonderful mind -- the member for Prince George North -- that now tells me that it should have been there a long time ago? Where was this wonderful mind when that was taking place? Was it somewhere else? Was that person just not thinking? Where was the member for Victoria-Hillside? Why was he not lobbying that member from Prince George to put these innocuous little amendments into a labour bill that, at that time, was actually a fairly extensive bill that totally rewrote the labour legislation in British Columbia? I ask you folks: where were you? Were you all sleeping at the switch? Were you all back home? Well, where were you? You should have been here in 1992 -- those that were elected in 1991 -- saying the same words that you're saying today. But all of a sudden today. . . .

The Speaker: Member, through the Chair, please.

R. Neufeld: Through the Chair to Bill 26, hon. Speaker.

Today, all of a sudden, it's a nothing thing. I just have a hard time with that, because I've listened to members from the government side tell me, time and time again, how this little piece of legislation won't hurt anything; this little piece of legislation should have been there a long time ago. All of a sudden. . . . You get the hook after a while. That's what this is all about, this whole piece of legislation: it's an unscrupulous way of not telling the truth. Why don't they just get up, put into legislation what they want to do and debate that? But they sit around and talk about how it really hasn't anything to do with anyone, and it's not going to affect anyone.

I do not recall ever receiving a letter in my office from a union organization in British Columbia saying that these changes had to be made. Not once -- from 1992 to just recently, when the pressure was on -- did I receive one letter from one of those. . . .

Interjection.

R. Neufeld: Someone says that they took me off the list. I don't think so, because I get lots of mail from union organizations. I get mail, but I didn't get any mail saying: "My goodness, member for Peace River North, we need your help. Here are the reasons why we need your help: there are terrible working conditions; people are just being taken advantage of." Not once did I get a letter stating that.

I've been bombarded in the last while, since the NDP decided that they would bring in some labour legislation. After last year and Bill 44, that terrible piece of legislation that this group thought they would just put through. . . . They had a cabinet minister who didn't understand it, hadn't read it and didn't know how to explain it. He tabled it in the House, and then walked behind the House and couldn't say anything about it. All he did say was: "Well, I guess the labour unions wanted it, so that's why you're getting it." I remember that scrum quite well. It was absolutely unbelievable.

What happened? Within days -- weeks, probably. . . . I can't remember, but it was fairly quick. All of a sudden Bill 44 left the docket. It was taken out, because it was felt at that time that it would have too much of a dramatic effect on British Columbia's economy, I guess -- on job creation and a whole host of other things. I'm not sure. . . . I can't think why they pulled it, other than that the Labour minister didn't know the legislation. I guess they could have brought him up to speed on it, but for some reason, in the strange world of socialism, they tabled the bill and took it away. Then this year they decide to table another bill, another piece of legislation dealing with labour. When you think about what kind of position the province of British Columbia is in economically -- losing jobs, people actually leaving British Columbia -- why would anyone in their right mind decide that we need to change the labour legislation?

I want to bring forward something that probably not too many people here remember. During that period of time, the labour standards were changed. One member talked about all the great things they were doing for the oil and gas industry but forgot to tell everyone how they really gave it to the oil and gas industry not all that long ago. It's always just half the story. They decided to take away an amendment to the labour standards on hours of work that the oil and gas industry enjoyed, so that we could be more in tune with Alberta -- which was our main competitor -- and keep companies in British Columbia. That was something that had been in place for years and years and years and had worked well.

As the member for Peace River North, where most of the oil and gas activity takes place, I never heard from anyone saying: "Change it. Change that piece of labour legislation, because it's not good for us." Not once did I hear that. I've worked with most of those people. I know many of them. What did we have? A labour government -- these folks across the way -- that all of a sudden decided that that amendment was going to go. It doesn't matter what -- we're going to take it away.

I argued with the Minister of Labour at the time, the fellow that didn't understand Bill 44. I tried to explain to him what the problems were. He told me that I was overreacting. I tried to explain to the Minister of Employment and Investment -- the Deputy Premier, who is now the Minister of Energy and Mines and Northern Development -- what would happen. He said that I worried too much and that there was still lots of money coming in from the oil and gas industry in royalties. So why should we care? I tried to explain to the Minister of Small Business and Tourism that this was going to drive businesses in northeast British Columbia to actually set up shop in Alberta and run their businesses out of Alberta, and that British Columbia would miss that income tax, the corporate tax, the stability -- all those kinds of things.

I explained it to the ministry staff. Not one. . . . "We're not going to listen to you, buddy. We're just not going to listen to you, because you don't understand labour. There's something wrong with you. Because you're not a New Democrat, you don't understand labour." Well, let me tell you, hon. Speaker, we understood labour and we understood business. What happened? The changes went into place as the minister said they were deemed to, because it was long overdue that the changes were in place and it really wasn't going to make that much difference.

[5:45]

[ Page 9172 ]

Well, this is the same scenario that's hitting here today. The same thing is happening with Bill 26. They just don't get it. They're going to continue to drive business out of British Columbia as fast as they can. You know, if I go around Fort St. John, Fort Nelson, Hudson's Hope and Taylor -- the main communities I represent -- I can't find anyone that wants these changes, other than about three or four top-level union organizers in those areas. I don't find people beating on the door and phoning me and saying: "Hey, this is good legislation. Let's have some more of it." I find exactly the opposite. In fact, from workers. . . . They're saying: "What are they trying to do -- bankrupt the north too?" What are we trying to do? They've absolutely brought British Columbia to its knees in just under seven years. This financial group of wizards over here has brought British Columbia from number one to number ten. What a legacy! It's just absolutely unbelievable.

Interjection.

R. Neufeld: The Minister of Transportation and Highways will have his opportunity to get up and say some words. In fact, he can probably do it after me, if he wishes -- or maybe later tonight. Whatever he wishes to do, he can do. The minister stated to me that the people in Fort St. John aren't talking about this piece of legislation. Well, hon. Speaker, nothing could be further from the truth. Actually, in the oil and gas industry in Fort St. John. . . . Although the member for North Island tried to talk about it a little while ago, he's not too familiar with it. The northeast is actually doing quite well. In fact, we've been a little hesitant about getting too many of the NDP up there, because they'll realize how well we're doing, and they'll want some more loot out of the northeast, and they'll drive some more business out.

What's happening in the province is that in the south, you have 10 percent unemployment; in the northeast we have 3 or 4 percent unemployment. That's good for me. The south is not too good. But how it's affecting us is. . . . I've received letters from people saying that for the first time, the food bank in Fort St. John is out of food. They're asking for help. One would ask: "How could that be, if the economy is doing that well?" Well, it's not because the economy in northeastern B.C. is doing that well; it's because the rest of the economy in the province is doing so poorly. People are coming from all over southern British Columbia to Fort St. John and Dawson Creek looking for work. They can't find it, and they're on their last dollars. In fact, income assistance applications are up 560 percent in an area that's got 4 percent unemployment. That's because it's so bad in the rest of the province. That's because it is so terrible, and these folks across the way are responsible for it. They're responsible for every bit of it. The economy in British Columbia has gone in the tank, and I can't point my finger at anyone other than those folks across the way -- the whole works of them.

The minister talks about our need for fair legislation. The minister says: "We must ensure that British Columbia's economy is efficient and capable of competing in the national and international marketplace." Well, we're doing a great job of that, aren't we? It's the highest-priced wood in all of North America. The member for North Coast brought it just a little bit closer to home earlier. He talked about how M&B was having so much trouble selling into the Asian market, and that that was part of the problem -- British Columbia was experiencing so much trouble because of the Asian market. But then he said that enlightening thing: Austria is actually taking up the slack in Japan, taking away M&B's business. Why would that be? If the Asian economy is bad and people across the way say that's why British Columbia is in the tank. . . . Yet the member for North Coast says that Austria is actually taking away exports from M&B -- who work on Vancouver Island -- and they're taking away those markets in Asia. It tells me something is wrong in British Columbia; in fact, I think it tells everyone that something is wrong in British Columbia. It tells us that what's wrong in British Columbia is that our costs are far too high. Our production costs are too high; our labour costs are too high. The list goes on and on and on.

Noting the time, I move that we adjourn the debate, and I will reserve the rest of my time for after supper.

Motion approved.

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

Hon. P. Ramsey: I move that the House stand recessed until 6:35 p.m. and sit thereafter until adjournment.

Motion approved.

The House recessed from 5:53 p.m. to 6:36 p.m.

[W. Hartley in the chair.]

Hon. S. Hammell: For everyone's information, in this House, we will continue with the debate on Bill 26. In Section A, we will continue with the estimates of the Minister of Finance.

LABOUR RELATIONS CODE AMENDMENT ACT, 1998
(second reading continued)

There's another interesting thing that I found out just in the last while. There is a value-added industry in the forest sector working on a deal where this company will import to British Columbia green sawn lumber from New Zealand. Import it, ship it all the way from New Zealand to British Columbia, remanufacture it, do the simple things -- finger-joint, those kinds of things -- and actually sell that back in the Asian market and make money. Now, what does that tell you

[ Page 9173 ]

An Hon. Member: In the dumpster.

R. Neufeld: In the dumpster, the member correctly says.

The economy in the province is in the tank, whether you like it or not. Whether or not the NDP likes to hear it, it doesn't really matter. When the Wall Street Journal publishes how terrible British Columbia's economy is -- its high taxes -- what kind of a message does that send out to the investment world? I'm sure it must worry you, too, hon. Speaker, because your job and my job depend on whether we can keep everybody and the province going. So it's important, I think, for the NDP to start thinking a bit before they introduce this kind of legislation.

The member for Vancouver-Burrard stood here just a little while ago and talked about how he was at an announcement the other day with Bombardier -- or today. . . .

An Hon. Member: This morning.

R. Neufeld: Yes, I just said today.

They're going to start some manufacturing jobs in British Columbia. Well, let me tell you the flip side of that story. It's not that Bombardier is coming here because British Columbia is such a great place; it's because a gun was held to their head. We're going to buy some more SkyTrain. We're going to put in some more rapid transit in British Columbia, and we'll buy from you only if you put a plant in British Columbia. That's the only way that this group. . .

H. Giesbrecht: What's wrong with that?

R. Neufeld: The member for Skeena asks: what's the matter with that?

. . .can get anyone to invest in British Columbia. People won't come to British Columbia with their money, saying: "I'm going to invest here because I can make some money." Obviously we have another example. The member for Vancouver-Burrard didn't speak glowingly about Alcan's plans. He didn't speak glowingly about Alcan here, just the other day. They say that their $1.2 billion investment, which could have created 2,000 permanent jobs in Kitimat, just may not go ahead, because costs have escalated to $1.8 billion. It's because of labour costs and taxation.

Interjections.

R. Neufeld: I know you don't like it. I know the members across the way don't like hearing that. But I know the truth always hurts; it hurts big time. The province of British Columbia is hurting big time under these folks across the way.

There's a company that would have reinvested in British Columbia because they're already here, but they're thinking about going elsewhere. Isn't that a sad legacy? Isn't that really sad? Then we have a Premier running around the country saying that we've got nine other people on the hook. What a way to encourage people to spend $1.2 billion and create 2,000 jobs. "To heck with them. We'll go find another one." What a way to do it. Bringing in labour legislation and not really living up to their promises about reducing regulation and all the red tape that goes along with trying to get something happening in British Columbia does not lead us in the direction we should go.

All we have to do is look east of us to Alberta. That's our main competitor in Canada. Or look to the U.S. state south of us. It's a sad legacy. In Alberta they have $40 billion worth of projects that are ongoing right now and that are going to happen by the turn of the century -- $40 billion. Where's British Columbia? In the absolute tank. In fact, Alberta is at about 9.2 percent growth, and B.C.'s at 1.3 percent. What a way to go, folks. Keep it up; we'll soon be at zero. Then where are we going to be?

H. Giesbrecht: Where's their health care?

R. Neufeld: Then what happens to our health care? I'll tell you, what we need in this House is a bill to protect health care and education from these folks, because they're ruining it. It's out the door; it's gone. If we continue to drive those industries that create the jobs out of the province -- I notice, hon. Speaker, that my time is done -- then we're in big trouble. I think these folks have to start seeing the light.

[6:45]

P. Calendino: [Applause.] I didn't know I was so popular. I'm very pleased and delighted to rise in support of Bill 26, because I think it is a bill that's necessary. It's a bill that's long overdue, and it's time that we at least do something to create a balance in this economic construction situation that we have in British Columbia.

I looked at this bill here and went through the various clauses and pages, and it's really a very small piece of legislation with not that much in it. I wonder why the debate is being protracted for so many days and with so much animosity.

I frequently travel to Europe. I also read European newspapers, not just from Italy -- just to inform the members opposite. But I read French and Spanish newspapers. When I'm in Europe, I even listen to what happens in Germany. In those countries a piece of legislation like this would not make any waves whatsoever. It wouldn't, because it wouldn't be necessary. Those countries are highly unionized, and being highly unionized, they have a very strong economy. Being highly unionized implies that those people have high remuneration and that they have disposable money and that they contribute to the economy. On top of that, the workers in Europe are not attacked by opposition members. They are usually part of the decision-making process of employers and of the government. It's a tripartite system, where the employees have a say. They're not shoved aside, like the members opposite would like them to be, for the rest of natural history. Perhaps we should take a page from labour relations in Europe and try and adopt it, but I'm sure that those members opposite are going to object vehemently to something like that.

[ Page 9174 ]

Interjection.

P. Calendino: The member is laughing.

I hear so much contempt for unions and for working people coming from that side that I wonder where it is all coming from and why. They talk about everything under the sun, except this minor amendment to the Labour Code.

The other day I came across some comments made by some members of the opposition, and then it started to click. I started to understand why they have such contempt and such animosity in the debate. I want to point out some of the comments that the Leader of the Opposition made just last month, when we were debating Bill 14. For people who don't know what Bill 14 is, it is simply on workplace safety. The Leader of the Opposition said: "We have seen this bill, and it strips away workers' rights in the province of British Columbia." I don't know. How can a bill that enforces workplace and health safety regulations strip workers of their rights? It boggles my mind. The member for Oak Bay-Gordon Head said on the same bill: "We cannot allow a union collective agreement to intervene and override workplace safety when it disagrees with management's disciplinary actions towards employees." My God! It seems that management's rights are divine rights, that workers should be stripped of any rights and that management should be allowed to discipline workers any way they want.

An Hon. Member: That's a harsh view for you to be taking, Pietro.

P. Calendino: Well, I'm learning from you guys.

I guess that's in line with the member for Kamloops-North Thompson, when he said. . . . I'll find in a second, hon. Speaker, where I put it.

Interjections.

P. Calendino: Yeah, that's right.

On his method of progressive discipline, he said: ". . .whack them once. If they do it again" -- talking of workers -- "you whack them again. Eventually you turf them right out." I can sense a lot of sympathy for workers in that statement.

But that's not all. Members over there simply don't want workers to earn a good living.

Interjections.

P. Calendino: They disagree with me. But if you really didn't have any problems with union wages and fair wages, you would not put up this kind of debate. This bill doesn't do anything to other workers.

R. Neufeld: We're talking about reality today. I know that's hard for you.

P. Calendino: We'll come to your reality in a moment.

The member for Vancouver-Quilchena, talking about fair wages. . . .

R. Neufeld: Page 74.

P. Calendino: Yes, you're right. He said just last fall: "We would eliminate the fair-wage act, because what it's doing is forcing all employers in this province that do any kind of government work to pay the same levels as trade unions are paying to their members." Wow, is that a sin -- to pay union wages to people?

The member for West Vancouver-Capilano, speaking on fair wages again, said: "Government should not be the one spending money, so those on the payroll can spend it in the community." My gosh, is that an anti-community sentiment?

R. Neufeld: Well, that's a stretch.

P. Calendino: He says that's stretching it. Now, let me tell you what fair wages do in a community. It puts disposable money in the pockets of working people, who in turn will go and use that disposable money to buy goods in the shops of that community. Perhaps those shopkeepers in your community should know about those comments.

An Hon. Member: What do they do with the non-fair-wage money? What happens to it? Don't they just spend it there?

P. Calendino: They don't have any left to spend, and you know that.

Then the member for Richmond Centre, who most of the time is a very sensible and very considerate person, surprised me with his position on fair wages. He said, talking of the Island Highway project: "It means we're all going to be paying union rates for jobs that could be going to the non-union sector." Well, that's what the members over there are all about.

Interjection.

P. Calendino: No, you didn't say. . . .

That's what the members over there are all about, hon. Speaker. All they want is non-union labour. But let me tell you about non-union contractors. When I was a trustee in Burnaby, legislation forced us to have open bidding for construction of schools and for large renovations, so we did that. When we analyzed the bids from the various contractors that came to us, a number of them were non-union and a number of them were union.

You know what? The difference between the non-union contractor and the union contractor was almost negligible -- in some cases, 1 percent, maybe 2 percent. Yet because of legislation in place, we had to award the contract to the lowest bid, which at times was a minimal difference. But do you know what happened? The workers that were put on those contracts. . . .

R. Neufeld: There's no legislation that says you have to do that. Obviously you had to. . . .

P. Calendino: Maybe I will propose a change. But what happened in those job sites. . . . It happens all over the province. First of all, you get unskilled workers. Secondly, those workers are paid about half of the fair wage that should be paid to those people. But we as a government are putting up almost the same amount of money as we would for unionized contractors.

[ Page 9175 ]

P. Calendino: Where is the money going? It's not going in the pockets of the workers; it's not staying with the school board. What a surprise: it's ending up in the pocket of some contractor who perhaps is from Alberta. Maybe that's why Alberta has a good strong economy.

Interjections.

Deputy Speaker: Order, members.

P. Calendino: Well, I just want to touch a little bit on the bill, hon. Speaker, because the bill, as I said earlier, really does not overturn the relationship between employer and employees in most of the labour force we have in B.C. It only touches one very small sector of the construction industry.

An Hon. Member: And there only a little tiny bit too.

P. Calendino: Yeah. Well, maybe I should use the phrase of the minister: "a subsector of a subsector of a subsector." In fact, it seems that if we had this amendment in place last year, it would have affected about 700 workers. Now, that's not an. . . . That number wouldn't have made anybody broke, certainly wouldn't have sent the economy into a tailspin and wouldn't have made the province broke. This bill will deal only with the sector of the construction industry that's called industrial, commercial and institutional. To set the record straight, and contrary to what the members over there are saying, it does not include residential construction; it does not include road construction; it does not include any other capital construction outside of the ICI. All it does is bring us in line with other jurisdictions around the country. Every other province in Canada has separate legislation for the construction industry, in particular for the industrial, commercial and institutional sector. B.C. was the only province that didn't have it. I don't know why we waited so long; it should have come in a long time ago. It should have come in in 1992 to remedy the great problems of Bill 19, which your friends brought in in 1986.

All this bill does is simply recognize the unique nature of the construction industry, which is not a long-term industry; it's a short-term project type of industry. For workers who attempt to organize in that kind of short-term environment, it is very difficult. Even if a craft union manages to organize its workers, by the time they have done all their work and apply for certification, the project usually ends, and so ends the relationship that has been created between the employer and the employee. It does not carry through to another project. All the bill does is remedy that difficulty. It just gives workers the ability to choose whether they want to be in a craft union or they want to be non-union. They have the right to refuse; they have the right to determine their own future. They also have. . . .

Interjections.

P. Calendino: All the legislation does is give craft employees access to a standard collective agreement -- though only if they choose a craft union. If they don't, then there is no standard agreement. It does nothing but level the playing field in the construction sector. As I said before, it's nothing different than what's done in Alberta or Ontario.

[7:00]

Hon. Speaker, those people over there call themselves Liberals, but they are not Liberals with a big "L." They're small "l" and maybe not even that. I think they're a conglomeration of anything under the sun. They're negative, they're naysayers, they're forecasters of gloom and doom, and they're advocates of "the sky is falling." Well, the sky is not falling. Perhaps it fell on that crowd over there because they know they won't be re-elected, and they know they have to stay on that side of the House for at least another two years. So it has fallen on them for at least the next two years.

You know, there is only one liberal on that side of the House, and he had to change parties because of it. That's the member for Powell River-Sunshine Coast. He examined every word of this bill, and he didn't find anything wrong with it. He didn't find any doom and gloom in it. He didn't see that this bill would devastate the economy, like those members are trying to tell us. In fact, he agrees with this side of the House, saying that the only controversial element in the bill, the only negative thing in this bill, is those members over there. Unfortunately, he has to sit on the other side.

Those people over there have been talking about a whole number of myths in their presentation. I want to touch on some of those myths. One of them is the myth that if investors come to B.C., they're putting their investment at risk. Let me say something about risk. If there is anything at risk here, it's not the investors investing in a democratic society with a stable democratic government like we have in B.C. What is at risk in the province is the lives of construction workers who are put in jeopardy day after day because of unsafe conditions in many workplaces. Those members know that.

