1988 Legislative Session: 2nd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 3, 1988

Morning Sitting

[ Page

4203 ]

CONTENTS

Routine Proceedings

Budget Stabilization Fund Act (Bill 14). Second reading. (Hon. Mr. Couvelier)

Mr. Stupich –– 4203

Hon. Mr. Couvelier –– 4203

Privatization Benefits Fund Act (Bill 17). Second reading. (Hon. Mr. Couvelier)

Hon. Mr. Couvelier –– 4204

Mr. Stupich –– 4204

Mr. Williams –– 4205

Hon. Mr. Couvelier –– 4206

Horse Racing Tax Amendment Act, 1988 (Bill 3). Committee stage.

(Hon. Mr. Couvelier) –– 4206

Mr. Stupich

Income Tax Amendment Act, 1988 (Bill 4). Committee stage. (Hon. Mr. Couvelier) –– 4207

Mr. Stupich

Insurance Premium Tax Amendment Act, 1988 (Bill 5). Committee stage.

(Hon. Mr. Couvelier) –– 4207

Mr. Stupich

Land Tax Deferment Amendment Act, 1988 (Bill 6). Committee stage. (Hon. Mr.

Couvelier) –– 4208

Mr. Stupich

Mineral Resource Tax Amendment Act, 1988 (Bill 7). Committee stage.

(Hon. Mr. Davis) –– 4208

Mr. Stupich

Mining Tax Amendment Act, 1988 (Bill 8). Committee stage. (Hon. Mr. Couvelier) –– 4209

Mr. Stupich

Motor Fuel Tax Amendment Act, 1988 (Bill 9). Committee stage. (Hon. Mr. Couvelier)

–– 4210

Mr. Stupich

Mr. Williams

Mr. Blencoe

Social Service Tax Amendment Act, 1988 (Bill 10). Committee stage.

(Hon. Mr. Couvelier) –– 4213

Mr. Stupich

Mr. Williams

Taxation (Rural Area) Amendment Act, 1988 (Bill 11). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Tobacco Tax Amendment Act, 1988 (Bill 12). Committee stage. (Hon. Mr. Couvelier)

–– 4215

Tourist Accommodation (Assessment Relief) Act (Bill 13). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Mr. Stupich

Education Excellence Appropriation Repeal Act (Bill 15). Committee stage.

(Hon. Mr. Couvelier) –– 4215

Mr. Stupich

Health Improvement Appropriation Repeal Act (Bill 16). Committee stage.

(Hon. Mr. Couvelier) –– 4216

Special Accounts Appropriation and Control Act (Bill 18). Committee stage.

(Hon. Mr. Couvelier) –– 4216

Mr. Stupich

Ministerial Statement

Diamond Resources drilling on South Moresby Island. Hon. Mr. Davis –– 4217

Appendix –– 4217

The House met at 10:07 a.m.

Prayers.

MR. BLENCOE :

In the precincts today there are going to be a number of school groups

from the greater Victoria area. The first group to visit this morning

are grade 5 students from Margaret Jenkins Elementary School in

Fairfield. Would the House please make these young people welcome.

Orders of the Day

HON. MR. STRACHAN : Adjourned debate on second reading of Bill 14.

BUDGET STABILIZATION FUND ACT

(continued)

MR. STUPICH :

The Minister of Finance has said that the Budget Stabilization Fund is

necessary because revenues in B.C. are difficult to predict. On

occasion he has had even more difficulty predicting some expenditures.

But leaving that aside, it is to facilitate long-term planning. On one

occasion when being interviewed, he was a little more forthright and

said, "Of course, it could be used for political purposes as well," and

that's really what it's all about. The naming of it was so fortunate;

it really is a BS fund. There isn't one nickel backing it up, as we've

said before and as the minister himself has said before.

The

minister said that revenues are difficult to predict. With much less to

go on than the Minister of Finance had, we predicted a year ago that he

was $500 million out in his estimates of revenue. From the figures he

has released since then — in his revised estimates — it would

appear as though we were right on. He had enough information,

assistance and time in preparing his budget to have been right on as

well.