Interjections.

P. Calendino: That's right, the kinds of laws over there are similar to the ones you want.

Risk in investment. I want to go a little bit further than just British Columbia in talking of investment. When an investor invests in B.C., he at least knows that he invests in a safe place. He or she knows that sooner or later there will be a return on their investment.

Interjections.

P. Calendino: Whether it's B.C., Alberta or Ontario, it's not immediate -- okay? Risk in investment is when investors try to exploit situations in developing countries. We know, for example, of the situation of Bre-X, where the investors went into a country that doesn't have any labour laws, that doesn't. . . .

Interjection.

P. Calendino: Well, you talked about everything; I can talk about whatever I want.

[ Page 9176 ]

P. Calendino: Let me tell you something I saw the other night on TV about investment and safety of investment. I'll come to your points.

Deputy Speaker: Excuse me, member.

P. Calendino: I'll come to your points in a moment.

Deputy Speaker: Member. . . .

P. Calendino: The other night. . . .

Deputy Speaker: Would the member take his seat, please.

An Hon. Member: Sit down, the Speaker is talking.

Deputy Speaker: Members, we're going to have to have order in the House. The member has the floor. Other members will have the opportunity to enter the debate in their turn. Also, all comments are to be directed through the Chair, please, members.

P. Calendino: I was talking of investment in developing countries. The other night I was watching CBC Newsworld, and. . . .

Interjection.

P. Calendino: Let me talk about this Canadian company who invested in Russia, in building a mega-expansion to the airport there. Well, they went there in the hope of exploiting the labour situation, the economic situation and the political situation in Russia. They entered into an agreement with some fly-by-night companies and with an unstable government. They spent billions of dollars building this huge complex in the hope that they would reap the benefit in a few years, because all the tourists from America and Western Europe would go to Moscow and enjoy the sights. Well, all those things have not materialized, and that company lost its investment because they were imprudent. They went to invest in a place which was undemocratic and which did not have a stable government. That is not the situation in British Columbia. Let me tell. . . .

Interjection.

P. Calendino: The member opposite. . .

Deputy Speaker: Members. . . .

P. Calendino: . . .talks about socialism.

Deputy Speaker: Member for Peace River North, would you please come to order.

P. Calendino: The member for Peace River North puts down the concept of socialism. Well, I have to tell you that in Europe, the strongest economies still have socialist-minded governments.

An Hon. Member: Name one.

P. Calendino: France, Italy, Spain, England. . . .

An Hon. Member: And what happened in England?

P. Calendino: Actually, they had their right-wing government, like you guys over there, and look what they did. They put their economy in the tank.

Let me touch on another item, and that's the loss of workers of British Columbia. That's what those members have been talking about. Yeah, maybe there are workers moving out of British Columbia and going to other provinces, but I can remember when we had the same situation in the 1980s. We had a booming construction industry in Ontario and a slowdown in British Columbia. We weren't in government, and there were thousands of workers from British Columbia going to Ontario looking for jobs.

Then in the nineties, under an NDP government and a booming economy, those workers came back -- and so did workers from Alberta and from the prairie provinces. To tell you the truth, they are still coming here, because we're still creating jobs in this province. To those people who espouse the wonderful province of Alberta, I have to say that along the border of Alberta, there are thousands of Albertan workers working in B.C. and earning their wages in British Columbia. The member for Peace River North knows that. There are thousands of Alberta workers, even in metro areas, in the construction industry.

Interjection.

P. Calendino: Oh, they do know that. They just don't want to admit it.

An Hon. Member: Even today, there are thousands of Albertans -- massing on our border.

P. Calendino: Yes, there are, and I can bring some to you -- okay?

Then they talk about the problem in the housing industry, and they bring up examples like Campbell River and some little town in the Okanagan. Well, they also know that Campbell River has had an explosion of population in the last ten years, and so did the Okanagan and the lower mainland. They also know that an explosion like that cannot be sustained forever. All it is is a natural cycle. There is a slowdown of people coming in and a slowdown of demand in housing construction. That's the reason it is down. They also know that Campbell River last year had a ten-month strike at their major employer. That had a huge impact on the disposable money of people up there, and that had an impact on the housing industry.

I'd like to ask them to come and visit my constituency, where there is no slowdown in the housing industry. I can tell them that in just about every block, there's at least one, if not two, new houses being built -- and people are buying those houses.

I can tell them that on the Hastings corridor, which had been dormant for a long time, there are four major housing and commercial projects going on, and three or four more are on the drawing board. Burnaby is booming in construction. Last year they had record applications for construction in Burnaby -- a record in '97 -- and it's continuing in '98. Yet those people are claiming doom and gloom in the housing

[ Page 9177 ]

They are trying to blame the slowdown on this government, and I think that when. . . .

Interjections.

P. Calendino: I'm not hearing everything they're saying, hon. Chair, so I can't answer whatever they're saying.

But we do have some challenges in some sectors here, and I'll talk about that. They've been claiming the sky is falling on our economy -- gloom and doom -- and in the forest industry and in the other resources. I'm not denying that. We have a considerable downturn in the forest industry and in the mining industry. I'm not denying that; nobody does. But those members also know why we have that slowdown: most of our resource industries export to Asian markets, and they know that those Asian markets are in a crisis.

Interjection.

P. Calendino: It's not an excuse. That is the truth. They want us to be in a global economy, but when we talk of the global economy and the fact that we as a small player cannot influence, cannot change, what happens in a global economy, they don't want to hear that. They know very well that the Japanese economy is really in the tank, and that affects our economy.

As a matter of fact, it's not only our economy that's affected, being resource-based. Let me tell you about other economies in the world that are affected. Let me tell you about New Zealand. My daughter is studying in New Zealand, and we communicate frequently. I won't tell you what my telephone bill is at home, but I talk to my daughter a lot and we communicate by e-mail. I ask her: "How is the situation in New Zealand?" So she cuts newspaper clippings from the major paper in Wellington, the capital of New Zealand. The last one she sent me said: "New Zealand has a $98 billion debt." Other clippings she sends me tell me that the resource sector in New Zealand is almost dead, because it's dependent on the purchasing power of the Asian economies like Japan, Korea and all the other Asian economies.

That's not the only other country. I talked to friends in Australia. My childhood friend, my school buddy, lives in Sydney, Australia. I talk to them and ask them: "Well, how are things there? Is it good for employment for young people?" And he tells me: "No, it's not. Unemployment is growing in Australia. There is 25 percent unemployment among young people in Australia."

Interjection.

P. Calendino: Well, you know, it isn't different in British Columbia. We go through these ups and downs. Three years ago we had a booming economy; now we're in a slowdown. We'll pick up again. It will come back, and those people know that. Oh, there are so many things, so many myths those people want to create.

Deputy Speaker: Hon. member, your time has expired.

[7:15]

E. Conroy: I really appreciate this opportunity to get up and speak to Bill 26. I want to start by giving a summary, as I would maybe normally do when I finish. I guess my summary is that the opposition hasn't spoken to Bill 26. They haven't talked about Bill 26; I don't even think they really care about Bill 26. I don't think they care. I think they have used Bill 26 as a political platform to get out there and talk about the situation they feel is happening in British Columbia.

If anyone out there in television land right now is not watching BCTV because they happen to be in a labour dispute and happens to be watching this program tonight, I would like to suggest that if you want to see a political party that's operating in its own best interests, rather than in the best interests of the province, you are seeing it right here in this debate. It's not about Bill 26. It's about furthering their own political interests and trying to draw people in this province into their neanderthal thinking about the trade union movement and what they hope to achieve in their agenda, with their attempt to become the next government in this province. I think that when the working people of the province of British Columbia understand the anti-union, anti-labour, anti-worker sentiment on the other side of this House, they're going to have no doubt whatsoever in their minds where these people on the other side of the House stand.

They talk about our province as an area of no hope. We've heard this time and time again. I heard the hon. member for North Vancouver-Lonsdale talk about perception: "It's about the perception of business in this province. It's all about perception." In my view, this bill does nothing to hurt the perception of business in this province. What the opposition is doing is doing everything to hurt business in this province.

Let me give you a little example, hon. Speaker. This is a letter dated April 3, 1998, to the Hon. Glen Clark:

"Dear Mr. Premier:

"Thank you for your recent letter and kind comments concerning the purchase of our second resort in British Columbia, the Kimberley Ski and Summer Resort. We are very excited about the potential of both Fernie and Kimberley, and your comments with respect to our plans are very welcome. As well, your recent directives about making British Columbia a friendlier place to invest are also encouraging. You probably are not aware that the Alberta government does not share your feelings with respect to mountain resort development -- hence the shifting of our focus to British Columbia.

"We expect to invest. . .for our own account or for the account of our resort partners, over $200 million at each resort over the next five. . .years. Bearing in mind the considerable investment that Intrawest is making in Panorama, I expect that over $500 million will be invested in the East Kootenays during the next few years, with the bulk of the money coming from Alberta. These investments will provide over 1,000 permanent jobs, in addition to construction jobs, when complete.

"Again, thank you for your gracious letter. It is indeed with pleasure that I say I look forward to working with you in achieving one of your priorities, mountain resort development."

It has been mentioned by the other side that it's not the Industrial Revolution we're fighting here; it's also been mentioned by the other side that this is not 1962. In other words, the point that the opposition is trying to make is: "This is not 1962; this is not the Industrial Revolution. So we don't even need trade unions anymore -- they're redundant. Those beautiful transnational corporations, who are moving in here and taking jobs away from British Columbia and the rest of Canada to Third World countries, using child labour, exploiting workers from all over the world. . . . We don't need unions

[ Page 9178 ]

This is good for us. It's good for me. I'm proud to stand up here and say I'm a trade union supporter. I'm proud to stand up here and say I don't understand you folks. I don't think you even care about the bill. I think you're using this as political fodder. As I said at the beginning, I think what you want to do is utilize this as a political platform to further your own political agenda.

They make it sound like labour is redundant, hon. Speaker. Now, just let me do what many of my colleagues have done, and that's quote a few of the labour-friendly quotes that have come from the other side with regard to labour debate in this province. The first one I'd like to quote, and it's been done before. . . . Of course, I'll get to the famous one that the member opposite is going to go down in history for. I'll get to that, because everyone else has gotten to it -- and I've gotta.

I'd like to refer, first of all, to a quote from the member for Oak Bay-Gordon Head: "We cannot allow a union collective agreement to intervene and override workplace safety when it disagrees with management's disciplinary actions towards employees." Let's think about that for a minute. If we applied that thinking when the railways were developed in British Columbia -- that we can't let workplace safety get in the way of company development. . . . What happened to the Chinese workers who worked on the railway? They were expendable, and hundreds and hundreds of them died when the railway was built in British Columbia.

An Hon. Member: They got in the way.

E. Conroy: They got in the way -- that's right. We can't let them get in the way of company business. We can't let safety issues harm the companies -- that's terrible for us, just terrible. Hundreds of Chinese died when we built the railway in British Columbia, and she of all people should understand that. I don't understand where she's coming from with a statement like that.

The Leader of the Opposition, when interviewed on BCTV. . . . Campbell is on record as saying he wants to slash the size of government. And should he win the next election, he says he isn't afraid to re-examine signed contracts. What does that say to all the trade union people out there? What does that say to the ordinary working people of B.C.? "You've got a signed contract; it don't mean nothin'. It doesn't mean anything to us, because when we're government. . . ." Trade unions know how you feel about trade unions. They know that it's over when you become government. The Leader of the Opposition says it right here. The reporter asks, "Are you hoping to reopen these negotiations?" and the reply is: "If necessary, to make sure that we can deliver services to protect education and health care in British Columbia. To do that, we would willingly do that -- absolutely." How do you expect the men and women in the trade union movement to react to a statement like that? How do you expect anybody to think that the members opposite are anything but anti-union? How do you think they feel about a statement like that by the Leader of the Opposition?

One of the members opposite, who is sitting here tonight, said with regard to fair wages: "We would eliminate the fair-wage act, because what it's doing is forcing all employers in this province that do any kind of government work to pay the same levels as trade unions are paying to their members." Well, isn't that a tragedy. Isn't it terrible that working people should receive fair remuneration for the work that they do. God, that's a tragedy! What do those working people do with their money? I was going to get to this later, but I'll say it now. What those working people do with their money is go out and spend it in the economy of British Columbia.

Let's go back for a minute. In the last downturn in our economy, when the right wing was in power and the building trades were gutted -- around the same time as we did the Expo deal -- you saw the difference in those contracts between union and non-union firms. On a $3 million contract, the difference might be. . . . Gee, in some cases, it was just a matter of a few thousand bucks. But the non-union contractors got all the contracts. The workers worked for $12 an hour. The union workers would have worked for about $20 an hour. So my question is: where did the extra $8 an hour go? I'll tell you where it went. It went into the hands of the major contractor, Kerkhoff Construction. If that $8 an hour had been paid to the workers of British Columbia, it would have been recirculated throughout the economy of the province -- it would have come back and come back and come back. Where's Kerkhoff Construction now? Where's all that money now that flowed into the hands of that construction company? I don't know -- Bermuda? Don't ask me, because it's gone. The only remuneration working people get in many instances is the wages they earn. We as the government here in British Columbia have to make sure that those are fair wages.

Hon. Speaker, let me quote from the member for West Vancouver-Capilano about fair wages: "The fair-wage policy has feathered the nests of unions at the expense of taxpayers." According to the member for West Vancouver-Capilano: "Government should not be the one spending money, so those on the payroll can spend it in the community." This has been said before, and that comment just baffles me.

An Hon. Member: Read it again.

E. Conroy: Okay, Mr. Minister, I'll do that: "Government should not be spending money, so those on the payroll can spend it in the community." Well, where are people who earn a fair wage supposed to spend it? We all know where they spend it. They spend it in the community. You know, another thing that I think might be almost enlightening to the people on the other side is that they spend it in small businesses. It's trade union workers who make fair wages that make small business work in this province. Somehow that message has not seeped into the members on the other side. They will be happy when everybody in this province is making minimum wage with no benefits. That's where they want to go. Not only that, they'll remove the minimum wage, so that the gap. . . .

Interjections.

E. Conroy: Absolutely, you will, and I have no doubt about that whatsoever.

Hon. Speaker, I'd like to move on to the Island Highway project and to a comment from the member for Richmond Centre.

Interjections.

[ Page 9179 ]

E. Conroy: He said: "It" -- the Island Highway project -- "means we're all going to be paying union rates for jobs that could be going to the non-union sector." Oh boy, here we go again -- you know, let's drive them down. Let's join the rest of the world in the race to the bottom. Let's get the Liberal agenda out here on the table. Let's not be happy until we're all working for $6 an hour with no benefits. That's what's going to happen, folks.

[7:30]

Interjection.

E. Conroy: If the member opposite is going to go down in the annals of history in our province, it's going to be for this quote, for the enlightened approach he has to industrial relations -- which, if we employed it in this province, we'd have nothing but total turmoil. You know, I appreciate the member opposite and his comments. I know he's entitled to his opinion, but I just have to do it: "The way good managers deal with conduct problems is called progressive discipline. You whack them once. If they do it again, you whack them again. Eventually you turf them right out." Is that the kind of labour relations the members opposite want? Is it? I don't hear anybody saying yes; I don't hear anybody saying no. I don't hear anything all of a sudden from the other side. It's amazing how they've been silenced. I love it; it's great.

With regard to replacement workers, I have one more quote I'd like to throw in here. This is by the member for Vancouver-Little Mountain: "Employers have the right to hire replacement workers. That's the way it's been, and that's the way it should stay." I mean, do the members opposite realize what they're saying? Do they realize the message they're sending out there to the rest of the province? What must they think when they hear their own quotations and the approach they're taking to ordinary men and women who only want to make a living in this province and enjoy the amenities that the members on the other side enjoy? But somehow they just don't get it. They believe it's some kind of a conspiracy within the trade union movement to ruin this province. The successful countries in the world right now -- the European countries -- are very highly unionized, and they've managed to do both. They've managed to support the working people within the framework of the countries that are involved, and they've managed to produce some of the strongest economies in the world today. There is no reason at all why that's not going. . . . I don't need to say why it's not going to happen. It is going to happen here in British Columbia, and we're going to make it happen.

[The Speaker in the chair.]

Interjection.

E. Conroy: Yes, thank you. I might come back to them if I have enough time.

We had a statement this afternoon about small business people and how they have to mortgage their house to start their business and how they're affected by this legislation. Well, I agree that they are affected by this legislation, but the effect on the small business people I deal with, with regard to this legislation, is positive because it puts more money in the hands of the people who go to those small businesses to spend money. It makes my communities better and more vibrant places to be because the workers in my communities have money to spend. I'm really proud that we're doing this, and I'm really happy that that's coming about. It's working men and women who support small business in this province, and it's working men and women who make fair union wages that support small business in this province.

Again, the member for North Vancouver-Lonsdale kept saying that perception is important.

Interjection.

E. Conroy: Yes, I know she's here, and I'm glad she's here.

Small business creates jobs. Again, she has to understand -- and I don't think she does -- that good union support, whether you're in the teachers union or in any other union in the province, really does have a major impact on small business. It was said before -- again, I think this was from the member for North Vancouver-Lonsdale -- that before 1991 we were number one in growth in the country. Well, we were number one in growth in the country in 1991. We were number one in 1992, we were number one in 1993, we were number one in 1994, we were number one in 1995, and, we were number one in 1996. Did I hear anything from the members opposite when we were number one for that long? No, not a word. I'm going to say it -- and I think some of my colleagues have said it: 20 percent of our economy is gone because of the Asian meltdown. So what's happening in our economy here in B.C. has a profound effect on the relative wealth of the people in this province and on what's going on.

I want to point out that the day before yesterday in the Vancouver Sun, your federal leader, who is sort of a Liberal -- unlike the members opposite, who aren't Liberals at all but Liberals in name only -- talked about the fact that the effect of the Asian meltdown is now having an impact on the federal economy. So to deny that the situation in Asia, as my colleague from Burnaby said, is not having an impact on the economy of British Columbia is simply an untruth. We have some major problems around the situation with Asia. We're doing all kinds of things to deal with them, and I think we're doing them very, very well. We're going to come out of this, and we're going to come out of this in good shape.

Again, I just want to say that this isn't about Bill 26. This is about the Liberal agenda to try and convince B.C. and be the naysayers that they always are, saying that the NDP has driven the economy of this province into the tank. That's simply not the case. Where were they when we were number one? They were nowhere. They weren't even in the picture. They had another focus of attack when we were number one. Now, because of the situation in Asia, we're not in the same favourable economic position as we were. Yet with leadership like we're getting from the Minister of Labour, we're going to position ourselves so that we will be number one again. I have absolutely no doubt about that. It's very difficult for them to realize that.

Politically speaking, again to go back to what I said at the beginning, right now you're witnessing a political party that is operating solely in their own best interests and absolutely not in the best interests of the people of this province. I think that's

[ Page 9180 ]

Let's move on to some of the other progressive bills we're doing that you're going to have some difficulty in dealing with because you can't deal with what's going to happen to this great province in the new millennium. We're bringing forth so many darned good bills that you guys can't decide which one to criticize next. I'm very interested to see what bills they are going to criticize next and how they're going to criticize them. It's going to be very difficult for them to put some of the political spin they want to on some of these bills that deal with human rights and other kinds of issues like that. I'm really looking forward to seeing what they're going to do with regard to some of these things.

Hon. D. Lovick: They'll do the usual: they'll speak against it and vote for it.

E. Conroy: That's very typical.

Hon. Speaker, just let me wind up. The Liberals keep saying -- and I hear it time and time again from the other side: "We've got nothing against unions, but. . . . We've got nothing against people of colour, but. . . . We've got nothing against women's rights, but. . . . We've got nothing against aboriginal people, but. . . . We've got nothing against gay rights, but. . . ." But what? The "but" is the big question. Every redneck in the world has got nothing against these issues, but. . . .

Our government struck a construction industry review panel to review this thing. We brought all the players in. This debate is not about Bill 26; it's about the Liberal agenda and the Liberal hopes to draw the people of the province in to their backward ways.

K. Krueger: What a pleasure it is to follow the member for Rossland-Trail. It wasn't that long ago that everybody in this House was really concerned about his health, and rightfully so. He came through a terrible time. Our thoughts and prayers were with him. It's a real pleasure to see him back in the House, robust and feeling good. I fundamentally disagree, obviously, with everything he said, but I'm awfully thankful that he's here with us to say it.

I've been listening very carefully to this debate for the last week. Of course, we weren't supposed to be debating this for the past week, because we had a commitment from the government: it wanted its budget concluded by the end of June, and there'd be no legislation debated in the House. That agreement was abandoned by the government at its whim, as these agreements tend to be, and once again we find ourselves with another broken NDP promise. You haven't heard too much about that, because essentially that's what we expect from this government. Frankly, that's what the people of British Columbia expect as well. But it's no laughing matter.