You can't come out right to the dollar, but when the

minister prepared his budget last year, the things he left out were so

obvious. He totally left out of consideration the fact that he was

going to get an extra $350 million by way of the forestry tariff and

the fact that he was going to get additional income tax because the

federal government had raised the rates, and B.C.'s take of that was

going to be $70 million. He left out the fact that we were going to get

$90 million from the federal government that they had been holding back

over a three-year period because B.C. insisted on levying charges for

hospital services that were not in line with the Canada health plan. So

he deliberately left out some $500 million in revenue. That's quite a

cushion. Now he might say that was to cover up other things, but it was

so obvious that he was underestimating revenue.

However, leaving that aside, we're now going to have, if we pass this legislation,

a $450 million BS fund that will not be represented by anything in the way of

assets. What it means, Mr. Speaker, is that from this day on, under this administration

or any other Social Credit administration, they will determine in advance what

they want the deficit or the surplus to be when it's all over — any figure

they want to pick out of the air — and say, "This is the deficit we want;

this is the surplus we want this year," and adjust the BS fund accordingly.

They can arrive at any figure at the bottom of the statement. That's exactly

what it's going to be used for.

Mr. Speaker, $450 million —

it could just as easily have been $45,000 or $4.5 billion. It doesn't

make a bit of difference to the finances of the province, whatever

figure he uses. He's looking in the long range at what he wants to be

able to show as the deficit figure for the year ended March 31, 1988;

for March 31, 1989; and for March 31, 1990. That's the game plan right

now. They're going to put other items in this: transfer some of the

lottery fund; transfer some other funds, we suppose. There's other

legislation coming up, and this fund will grow or decrease as the

government wants, in order to come out with the prearranged

determination of what the deficit should be in that particular budget.

It's

quite properly labelled the BS fund, Mr. Speaker, because it has

nothing at all to do with current revenues and expenditures. The

fluctuation in that fund will determine what the deficit or surplus

will be, and as the minister himself has said, it may be used for many

purposes, including that of winning election campaigns. Whether they

have the money to fund the goodies that they want to hand out in

election year or not, it doesn't matter. They can simply adjust the BS

fund and come up with the surplus they want going into an election

campaign, and use that money in winning that election.

It's

all legal. We're going to make it legal if we pass this legislation, so

there's nothing wrong with it in that sense, but it's playing games

with the public. It's trying to pull the wool over their eyes. It's

trying to make the public think that conditions in any particular year

are what the government wants them to be rather than what they actually

are: that the surplus that's arrived at for that year doesn't depend on

revenue and expenditures but depends totally upon the flexibility of

that BS fund.

That BS fund could even be in a deficit position, and they could still transfer revenue from it —

a bookkeeping, paper entry. That BS fund doesn't have to always be in a

surplus position; it could be in a deficit position and used to make

the public think that the administration has been able to produce a

certain result at the end of the year to suit its own political

purposes.

That isn't good enough. It's not as bad as some

of the statements that were presented in this Legislature with respect

to the Coquihalla Highway reports, but it isn't good enough to be

trying to fool people into thinking things aren't what they really are.

I wonder, when the government covets the triple-A credit rating that

the city of Vancouver has, whether they think this kind of chicanery is

going to help them in their attempts to improve B.C.'s credit rating so

that the province will as well get as good a credit rating as has the

city of Vancouver.

We're opposed to this kind of

smokescreen, this kind of delusion. We're opposed to this concept of

setting up a BS fund that will be used simply to pull the wool over the

voters' eyes and be used simply for political election purposes.

[10:15]

HON. MR. COUVELIER : The hon. member makes reference to the suspicion that the BS fund — the budget stabilization fund —

will be used for political purposes. My memory of the comments I made

in that respect were in response to the suggestion that that might be

so. I answered that I cannot, nor can anybody that I know, say with

certainty when the need for expenditures out of this fund will occur.

We envisage a need to spend out of this fund when the economy warrants

and justifies the expenditure.

[ Page 4204 ]

can't predict when that will occur. I had the good grace to admit when

questioned by the media that that might well occur in an election year,

but my guess was that, given we only go to the election maybe one year

in four, the odds were about 25 percent that that might occur during an

election year. The issue of whether it's used for election purposes is

not the purpose behind this initiative. It is purely and simply to put

aside some funds for the rainy day.