The hon. member who just spoke, sincere as he was, and probably believing what he said -- although he said a lot of it tongue in cheek, I believe -- is completely wrong when he thinks that Bill 26 is an innocuous, harmless bill that won't have any effect on the B.C. economy, or when he says that the B.C. Liberals have not been speaking about Bill 26. What the hon. member misses completely -- and what everybody on the government side and indeed the minister himself seemed to miss -- is that Bill 26 is all about the economy. That's all it's about: the effects that this kind of misguided thinking and behaviour and legislation on the part of the government have already had and will have on the economy. That's what Bill 26 is all about, and that's what the B.C. Liberals are speaking about day after day as we oppose this legislation -- as I will oppose it in these brief remarks, and as we will continue to oppose it over the coming days.

As I've been listening to this debate and the remarks of the government members, I've often thought how the issues that we consider, debate and talk about here in the Legislature and the accomplishments of the government that we are presently a part of -- indeed, the government that's been in power for the last seven years. . . . I've often thought how those issues and accomplishments stack up compared to the accomplishments of governments of the past, both provincially for British Columbia and federally. I think about the years when I was growing up in the Peace River country and the way things were for British Columbia when W.A.C. Bennett was Premier. There were hydro dams being constructed. The W.A.C. Bennett Dam at Hudson's Hope, not far from where I lived in Dawson Creek, was a huge project -- a megaproject -- that delivered massive amounts of power to British Columbia.

I see the members on the opposite benches enthusing about that, and they're right. Those were the heydays of British Columbia. They were wonderful days. It wasn't an NDP government, of course; it was W.A.C. Bennett. He considered the NDP, as he called them, "the socialist hordes" and would do almost anything to avoid the socialist hordes ever assuming power.

Interjection.

K. Krueger: He used to make remarks, such as the member for Peace River North just quoted, that the socialist hordes were at the gates. This was a thing to be feared; this was a thing to be avoided at all costs. Of course, it turns out that he was right. He used to say that the NDP aren't capable of running a peanut stand, and of course that's what we've found out. The man was a visionary; the man was right. His judgment was superb, and so was his performance. I don't think anybody contests that. I've heard the Premier of today comparing himself to W.A.C. Bennett and seeking to somehow draw a parallel between himself and W.A.C. Bennett, even though their results are entirely different. They're diametrically opposed; they're opposites.

[7:45]

Interjections.

K. Krueger: The members are urging me to talk about Six Mile, and I gladly will. But there is the mid-Island highway first, so let's talk about that for just a moment.

[ Page 9181 ]

K. Krueger: I don't mind, hon. Speaker. I can see you're about to try to silence the rabble, but they don't bother me. I needed those examples; I asked for them.

So we'll talk about the first one they raised, which was the mid-Island highway. As I understand it, the mid-Island highway has cost British Columbians $1.2 billion -- $400 million more than the Coquihalla Highway. Imagine that: 50 percent more than the Coquihalla Highway. The Coquihalla Highway runs through incredible mountain territory. I drive it every week. At certain times of the winter, they have to plow it 24 hours a day to keep it open. That's how high it goes; that's how rugged it is. It involved bridges and tremendous work. Of course, it has cloverleafs; it's a superhighway. It has at least four lanes everywhere. In some places, it has six lanes and beautiful pullouts for putting on chains, and beautiful cloverleafs. On the Coquihalla Highway, you don't have to worry that anybody hasn't engineered it for the kind of highway driving you're trying to do. Then we compare that to the mid-Island highway on which the NDP spent $400 million more than the Coquihalla cost. Fifty percent more! Imagine that. You drive along the mid-Island highway, and what do you come to? A red light. On a superhighway that costs $400 million more than the Coquihalla, you have to stop for a red light. Why? Because of some little road that traverses Vancouver Island from east to west. You stop and you wait and you ask: "How could this be on a $1.2 billion highway?" But sure enough, a mile or so down the road it happens to you again, and it happens over and over and over all the way up the Island, because. . . .

Well, we all know why. It's because they ran out of money. Why did the NDP run out of money on the mid-Island highway? Why did they have to get rid of the cloverleafs and the underpasses and the passing lanes and all those things that the Coquihalla Highway has? Why? It's because of one of their funny little deals with friends and insiders and big union bosses. We've heard how the NDP hate us using that term. We don't like to hurt their feelings or anybody's feelings. But it is the deal with the big union bosses. Everybody has to hire through the union hiring hall. You have to go with the HCL agreements. You have to have the so-called fair-wage policy -- everybody knows it's the fixed-wage policy -- because all those costs are built in. The collective agreements that the NDP have set out to try and protect and enshrine and impose on all the rest of British Columbia -- with this ill-advised, costly, stupid, negative legislation -- are the kinds of agreements that led to that massive overrun on the mid-Island highway that has it essentially ending nowhere. You drive north on the mid-Island highway, and it just sort of peters out. You've got to make your embarrassing little way off that highway -- that super-expensive highway -- and onto the old Island Highway along the coast.

Interjections.

The Speaker: Hon. member, I don't want to interrupt you, but I think I must because there's rather too much noise in the chamber. So if the conversations would. . . .

Interjection.

The Speaker: There is a member speaking who isn't even speaking from his seat, never mind that he is also speaking out of turn. I think it might be a minister. If I could recommend, if conversations must happen, that they happen out in the corridor. . . . Thank you.

K. Krueger: Thank you, hon. Speaker. What a shame that I had to interrupt my train of thought just when it was in mid-flow and the members opposite were enjoying it so much. My colleague tempts me to start over, but I'll try to pick up where I left off.

There were only two examples that were called out by the government benches, who are, of course, tremendously fond of heckling us as we speak. One was the mid-Island highway and the other was the Six Mile Ranch in Kamloops. They are already trying to claim credit for having done something at Six Mile Ranch, and all they actually managed to do was finally tell the developer, in recent weeks, that he can go ahead with this project. It's been over two years that he's been trying to get that approval. He spent over $300,000. His trials in trying to get that project approved stand as a monument to other investors who might be considering doing something in British Columbia as to how tremendously difficult and costly and well-nigh impossible it is to get anything done by way of development in British Columbia. That developer tried for all that time to get the government to pay attention to him, and the irony of it is that the government wanted to.

My colleague the MLA for Kamloops, the hon. Minister of Environment, Lands and Parks, actually wrote a letter, we learned, in the fall, after she was first elected. She appealed to the Premier and to the Agriculture minister -- who was heckling me and who you had to discipline a few moments ago -- and to the Minister of Employment and Investment, and pleaded with them to intercede with the Agricultural Land Commission and try to make that project happen. She may not have realized at the time that she was counselling them to do something that was completely improper. Of course, they knew it, and they should have told her, but apparently they didn't. Apparently they went and did what she said, which was to try to pressure the agricultural land commissioner into making that decision for them even though it was outside of his mandate. It was completely inappropriate for them to do any such thing. Indeed, they messed around with that for well over a year. I wrote them in February of '97 and asked them to please don't do that, but declare this project in the provincial interest.

I can see, hon. Speaker, that you're trying to get me to relate this to Bill 26, which, of course, I'm about to do.

I wrote to the ministry and said: "Why don't you declare that project in the provincial interest and give it a wide-open public consultation in the light of day, before the eyes of the entire population, and let everybody have their say, let all the cards be out on the table, let the chips fall where they may" -- using some of the gambling parlance that this government is all too familiar with -- "and let the project proceed if it's a good project. It looks to me like it might be. It looks to me like it might stand on its own." But oh, no. They had to try and cut these backroom deals and pressure employees to do this and that and spend money on their consultants -- their patronage appointees. Finally, having tried to pressure that poor commissioner until it nearly made him pull his hair out, they realized that in that particular man, they had a public servant they couldn't bully. They decided, on January 16, 1998, to withdraw from the second Agricultural Land Commission hearing that they had tried to arrange and finally to do the right thing, which was to go to a public consultation process.

Of course, the final outcome of that was a recent approval by the provincial government. But by no means does that amount to a spade in the ground yet, let alone something that the member for Esquimalt-Metchosin should be claiming credit for on behalf of the provincial government. Nothing has

[ Page 9182 ]

I see that the Chair of Committee A is in the House with us. Noting the time, I move that the House do now adjourn.

The Speaker: The motion, hon. member, is to adjourn the debate.

K. Krueger: As I do that, if I may, I'll reserve my right to continue these remarks tomorrow.

The Speaker: We're adjourning the debate -- that's the motion at this time.

K. Krueger: All right, hon. Speaker. I reserve my right to continue to speak. . .

The Speaker: Of course.

K. Krueger: . . .in second reading tomorrow.

I move that we adjourn the debate.

Motion approved.

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

Hon. S. Hammell moved adjournment of the House.

Motion approved.

The House adjourned at 7:55 p.m.

PROCEEDINGS IN THE DOUGLAS FIR ROOM

The committee met at 2:39 p.m.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS

Hon. J. MacPhail: I have a few opening remarks. Before I begin, I'd like to introduce my staff who are with me. On my left is Chris Trumpy, the Deputy Minister of Finance. On my right is Lawrie McFarlane, secretary to Treasury Board; and Brian Mann, senior financial officer. There will be others joining us as well.

I would like to take this opportunity to recognize some of the important functions through the Ministry of Finance that contribute to the financial and economic well-being of the province. This ministry is the government's tax collector through the revenue division. We're the banker and the money manager through the provincial treasury. We're the chief accountant through the office of the comptroller general. We are the fiscal and economic policy-makers, the budget and expenditure arm through our Treasury Board staff. We perform corporate and personal property registrar duties through registries. We're the collector of statistical information through B.C. Stats. We're the purchaser of goods and services through our Purchasing Commission, and we're the central post office through B.C. Mail Plus. We're the central communications and policy group through CPCS. We're the government's printer through the Queen's Printer. We have 2,502 FTEs to fulfil this broad mandate and a budget of $686.7 million for this fiscal year.

I am also the minister responsible for the Public Service Employee Relations Commission, which is the government's central human resource and labour relations agency. I'm responsible for the Public Service Appeal Board, the Public Sector Employers Council, the Superannuation Commission, the Financial Institutions Commission, the B.C. Securities Commission and, finally, B.C. Transit.

As I told the House in the budget speech, we've developed a three-year plan based on our consultations with big and small businesses, with labour and community organizations, and with ordinary British Columbians. We're now implementing this plan to stimulate the economy, to make B.C. more competitive and to attract investments and create jobs. We're cutting taxes for 40,000 small businesses. We're cutting red tape. We're eliminating the corporation capital tax for 10,000 small businesses. We're revitalizing our traditional industries: forestry, mining, oil and gas and agriculture, and we're strengthening our new economy as well. We're creating a very positive business climate.

The Ministry of Finance and Corporate Relations is playing a major role in cutting the cost of doing business in B.C. and making B.C. more competitive. Our ministry is leading the government's initiative to improve the business climate by streamlining regulatory processes to reduce the cost of complying with government requirements.

The small business task force, which I chair, had its first meeting on May 15. It includes my colleague the Minister of Small Business, Tourism and Culture, and 14 other people who want to work to cut red tape and streamline the process of doing business here. The task force will recommend priorities for the reduction of red tape and regulatory burden, and it will recommend measures to prevent the creation of unnecessary new regulations. It will report quarterly on the progress. The first report on priorities for action is due by the end of this month. So the first legislative changes can be introduced this session if there is agreement.

Several changes to improve the business climate in B.C. are already underway. The new Company Act draft and business names act discussion paper were released for public comment by our financial and corporate sector policy branch. One could assume that there may be legislation on that soon. All consumer taxation branch public information bulletins and pamphlets have now been loaded onto the Internet web site to give people up-to-date interpretation of the rules. Vendor registration numbers can now be assigned immediately to all persons applying for registration in the Victoria office. There used to be a two-week delay for this. Immediate vendor numbers are also available for specific vendor groups at the Vancouver consumer tax office. This faster service will be expanded to include more vendor groups at more locations during this coming fiscal year.

One-stop business regulation continued to make registering a new business easier. The combined efforts of the con-

[ Page 9183 ]

[2:45]

For six large businesses, the inconvenience of being audited separately by the consumer taxation branch and by Revenue Canada was cut in half when the audits were combined, using the same test period. More combined audits will occur in the future, reducing the amount of staff time and the material that businesses need to provide. The consumer taxation branch's application form for registration as a vendor was redesigned, with two tear-off wings containing detailed line-by-line instructions for completing the form. The form is now easier to complete, and processing time has been reduced because of the reduced need for callbacks for missing information.

Other significant accomplishments of our ministry in the 1997-98 year include the land tax deferment system. It's now running on a new computer system, which began operation in March. The new system provides more time-efficient management of deferment agreements. It gives clients and property tax collectors in municipal and government agent offices faster and better information. Backlogs in processing rural property tax payments are being reduced and possibly eliminated. That's done by using the optical character recognition system. This system, starting for the 1998 property tax season, will allow payments to be handled in a more efficient and effective manner by eliminating the need for manual keypunching.

The office of the comptroller general reached agreement with the auditor general to eliminate two of the three audit qualifications on the government's '97-98 financial statements. Qualifications related to fiscal agency loans and land will be dropped in the future. The OCG carried out a far-reaching examination of the accountability framework in the former Ministry of Education, Skills and Training, which will improve performance measurement and accountability.

Fund managers of the office of the chief investment officer were very successful in exceeding the investment goals and therefore had a large, positive effect on reducing unfunded pension liability. Joint federal-provincial surveillance and enforcement operations continued during the year, resulting in seizures of illicit cigarettes. A joint prosecution program was established with Revenue Canada to bring smugglers and other offenders to court for violations of the Tobacco Tax Act and the Excise Tax Act of Canada.

The corporate accounting system moved payment-processing from the old central batching system to a new millennium-compliant CAS core system, eliminating the risk of business disruption or failure in the year 2000. The CAS core system was also improved in the areas of supplier payments and travel advances. In 1997-98, 37 auditors were hired as a part of the revenue initiative and brought in an additional $6.5 million from audits related to consumer and income taxes. This year we plan to hire another 68 audit and support staff to recover more taxes owed to our province.

B.C. Transit, one of the Crown corporations I'm responsible for, helped the government reach agreement for the greater Vancouver regional district to transfer responsibility for public transit and transportation to the GVTA. B.C. Transit continued to expand and improve public transit service in communities around the province.

PSERC negotiated collective agreements, and you are well aware of the recent settlement with BCGEU. PSEC also negotiated settlements with the health sector and the teacher sector.

There were two significant awards recently in the Ministry of Finance and Corporate Relations, of which we are very proud. Phil Grewar, director of the risk management branch, was named risk manager of the year by the Chicago-based Business Insurance magazine. He was recognized for his 12 years of work to cut the provincial government's insurance costs by a series of innovations that have provided better and cheaper insurance coverage for schools, hospitals and provincial government operations. Those savings exceeded $300 million to date. Phil Grewar was the first risk manager from any government in Canada or the United States to be chosen for this award in the magazine's 21-year history.

Euromoney magazine has named the B.C. government Canadian borrower of the year, because of B.C.'s diversification and number of successful issues in 1997. The debt management branch of my ministry saves taxpayer dollars by adopting an opportunistic borrowing strategy to access low-cost sources of debt.

Although the B.C. economy is forecast to grow at 0.9 percent this year, there are reasons for optimism about the future. Next year we forecast improved growth of 1.7 percent, as the world recovers from Asia's economic problems and the commodity downturn. Economic growth has been slow overall due to low commodity prices in exports, slowing in-migration and lower new housing construction. The slowdown in Asia has played a part in this, but Asia accounts for only about 20 percent of B.C.'s total exports.

The effects on B.C. will not be as strong or as long-lived as some people believe. Continuing strength in the North American economy and growth in Europe are helping to offset the effects of Asia's economic problems. Some sectors of the B.C. economy continue to perform well, including high technology, non-residential construction and tourism.

We're working hard to develop opportunities for further investment in B.C. as well. The government's three-year budget plan includes tax incentives, streamlining and other cost-cutting measures, with the intent of making B.C. more competitive, improving our investment climate and creating jobs. These actions will help us to manage the impacts of the Asian downturn. When growth in Asia picks up again, B.C. will be ready to benefit.

As we begin our debate on the spending estimates of the Ministry of Finance, there are some things that all members of the House should keep in mind. For most taxpayers, B.C.'s tax burden is amongst the lowest in Canada. Our tax freeze for families is continuing. B.C. continues to retain its high credit rating. We're improving B.C.'s economy by encouraging investment and job creation. While we forecast economic growth of 0.9 percent this year in B.C., we have chosen to base our revenue forecast on growth of 0.3 percent. We met our

[ Page 9184 ]

I'd like to thank the staff of the Ministry of Finance and the agencies which report to me for their hard work and dedication. I know that they will continue to provide excellent support as we meet the challenges of the coming year.

I look forward very much to our discussions.

G. Farrell-Collins: I want to take a few minutes, too, to start out and congratulate those members of the ministry's staff who I know put in long hours and hard work to try and come up with administrative and systems improvements that year by year, decade after decade, make the process of governing a little more efficient, hopefully, as opposed to a little less efficient. I know that there are improvements this year, as there were last year and the year before. For those individuals who come up with the good ideas, who take the leadership to follow them through, to advocate for them and to push for those changes, I want to thank them, on behalf of the opposition.

I also want to extend congratulations to Phil Grewar for his award. It was brought to the attention of the opposition a while ago, and it is truly something to be proud of. I think it's quite an achievement. When one looks at the dollar figure, that lends even more credibility to that award. It's something he should be proud of. On perhaps a lighter note, I would say that nowhere did he probably face more challenges in risk management than in the Ministry of Finance in the province of British Columbia in the last six years, although I suppose that's not related directly to the insurance costs but to a few other things.

I must say that I was a little amused that British Columbia's other award was for Canadian borrower of the year. I know that it's probably not what one thinks it is. In fact, for those individuals who work hard to manage the ever-increasing debt in a way that costs the taxpayers of British Columbia as little as possible, credit should go to them for that work. I'm sure that it's difficult and challenging at times. I'm sure that to receive an award like that, on a serious note, is a great flower in their lapel. But again, I must say that I'd prefer that British Columbia were named "lender of the year" or "balancer of budgets of the year," rather than "Canadian borrower of the year." I think that's relatively amusing.

The minister talked a little about some of the accomplishments of the government in the last year. Well, you can look at the last year, but you can also look at the last six years in some ways. I found it interesting that this year, after six years of NDP government, we now have a three-year plan. I would have thought that when one was elected, one would have at least a three-year plan and would have been working on that plan for economic development since 1991. The minister informs us that we now have a three-year plan to improve the investment climate and the business climate in the province of British Columbia and that we can be so proud of that. Can the minister -- when she gets up and responds -- perhaps talk about how that three-year plan compares to the three- or four- or five-year plans that exist in other provinces. How does British Columbia compare to those other regions and what types of things are they doing to keep their own businesses and to attract businesses from other jurisdictions?

I've sent the minister an outline of the areas which we intend to start our debate with and which we wish to examine. There may be others towards the end as issues pop up. I don't expect that, but certainly I'd be glad to give the minister and the ministry notice if there are any other particular areas that need to be examined.

I want to talk a little bit about some of the assumptions that were made in the budget this year and ask how well we're doing as far as those economic targets go. If we look at some of the economic assumptions contained in this year's budget, there was a projection that employment in 1998 will average 1.847 million, which is up 0.5 percent from 1997. In light of the fact that in the first two months the B.C. average was 1.822 million, can the minister tell us where we are as far as hitting the target of 1.847 million jobs this year, averaged over the entire 12-month period?

Hon. J. MacPhail: The employment number for May was 1,850,000, so we're a little above that. The year-to-date change is plus 0.5 percent, so we're right on target.

[3:00]

Hon. J. MacPhail: Sorry, the comparison you're asking for, I think, is season-to-season. This is the comparison: the plus 0.5 percent is the seasonal comparison; it's year-to-date -- the first five months of this year compared to the first five months of last year. So we're on target.

G. Farrell-Collins: The minister gave us a figure of 1.85 million employed; I'm assuming that that's this month versus the same month. . . . I don't know which month's figure she is using. If it's May '97 and May '98, for example, that's one thing. What I'm looking for in the projection of the budget is that there would be an average employment rate over the entire fiscal year of 1.847 million. If the minister is telling me that at the high point of this year -- if this is the high point or close -- we're at 1.85 million, then I would argue that we're probably going to drop to somewhere below. At the end of the year, we're likely to end up with a figure that is less than the projected number of 1.847 million. That's a yearly average, not just a specific month target; what I'm talking about is the overall yearly average. How are we doing?

Of course, every month at the front that you're below average, you're required somewhere in some month to exceed the figure that you were anticipating at that time in order to attain the average over the entire 12-month period. We may be speaking apples and oranges. The minister, I understand, is giving me a figure as of, I'm assuming -- she can clarify -- the end of May, and the figure is 1.85 million. That's one month, and she may measure that over the previous year's May. What I'm looking for is how we're doing across the 12-month period with the target average of 1.847 million. Are we on target for that at this point in a rolling average?

Hon. J. MacPhail: We're probably going to have agree on how we can use statistics. I have found the most useful

[ Page 9185 ]

G. Farrell-Collins: Can the minister then tell me which months of the year are likely the months of the highest employment? Is it the summer season, the July-August season? Or is it June or September? What's the time frame?

Hon. J. MacPhail: It is the summer months, spilling over a bit into September as well, that are the highest.

G. Farrell-Collins: Perhaps I'll come back to the job figures a little later, when I have additional information.

I'd like to ask a little bit about the housing starts. In the budget, the government projected housing starts to be 27,800 in this fiscal year. Can the minister tell me how we are year-to-date, if we're going to use year-to-date figures, over last year?

Hon. J. MacPhail: For housing starts, the latest month is 21,500. That's a change from the previous month of minus 0.5 percent. But overall, the year-to-date is down 13.3 percent. That's housing starts. Is that what you asked about specifically -- housing starts?

G. Farrell-Collins: So the minister is telling me that housing starts year-to-date are down 13.3 percent. Can the minister tell me what was forecast in the budget for housing starts at this point?

Hon. J. MacPhail: The housing starts were forecast to be 27,900 -- down 4.9 percent. So the housing starts are less than the least that was forecast in the budget.

G. Farrell-Collins: I'm just trying to set some benchmarks here, so we know what we're talking about and what we're measuring from. Last year, the housing starts, the minister said, were. . . . Okay, this year the minister is telling us that they're 21,500 year-to-date -- or at this point.

Hon. J. MacPhail: In one month, May.

G. Farrell-Collins: In one month. Well, unless I'm really misunderstanding, I don't. . . . Is the minister trying to say that there were 21,500 housing starts in the month of May? I didn't think so. What I'm looking for. . . . Maybe I can make clear exactly what I'd like to see. I'd like to see what the projection was in the budget for this year over last year, and then how we're doing relative to that projection year-to-date.

Hon. J. MacPhail: For the full year, we were projecting a decrease of 4.9 percent. Year-to-date, the decrease is 13.3 percent. I can get you that on a month-by-month basis if you wish.

Interjection.

Hon. J. MacPhail: It'll be in the form of a graph.

G. Farrell-Collins: That's fine. I'll wait for that. Can the minister quantify that in numbers, as far as year-to-date? We're off; we were supposed to have. . . . A decrease of 4.9 percent is what was projected three months ago. We're now off 13.3 percent. So that's an 8.4 percent difference; it's a fairly significant deviation from what was projected a fairly brief time ago. Can the minister quantify that -- what was projected in total housing starts to have taken place at this point and what we actually have here today in housing starts -- in a number?

Hon. J. MacPhail: When I give you figures. . . . We're going to have to explain these all the time. The figures are annualized -- like, if that had happened throughout the year, what it would be. So for May it was 21,500 on an annualized basis.

We forecast an annualized housing start of 27,900. The year-to-date annualized figure up to the end of May is 23,680. So the annualized figure -- we'll do the math for you there -- would be the difference between 23,680 and 27,900, as a reduction in percentage.

G. Farrell-Collins: So at this point, actual versus forecast, we're anticipating. . . . Actual as per forecast, if you were to annualize it, we're short. We're down 4,260 housing starts; that's 27,900 minus 23,680. So we're under by 4,260. I guess that's where the 13.3 percent comes in.

The minister gave me a figure earlier of 21,500. Is that the current revised forecast for this year?

Hon. J. MacPhail: No, that was just for the month of May, as an annualized figure. The year-to-date, from January to May, is 23,680.

G. Farrell-Collins: Can the minister tell me what month of the year -- if there is one -- the housing starts are usually the highest?

Hon. J. MacPhail: They're almost always highest in the summer period.

G. Farrell-Collins: The reason I'm asking is that I'm trying to understand how the ministry forecasts this. If we were to annualize the drop-off in the May figures alone, we're looking at a housing-start level of 21,500 for the year. That is 6,400 housing starts lower, which is about a 20 percent drop-off. Of course the earlier months, if you do year-to-date, boost that up for March and April. Or I guess it's April and May, because there are really only two months in the fiscal year.

I'm sensing that year-to-date is the calendar year. It is the calendar year, so we're five months into it now. In fact, one could say that the drop-off has started to increase. The speed with which the drop-off in housing starts is declining is picking up. In fact, it's getting worse month by month, if one were to look at those figures, in that May is probably off a lot more than the previous months combined were, when you compare May's annualized versus the year-to-date annualized. In fact, the drop-off, if I look at that, is a fairly significant change in. . . . Mind you, it is only one month. But when you're thinking that May, June, July and August are going to be the big months for housing starts, that's a relatively significant decline in housing starts. Does the minister have an explanation for that deviation from forecasts so quickly into the fiscal year?

Hon. J. MacPhail: Slower in-migration and an absolute glut in the condo market.

[ Page 9186 ]

This year the net interprovincial migration is forecast to fall from 7,400 in 1997 to a net in-migration of 3,000 in 1998. That's what was given to us in the budget three short months ago. Can the minister tell us, in the same vein, how we're doing year-to-date over the forecast that was included in the budget earlier in the year?

Hon. J. MacPhail: During the first quarter of 1998, the net outflow of people from B.C. to the rest of Canada was 3,500.

[3:15]

Hon. J. MacPhail: We haven't done one yet.

G. Farrell-Collins: For the whole year 1998 -- i.e., the next nine months and the previous three months -- we were expecting to gain 3,000 people in British Columbia through provincial in-migration, a net gain of 3,000. In fact, in the first three months alone we've lost 3,500. That's a pretty significant change. That's 6,500 in the hole, off the forecast. That's an error of 112.5 percent in that forecast, in three short months. It's a pretty significant deviation. Can the minister tell me, first of all, when the revised forecast will be done and, second of all, if she has an explanation for that size of deviation from a forecast that was done only three months ago?

Hon. J. MacPhail: Let me try to perhaps answer some of the broader implications that are behind these questions. We may do a revised forecast in September. We will look at that. The indication now would be that we will, but that's not for sure. Some areas of our forecast are underforecasted now. Certainly the areas of expenditure and revenue generally are on forecast, in terms of what the meanings are to the taxpayers.

It is true that the economy is softening in certain areas. There is no challenge to that. Our government has admitted that. We're working very carefully and very diligently to try to manage our way through the economic challenges that we face now. Some of the economic challenges that we face now are that the growth we've experienced in the nineties through in-migration and immigration is slowing down. People are choosing to not come to British Columbia because of the growth in the economies elsewhere. From Ontario west, the economies are growing. The large in-migrations that we used to discuss in terms of the increased welfare caseloads, which was my first experience with the in-migration discussions, has now reversed itself. That is an admission.

That also is related to the housing starts. The significant portion of the housing starts is related to the dilemma that's faced in the condo market as well. No one denies that, including the real estate developers themselves. Certainly, because British Columbia's economy is growing only at 0.9 percent this year, people are seeking job opportunities elsewhere as well. We don't need to disagree on that.

G. Farrell-Collins: The minister said that she may do a revised forecast in September. Is that just the in-migration and out-migration numbers? Or is that a total set of revised forecasts for the budget for this year?

Hon. J. MacPhail: If we do a revised forecast, it will be a revised forecast for all economic indicators.

G. Farrell-Collins: Can the minister tell me how many times in the last six years the Ministry of Finance has had to revise its forecasts midstream -- an entire reforecast of their economic indicators?

Hon. J. MacPhail: Actually, we do it almost every year.

G. Farrell-Collins: Almost every year the ministry does a revised forecast of all of its economic indicators -- sometime throughout the year. September is the date the minister gave me for this year. Can the minister tell me in how many of the last six years that has been done -- five of the six, or three, or four? I'm just curious to know if there's a figure for that.

Hon. J. MacPhail: We can get you that information.

G. Farrell-Collins: Thank you. It seems surprising to me that. . . . I've dealt with two of the stats here that are significantly different: housing starts -- in a fairly significant way, a 13.5 percent or 20 percent drop-off in forecast, depending on how you choose to look at the statistics, not from last year's forecast but from only three months ago; and net in-migration numbers are out 112 percent from what was forecast a very short time ago. I can't think of any year in recent memory, since I've been here, that the figures were likely to have been out by that much. Maybe the minister can inform me otherwise, but I can't think of one. I know that in some years the figures have been higher than expected, but I don't believe it's been this order of magnitude. I think these are relatively significant changes in those two areas of statistics, anyway.

The minister says that it's almost every year that they do these forecasts, but they don't know if they're going to this year. I'm asking the question in a legitimate way: is there some sort of policy insofar as within a certain standard deviation, if numbers start to deviate by a certain amount, is a reforecast done? Or is it just a decision that the ministry makes at its discretion, depending on need or demand or a request for that?

Hon. J. MacPhail: It would be my view that forecasts are done to inform the public and to give the public a sense of where the economy is going. When that needs to be done, we will do it. Most years we do it. I don't anticipate any change in that this year, but I can't give you a firm commitment. I don't think you're asking for one, either. It's normally done and would probably be done in the context of publishing the quarterly reports.

G. Farrell-Collins: I'll await the figure for how many years that has been done, and how often it's done in a year.

On my question regarding interprovincial migration and the net figure, I'm wondering if the minister has any net migration numbers for British Columbia and other jurisdic-

[ Page 9187 ]

Hon. J. MacPhail: Immigration is plus 7,500 -- so the population continues to grow.

G. Farrell-Collins: The minister says immigration is plus 7,500. Is that figure a year-to-date, and what is it compared to forecast?

Hon. J. MacPhail: It's for the first quarter, and it's around forecast.

G. Farrell-Collins: The minister said it's the first quarter, year-to-date, and it's around forecast. You mean it's around the forecast figure, as in close to -- pretty much on target?

Hon. J. MacPhail: Yes.

G. Farrell-Collins: Thank you. Given some of the downturns in the two areas we've talked about -- I know there are other areas that aren't performing as well, such as the forest sector, and I know that some sectors are doing relatively well -- can the minister tell me overall, year-to-date, how well we're doing from forecast GDP growth?

Hon. J. MacPhail: The actual GDP is only confirmed once a year, at the beginning of the next calendar year. For instance, I think it was in April or May that the actual GDP growth for '97 was confirmed; that's a Statistics Canada confirmation. But the broad indicators -- you've dealt with one of them, the employment indicators. . . . The unemployment rate is on forecast. The wages and salaries is on forecast -- and might be a bit high, actually. The year-to-date is plus 2.5 percent growth. Retail sales is on forecast; the CPI is plus 0.2 percent. Housing starts versus non-residential starts, for instance, is up substantially.

G. Farrell-Collins: I know that the minister said that confirmation only takes place once a year. Does B.C. Stats or the Ministry of Finance do any rolling GDP numbers, or do they just look at these indicators and try and measure relative to the indicators whether or not you're on target. Is there any other actual measurement that's done, or is there a particular forecast that's done? Or do you just rely on those indicators to give you a sense of where we're going?

Hon. J. MacPhail: We actually do our economic forecasting the same way as others do. We use the broad indicators that have occurred so far and then make a forecast of what it will be the rest of the year. But we rely on the forecasts of others, as well, in determining whether to revise or not.

G. Farrell-Collins: The minister is telling me that at this point in the fiscal year she has no indication that GDP is anything other than what the government has projected, and that all of her broader indicators are indicating to her that the forecasts made by the Ministry of Finance in preparation for the budget have essentially not changed. Is that correct?

Hon. J. MacPhail: This is the first time we've done this, so I don't know how direct you want to be in your questions. Let me give you a direct answer. There is no indication at this time that the broad state of the economy is anything other than what our forecast is. Within the parameters of the economy, some things are better and some things are worse, and we've already discussed some of those. When one forecasts, one actually expects that to occur, even within the context of a forecast. However, we will continue to monitor it and make the changes in forecast as needed, and we will work with other forecasters on it as well.

G. Farrell-Collins: Can the minister tell me. . . ? Maybe this isn't the place to do it. Maybe there's another area of the ministry where she may want to speak about this or she may want to have staff here to deal with it. But I'd particularly like to go through some of the forest numbers and get a sense of how we're doing in that sector as far as any economic indicators that the ministry tracks or actual financial transactions that are tracked.

Hon. J. MacPhail: I'll give you what we have. There's only been two months of revenue from forestry, and that's too little to predict whether forecasts are on target or not. But I can talk about prices, which may help a little bit. The budget forecast had lumber prices -- spruce, pine, fir -- at an average of $300 (U.S.). The year-to-date average has been $285 (U.S.). In hemlock, for lumber prices, the forecast was $650 (U.S.); year-to-date, it's been $592 (U.S.). For pulp prices, it was forecast at $560 (U.S.). The year-to-date is $533 (U.S.).

[3:30]

Hon. J. MacPhail: The Ministry of Forests collects its own revenue.

G. Farrell-Collins: Can the minister tell me if, in the analysis of employment that the government does, it also tracks forest sector jobs, or is that done separately? I know the ministry did some work. As we were told in the briefing, it had done some economic analysis numbers and some tracking numbers, performance numbers for FRBC, but that it doesn't do that any more and is finishing that up. Does the ministry still track overall employment figures by industrial sector?

Hon. J. MacPhail: We monitor employment statistics in all sectors. The statistics come from Statistics Canada.

G. Farrell-Collins: This is new for me. It's probably newer for me than it is for the minister. Can the minister tell me if that's how B.C. Stats does its employment numbers? Does it only get them from Stats Canada and reinterpret them and break them out for British Columbia, or does B.C. Stats actually monitor and track its own figures?

Hon. J. MacPhail: B.C. Stats gets its information from Stats Canada.

G. Farrell-Collins: I want to come back, just for a minute, to the GDP line of questioning, and then we can move on. In the budget reports from 1997 -- I believe it's page 32 -- there was a range of economic forecasts given for British Columbia for '97-98-99, with low, mid and high scenarios. The low scenario for 1998 at that time was an annual growth in GDP of

[ Page 9188 ]

Can the minister tell me. . . ? I know they haven't done any in the ministry, because the minister told us she hasn't done any rejigging for this year, and at this point she says she doesn't see a need to. Can she tell me if there's been any revision of the 1999 forecast? I've heard the minister speak recently, saying that 1999 -- next year -- is going to be a good year, or better than people are perhaps anticipating. I'm wondering if the government has done any rejigging of those GDP numbers.

Hon. J. MacPhail: Just to be clear, I'll reiterate the question as I thought you asked it. We did revise the forecast in our '98 budget. So you're asking if we have revised our '98 forecast for. . . ?

G. Farrell-Collins: No, your '99 forecast.

Hon. J. MacPhail: Our '99 forecast done in the '98 budget -- no.

G. Farrell-Collins: We'll wait and see. It's going to be interesting to see what sort of impact the downturn in the economy has on revenues over time. Clearly at this point there are going to be some significant drops in some areas relative to forecasts, and the minister is suggesting that those will be made up for by increased revenues from other sources within the economy that are over-forecast. They would have to be, according to the minister. The minister gave us some of the broad indicators: wages and salaries are up 2.5 percent, retail sales are on target, CPI is up 0.2 percent and non-residential starts are up significantly. I'm assuming those are the areas where the ministry anticipates accruing additional revenues to offset those that are lost in our largest industry, forestry, which one would anticipate would be significant, and those that are being lost in other areas.

Can the minister tell me when she will start to get an indication from the Ministry of Forests as to how well they're doing or not doing on their revenue projections for this fiscal year? I do know they inform the ministry at some point in time. When will the ministry start to get those figures in to be able to determine whether or not they are deviating from the forecast by very much?

Hon. J. MacPhail: There are two steps to this. We will publish the actuals in the April-to-June quarterly report. In September the Ministry of Finance sits down with the Ministry of Forests and reviews the trends in terms of climate and harvesting at that point and then decides whether the trend supports the forecast or if it needs to be revised.

G. Farrell-Collins: The minister talked about her three-year economic plan to revitalize the economy. To start with, can the minister tell me what analysis, studies and projections the ministry has done to measure the potential impacts of those changes that are going to take place in this calendar year? The minister talked about turning it around. I think there was a press release out a little while ago that said that things were looking good and everything was going to turn around a lot sooner than anybody thought -- and took credit, in some way anyway, for that perhaps soon to be realized turnaround in the economy. It took credit for that based on some of the changes the government brought in in this last year's budget. Can the minister tell me what analysis they've done to determine what the impact may be of the changes contained in the government's three-year plan?

Hon. J. MacPhail: I'd be pleased to actually see the iteration of the words attributed to me, because I'm spending almost all of my time, when I'm not here, in discussions with the business community, being cautious and cooperative and not in any way indicating that the challenges are easily dealt with. I mean, I don't want our discussions to be based on hyperbole that doesn't exist. I'm working very hard to meet the challenges, and there are challenges in our economy. What I have said is that there are myths out there about our economy. There are challenges but there are also myths. I actually believe that hard work that is very focused and very targeted can have an effect on the economy. But there are challenges that we face, and others have said, as well as us, that it wouldn't matter how much government policy there is, it will take years to turn around, particularly in the commodity sector.

In the area of developing the three-year economic plan, several factors and economic theories prevailed. We frequently met with the business community, who said: "There are at least two government policies that are contributing in a negative way to the economy, and we want you to change those." One area was the imposition of regulation that raised the cost of doing business, and the other was high taxes, particularly in the area of the personal tax high marginal tax rate and corporate capital tax. The discussions flowed from the economic theory that "if you reduce taxes on us businesses, we will create jobs." There are many analyses out there that have that. The Canadian Federation of Independent Business has done analyses, the Business Council of B.C. has done analyses in terms of job creation flowing from tax cuts.

I might add that there was also the theory out there that at times when expenditures would have to be reduced in order to pay for the tax cut, perhaps one should not do that. But the position of business -- that we should cut taxes -- prevailed. We also knew that in the area of the government balance sheet, the public had balancing the books as its priority. Business conceded that, although there was quite a substantial amount of discussion about whether we should actually risk a larger deficit and make the tax cuts bigger. Some aspects of business put that forward.

The third area that no one disagreed with. . . . Sorry, I said there were two policies that business said affected the economy from their point of view. But the third area of the economy that no one disagreed with was maintaining our expenditures in the area of social programs -- particularly health and education. So we worked from a point of view of protecting health and education. That was agreed upon; there was no disagreement there whatsoever. Then we worked carefully to meet the broader public's need to balance the budget -- the public that would be unaffected, directly, by the tax cuts -- and the business sector's desire to test the economic theory that tax cuts would flow through to the economy and stimulate the economy.

[3:45]

I don't think the intent was to actually test the theory; I think the intent was to be able to put in the budget that the

[ Page 9189 ]

Coming back to the minister's response to my question and her discussion of hyperbole. . . . I'm referring to her press release from June 9 -- the twenty-first one of '98 -- where it says, in the lead line: "Provincial government economic and business initiatives designed to foster investment and create jobs are beginning to pay dividends for the economy. . . ." Then it lists a bunch of items, most of which haven't taken place yet this year. They'll be taking place next year: the personal income tax, some of the business income tax cuts for small business, etc. I was just curious what it was exactly that the minister was using to measure that impact to be able to make that statement.

I know she talks in here about the help-wanted index and bankruptcies, etc. But the minister has just spoken to me for about an hour about how tentative the first indications are with the budget, how difficult it is to try and make any changes on the projection of GDP and how difficult it is at this early stage in the fiscal year to measure, in any scientific way, any economic way, any impact of anything. The minister has listed, and we've gone through. . . . They've measured some numbers. But she's telling me that overall, everything is right on target. We're on target for a government-anticipated revenue growth of 0.3 percent for this fiscal year.

So for the minister to tell us at this early stage that she's on target for a 0.3 percent increase in revenue growth based on a 0.9 percent projected increase in GDP, and then to issue a press release which says that all of these changes, many of which haven't yet come into force, have already started to create jobs and pay dividends for the economy. . . . I'm wondering how she can make that assertion, given the debate we've just had for the last hour, which indicates that there's been no real impact, there's been no significant change to what was planned.

Hon. J. MacPhail: You know, I guess it's too early to do big speeches, so I won't. But what you have to understand is that when you say that I'm saying what. . . . What needs to be understood is that when someone stands up and says that I'm saying that everything is fine and that the government is responsible for the turnaround, and then a news release is quoted where I say that we're beginning to pay dividends. . . . I'm very careful about what I say on the economy. I'm very careful about what's put into news releases. What's put into news releases is exactly the facts -- nothing more. Those facts are undisputed. They're not hyperbole; they're the facts.