The hon. member made

comment about the difficulty in predicting revenues. I must say that

while it's all well and good for the hon. members to now beat their

breasts with pride that they said or predicted an improvement in

revenues, I don't recollect any glowing speeches on the other side of

the House about expectations for the provincial economy in the year

just past. I don't recollect people standing up and saying: "We will

increase employment; we will increase capital investment." I didn't

hear those arguments. Now, of course, they're saying: "We told you so."

It's a question of selective memory, I suspect, Mr. Speaker.

The

question of the propriety of this account is something I would just

like to make a comment about. I think it's important for us all to

appreciate that a budget is merely a management tool, a device whereby

the government can allocate to each line ministry spending envelopes so

that they know what it is they are able to spend during the coming year.

a similar sense, when we design the budget, we make estimates of the

revenue that we will receive. To the extent that the revenues are:

dramatically more than we predicted, the issue is: what do you do with

those revenues? Do you spend them? I know that other governments in

Canada and the western world might well be tempted to spend them; this

government is not. This government takes the responsible position that

when we have windfall, one-time revenues, we should isolate them for

the rainy day. I think that is morally and fiscally responsible, and

I'm convinced that it's in the interest of British Columbians to see us

do that.

It has been suggested, Mr. Speaker, that we are "playing games with the public" when we create this account —

that's a direct quotation. Let me just remind the members opposite that

the same kind of criticisms were levied when one of our predecessor

governments instituted the homeowner grant. It was similarly described

as playing games with the public money. Now we have the situation where

the members opposite spoke yesterday about the merits of increasing the

homeowner grant, as if it were their idea. Any innovative management

tools brought into place in this province have been brought in by our

party and our previous governments. That's a matter of record.

Lastly,

let me just remind the House that we are very concerned about credit

ratings and that as a consequence of this last budget, we had glowing

reports from the rating agencies. We have made our trip to central

Canada and to the New York financial community, and they speak very

favourably of the initiatives we've undertaken with this budget

stabilization fund. They agree with the philosophy, and the consequence

of these decisions will, in the fullness of time, result in an

improvement in our credit rating. People experienced in the financial

community applaud our efforts and speak about creativity, ingenuity and

our sense of fiscal responsibility. I'm very proud to receive those

kinds of laudatory comments.

Mr. Speaker, I'm pleased to move second reading of Bill 14.

Motion approved.

Bill

14, Budget Stabilization Fund Act, read a second time and referred to a

Committee of the Whole House for consideration at the next sitting of

the House after today.

HON. MR. STRACHAN : Second reading of Bill 17, Mr. Speaker.

PRIVATIZATION BENEFITS FUND ACT

HON. MR. COUVELIER :

Mr. Speaker, the government will receive substantial revenue from the

sale of government assets under the privatization program. The

government intends that a lasting benefit be enjoyed by future

generations of British Columbians from the proceeds of these sales.

This bill will establish a perpetual fund to hold the proceeds received

from the sale of Crown assets and operations to the private sector. The

funds will be invested, and the earnings generated each year will be

transferred into general revenue. Mr. Speaker, I am pleased to move

second reading.

MR. STUPICH : If the government

really intended to do this, they wouldn't require legislation to

accomplish it. What the legislation does is leave the door wide open

for them to do almost anything or nothing with respect to the proceeds

from the sale of assets as part of privatization.

I've said on previous occasions — and no one has ever questioned it —

that everything the people of British Columbia own through their

government, with the exception of the building that we're in at this

moment, has been mortgaged to the hilt. Public buildings all over the

province were transferred to BCBC, and the last time I looked at BCBC

statements they showed debts of something like $400 million. If we sold

the courthouse in Nanaimo or in Saanich or wherever, it should bear a

share of the debt that B.C. Buildings Corporation has.

have previously sold the ferries. We can't sell them again; the B.C.

Ferries operation is gone. We talked about selling the gas division of

B.C. Hydro. I don't know the figure. I've seen one forecast to the

effect that the portion of B.C. Hydro's debt that should be allocated

to the gas division is just about equal to the value of the assets of

B.C. Hydro's gas division.