In terms of the tax cuts and the three-year commitment, there were many who wanted us to not make a three-year commitment to our economic plan -- to not have, at the beginning of the third year, a $400 million tax expenditure in the area of personal income taxes alone. We chose to make that three-year commitment, to not deviate from it, and to not say next year that it wouldn't occur. Over and over and over again our commitment has been to a three-year plan that will not be deviated from.

In the area of cuts to personal income tax, the high marginal tax rate was one that had much debate -- both within the business community and within our government caucus -- about whether that was the way to expend taxes in a time of a softening of the economy. We were told by business that we have to become competitive in that area in order to make sure B.C. can attract the people it needs -- particularly to grow its high-tech, knowledge-based industry area. That was the genesis of that tax cut. In fact, we're now in the middle of the range for the high marginal tax increase.

I would suggest that the oil and gas sector would disagree with the member opposite about whether the tax incentives are working. They suggest that they are working. I would disagree with the member opposite that the tax cuts aren't working in the area of film. And I would disagree with the member opposite that the mining sector would say that the tax incentives aren't working as well.

So we are. . . . It's an interesting debate to have amongst British Columbians: "No, no. It's much worse than you say. In fact, we really want it to be worse than it is." What I'm doing is taking a very prudent but optimistic approach to our economy. Every tax dollar that we expend, either in the form of a tax cut or on an expenditure, is very carefully targeted. One of the issues that we haven't dealt with in terms of the economic forecast, of course, is the expenditure side and the ability to meet your forecasts, in the overall budget, on the expenditure side. We're committed to changing the expenditure side if the revenue forecast doesn't come in.

G. Farrell-Collins: So the minister is telling me that if revenue forecasts drop off, the government will make up those revenues some other way. Is that correct?

Hon. J. MacPhail: No, the expenditure side of government.

G. Farrell-Collins: I'll check what she said. Maybe I heard it wrong, or maybe the minister misspoke herself. I don't recall. I'll check that. But what I thought I heard, and the minister has obviously corrected me as being wrong, was that if the revenues were off, the minister would fix that. I guess what she's saying is that she meant they'd do that on the spending side. I'll look for that.

The minister talked about how she would disagree with me -- actually, I hadn't made an assertion -- and that the mining sector, the film sector, etc., would say that in fact the changes that were brought in by the government have made significant impacts. They may; that's yet to be seen. As the minister knows, a big deal of what goes on in the mining sector is also based on commodity prices, much as the forest sector is and sometimes in an even more volatile way. The film industry, while a lucrative industry, can sometimes be fickle too, in that it can pick up and leave, or it can arrive all of a sudden. It's a fairly volatile industry in that form too.

[ Page 9190 ]

Hon. J. MacPhail: As you know, the job increase in this province is up 32,000 in the first three months. To date, the statistics are not in for where those new jobs are, be they in mining or whatever. The film industry has been growing by an average of 25 percent per year. That means job creation. It's a highly labour-intensive industry. It would be safe to say that the job growth in that area grows at the rate of 25 percent as well. In the area of mining. . . . I recently met with the mining CEOs, and there is an increase in exploration that has added jobs. There is an admission by the mining industry themselves. . . . Sorry, I don't mean "admission" in a negative sense. They assert an increase in employment, and they expect that to increase, particularly in the area of exploration. But they also are, as you indicate, subject to the commodity prices as well.

G. Farrell-Collins: All I would. . . . Well, I won't get into that area; I'll leave that alone for now. I think we've made our points.

One other item I want to deal with is comparing what's going on in our economy to what's going on in neighbouring jurisdictions. I know that the government likes to bash away at Alberta, and I'll talk a bit about Alberta in a minute. I also want to talk about Washington State and Oregon and what is taking place there. From the data I've looked at -- their budgets and economic performance -- it appears to me that for economies and populations that are roughly the same size, those two economies seem to be doing remarkably better than British Columbia's. Has the Finance ministry done any examination as to why that might be the case?

Hon. J. MacPhail: We have studies of the competitive position of B.C., Washington and Oregon.

G. Farrell-Collins: I'm familiar with the study that the government did a while ago on comparative taxation or competitiveness between the three jurisdictions. I recall that document. My question to the minister, though, asked if they've done any sort of analysis to try and figure out what it is that they're doing right that we're perhaps not doing as well right now. They appear to have an unemployment rate of about half, or less than half, of what ours is. Their GDP seems to be increasing and their economy seems to be significantly more diversified. I'm wondering if we're looking, as part of the economic policy, beyond just three years for British Columbia and if we're looking at other jurisdictions to find out what they're doing right, instead of just what they're doing wrong. We could see if there are things they're doing that we can do here in order to further diversify our economy and make it more prosperous and more able to withstand the cyclical nature of resource commodity prices.

Hon. J. MacPhail: Actually, I'd appreciate the specifics of the questions around the studies. Perhaps you could assert the GDP growth of the individual economies, etc., and we can deal with it in that turn; otherwise, we can just have a general discussion about our diversification and the need to diversify our economy, which I'm more than happy to do.

In Washington, of course, there is the knowledge-based sector that is booming. We too are trying to develop that sector of our economy. We have put a great deal of effort into diversification. It was interesting when I met with investors to make a substantive presentation on the diversification of the British Columbia economy. However, much more needs to happen. In 1976, 22 percent of our GDP came from the resource-based sector; it's now 11 percent. There is diversification occurring in the areas of film, tourism and the technology-based sector. Although our technology-based sector absorbs 3 percent of our GDP now, that's more than double what it was a decade ago. We are targeting both our tax cuts and our incentives toward a more diversified economy.

[4:00]

G. Farrell-Collins: I did refer to these figures, I think, earlier during the budget debate, but I'll raise them again for the minister, seeing as she asked.

I'm looking at Washington State right now. Let me look, first of all, at their employment figures. I'm quoting from a Washington State government document: "Unemployment dropped this last year like a rock. The state's overall jobless rate fell nearly 1.5 percentage points immediately in the first quarter on a seasonally" -- this is '97 -- "adjusted basis, going from 6.4 percent to 5.2 percent. Then it hovered around 5 percent through the third quarter" -- towards the end of the year -- "the lowest rate in seven years." There are other numbers too.

As far as taxation competitiveness goes in that department, the 1993 tax on business was rolled back by half in 1996, which saved $132 million for small businesses. In '97 it was cut by another $97 million, which almost eliminated that tax. In '97 a limit was put on property tax growth, for a saving of $195 million. Property taxes were cut by 5 percent, or $126 million. In '97 targeted tax relief measures, primarily for businesses in this example, were a further $57 million. In 1998 taxes were cut by $270 million. A significant amount of that was in senior citizens' property taxes and other business taxes. Total tax cuts from '96 to '98 were approximately a billion dollars.

I know that their economy is different than ours, and I also know that their health care system is different from ours, etc., but the employment and unemployment figures, I think,

[ Page 9191 ]

This is a letter to the Governor's economic advisers in the state of Oregon from February 3 of this year. It's a preliminary February 1998 economic forecast. So at about the same time that we were putting our economic forecast together for British Columbia, this letter was going to the Governor's economic advisory council in Oregon. They said: "Real GDP growth accelerated in the fourth quarter of 1997 to an annual rate of 4.3 percent, compared to 3.5 percent in the forecast." So they actually shot up; they were 0.8 percent over their forecast. A 4.3 percent growth is fairly significant for any economy. The fourth-quarter-to-fourth-quarter growth in real GDP -- these are measured figures which they had at the disposal in the beginning of February, and this is for the full calendar year of '97, so within a month they had these figures -- was 3.9 percent, which I think is significant.

As far as the tax structure in Oregon -- these are personal and corporate taxes, but primarily personal taxes -- they have a method that if the economy does better than projected and they actually have a surplus in revenue -- i.e., more revenue then they anticipated -- they give the money back, which is a novel thought for anyone. I'm sure people would love to see that. If we look at some of the things they've done. . . . They've improved their K-to-12 system. They've enhanced services to their medically disadvantaged through Medicare, although I know that Oregon has a significantly different medical plan and a different philosophy than British Columbia does. This is an interesting one in light of today. They avoided the threat of park closures and initiated a program of park system rehabilitation, in addition to improving their stream and salmon restoration plans. They were able to do all of those things. In addition, they gave back a record high of personal and corporate taxpayer payments -- what they call "kicker" payments. It was ultimately certified to be $635 million in moneys given back to the taxpayers. Personal taxpayer refunds will total $442 million -- a refund of 14.37 percent of what the paid taxes were. Corporate tax credits will be $203 million. The credit available on 1997 returns is 42 percent of their projected tax liability.

Those are pretty significant numbers. When one sees the kinds of figures that are taking place there -- in economies that are very close to ours, that historically have been fairly similar to ours in both size and structure -- one has to ask if there are things they are doing. . . . Not everything they're doing is something that we're going to want to emulate, but certainly one would think that we would want to be looking there and seeing what they have done and what we may be able to do in our economy here in order to turn us around.

British Columbia has had a very cyclical economy for a long period of time. Sometimes the cycles are a lot deeper than anybody wants or would hope -- or, quite frankly, than are necessary. There are obviously things that other economies -- economies fairly similar in geographical location, size and structure to ours -- have done to offset that cyclical nature. I wonder if the ministry's economic development policy department has looked at those other jurisdictions and come up with some ideas that British Columbia may follow in order to avoid some of the pain that comes along with the cyclical nature of our economy.

Hon. J. MacPhail: I would offer a couple of things. It's interesting to note that the list of tax cuts that is lauded in Washington and Oregon are about the same size as the tax cuts we've made, yet it's good news in Washington and Oregon, and it's bad news -- it's not enough -- here. Our tax cuts from 1996 through to the year 2000 will well exceed $1.2 billion. That actually doesn't take into account some of the incentives that we have initiated recently.

Yes, we look at the economies around us. We look at them very carefully, and I know that our forest sector CEOs would say: "Yes, there's one thing that Oregon and Washington are particularly advantaged under, and that's the softwood lumber agreement." Washington and Oregon are very advantaged -- to the disadvantage of British Columbia, directly and harmfully. Of course, we seek every opportunity to learn from success, to avoid failure and to build upon that -- no matter what jurisdiction that success or failure may occur in.

G. Farrell-Collins: I would argue that what this government is doing for its economic plan, its three-year plan, pales in comparison to the figures that I have given here. They're not comparable at all. In fact, if you look at the budget report from this year -- pages 52 and 53, which are a summary of the revenue measures, the tax cuts -- the total for the 1998-99 fiscal year is $52 million in tax reductions, and all of the tax changes, when fully implemented, are $237 million. So they're not even close to the figures that are shown here in each year. They're not close. The minister can shake her head, but we're looking at two to three times those figures in total in Oregon. In Washington State the figure is significant also: $1 billion in tax cuts in two years. We certainly haven't seen that in the last two years in British Columbia. The minister can make the assertion, but the facts and the records in the three jurisdictions don't back up that assertion.

If the minister says that the government has been looking elsewhere and has been looking at those jurisdictions for things to do to improve our economy here, can she tell me what some of them are? What action have we taken so far -- or are we planning to take -- to implement some of them?

Hon. J. MacPhail: I've actually iterated them in the area of. . . . The economic plan incorporates diversification in the areas of film, tourism and aviation; enhancement in the areas of farming, oil and gas, mining and forestry.

G. Farrell-Collins: In looking through everything the government's put out that I can see, those are goals. Those are areas where the government wants to make a change. She would argue that the changes that the government's bringing in are sufficient to do that and to diversify our economy sufficiently, so we don't have the same types of problems in the long term.

I would argue that the tax cuts and incentives that the government has offered are relatively insignificant in the long term when you compare that to what's being done elsewhere -- that in fact they will not go a great distance to diversifying our economy significantly, to resulting in large improvements in the diversity of our economy and to allowing us to ride that out. If the minister is telling me that those are the items that the government has searched far and wide for, and that's what she's come up with, that's nice to know. I guess we can move on.

I argue that it's not nearly significant enough. It's not nearly aggressive enough. It was a tepid attempt to refocus the ideological agenda of the government, to repair some small portion of the significant damage that's been done to British Columbia's reputation as an investment-friendly locale

[ Page 9192 ]

If one looks at the size of the cuts when fully implemented -- $237 million in cuts -- and compares those cuts to the first two budgets of the government's administration in '92 and '93, where tax increases were $750 million and $850 million respectively for those two years, this is one-third or one-quarter of one of those years. So it's a tiny fraction of just the taxation burden that was imposed on the consumers and the average, tax-paying individuals -- on individual taxes and corporate taxes, business taxes on small and large businesses across the board. I think it's important to put it in perspective. The damage that's been done to British Columbia's reputation strictly in one area, the taxation area -- as to whether or not it's a competitive place to do business or to stay, try and raise your family and to try and have some disposable income left at the end of the year -- is significant.

[4:15]

And we haven't even started to talk about the other areas that have also made this investment climate so hostile to investors locally, nationally and internationally. That is the regulatory regime that's been imposed by the government. I know the minister will stand up and talk about this panel that she struck to examine red tape, which is going to report out before the end of June -- although the end-of-June report is really internally generated changes within the government. She shakes her head; that's great. I don't know how, with one meeting, all of those changes could have been developed.

Hon. J. MacPhail: Well, ask.

G. Farrell-Collins: I'll ask. Perhaps the minister can tell me, then, how many meetings she's had with her panel and can outline the wide array of recommendations -- made in those one, two, three, four, five or half a dozen meetings that she's had with those business people, communities and people in the business community -- that she intends to implement on the fast-track method by the end of the month.

Hon. J. MacPhail: The panel, the task force, has met once. We've then taken our assignments away and done a whole bunch of work. Each and every one of us has been working since that first meeting in May. We have had 90 consultations; I think it's about 90. I don't know whether this was on the list to deal with right now.

Interjection.

Hon. J. MacPhail: No, no, that's fine. Yeah, I didn't want to get you off your schedule, though.

The Chair: Through the Chair.

Hon. J. MacPhail: We've had over 90 consultations or submissions. We have also at the same time searched internally to government, asking the ministries for their own submissions. The two combined exercises, both the consultations -- the task force members themselves making their submissions, as well as meetings and submissions from almost every sector across the private and public sector -- have resulted in a list, which the task force will be dealing with on Monday, that runs in the hundreds of suggestions.

G. Farrell-Collins: Can the minister tell me if any other ministry in government -- hers in particular -- has ever gone through this exercise previously?

Hon. J. MacPhail: Well, I'll certainly find out. My corporate memory goes back four months.

G. Farrell-Collins: I realize that. Mine goes back about that far, too, in this portfolio, perhaps a little further. But I know that there are people with her who've been here a little longer. My direct question is. . . . I can't remember whether it was '93 or '94 when the Ministry of Finance and the Ministry of Small Business, I believe -- I think it was the Ministry of Finance, but I'm not positive on that -- did a review of the regulatory regime. They actually did an audit of every ministry, looked through all the various ministries and looked at the regulations that they had and how they impacted business. It probably was the Ministry of Small Business, now that I think of it, that did that audit.

They went through every ministry, and they said to them: "We've talked to small businesses extensively. This is what they've told us are problems. We've taken all those anecdotal problems, and we've separated them off. Here's the list of complaints for your ministry. What are you going to do about them?" I'm wondering, in her review, if the staff in the Ministry of Finance, when they started out this project to reduce red tape, had any input from the Ministry of Small Business, which did a similar exercise a number of years ago.

Hon. J. MacPhail: The Ministry of Small Business and Tourism had already started the consultations earlier -- late last year and earlier this year -- on their own.

I must say that the change in regulation, and in the way we do business, from a government perspective to a business perspective is changing all the time. I actually listed in my opening remarks some of the successes which make substantial change for business.

In the area of small business and tourism, I don't actually recall the consultation that the member refers to, but I don't deny it. But I do know that around 1994 we instituted one-stop shopping for small businesses in ten or 12 sectors across the province. So there is much change to be made. There is much change that has been made, and there's a long way to go.

G. Farrell-Collins: I asked a specific question. I appreciate the answer that the minister gave me, but I'm asking: did the Ministry of Finance task force group -- whoever is managing that from the staffing side -- receive any input from that fairly extensive review of ministrywide regulations that was done previously? Did they sort of get this: "Here's where we're at. This is what we did. You know, you may want to use that as a starting point"?

Hon. J. MacPhail: Well, we did start from the point of asking every single ministry. I mean, much has changed since

[ Page 9193 ]

G. Farrell-Collins: I'll ask the question again, because I do want to be specific about it. The review was done. I was unsure which ministry; as I rethink it, it was the Ministry of Small Business and Tourism. They did a review. They didn't go to the ministries; they went to small businesses and did an audit of them -- asked them, did focus groups and, I think, consultations. There was a report that they issued in the library, none of which was really acted upon at that time. What I'm asking is: did the people who the minister pulled together to manage this task force -- I know she chairs it, so I think she would be able to answer this -- get from the Ministry of Small Business a sort of: "Here's the work we did; you may want to use this as a starting point"? Or instead of working with what had been done previously, did they just go out to all the various ministries and say: "What's your wish list?" I'm curious as to which it was, or if it was a third option.

Hon. J. MacPhail: The Minister of Small Business actually sits on the task force as well. The Ministry of Small Business updated its consultations in late 1997 and into 1998, as I just informed the members. All of the previous work of the ministry, up to and including the work done in 1998, forms the basis of the beginning work of the task force.

G. Farrell-Collins: The ministry has set a goal or a time line with some targets for this task force. The first go at it and the first package of legislation are items that really were generated by the ministries internally. When we saw the government's cabinet documents from October, they indicated that in fact that was the plan back in October. Long before the consultations were done with the business groups, etc., there was actually a list of fast-tracked items that were in place and itemized at that time for implementation in this session in a business improvement act -- or something like that; some name to that effect was used on the cabinet documents in October. Those items were already determined then. Can the minister tell me whether the package that was determined in October has changed significantly to the package that's being worked on as a target for the end of this month?

Hon. J. MacPhail: Yes. It's much expanded.

G. Farrell-Collins: Thank you. I will look to see what that is when it finally comes in. I know the member for Oak Bay-Gordon Head has a couple of questions that she wants to ask, specifically on the property purchase tax as far as tax policy goes. I don't know if you have those people here to answer those types of questions, but we'll give it a shot and see how it goes.

I. Chong: As the opposition critic mentioned, I do have some questions specifically on the property purchase tax, in particular, whether the ministry has done a recent review or when the last time was that a review was done with regards to its mandate, objectives and goals. I ask that in relation to the changing reality of today in terms of relationships and why people sometimes register homes in joint names and what that does in terms of causing the property purchase tax to come into play. Because of the changing reality of relationships today, this has caused some problems to some constituents who have contacted me. I would just like to get an idea of whether there has been a review in the last while of the Property Purchase Tax Act or any of its policies.

Hon. J. MacPhail: No, we haven't done an overall review recently. We did make some changes in this budget in the area of vacation properties, etc. But it's an interesting point. I assume it's when families separate or break up or. . . .

Interjection.

Hon. J. MacPhail: I see. I'd be more than happy to look into it. We should discuss it and see whether we can deal with the constituents' concerns from a policy perspective as well.

I. Chong: That would be very helpful, I think, for all constituents and the MLAs who represent those who have problems. I'll be more specific to get it on the record so that your staff can pursue it. I understand there's an inequity, in a sense, when there are relationships coming together, whether they are actually solidified in a marriage situation or just a living arrangement.

What has happened in the past is that when you present your marriage certificate. . . . If you met someone and had a whirlwind romance, and after a month you married and you transferred things into that person's name, there was no cost in terms of the property purchase tax. However, I understand that if you had a common-law relationship that lasted eight months -- a whirlwind kind of romance anyway -- and you attempted that transfer, the property purchase tax applied, because there is a criterion that that relationship exist for at least two years. Now that may have changed, but this was what was told to me about a year ago. If that has changed, then I stand corrected. If it hasn't changed, then this is where the problem is. We have to take a look at those inequities.

The other problem is that if someone unknowingly makes those changes, in terms of registering a piece of property in joint names, then in other taxation jurisdictions, you have the ability to revoke it if you've made a mistake. With the property purchase tax, you don't have that ability. For example, if you file something with Revenue Canada, and you make a mistake, you can amend it. You can make an adjustment. Revenue Canada will oftentimes -- not all the time -- allow you to revoke or amend or change that.

In this particular instance, where someone did make a mistake and they found that they didn't meet the criteria, the Ministry of Finance was delayed in telling this couple the situation. The question was: "What can we do?" My first thought was: "Well, appeal it or change it." When I contacted the office, they said: "Yes, you can appeal it. We have an appeal mechanism in place." But when I asked how successful those have been, they said: "Never." That really takes away from what we're trying to accomplish here. Property purchase tax was, I think, intended for a bona fide situation where there was a purchase. I don't think it was intended for when there were relationships coming together or, in fact, being divided.

I think sometimes we do have to take a look back. I realize it was not a tax that was brought in by this administration, but as I say, things are changing, times are changing, and relationships are changing. Maybe as we've made changes to pensions, we should perhaps be taking a look at changes to property taxes that are affecting families and couples. That is the thrust of where I'm headed with this. If that's something that this ministry can take a look at, then I think that would make a difference to a number of people out there who are caught unknowingly.

[ Page 9194 ]

[4:30]

Hon. J. MacPhail: I'd be pleased to look into that. I may need to seek further guidance from the member on it as well.

G. Farrell-Collins: I do have some questions on taxation, competitiveness and a particular case on the corporate capital tax which I want to address with the minister. The member for Powell River-Sunshine Coast has a schedule that he needs to comply with. I believe he has some taxation questions that he'll be going on with for the next little while, if that's okay.

G. Wilson: I thank the official opposition critic for giving me an opportunity to ask some questions. I'm going to try to be very concise, so that we can wrap up these questions very quickly.

I'm particularly intrigued by, and would like the minister to comment on, discussions that seem to be taking place between the provinces with respect to the need to amend the federal taxation system to give provinces a greater say in tax policy and also potentially in tax collection. It's my understanding that a number of meetings have taken place, if not between finance ministers, then certainly between staff. I wonder if the minister might bring us up to date as to what is being done in this field and how we can expect to see progress on that matter.

Hon. J. MacPhail: In fact, during my first finance ministers' conference call, we discussed this very issue. There is a paper available on this -- done by one of our staff, Michael Butler -- that is well received across Canada. I know that the member is well aware that history would show that provinces transferred their tax collection ability to the federal government in the Second World War, and we never got it back. It's no more complicated than that.

What happens now is that the federal government does the tax collection and remits to the provinces. But possession is nine-tenths of the law: they have control over the tax collection. As tax revenue grew, or if there were any tax revenue changes, because the federal government's portion of tax room continued to grow, they exponentially benefited from the growth in the tax that occurred as a result of the increased taxation -- to the point now that if there's an increase in tax revenue, the federal government gains on that increase by almost 2 to 1 to the provinces. It was never intended to be this way. This is not a constitutional authority that the federal government has; it's simply a historical anomaly, I think, that has developed over the years to the detriment of the provinces.

I would advise the member that the discussions are not going well, in terms of shifting it back to get rid of the historical anomaly, but all the provinces agree that we should be pursuing this with the federal government.

G. Wilson: I'm actually familiar with Mr. Butler's report, and I concur. It's a very interesting document. I do think, though, if we could focus a little more specifically with respect to the agreements that the provinces have with the federal government. . . . The federal government isn't without some legal claim. It's not as though they have simply usurped this power and are not giving it back. The province of British Columbia, like every other province, has sat down from time to time and worked out bilateral arrangements with the federal government with respect to tax collection.

I concur with the minister that by constitution, as part of the terms of the union, British Columbia had exclusive rights over the collection of income tax, including corporate income tax, and we have relinquished that. Certainly in my judgment, it's time that we take it back and that we collect our taxes provincially and then remit federally.

I wonder if the minister might comment on the latest round of discussions that we have had on a bilateral level with Ottawa. Clearly the bilateral discussions between Quebec and Ottawa, and between Ontario and Ottawa, are now starting to see a significant shift with respect to the arrangement that those provinces have made with the federal government on the collection of taxes. I wonder if we're taking the same aggressive role in our discussions with Ottawa on a bilateral basis, as well as in working with the provincial finance ministers.

Hon. J. MacPhail: Actually, I am advised that the Ontario situation is more of a threat to the federal government. They did it in a budget, and they haven't actually acted upon it. We are in discussions with the federal government around greater flexibility in the tax collection system, but it doesn't go to the fundamental issue of what has developed as this anomaly, post-World War II, that really is a detriment to the province and a substantial gain to the federal government that was unanticipated in the original system of tax collection.

There are a couple of other areas that we need to address as well, that we are pursuing aggressively. One is the net outflow of money in terms of per-capita taxation from British Columbia to Ottawa, even after you take equalization payments into account. Our government has always said: "Equalization payments, yes, but on a per-capita taxation basis there is a net outflow." I'm saying that on a taxation basis, considering our population, there is a net outflow to Ottawa. Also, this federal government spends less on program services in British Columbia than in virtually anywhere else in Canada. So those are two areas that need to be pursued as well as the taxation area. We are pursuing those.

G. Wilson: It's my understanding, and perhaps the minister might confirm these figures. . . . I don't expect her to necessarily have them at her fingertips, but I would like to get an accurate update on the amount of federal tax collected out of British Columbia for 1997. It's my understanding that it's in the neighbourhood of $19.5 billion, and that's taking a very small-c conservative view of what actually constitutes a

[ Page 9195 ]

So when one considers that some three million British Columbians are generating revenue, in total collection, of $20 billion to run the province, and that we're sending roughly $19.5 billion to Ottawa, that's a $40 billion revenue collection out of the province. I find it staggering that having collected those levels of dollars, we have any problem whatsoever funding health care, education, social services, first nations services and all of those kinds of services. The federal government is spending $9.6 billion on first nations and roughly 13 cents gets back to British Columbia. Of that, I think about 7 cents gets to a first nations person. It's just atrocious. Yet the provinces are having to pick up the burden of this pillaging of the tax pool while the federal minister is crowing about a surplus.

So it seems to me that the time has come for the province to take a very strong stand on this. I wonder if the minister might comment on those figures. I've tried to be conservative in my estimate on these numbers, and I certainly think they can be substantiated. If that's so, then clearly we have a very, very strong case in this province to seek amendments to the taxation system, because the taxpayer -- that's the British Columbian and the Canadian -- is not being well served by a federal government that seems to glut itself on our tax dollars and not put back the moneys where they have, I believe, a statutory obligation to do so.

Hon. J. MacPhail: Your points are well taken. I can't confirm the numbers, but I would be happy to get the actual numbers for you in terms of the net outflow of dollars to Ottawa.

We are pursuing this issue very aggressively with the federal government. My colleague the Minister of Advanced Education and Minister of Intergovernmental Relations is pursuing it, as am I. We are working on a concerted front not only at the social policy renewal table amongst provincial ministers but also at the finance ministers' table as well. We are, of course, being received with blank stares from the federal government. It's my view that the debate that's raging inside the federal cabinet will only make the situation worse. The minimum that the federal government could do is restore transfer payments -- on a per-capita basis, not on the historical anomalies that have developed, pitting the have provinces against the have-not provinces.

We are pursuing that very aggressively, but the debate that's going on inside the federal cabinet is: "Well, should we do that or should we really just force the provinces to fund. . . ? We'll initiate boutique federal programs in the area of social spending, and then either the province will have to pick it up when we decide to exit those programs, or they'll have to match the dollars." That's exactly the kind of debate that's going on internally in the federal cabinet now. We will be in a very big dilemma in British Columbia if the side that says we should restore per-capita social program funding loses.

G. Wilson: I wonder if the minister has considered. . . . As I go around the province and talk to British Columbians, this is, as the minister is probably aware, a favourite subject of mine. Part of the reason why is that it's also our party policy to collect all taxes provincially. In the matter of reporting -- that is, in budgeting and putting out these estimates and expenditures -- one of the areas that I think is not adequately reported is the amount of actual transfer out, the net loss. It seems to me that if British Columbians were able to see those figures reported in a more accurate way as to exactly what the net outflow is with respect to taxation collected and the federal portion, they could look at it in comparison to the provincial portion.

For example, they would see, as this province has demonstrated -- I believe the figures are right -- a relatively zero lift on income tax. As a percentage share, the federal government is looking at about 7.7 percent. I think it's time that British Columbians understood this relationship. Quite clearly, as the minister has pointed out -- and we need to be a lot more aggressive in our pursuit of this -- if the public was aware that a 7.7 percent lift at the federal level has gone virtually unreported as a functional part of this budget. . . .

The Minister of Finance knows that those increased revenues out, with limited transfers back, provide an even greater fiscal difficulty for the province of British Columbia, both in terms of having to come up with the cost of services that we are statutorily obliged to provide and, more importantly, the capacity of British Columbians to pay for them. They're already taxed to the limit. One of the reasons they need to be reported -- and I think we need to report those figures -- is because the feds have already gouged the tax base. I wonder if the minister has been giving some thought to that, because public opinion often drives public policy. If the public isn't aware of that balance, I think they should be.

[4:45]

I often get confronted by the taxpayers saying: "We've just got one pocket, and it doesn't matter whether it's federal or provincial." If it were a level playing field across the country, that would be true. There would be no sense in pursuing a taxpayer interest in Ottawa, because it's the one-pocket philosophy. But in British Columbia, by virtue of what you've said and what I've talked about, we are disproportionately harmed in our tax relationship with Ottawa. I think that needs to be articulated more clearly to the public, and I will undertake to do that.

G. Wilson: If I could just move along. . . . I appreciate the opportunity to get in, and I do have a very limited time, so I'm going to try to sort of jump ahead. If it doesn't seem to be in sequence, I apologize.

With respect to the need for the province to take greater control over income tax in particular, it seems that in the amendments that are brought into the budget in this fiscal year with respect to seeking to find reduction on income tax by providing reduction on the provincial share -- and the provincial share in income tax is all we're really talking about -- we're really not able to accomplish what I think British Columbians would like to see and could probably benefit from. For example, we are constrained in our capacity to be able to bring in deductibility on income tax measures. We can't deal with it, because the federal government has control over it. From my perspective, deduction of interest paid on a first mortgage, for example, which is our policy -- and I know you enunciate it. . . . People who are in the audience, if they are skilled in tax law, will immediately say: "Well, you can't do that, because it's federally controlled."

The measures that we need to put in place to bring absolute relief to British Columbians are curtailed by the

[ Page 9196 ]

Hon. J. MacPhail: No, we are not looking at it to the extent that would meet the criteria you've outlined. We are looking at getting greater flexibility from the federal government in the area of taxation. Of course, if the federal government treated us fairly in British Columbia -- or treated us the same as they treat the rest of Canada, even in the context of equalization -- some of these issues would disappear for our taxpayers because they would have less of a tax burden from the federal government. It is from that point of view that we're trying to pursue tax fairness for British Columbians.

I would only note -- it's only an observation; I'm not even taking a side on this -- that taking over tax collection has substantial costs attached to it, both in the collection area and in the enforcement area. But I only note that; it's not to detract from your argument.

G. Wilson: The minister is absolutely correct: there are some liabilities, obviously, in taking that on. That's why we need to simplify the tax system and move toward a single, graduated tax and a whole bunch of other things -- which I won't get into now, for fear of giving you a political speech and outlining our political policy. Let me move on, because I'm conscious of time.

Another area that I am really concerned about is the inequity that seems to be emerging with respect to taxation demands against credit unions versus banks. I'm concerned that federally chartered banks in British Columbia are able to have far greater flexibility within the context of their charter than credit unions are, in terms of doing business in the province of British Columbia. I wonder if there is any discussion underway on the national level to provide a greater degree of provincial authority with respect to taxation on banks. I realize that all of our political careers are in jeopardy as soon as we challenge the banks in any way. Nevertheless, I think it needs to be done. There is an enormous amount of revenue outflow as a result of profits generated and made in British Columbia, and a lack of ability for us to adequately capture it, yet the service costs and those same profits developed and generated through credit unions are not subject to the same levels of exemption. It strikes me that there is an inequity here that needs to be addressed. I wonder if there's anything being done on that.

Hon. J. MacPhail: I'm not aware of anything, but it could be that I'm a rookie. I'll look into that point. We in this province, of course, do tax the large banks differently and take a lot of heat for doing that. In the area of the competitiveness issue between credit unions and the large banks, I'd be happy to explore that further with you.

G. Wilson: I appreciate that. Perhaps at some time when we're not all under the pressure of the House, we might have a chance to sit down and talk about it.

Let me move on to a matter of taxation with respect to property and property assessment. A large area of concern. . . . My questions are twofold. There is a growing level of concern among retired British Columbians who are living on properties that are paid for. They have done some capital improvement, and they are now living on a fixed income, only to find that neighbouring properties are developing, and therefore real estate values are escalating. Retired people on a fixed income are finding that their property taxes are increasing, sometimes beyond their capacity to pay. Therefore they have to defer taxes, and so on. It seems to me that there is a time for us to actually look at amending the property taxation formula and to look at real sale value as a measure, not at market value. There are other jurisdictions in North America where they are attempting to do this or have done this. Some have worked and some have not. To what extent is the Ministry of Finance undertaking a review of the property assessment process, and to what extent is there likely to be. . . ? Well, I guess you can't say for future-policy purposes, but to what extent is the issue I've outlined being addressed?

Hon. J. MacPhail: Actually, property assessment is the jurisdiction of the Ministry of Municipal Affairs. But I would be happy to pass that question along to the ministry.

The problem you've raised is the issue of seniors having a value forced on them, from which they have no benefit, and there is potentially a cost because of the way land is valued. Our property tax deferment program is working very well. It is actually quite a cost to the taxpayers.

G. Wilson: It's $80 million.

Hon. J. MacPhail: As a cost, yes. But it is working well, and it is used more and more.

G. Wilson: I understand that the Assessment Authority falls within Municipal Affairs. I guess that what I'm looking at more is the broader issue of revenue collection and taxation generally. There is no question that deferment is a cost. It's also a burden on a person on a fixed income. Many feel very proud that they have retired and are no longer a burden to anybody, and they don't want to have to defer taxes and therefore incur debt.

One other area I'll come to -- and, again, the minister may want to push me off to the Ministry of Aboriginal Affairs -- is that we are now increasingly moving toward aboriginal tax authority in British Columbia, and we do have a number of negotiated agreements whereby that tax authority has come forward. Yet there doesn't seem to be a great deal of discussion taking place between the. . . . Often there are people who are on lease properties, who have private ownership of capital improvement but no ownership of land. They are now falling under the jurisdiction of first nations government, even though there is no statutory authority in that government at this time. It's pretty much by negotiated agreement.

In trying to deal with this issue, it's interesting that I've sort of been pushed from Municipal Affairs to Aboriginal Affairs to the Department of Indian and Northern Affairs, where I'm told to mind my own business and stay out of federal issues, and then I've eventually come back to the Ministry of Finance. I wonder if the Minister of Finance might shed any light on this with respect to how we can build a system of fairness with respect to the revenue collection on those lands so that there can be formalized appeal processes that are recognized in B.C., and so that people are not punished as a result of being on lease properties.

Hon. J. MacPhail: I regret to inform the member that this is strictly a federal issue. They have the right to set the rules in this area, and it's by legislation with the Department of Indian and Northern Affairs. Our only role was to decide whether we

[ Page 9197 ]

G. Wilson: Well, maybe when we get finished with the fishery we'll take on this issue, eh? Pretty soon -- who knows? -- we may not. . . . Oh no, let me not go down that road or I'll be accused. . . .

This is a very, very frustrating area, and I'm sure the minister will acknowledge that it is very frustrating. I can say, just by way of a slight digression on this -- and I won't digress too far -- that it is the critical area, in my judgment, with respect to the financial liability that the province has with respect to the Delgamuukw ruling. It will not be the first nations who will bankrupt this province over Delgamuukw; it will be the federal government. The Delgamuukw ruling suggests that those lands that are under claim be treated as section 91 lands, which are federal in jurisdiction. To me, Delgamuukw, if allowed to apply as it is now, will constitute one of the single largest federal land grabs of provincial jurisdiction, and it will bankrupt this province. I say that only by way of caution. So I think we need to. . . . I don't want to get into Aboriginal Affairs issues, but it seems to me that the sooner we move toward joint tenancy with first nations in the province of British Columbia, the sooner we'll have economic security and certainty with respect to revenue to government.

Let me come to PST-GST and the provincial policy with respect to any blending of this tax. I know that in the past, the government has been very steadfast with respect to making sure that those two are not blended. We are hearing now from Ottawa that there is a strong pressure afoot within the discussions and negotiations with provincial ministries to find some method of blending these into a single tax, for a single collection, to try and reduce the costs of collection and reporting. I wonder if the minister might just give me an update on what this province is doing in respect to that, if anything at all.

Hon. J. MacPhail: There's no blending; there's no harmonization. We have been in negotiations with the federal government for them to collect PST at the border, but that's the extent of discussions.

G. Wilson: I only have one last area with respect to taxation that I want to try to get in. It comes back to the issue of provincial authority over tax. In the finance ministers' meeting. . . . I believe it might have been just prior to the appointment of this minister. There were discussions in Alberta -- it was an Alberta meeting of finance ministers -- that there be a paper prepared with respect to the movement of the provinces toward an independent tax-collecting agency able to collect taxes on a national level. I wonder if the minister might tell me if there has been any advancement on that. Is there any discussion now with respect to the establishment of an independent tax-collecting agency outside of Revenue Canada -- that is, the retirement of Revenue Canada and allowing for a free-market collection system, if I can put it that way, by somebody who is outside of the Revenue Canada context for collection of taxes?

[5:00]

G. Wilson: I wonder if the minister might just tell us what our provincial representation is on that committee. Do we know? I have to plead ignorance. I have not read the legislation. It's interesting to me that it has been introduced. It's received very little coverage across the country, but then it's only our taxes.

Hon. J. MacPhail: Each province will have one member on the board governing this agency.

G. Wilson: So each government will have one member that will come from the provincial ministry, presumably, or whomever they may appoint. They will have to sit on a board with how many representatives from the federal government?

Hon. J. MacPhail: We nominate. It doesn't necessarily have to be from Finance, but we nominate. I'll attempt to get you the information on that. I don't know what the total composition of the board is beyond the provincial representation, but I'll get that information for the member.

I. Chong: Just some follow-up comments on what was stated by the member for Powell River-Sunshine Coast. He does raise some interesting issues regarding the federal income tax. I have to admit that I'm not a big fan of the federal Income Tax Act as it is at present, because I have seen the unfairness in that. If the minister is looking at heading toward that direction and setting up a committee, then I certainly would offer my services in a non-partisan way, because I believe that there can be some changes that would be of benefit to all of our constituents. I do recognize there are problems there. It would take a courageous government, the federal government and a courageous Revenue minister to make changes. If B.C. has any part in that, then I think we can move in that direction.

The other area I think we were going to talk about in terms of taxation policy is the corporation capital tax. If the minister has staff available to talk about that now, I would like to raise a particular issue in regards to the application of the corporation capital tax as it relates to R and D -- research and development -- expenditures.

Just by way of background, there are two methods by which a business or corporation can record research and development expenditures. Those two options are afforded to them through the Income Tax Act. They can capitalize them on their balance sheets so they show up as items and write them off over a period of a number of years -- whatever amortization period they choose. If they have substantial revenues, they can also write off those R and D expenditures in the year they incur them. How you decide to record them is usually based on the size of that business and on what they're able to do.

If you are a small corporation in terms of the larger ones, and you spend $5 million in R and D expenses, but you have absolutely no revenue, then the logical thing you would be asked to do by your accountant is to record them on your balance sheet and show them as an equity item. What then happens is that you would be subject to corporation capital tax each and every year on that same amount, until such time as you can amortize it against some income. With R and D, it

[ Page 9198 ]

On the other hand, a large corporation that expends $5 million in R and D annually would be able to write that off against other income they have and never have to be subject to corporation capital tax on that component, even if they're developing the same item.

And whoever gets there first is going to get their rewards. Therein lies a bit of the inequity. I'm wondering whether the minister or her staff can offer any insight as to how we can address that inequity. We want to see R and D expand, especially in the high-tech industries now.

In the new knowledge-based industries, there are a lot of research and development costs, and those costs can be all intangible costs. They could be all considered as staff consultant time, those dollars, and they can amount to a lot of money. Even some other -- I won't say artificial -- very intangible costs that you can't actually put your hands on and can't resell in any fashion -- such as consultant costs, accounting costs, legal costs -- can all be included as R and D expenditures. You do want to capitalize that so that you don't lose the tax write-off for income tax purposes when you sell your project and make $100 million.

But it is a problem, because a small company that's developing is being treated differently than a large company. I don't know whether corporation capital tax has addressed it, especially when we're heading to R-and-D-based and knowledge-based industry in such a fast way, into the twenty-first century.

Hon. J. MacPhail: Is it your view that this problem could exist even after we raise the threshold to $5 million? I don't apologize for this, because I'm not an accountant. But you raise a good point. Let me look into it. I'll try to get back to you in a way -- I don't doubt what you say -- that either confirms the accuracy of it and offers assistance or, perhaps, holds out for future policy change.

I. Chong: I appreciate the minister acknowledging that she's not an accountant, because I wasn't trying to suggest that. It is a problem. The reason why it is, is because. . . . It has been a problem for accountants, to tell you the truth. There were instances -- and this was not allowed -- I have to admit, where accountants had prepared two sets of financial statements: one to avoid the corporation capital tax, and then one that they'd present to their shareholders or their bankers. Quite honestly, those accountants who did that were slapped on the hand for doing that, and rightfully so. But, you know, they were trying to do their clients a favour, because they felt that there was an unfair tax cost and liability being applied.