I'm wondering what money is

really going to be coming in from the sale of assets, unless the

government in selling the assets keeps the debt and thereby inflates

our own public debt. I don't know what's in mind. I don't know whether

the Minister of Finance has any idea how this is going to be handled.

To the best of my knowledge, there isn't any significant asset that the

government has right now that should not bear an amount of debt in

excess of the value of the asset. We're in a deficit position, as far

as public accounts are concerned, of some $5 billion or $6 billion.

The

minister talked about the long-term benefit. The government will be

getting significant interest revenue from this fund as assets are sold.

Again; I have to wonder how much money is going to be in that fund. I

wonder whether the fund itself will bear the costs of the privatization

process. Part of that, of course, is the early retirement package. If

we're going to be getting rid of government employees and we offer them

early retirement, it is going to cost something like $100 million. Is

that part of the cost of the privatization process? Is

[ Page 4205 ]

that going to be borne by the public accounts, or is that going to be borne by the privatization fund?

The

government is not required by this legislation, as I see it, to put

everything into the privatization fund; it may do it. It gives the

Minister of Finance the opportunity to direct how much of the earnings

of this fund will come into consolidated revenue. It leaves it wide

open, once again, for the government, the Minister of Finance — whatever —

to play around with it; to put money in when they want; to take it out

when they want; to take earnings out when they want or leave them in;

and to use the fund, once again, for their own political purposes. It

would seem as though that's the main game plan, rather than actually

building up a heritage fund with the proceeds of the sale of assets.

we had real assets to sell, Mr. Speaker, it would be one thing, and if

we really were going to lock up the net value of those assets in a fund

from which the government could only draw interest revenue, that would

be protection for the fund and protection for the future. But as I read

this legislation, the government may do that if it chooses, when it

chooses, as it chooses, but it may also do almost anything else. Once

again, it's not finance. It's politics, and we're opposed to this

legislation as it stands.

MR. WILLIAMS : At the very

least we should have something out of this minister in terms of what

it's anticipated the numbers will be. What do you expect in terms of

dollars, inflow? What do you expect in terms of this whole exercise?

Well, I suspect it's going to be very modest indeed. The whole question

of net revenues from these sales of Crown assets.... As the member for

Nanaimo says, once you look at the debt structure of most of these

outfits, it doesn't leave very much. So maybe you should start coming

clean as to what you see those numbers as and whether there's going to

be anything in here at all. You can put in what you want to put in; you

can take out what you want to take out. Who needs it? It's just like

the last one: it's another BS fund, given to you by one of your

golden-handshake colleagues. Ever thought about that, Mr. Minister —

just what your golden handshakes are costing in staff morale, in terms

of what they're doing here? Maybe you've never thought about that.

Hydro Gas: what is it —

half a billion in debt? What will it leave in net return to the

province once you've sold it? The ombudsman has already raised the

question of the terrible conflicts there will be with outfits such as

this, when you both deregulate and privatize at the same time. Then the

consumer is likely to be a victim, and this for at best maybe a net of

$100 million out of the jewel that you're selling: Hydro Gas.

what is there in it for us? Isn't it true that your minister of energy

and privatization is now satisfied that he's not going to get that much

out of the exercise, so he wants it shopped around the world, and that

we could now likely have Hydro Gas owned by Hong Kong Gas; that that's

the next step, in terms of our Pacific Rim initiative, from this

administration?

AN HON. MEMBER : Shame!

MR. WILLIAMS :

You can say "Shame!" all you like, Mr. Minister, but it makes no sense

whatsoever to dispose of these assets. If you want to jockey the price

up, they're going to want a return. The buyers are going to want a

return, and that means higher rates in the end to the consumer. It's

straightforward. In the end, as you try to ratchet those prices up by

shopping these assets around the world, it will push prices up. So it

really doesn't make any sense whatsoever.

You look at the

other assets you're selling, Mr. Minister. B.C. Hydro Rail: what do you

anticipate getting out of that from selling the assets? Pretty modest,

I suspect. And the research agency of B.C. Hydro: how many buyers are

there for the very specific research that agency does for Hydro itself?

What sort of price? What kind of net position for the province?