You know, if this is a B.C. corporation capital tax, then we don't have to go to the federal government. We can, in our own fashion, when we prepare our forms or when the ministry staff adjust the forms, have a spot for R and D expenditures which can be deducted before the application of the corporation capital tax -- the R and D expenditures which would otherwise be listed on the balance sheet. I offer that as a suggestion for the staff to look at. I know that there are a lot of accountants there, a lot colleagues of mine there, and I know they can look into it.

I appreciate that the minister can in fact pursue that, because as I say, we are headed in that direction. That would send a good signal about the business investment climate for those kinds of expenditures. Believe me, on this side of the House we want to do everything possible to encourage the economy to grow and to have a better investment climate. This could be one of those small changes that makes a big difference to that investment climate.

G. Farrell-Collins: I want to talk a little bit about comparative taxes and how that relates to the economy. But I want to ask one fairly particular question. In the budget it shows an increase of $50 million in revenues from fees. Can the minister tell me where the government intends to receive those funds from?

Hon. J. MacPhail: There is $14 million for new fee increases. The rest is from fee growth, to make up the $50 million in revenue. Half of that fee increase is from. . . . I get slapped for calling it the deadbeat parents tax or fee. When a parent is in arrears in the family maintenance enforcement program, there will be a fee charged for administration, even after collection of the arrears. That's over half -- yeah, about $7.5 million -- of the $14 million. The others are spread between -- and we've announced these -- an increase in land title fees and civil court filing fees. That's about it.

G. Farrell-Collins: The $6.5 million that's left over. . . . The $36 million, rather, that's just an increase in volume. . . . Can the minister tell me where that growth area is going to be? Is it overall, or are there any particular areas where the government is anticipating growth? What is the current. . . ? Let me put it this way: what was 1997's total revenue from fees?

Hon. J. MacPhail: The fees collected for '97-98 are $1.743 billion -- and, of course, this is still. . . . The books haven't been closed on this yet. The forecast for '98 is adding $50 million to that, and it's evenly spread across. . . . What's included under the fees, licences and other charges is petroleum, natural gas, mineral and forest fees and licences, minor water rentals, motor vehicle licence permits, and other fees and licences. MSP premiums are included under that, and fines and penalties as well.

G. Farrell-Collins: The minister listed three items: land titles, civil court filing fees and the $7.5 million from the family maintenance enforcement program. Are those the only fees that have been increased? All other fees have been frozen for this year -- is that what the minister is telling me?

Hon. J. MacPhail: No, those were the bulk of them. Those three fees that I told you about -- that is about $13 million of the $14 million. There are other small fee increases. There was an increase in the registry fees under Finance and Corporate Relations. There was a reduction in some fees in the area of health-permitting as well. There was a reduction in vital stats fees. There was a increase in the non-beneficiary ambulance service fees. There was a very minor increase in inspection fees for railways, and for safety inspection fees for boiler and pressure vessels. And there's a fee for the graduated driver-licensing program.

[5:15]

[ Page 9199 ]

Going through it is actually interesting, because there are a few countries that actually had higher marginal rates at this time than Canada did. France, Italy, Germany and Japan were higher. They've listed here. . . . And again, this was in 1994, but I'll come up to more current times in a minute. This was the last year the OECD did the figures. Australia was about the same as Canada, at 48.4 percent; Canada, 48.1 percent; France, Germany and Italy ranged anywhere from 3 percent to 11 percent higher; Japan was 61 percent; New Zealand was at 33 percent; the U.K., 40 percent; and the United States, 44.1 percent. I'm wondering if the government has done any more up-to-date studies, not just across Canada but in an international way, comparing British Columbia's tax rates at about that category -- that sort of average-worker level, the $32,000 range. I know there's lots of talk about the highest marginal income tax rates, etc., but I'm wondering if we've done any work on what the average individual is likely to pay relative to other jurisdictions outside of Canada.

Hon. J. MacPhail: No, we haven't made international comparisons. Could I just ask for a clarification from the member? You said high marginal tax rate, but you. . . . Sorry, what was it?

G. Farrell-Collins: I'll clarify. I'll send the minister a copy of it too, if she wants. It's the top marginal tax rate in 1994.

Interjection.

G. Farrell-Collins: Yeah, and it's as a multiple of the average worker. I'll send the statistics over to you. Then there's a combined marginal rate. The interesting thing about it, which I was going to talk about in a minute too, is the point at which that top marginal rate kicks in. In some countries. . . . If you look, for example, at Italy, which has a 51 percent rate, that doesn't kick in until you're at almost ten times $32,000 a year in salary. You have to be earning a lot before you start paying the really high rates. In Germany and France, both of which have higher marginal rates than us, it doesn't kick in until much later on -- sometimes around the $100,000 range. The United States has a 44.1 percent top marginal rate, but it doesn't kick in until 9.6 times that $32,000 a year. It's pretty significant. In Canada it's 1.8 times the $32,000 -- around the $50,000 range.

I guess my question for the minister is. . . . I know the federal government probably does it. I'm just wondering if British Columbia does it too. We are a small trading economy -- that's what British Columbia is sort of defined as -- and we're clearly in the market. We're out there competing in the market for highly skilled, highly trained workers at a variety of income rates. My question was: does the ministry do any analysis on that?

I would think that, looking, as the minister said, at part of the three-year plan. . . . Part of that plan can't just be investment; it can't just be attracting new investment to British Columbia. You have to look at the other factors of production. One of the key ones, particularly in a modern economy, is the people, the intellectual base. It's the highly skilled people, whether they're earning a lot of money or not, who bring their intelligence and their skills into our economy and help diversify our economy. We're not just competing for investors; we're competing for intellectual capital too, if you want to put it that way. While the public tends to focus a great deal on the dollar investment that comes here, there has been more and more discussion given to the competition for intellectual capital. I mentioned it earlier.

Today in the Vancouver Sun, there was one article where they talked about the difficulty some firms have in attracting. . . . They talked about the economic cost to British Columbia, specifically, of training people at universities. It costs us about $250,000 to $300,000 of taxpayers' money to train and educate somebody at university. I think it was a PhD example that they had -- a person with a PhD in economics. That person pays $30,000 into that cost, and then they're gone. They leave, and we're left with this deficit -- both a fiscal deficit and an intellectual deficit. We've lost that intellectual capital.

I'm wondering what the government has done in looking at that as one of our major factors of production, in diversifying our economy and targeting, specifically, plans and strategies to keep the people we educate here, to provide them with opportunities and the ability to earn an income and raise a family in British Columbia -- without having to leave and go somewhere else where they have a greater disposable income.

Hon. J. MacPhail: I appreciate the member's comments about international tax competitiveness, but there are constraints to people going outside the country -- immigration constraints as well. It is a huge task to make comparisons in terms of family expenditures across international jurisdictions, although we have -- as the member pointed out -- done some tax competitiveness issues in this decade across the border, etc. We certainly compare ourselves to the rest of Canada as well. So that's an explanation of why we haven't gone international in our studies.

I would also just say that the advice I've been given from the point of view of investment in British Columbia is as much about the price. . . . We're price-takers in British Columbia. We no longer influence commodity prices in the world, whereas we might once have. That's a big influence as well, but a separate issue.

In the area of attracting and retaining people, we've done several things. We did talk earlier about the reduction of the high marginal tax rate. By January 2000 we will be mid-range in our high marginal tax rate. I just looked at it -- and this incorporates the most recent budgets as well -- and by January of 2001 we will be the third-lowest. There is a substantial gap between Alberta and the rest of the world, but we are competitive with the rest of the world. That's one factor.

I do know, though, from my discussions with people in Ontario, for instance, that the provincial government put on a high marginal health tax at the same time that they reduced the high marginal tax rate. So those who make $100,000 and more, and have the courage to complain about their taxes, do so in Ontario even after the high marginal tax rate has been reduced. So we are attempting to be competitive in that area.

I do know, though, that the public doesn't see reducing tax revenue as an issue on which we should be spending dollars. What we have to do is figure out other ways of

[ Page 9200 ]

Lastly, there is much to be said about what we have done, but I believe that there is much more to be done in actually targeting post-secondary education seats to the knowledge-based and high-tech sector. I am spilling over into the Advanced Education area, but it is about attracting and retaining. We have targeted fully 500 of our 2,900 new seats this year -- either 500 or 600, but I'll go with the lower number -- specifically towards post-secondary high-tech education. Royal Roads is on the cutting edge in that area, as is BCIT. Our other universities would suggest they are, but those two are for sure. I believe there's more to be done in that area as well.

G. Farrell-Collins: It's true that there are barriers to moving across international borders. They're becoming less and less, but they are there. The United States has just expanded the number of immigrants they will take -- people to come and work in their economy. They've expanded that again, and I believe that it's being driven by an industry that is also finding it difficult to staff its operations. I saw a story on television -- it was a week ago, I think, on "60 Minutes" or something like that. They were interviewing a company -- one gentleman and his partner -- and the job of the two of them was to go out and recruit large numbers of people for specific projects in some of the high-tech firms in the California market. They would get the job to go out and hire 60 employees to work on project X in a large high-tech firm, and they would look right around the world and find those people. It was intriguing to see the types of things that they were looking for. It wasn't all money, but that was certainly a big player in it. Employees wanted to know that they would have a certain amount of disposable income at the end of the day. That's certainly one of the areas with which you compete for people.

[5:30]

I think it's important that we not lose sight of those comparisons that are done internationally, because it is a comparison. It's not the only one, but I do think it's something that we should be consciously looking at, and it should be part of the economic plan. In this three-year economic plan, there should be a strategy on how we intend to attract and keep the highly skilled workforce that we're going to need to diversify our economy. That includes monitoring comparative taxation levels -- particularly for income, but for other items also -- and working with the people who have to go out and recruit these people, to ensure that we've got some plan to attract these people and keep them here. I would hope that we do that.

I raised the issue of the multiple of that average worker salary at which these higher tax rates kick in, and the minister didn't comment on it. I think everybody would like to have a progressive income tax system where those who can afford it pay a larger portion. But like anything, there's a limit where you start to hit diminishing returns, and you may start to affect the ability of your economy to diversify because of those taxation levels. You also see an exodus of investment capital. I would argue that in the same way that people who are educated in a jurisdiction tend to want to stay there because of their business connections, people who live in a jurisdiction and hold their capital in a jurisdiction are more likely to invest that capital in that jurisdiction. When we reach a point where you can't push any harder on "the rich people," as they tend to be called, and you can't squeeze them any tighter, they slip through your fingers and go elsewhere, and they take their capital with them. I think there's a. . . . Well, as I said, everyone wants a progressive taxation system where those who can afford will pay more. There's a limit to what you can do, and quite frankly, internationally, as borders open, as capital flows more freely, it's harder and harder to force people to stay in any one jurisdiction.

But I can honestly say that the people I've spoken to and the employers I've spoken to, who have had employees or been employees themselves, and have picked up and moved out of British Columbia or are intending to do that. . . . They're not happy about doing it. Nobody is saying to me, that I've noticed: "Gee, I'm really glad; I finally get to move to San Francisco" -- although it's a nice place -- or "I finally get to move to Saskatchewan." Nobody's saying that. Nobody's excited about the prospect of leaving British Columbia; they don't want to. But they find that because of all these things, they're not willing to pay that premium anymore to live in British Columbia. As I said, we lose the intellectual base and we also lose the capital base, because those people leave.

I'm wondering if the government has looked comparatively at that multiplier and seen if that's a factor, if that's something we should be looking at in trying to encourage our intellectual capital and our investment capital to stay here. There may be some adjustment that needs to be made to make us more competitive on that scale with other jurisdictions around the world.

Hon. J. MacPhail: Yes, we are. Again, we're having regular discussions at our high-technology table, which the Minister of Advanced Education conducts, with those businesses that need to attract the capital.

Just a couple of things. There are international. . . . First of all, I would just like to address the issue of the multiplier factor: at what level does our high marginal tax increase? It kicks in at $80,000, so it's about two and a half times the Canadian average. . .harms us in British Columbia, where 4 percent of people pay that high marginal tax rate. I suspect that's why there's such high resistance amongst the rest of the population to do anything about the high marginal tax rate. Businesses told us that it was significant for attracting people -- even internationally -- that we be below the 50 percent level. They said it was a confidence issue, so that's what we've targeted for.

[ Page 9201 ]

G. Farrell-Collins: I want to ask a little bit about our debt management plan. I guess it's now our "extra-modified" financial management plan. I won't ask what we're planning on calling it next year; I'll just leave that alone. Can the minister tell me -- and I don't have those numbers right in front of me -- how far off are we from the original target, when the first debt management plan was brought in? There was a target for this fiscal year. How far is this year's budget off that original target from the original debt management plan?

Hon. J. MacPhail: We actually met our debt management plan target last year. This year there is a proposal for a range from 19 to 22 percent, with an average of -- I'm doing this by memory -- less than 21 percent, I think. I'll get that figure for you. So we did meet our financial management plan target last year. What the financial management plan does is a range over the three years. It's part of the three-year economic plan that says: you will average out meeting the targets, but in times of economic slowness, like right now, you should spend more -- and then, as the economy improves, ratchet that down.

G. Farrell-Collins: I'd have a lot more confidence in that if, during the early part of this government's first mandate, they had ratcheted down. But in fact, they ratcheted up, and our debt skyrocketed in the first years of the government's mandate, during a time -- as we were told again and again -- of relative economic prosperity. We were told all the time how wonderful British Columbia's economy was doing, so that was a time of good economic fundamentals. They were there. That was the time to be paying down the debt.

I certainly remember the commitment made in 1990-91 to balance the budget within the business cycle. Well, this is the longest business cycle I think we've ever seen, and we still haven't balanced it. It wasn't to have a budget balanced by the end of the business cycle; it was to balance the budget over the business cycle. That means you take all the deficits and all the surpluses and add them together, and it comes out to zero over that business cycle.

For seven budgets, we've had a business cycle in which, every year, we've had a deficit. Unless there's a plan to start running huge surpluses over the next few years, we're never going to balance that budget over the cycle. In fact, it's clear from the debt management plan, the financial management plan and the modified financial management plan that there isn't really the will or even the desire to hope to hit those targets and maintain them for any period of time.

It's easy to hit a target if you keep moving the target. If you actually shoot the arrow into the air and if you have somebody who can run up and down and move the target to where the arrow is about to land, it's easy to hit it. I must say, though, that even with that person running really hard to move the target over the last number of years, there was only once when the target actually got hit. Where's the commitment to actually deliver on that commitment? It seems that the commitment changes every year. The ability to get there never seems to come to fruition.

I see what we've got for a financial management plan this year. I don't have the actual figure, which is what I asked the minister for. How much does the debt this year deviate from the target that was set in the original debt management plan when it was brought in? It must be on the order of several billion dollars. I'm wondering if the minister has that figure for us.

Hon. J. MacPhail: What we. . . ?

G. Farrell-Collins: I'll rephrase my question. The very first debt management plan that was brought in. . . . I think it was in '94, if I remember correctly, or maybe in '95; but it was one of those years. The original debt management plan was brought in, and it forecast what the debt would likely be at each interval -- each year for the next five years, I think it was. That would certainly bring us into this fiscal year. There was a target in that debt management plan in 1993 for the 1998 fiscal year. From what that target was to what it actually is forecast to be now, what's the difference between those two?

Hon. J. MacPhail: We will get that information for you.

G. Farrell-Collins: The clock is pretty much at the quarter-to mark, so I'll move that the committee rise, report progress and ask leave to sit again.

If I may, hon. Chair, we're probably going to do the vehicle management portion of the list this evening. If we can do that, I think that will work better, unless you don't have the people here, and then we can perhaps do something else. It's just the scheduling on our side of. . . .

The Chair: We have a motion on the floor.

Hon. J. MacPhail: I need a point of clarification on what the member wants done.

The Chair: There's no debate on the motion. You've heard the motion.

Motion approved.

The committee rose at 5:43 p.m.

The House in Committee of Supply A; E. Walsh in the chair.

The committee met at 6:39 p.m.

ESTIMATES: MINISTRY OF FINANCE
AND CORPORATE RELATIONS
(continued)

Hon. J. MacPhail: If I could have a moment to introduce my staff.

The Chair: Member?

R. Thorpe: Certainly, minister.

[ Page 9202 ]

R. Thorpe: With respect to the disposal of government vehicles, was there one RFP done for the vehicle purchase and another one done for the ongoing management contract of the fleet, or was it just one RFP?

Hon. J. MacPhail: It was one RFP with two parts. You could bid on either or both.

R. Thorpe: In the announcement of this initiative by the government, the minister on March 20 made the statement that it's a "cooperative approach to cost-cutting." I wonder if the minister could expand upon what is meant by "cooperative approach to cost-cutting."

Hon. J. MacPhail: One of the issues that has come to my attention as Minister of Finance as we discuss matters with the business community at large -- which of course doesn't speak with one voice, nor have they ever said they do -- is that they felt that there are things that government should be doing and there are things that the private sector, the non-government sector, should be doing. This is perhaps a reflection of the discussion that there are areas in which the government knows best and delivers best and there are areas in which the private sector can deliver better than the government sector. This would be an example of that. The person who actually saves in that is the taxpayer.

R. Thorpe: Since this was a cooperative approach to cost-cutting, could the minister advise what the targeted annualized savings in this transaction were?

Hon. J. MacPhail: I hope we can agree that there were two parts to this issue. One is the sale of the fleet, and the other was the ongoing management of the fleet. In terms of the ongoing management of the fleet, there are annualized cost savings of $2.6 million.

R. Thorpe: I understood that the minister said that there was one RFP. We had the capital side for the vehicles, and we had the operational side for which, I believe, PHH has come forward. What were the annual operating costs of running the fleet?

Hon. J. MacPhail: The administrative costs of managing the fleet, our status quo costs, are about $4 million. That doesn't include the vehicle operating costs, such as gas and insurance. So we will get those details for you. But the administrative costs from status quo are about $4 million. To move into a future model -- change the status quo, change what the future costs could be, as well -- we can delve into that, if you wish.

[6:45]

Hon. J. MacPhail: The administration.

R. Thorpe: So what we're saying here -- and I'd like the minister to confirm it, if she has the officials with her -- is that the total administration of fleet management was $6.6 million. Is that correct?

Hon. J. MacPhail: What I've reported so far is that the total administration costs were $4 million. The annualized savings by going to another method of fleet management were $2.6 million.

R. Thorpe: Are we saying that the PHH administration cost is $1.4 million per year?

Hon. J. MacPhail: It's $1.2 million.

R. Thorpe: What were -- and I'm sure. . . . Maybe I shouldn't answer my own questions.

When you were looking at this RFP, was it just the administration costs you were looking at, or were there a whole bunch of different segments you looked at? If there was more than one segment, could you please identify those segments?

Hon. J. MacPhail: I'd actually be pleased to provide the member with a copy of the RFP, which was inclusive. We don't have it here, but we'll make it available to you. It included things like fuel costs, maintenance, access to service -- the full range -- as well as administration.

R. Thorpe: I do appreciate that, and I look forward to receiving that. The trouble is that it's going to be very difficult to ask questions after the fact, because we want to do this part tonight.

A Voice: Why didn't you ask?

R. Thorpe: How do you know we didn't?

What would be broad-brush? We did this project, so surely we must know top line -- the four or five key elements and what our savings were on the total project, not just the administration.

Hon. J. MacPhail: Hon. member, if indeed you have asked information and you have been denied it, my apologies. We're more than happy to provide all of this information to you in the context of the regular rules of confidentiality around business proposals. We'd be more than happy to share all of this with you.

Let me give the hon. member an overview of what actually happened. The RFP was submitted. We then asked for a detailed input of cost elements through a business case, not necessarily on the status quo but on future needs -- the change in the fleet, the change in the requirements of government. It was all done through the accounting firm of Arthur Andersen. Arthur Andersen then took the various elements submitted -- and I think the cost elements had to be submitted on an individual basis -- and applied each submitter's individual cost elements to the overall model of future needs requirement. They then calculated the net present value of that and then awarded the contract on that basis.

I would be more than happy to provide these details. As I've said perhaps two or three times already, I'm not an accountant, and I wouldn't dare match my wits against an accountant.

R. Thorpe: I want to understand what Arthur Andersen's role was in this process. It was my understanding

[ Page 9203 ]

Hon. J. MacPhail: We hire Arthur Andersen as our adviser. There is no relationship between PHH and Arthur Andersen.

R. Thorpe: In the total savings of $2.6 million, as you've worked through this RFP and the inputs from Arthur Andersen, is that the number you're going to stand on, or are the total savings from this project targeted to be much higher than that, with fuel and tires and all your other arrangements that you may or may not have made?

Hon. J. MacPhail: I think this question is an opening for doing an overview. What the member is asking is for an overview of: why, and what did we get out of it? It won't take long to just do an overview of why we entered into this.

We were facing a high-cost situation with our light vehicle fleet, as government. An external review. . . .

Hon. Chair, we're having trouble hearing, with certain members. I'd like you to bring them to order, if you could, please. Thank you.

An external review was done by expert fleet management consultants. That actually revealed that our ongoing fleet was out of step with best industry practices. Just to give you one example, the average cost per kilometre spent on repairs and maintenance when government was doing this was over four times the industry standard. Frankly, in some cases safety and security were at issue as well. So this had been done, and government deferred, on the basis of that, spending over $90 million in capital purchases for our fleet vehicles. I remember that well, dealing with each and every point at Treasury Board.

Government at that point was faced with two choices: (1) we could increase debt to purchase and own our own replacement vehicles or (2) we could sell the fleet, realize the value on the assets and then enter into operating leases. Hence the two parts of the RFP: one for the sale of the assets and the other for the operating leases. Clearly we chose the second, which was to sell the fleet and enter into an operating lease on vehicle management and maintenance.

The basis for our second choice was this: it avoided increasing the debt to purchase new vehicles -- an issue with the public and an issue, I would also say, with the opposition. That would have been up to $125 million over the next five years. It will bring in $37 million in cash for the sales. Most important, it moves the government actually to a new business model in line with current industry standards. Just to give you one example of what we mean by that, there's increased flexibility to either increase or decrease the fleet size, depending on program changes or reorganizations. I think that's based on the minimum lease available to us. It gives us flexibility to not have to carry on leasing of vehicles for long periods of time.

We also looked at the most efficient way to provide management services to ministry program areas. By utilizing the efficiencies, the economies of scale and the state-of-the-art information management systems of a large fleet management company, we're actually going to be able to realize the annual savings that we've already talked about on the operations side. So it was simply a business model on which we proceeded to do this.

R. Thorpe: But I think it must be stated -- at least, I'm led to believe -- that the reason the fleet was in the condition it was and our costs were out of whack with industry norms, as the minister said. . . . I'm led to believe that there was a Treasury Board freeze on vehicles for three years, which I'm sure would cause some quality depletions with respect to the fleet and aging, and it would obviously put up the maintenance costs.

With respect to the flexibility, can the minister tell us what is the. . . ? She talks about flexibility, so what lease period are we locking in when we're taking a new vehicle?

Hon. J. MacPhail: I will not disagree with the member's supposition that Treasury Board delayed the vehicle renewal. We are constantly under pressure to manage our expenditures and do everything we can not to affect programs. So we turned to what one would call administration and support costs. Yes, Treasury Board said: "We will not spend money on vehicles when, for instance, we need MRIs, CAT scanners and child protection officers." The decisions that we make at the Treasury Board table are as simple as that.

[7:00]

What is the minimum lease length? It's 12 months, and after that it's month-to-month, at government's discretion.

R. Thorpe: Well, I'm glad to see that the minister and her officials are buying into best industry standards. As we review other operations of government, we would also want to follow that model in some other discussions that we'll no doubt be having over the next while.

With respect to this agreement, I understand it's a five-year agreement, and it's a fixed price. Now, is the fixed price just on the administration? Is there a variable fee on repairs and maintenance, or is that just on a purely cost basis?

Hon. J. MacPhail: The administration costs are fixed. That's what we pay PHH for their services. In the areas of gas, repairs, maintenance, tires and windshields, there are variable costs, but these costs are applied according to various restrictions, such as the Chilton labour guide and master standing offers, etc. And there is, of course, a volume discount as well.

R. Thorpe: So does PHH make a penny off those costs? Or is it just a cost flow-through, no administration fees, nothing else on top of that?

Hon. J. MacPhail: No, they don't make any money from that part.

R. Thorpe: I understand that when the vehicle management services branch was operational, they had established

[ Page 9204 ]

Hon. J. MacPhail: They're in place.

R. Thorpe: What work has the government or Treasury Board done on this RFP to ensure that PHH is not receiving rebates or something from other suppliers for directing people to buy tires here or buy fuel there? Or does PHH have control over that?

Hon. J. MacPhail: Government has arranged through various suppliers for the most cost-effective. . . . The master standing offers are based on a series of requirements, but cost-effectiveness is one of them. Government has those arrangements; PHH have their arrangements as well. We have authorized dealers that we direct them to deal with, but at the end of the day, the choice is that they're asked to go to the one that is most cost-effective -- either the one that government has arranged or they themselves have arranged.

R. Thorpe: What I'm really trying to get at here is that PHH does business across North America and probably around the world. Are they able to take the purchases that are used here and put those into other purchasing agreements that they have in other jurisdictions to increase the volume rebates that they may or may not get from their suppliers? The minister turns her face. Well, those kinds of things happen out there. That's the real world in auto management. It happens. They're called incentives, aren't they?

Is there any rebating through to PHH at all on that? Do we know that? Or is there any rebating from any volume discounts from the various oil and tire companies back to the province based on the purchases that we do in the province?

Hon. J. MacPhail: Let me start by saying that if the hon. member has some information that he'd like us to investigate in terms of rebating to PHH, which may not be passed on in an appropriate way to the taxpayer -- and I don't say this is what he's implying -- we'd be more than happy to look into that. But here's what we've negotiated. We've negotiated the volume discounts and the pre-authorized dealer benefit into our discounted price. That was part of the negotiation. It shows up as the discounted price. That's true of PHH as well.

I would just offer this to the member as something for him to consider: in bidding on the administration costs, PHH may have considered their own volume cost discounts and cost-effectiveness as well and passed that benefit on through the administration costs. I only offer that.

R. Thorpe: First of all, yes, if I did have any knowledge of the taxpayers of British Columbia getting ripped off, I would report it to the comptroller general and the auditor general. That's not the point. The point is that these folks are in business and they operate around the world. They operate on thin margins, and they'll try to pick up whatever they can based on volumes. I'm just trying to understand. . . .

Interjection.

R. Thorpe: Actually, it's very good, hon. minister, provided that we get our fair share. That was the real question.

I just want to jump back to the Arthur Andersen study. How much did that cost British Columbians?

Hon. J. MacPhail: Actually, it wasn't a study. They provided advice to us, and they provided several types of consulting and accounting services throughout the period of the review. They provided a financial analysis and business advice, and they also collected and developed the data required to complete the sale. The total fees paid to Arthur Andersen for both proposals during the 14-month period were around $350,000.

R. Coleman: I just want to go back to this for a minute. The hon. member asked a few questions, and I just want to see if I can get a clearer understanding on how this is working. I'd like to take it down to a little different common denominator, so that maybe we could understand it.

Let's say, for instance, a government vehicle needs an engine job. It has to have an engine replaced, and it gets replaced. How do we determine that we get the best job for the engine job? What is PHH's involvement in getting that engine job done? Or is that the responsibility of the ministry that has the vehicle? I guess what I'm looking for is: do they go in and say, "This is the best price," and we charge that, then put a fee on top of it -- like 10 percent cost-plus? Is there a cost-plus arrangement with PHH on all the volume of work that's done on government vehicles? If we take it down to one denominator, it might be easier to explain.

Hon. J. MacPhail: I've actually been through this personally, but I needed the official explanation. There is no cost-plus -- none whatsoever. The administration charges are the administration charges, which are the $1.2 million. That's guaranteed. That's paid in the form of a monthly administration fee per vehicle; that is the way we pay the $1.2 million.

We've negotiated contracts with pre-authorized dealers or service providers. So has PHH, as alternatives. The person whose vehicle blows up or has something wrong with it has to take it into a pre-authorized dealer with whom we have a contract, and then there's an evaluation done. After that evaluation, the dealer has to get authorization for payment. PHH manages these steps, and then the work is done.

[7:15]

Hon. J. MacPhail: The answer to the first part is yes, that is what's happened in terms of the administration of this. What used to be done in government is now done out of government, and the annualized savings for making that decision on that basis is $2.6 million. The renewal of the contracts is done, on average, every two years. There are some options to renew. The fact is that the government watches the volatility in the market and seizes the opportunity to either renew or renegotiate, based on what is the best price for the taxpayer.

R. Coleman: That brings me back to the earlier question from my colleague on volume discounts. Assuming that we would be reviewing these contracts every two years, we would already be getting the volume discount directly,

[ Page 9205 ]

Hon. J. MacPhail: Essentially yes, with this added advantage, I would say, to the taxpayer: we negotiate our volume discounts, that is as it was before, but PHH brings its own expertise in this area and its own discounts because of its size. The advantage, then, is that. . . . I mean, there are savings from administration, but there's also an advantage in terms of. . . If the PHH alternative is cheaper than the one we've negotiated, then we access that. The other advantage is that PHH has negotiated alternative service providers as well, and there are efficiencies in getting the work done more quickly too.

R. Coleman: Let's just leave that for a second. I've got some thoughts on that as well. Obviously government had arrangements for discounts and prices before. I guess the question I would have is: how are you going to take what you were doing before as far as parts, service, volume buying, etc. . . ? Now you have two bodies that are doing. . . . First of all, I'd like to know who's actually negotiating the first set of volume services and reductions. If the branch is now closed, who's now filling that void on behalf of government? Once that question is answered, how are you going to meld these two to measure whether you're actually saving money as a result of the contract with PHH, versus what you would already have negotiated in your volume discounts? What type of accounting matrix have you put in place to handle that?

Hon. J. MacPhail: There's an admission that one has to make on how inefficient the past practice was, as I explain this. The Purchasing Commission did negotiate and continues to negotiate volume discounts and the best price. The savings in this exercise are through the administration savings from having a government vehicle management operation administer the whole system. We've now turned that over to PHH. There are real, clear and isolated savings in administration.

The best cost and the volume discounts continue as they were in the past, with the added element that, in this business, PHH may have its own established best price and volume discount. We continue to monitor, as the Purchasing Commission always does, to make sure not only that our negotiated arrangements are in place but also that as we get the benefit of PHH's experience as well, the overall price will be reduced, including what we negotiate.

R. Coleman: To achieve that from a company standard like PHH, usually there has to be, in order to be successful, some history and some experience in a particular marketplace. Could the minister tell me what the experience of PHH is in the B.C. marketplace relative to vehicles -- their wear and tear, and their operation in our climate versus other climates in North America? What's their experience in our particular marketplace?

Hon. J. MacPhail: Actually, the point the member raises in terms of experience, to be able to deal with the situation in British Columbia, was an element of consideration in the RFP and in examination throughout all of the bids. PHH came out on top. They have experience with clients throughout Canada -- actually throughout North America -- and throughout all climate and geographic variations as well.

R. Coleman: Did they have any experience with clients in British Columbia?

Hon. J. MacPhail: I will get that information for the hon. member. We just don't have it at hand.

R. Coleman: I just want to go back to a couple of notes I have relative to the previous vehicle management services branch, which the minister could clear up for me. It's relative to this decision, which I don't argue with. I just want to make sure that we're moving in the right direction. The information I received is that the branch used to consist of approximately 30 employees. Historically, there were four commissioned studies done on the government's vehicle management services branch. The first study of the four concluded that the vehicle management services branch was doing the most cost-effective job -- that the process should remain status quo. The second study that was commissioned was more in-depth. After a number of months, approximately $120,000 was spent. This study ended with some basic recommendations for improvement and delivery, but still maintained the vehicle management services branch operation.

There were a number of recommendations that came out of that. One of them is the area of savings that was realized by extending the number of kilometres per service from 5,000 to 8,000 on a maintenance schedule, and that type of thing, which the Big Three auto manufacturers evidently agreed to at that time. I'm just wondering if the minister could tell me how many studies were actually conducted on this. This would be prior to them actually trying to do the final study, which was the one that actually made the decision. But one of the comments that keeps coming back to opposition offices when you shut down an office is that other studies took place. I wonder if the minister could comment on those and just give us a bit of history on what happened with those and with those recommendations.

Hon. J. MacPhail: Again, this is an interesting question to answer, because one has to admit to certain issues of previous governments -- perhaps previous Treasury Boards -- which I could be accused of being part of.

Just to tell you, there are 35 FTEs. You asked that question at first. We don't have the information here, but we wouldn't dispute your figure about the number of studies done. I would anticipate, then -- because I've heard it from opposition members in other areas -- that the next question would be: "Studies have been done. Why didn't you do anything?" I would say this. I've actually been privy to some of these discussions over a period of about five years at Treasury Board. This is a situation where we are saying to the private sector: "You can do something better than government." There are all sorts of people whom you have to convince that that is true. You have to convince the public service that while you're not undermining the entire thrust of the public service, in this one particular area of the public service, there are others that can do it better. So yes, we can be accused of being guilty of managing those issues in terms of the public service.

At the same time, the fleet was aging substantially, and we chose not to renew the fleet. So the issues around future costs became even more crucial. The last study that we did certainly was the most expert study. It reached government at a time when it was crucial for us to make our government expenditures most cost-efficient and reduce our overall expen-

[ Page 9206 ]

R. Coleman: I admire the minister's clairvoyance, but I wasn't going to ask that next. That wasn't the issue for me. I was just basically trying to get to what the minister said: that over a period of time, it's taken some time for the culture to realize that maybe there are some changes that can be made. In this particular case, this was one of them.

[7:30]

Hon. J. MacPhail: We're talking about 4,400 vehicles. We owned them all. We sold them en bloc, and then we entered into operating leases on those 4,400 vehicles. The people who now own the vehicles are in the process of disposing of the older vehicles. As they dispose of them, we enter into an operating lease for the new replacements.

R. Coleman: My understanding is that it would be an arm of the Toronto-Dominion Bank that put this deal together -- either the lease arm or a financial arm of the bank.

Hon. J. MacPhail: PHH is the lessor; they're actually the owner. The financial arrangements are made through TD Securities investment banking.

R. Coleman: The purchase of these vehicles. . . . Who evaluated the fleet, and how was the evaluation and the assessment of the value of the fleet determined?

Hon. J. MacPhail: Arthur Andersen did it, and they did an independent market evaluation.

R. Coleman: Did Arthur Andersen evaluate each one of the 4,400 vehicles on an individual basis for value, or did they use the market black book for the evaluation of the vehicles?

Hon. J. MacPhail: I don't know whether or not you've got your colour right, but it's the latter.

R. Coleman: There are a couple, but the one that's usually the industry standard is the black one.

Now that the valuation is done and the purchase has taken place, is there a clause in the purchase agreement, by the purchaser? I know I would want this if I was buying these vehicles. I know that a number of the Forestry vehicles, for instance, if they were appraised by black book or by any book, wouldn't meet value today. They would probably be a lot more abused than a vehicle that might just be on the highway. My question to the minister would be: is there a guaranteed upset price on the resale of those vehicles at the end of their term or on the resale of them by the purchaser? Is there an upset price between what they actually get for the vehicle and what the value that was determined without full inspection of each individual vehicle?

Hon. J. MacPhail: Yes, there's a residual value clause. If the vehicle is sold for more than the black book estimate, we pocket the money; if it's sold for less, we make up the difference to a certain point.

R. Coleman: I doubt that it'll ever be much above, but I anticipate there'll be a number of them below. Could the minister tell me what that certain point is -- where that bar is set?

Hon. J. MacPhail: I'm told that government vehicles have a higher market value -- a higher sale value, actually -- particularly in the regions. People are well aware that there's a required maintenance schedule and that it's stuck to and maintained. The experience is that there's usually a higher sale value.

It is a standard operating lease. On your point about what the level is, the lessor picks up 15 percent of the risk.

R. Coleman: Would that 15 percent of the risk be passed on as a cost to the ministries that have the vehicles on the new lease? Or would that be rolled over? Is there an arrangement that if we have a shortfall, it's rolled over into the term of the new lease -- in other words, amortized into the new lease?

Hon. J. MacPhail: The whole schmeer is run. . . . The whole operation -- sorry -- is operated on a plus-minus situation, like a bank account, and at the end of each month there is a reckoning of that, by ministry.

R. Coleman: I don't think you answered my question, but maybe it's only because of the way the answer was phrased.

Interjection.

R. Coleman: It could have been the schmeer.

What I'm looking for is that oftentimes when a vehicle comes off lease in business and there's a shortfall on the value of the vehicle, the leasing agency will allow for that to be rolled over into the new lease and amortized. Reconciling where you have a shortfall is a different question. That was the first part of the question. If there's a shortfall, does that go back as a charge to the ministry, or does it end up back in the lap of the Ministry of Finance? On the other side, where there's a shortfall on renewal, is that being rolled over and amortized into the new leases, where there's an actual capital payment taking place to make up that shortfall?

Hon. J. MacPhail: There's no rollover into the new lease.

R. Coleman: The minister answered the second part of my question. The first part was: is any shortfall charged to the ministry or back to the Ministry of Finance or to Treasury Board?

Hon. J. MacPhail: Sorry, I thought I answered that question in my explanation. It's initially done as a bank account where you do the pluses and the minuses, and the reckoning is then charged to the ministry.

R. Coleman: The ministry that is affected -- would that be correct?

[ Page 9207 ]

R. Coleman: Could the minister tell me, with the pluses and the minuses as this was dealt with on the sale, what margin of error you've allowed for in the actual dollars you're going receive of the $37 million over the first year as the renewal of all the vehicles takes place? What margin did you factor in? You sold for $37 million, but your plus and minus. . . . Do you have a factor in there of where you think the actual balance of net dollars will be after all the vehicles move off their effective life?

Hon. J. MacPhail: We've actually taken the industry standard into account, and we've calculated that into our estimate of the $37 million. We don't anticipate any change to that.

R. Thorpe: I just want to ask a few more questions in this area. I understand you're going to turn about 900 vehicles a year. Is that correct? Is that what we turn, on average -- around 900 vehicles a year?

Hon. J. MacPhail: Yes.

R. Thorpe: When did the actual PHH administration of the fleet start?

Hon. J. MacPhail: We're actually in the transition phase of passing over to them now. The gas cards kick in July 1 under PHH.

R. Thorpe: So the reason we haven't been able to establish whether we've had losses or gains on some of the vehicles is because the deal hasn't really kicked in yet. Is that correct?

Hon. J. MacPhail: Sorry, we thought you were talking about the operation and maintenance side of it. The sale was April 1.

[7:45]

Hon. J. MacPhail: I would offer this to each and every member of the House: if we get this opportunity to explore an issue like this in depth, which I welcome, I'd be more than happy to do it in the form of a briefing -- written or verbal or whatever -- at the pleasure of the members of the opposition. Estimates is a good time to do this, but I would welcome the opportunity to do it at another time as well.

There have been. . . .

Interjection.

Hon. J. MacPhail: Yes, that's fine.

The sale took place, but there has been no disposal of the vehicles because we lease them back for one year, and then the disposal starts. We sold, but there are operating leases now.

R. Thorpe: So we get the money, it runs for a year and then we start trading vehicles. Then we'll see whether we have losses or gains based on the book values at that point in time.

Hon. J. MacPhail: Right.

R. Thorpe: Okay. We'll look forward to that. We do look forward to the in-depth briefing that the minister has offered, and, hopefully, the Chair will be able to attend too.

The monthly fee that the minister mentioned -- on the $1.2 million a year . . . . She said that is per vehicle. Is that fixed or variable?

Hon. J. MacPhail: It's fixed -- the $1.2 million annually is fixed.

Interjection.

Hon. J. MacPhail: Yes, exactly.

R. Thorpe: I certainly didn't want to test the patience of the minister, but the minister in her earlier answer -- and I'm sure she'll go back to her office and check Hansard -- said per vehicle, and that's why I was asking.

Hon. J. MacPhail: Well. . . .

R. Thorpe: But I realize that it has been a long day, and people start to get a little testy.

Hon. J. MacPhail: It's fixed at per vehicle. . . .

R. Thorpe: What I'd like to know, as part of this whole process, is: what kind of follow-up process at year 1, year 2, year 3, year 4 and year 5 has been put in place to measure our actual results against what we said was going to happen? What kind of performance matrix has been put in place to see that the decision that was made and the criteria it was made on do in fact turn out to be reality?

Hon. J. MacPhail: We've established a contract management group to monitor this. There will be audits, and we will report out to you. I look forward to doing exactly the same thing next year at this time.

R. Coleman: I have one last question, hon. Chair, and it's a very quick and easy one, I think. Could the minister just tell me, before we close -- and we're going to be rising, I assume, shortly -- the period of the tender, the date of selection and how many people bid?

Hon. J. MacPhail: The beginning of August. . . . I'd name a date, because my staff actually remember, but I wouldn't want to be held to it. But it was the beginning of August 1997 when the RFP went out. It was the middle of November -- towards the end of November -- when a decision was made. There were eight bids received.

R. Thorpe: This is the last question. Could the minister advise who the consultant named Griffith and Associates are and what role they played in this process?

The Chair: Minister, noting the time.

Hon. J. MacPhail: D.M. Griffith and Associates are the expert fleet management consultants who did the external review that actually revealed an ongoing fleet out of step with best industry practices.

Noting the hour, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 7:52 p.m.

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