What

you've really established is an ideological trap for yourselves here by

trying to pursue the Thatcher initiative in areas where the returns

will be zero or very little. You're really just in an ideological trap.

What have you got for the labs you've sold? Why, you've got little more

than the price of machines that were bought in the last year in the

Okanagan. So there's no net there at all. What about the little sign

shop out in Langford, talking a couple of hundred thousand or something

like that? Again, it's hardly any net at all.

Highways is still the big question mark.

HON. MR. REID : Look at how many signs are coming out now — twice as many.

MR. WILLIAMS : Oh, and I guess the bill is twice as high.

HON. MR. REID : No, twice as much production because somebody is working for himself.

MR. WILLIAMS : I bet the minister doesn't even know what the cost per sign out of production was previously. Answer.

HON. MR. REID : Sure I do. I'll get you an answer.

MR. WILLIAMS : I'll let you know, Mr. Minister.

MR. MICHAEL : It's $29.

MR. WILLIAMS :

No, it's $25. You're wrong by 100 percent, my friend. If you put it

together, $25 a sign for the whole range of signs we produce in this

province — from those huge, green freeway ones to the smaller stop signs — that's a modest cost. You guys spend more than that for your election signs, for God's sake.

[10:30]

HON. MR. REID : If we get re-elected, we'll do them all over again.

MR. WILLIAMS :

Can we get the chorus together here? The one thing they understand, Mr.

Speaker, is the cost of election signs. I'm not quite sure why, because

do they ever pay the cost of those election signs? Maybe they review

the correspondence.

The member from Nanaimo is absolutely correct. It's more smoke and mirrors here from the Minister of Finance — a

very vague, open-ended statute. Money may go in, money may go out, and

who will know in that revolving door what in the world is going on?

We're saying: "No thanks, we don't vote for this kind of phony

legislation" — which is becoming the hallmark of this minister.

[ Page 4206 ]

HON. MR. COUVELIER :

I have lots of good meat there to respond to, but I think we'll leave

it for the committee discussion. I am pleased to move second reading.

Motion approved.

Bill

17, Privatization Benefits Fund Act, read a second time and referred to

a Committee of the Whole House for consideration at the next sitting of

the House after today.

HON. MR. STRACHAN : Committee on Bill 3, Mr. Speaker.

HORSE RACING TAX AMENDMENT ACT, 1988

The House in committee on Bill 3; Mr. Pelton in the chair.

section 1.

MR. STUPICH :

From the reading of the bill and from other material I've seen from

time to time, although this purports to decrease the government's share

of revenue from horse racing, because the commission is being saddled

with costs that it has not borne in the past, it will actually have

minimal or no effect on net government revenues. Is my reading of it

correct?

HON. MR. COUVELIER : I'm sorry. I didn't hear that question.

MR. STUPICH :

From my reading of this and from what I've seen in the press and from

talking to people, it is my impression that, although this purports to

reduce the government's share of revenue from horse racing, in fact it

won't affect our net revenue, because we are imposing costs on the

commission that formerly had been borne by the government. There would

be very little, if any, effect on net government revenue.

HON. MR. COUVELIER :

That is not my understanding. I do believe that this is intended as an

incentive to the industry to improve the breeding and overall

contribution that it makes to the B.C. economy.

MR. STUPICH :

I'm surprised when the minister says it was not his understanding. It

is his bill, and I thought he would be a little more in tune with what

it's doing. It does say that it is reducing the rate from 3.5 percent

to 3 percent, but then it also includes further responsibilities on the

part of the commission: "...the operation of breeder societies in the

Province...the establishment or the improvement of horse racing

facilities...the covering of costs of feasibility studies and research,

and the assessment of either or both of them, and any other similar

costs for purposes of the establishment or improvement of

facilities...." It was my understanding that the government had

embarked on a study to determine where — or if — another

horse racing facility should be established. That was the government

accepting that responsibility. In this legislation the government is

charging the commission with the cost of that, and it will come out of

the additional revenue the commission is getting.

I was

just hoping the minister, if I kept talking, would have time to

consider that the commission is really going to have more costs that

previously had been borne by government one way or another. The net

revenue to the government is that they'll be losing some revenue and

losing some costs, and they'll come out fairly even. I may be wrong,

but that's the way I read it.

HON. MR. COUVELIER : As

I've indicated with my earlier answer, the effect of this will be to

reduce provincial revenues, and it will not result in a trade-off, so

to speak. In other words, the initiative that is offered by this

legislation is one that should result in funding being available to the

industry to perform some of those functions that the member described.

Section 1 approved.

section 2.

MR. STUPICH :

We may have a problem again. My

interpretation of this

section is that

it gives the cabinet some authority in directing the commission how it

shall spend the extra money it receives as a result of this

redistribution of income. It allows in the L-G-in-C to establish a

formula for how the commission is allowed to spend the extra money it

is going to get. That's the way I read it.

HON. MR. COUVELIER :

The funds will be spent this way: for supplementary purses, up to 1.5

percent of the tax; breeders incentive fund is up to 1.5 percent; not

less than 0.5 percent for the operation of breeder societies and race

courses, providing they meet the requirements of the equine health

research.

Interjection.

HON. MR. COUVELIER : If you'd like the answer, you might like to listen.

The

new provision provides for 0.5 percent for the research and improvement

of facilities. That's the only new aspect of this, and this will allow

the industry itself to perform those functions.

MR. STUPICH :

The Minister of Finance said in his opening words that the funds "will"

be spent. In other words, that's his determination or government's

determination that the commission will do thus and so. I think that's

what he meant, and I just want him to indicate whether the funds will

be spent. He is saying that they will be spent that way, and I see the

minister nodding in agreement. I take that to mean then, as I said,

cabinet will decide how the commission spends its revenue. The

commission will be doing what the government bids with the extra

revenue, as well as the revenue it's been getting to this point.

the government decides to change, the minister gave us percentages. The

percentages are not written into the legislation, but if the government

next week decides to change the proportions that are being spent on any

one activity, or indeed, to do away with instructions to spend on an

activity, or to add an additional activity, cabinet will decide how the

commission is to spend this extra money. I just want to make sure

that's what the minister meant.

HON. MR. COUVELIER : The hon. member is correct. The Lieutenant-Governor-in- Council will make those adjudications.

[ Page 4207 ]

MR. STUPICH :

I think that takes me back to where I was on the first one, where I

said that the government can, if it chooses, charge the commission with

activities which heretofore have been conducted by government, and the

government may well save some expenses as a result of this increase in

revenue for the commission by telling the commission that they have to

pay for this. I just want to know where we are, that's all.

Sections 2 and 3 approved.

Title approved.

HON. MR. COUVELIER : I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 3, Horse Racing Tax Amendment Act, 1988, reported completed without amendment, read a third time and passed.

HON. MR. STRACHAN : I call committee on Bill 4, Mr. Speaker, in the name of the hon. Minister of Finance and Corporate Relations.

INCOME TAX AMENDMENT ACT, 1988

The House in committee on Bill 4; Mr. Pelton in the chair.

section 1.

MR. STUPICH : I am reminded — I've done this before —

of one of my favourite Tommy Douglas stories about the fellow in the

insane asylum who was hammering his head against the wall. When asked

why he did it, he said: "Because it feels so good when I stop."

Last

year the government increased the rate of tax for small corporations by

3 percent. This year it's reducing it by 2 percent. I predict that the

year after next, heading into an election campaign, it will be reduced

one more point so it will be exactly where it was when this government

was elected, and they'll take credit for having reduced the rate of

taxation on small corporations by three points. We support it.

Section I approved.

Sections 2 to 4 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 4, Income Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : I call committee on Bill 5, Mr. Speaker, in the name of the hon. Minister of Finance and Corporate Relations.

INSURANCE PREMIUM TAX

AMENDMENT ACT, 1988

The House in committee on Bill 5: Mr. Pelton in the chair.

Section I approved.

section 2.

MR. STUPICH :

I had some things to say about this bill yesterday, and the minister,

as I recall, didn't respond particularly when he wound up second

reading. I said then that it was simply his attempt to grab more

revenue from taxpayers indirectly. I argued that the automobile

insurance corporation quite properly is bearing the cost of automobile

accidents and of the administration of the whole program, but that

automobile drivers.... It's not reasonable, proper or fair that they

should be called upon to supplement government revenue, in this case by

an additional $6 million. Was calling on drivers — you and I, Mr. Chairman —

when we pay for our licence to contribute an extra.... With this

increase, the tax now will be $20 out of your pocket and my pocket on

the average when we go to renew our automobile insurance. I can see

that the government is desperate to get revenue. It has increased fees

of all kinds. The minister said that all he was doing was rationalizing

the cost of the service with the amount being charged for that service.

Yesterday I asked how this explanation ties in with what he's doing

with respect to automobile drivers. I think the costs of insurance are

going up rapidly enough. They come down only in an election year,

entirely by coincidence, I'm sure. But last year they went up

dramatically, and this year again there are substantial increases. The

likelihood is that they'll go up again.

[Mr. Weisgerber in the chair.]

Why

we should be loading this extra impost on automobile drivers simply to

get more revenue is beyond me. There are other ways, I would think, of

getting $6 million more revenue this year than taking it out of the

hides of sorely pressed drivers who are paying for their auto insurance

in B.C. We are opposed to this

section and to this bill.

[10:45]

Section 2 approved on division.

Sections 3 to 6 inclusive approved.

Title approved.

HON. MR. COUVELIER : I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 5, Insurance Premium Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

[ Page 4208 ]

HON. MR. STRACHAN : Mr. Speaker, I call committee on Bill 6.

LAND TAX DEFERMENT AMENDMENT ACT, 1988

The House in committee on Bill 6; Mr. Weisgerber in the chair.

section 1.

MR. STUPICH : I made the point yesterday — I think the minister didn't comment on this and perhaps he won't today —

that it's good legislation because it's correcting something that the

government has done on previous occasions. When the homeowner grant

allowed taxes for senior citizens to be reduced to $1, there was no

need for the provision that will enable them to defer property taxes on

their property. But now that the tax may not be reduced below $100 — a fact of life in the province of British Columbia —

then it is good that we're allowing senior citizen residents in mobile

homes to defer their taxes, since the $100 is sometimes hard for them

to come by.

We support this legislation. We regret that we're in a position where it has to be, that it's needed, but we support it.

Section 1 approved.

Sections 2 to 8 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 6, Land Tax Deferment Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Mr. Speaker, I call committee on Bill 7.

MINERAL RESOURCE TAX AMENDMENT ACT, 1988

The House in committee on Bill 7; Mr. Weisgerber in the chair.

section 1.

MR. STUPICH :

Mr. Chairman, yesterday when we were discussing this bill on second

reading, I suggested to the minister that there are relatively few

companies that are contributing to this tax — just the ones that

are large enough to be making a profit in excess of $50,000. 1 wonder

if he could tell us how many companies are going to be affected by this?

HON. MR. DAVIS :

Mr. Chairman, this is a profits tax, or it's a profits-type tax.

Hopefully, a significant number of companies will be making a profit in

excess of $50,000, but in the last few years only half a dozen were in

that category — and their profits were nominal at that. So it

could involve a significant number of dollars. It has not in recent

years, mainly because it's a profits tax and this industry hasn't been

making exceptional profits.

MR. STUPICH : I think the

minister said only a half a dozen companies had been contributing to

some $14 million in tax revenue the government's been getting from this

source. Since it is a tax on income, those half-dozen companies, while

they might not have been making the kinds of profits they would like to

have, are making very substantial profits. I wonder, at the same time

as we have to take another $6 million away from automobile insurance

drivers, why we have to give half a dozen companies that paid in the

neighbourhood of $14 million in the form of a minimum income tax....

It's not at the regular level of income tax; it's a relatively low rate

of income tax. I don't know the figures right now, but I would think

that to be paying $14 million in the form of this tax, they must have

been making at least $140 million in net income over the total — some of them a lot more than that, some of them less.

Mr.

Chairman, on the face of it, I'm opposed to this section. We're giving

relief where it really isn't needed, if it's affecting only half a

dozen companies that have made substantial profits and should be paying

something for the resource. There's no royalty anymore; it is, as the

minister said, a tax on income. If he wanted to give relief to the

mining companies — some of whom are suffering — then surely

it could have been done through the water licence fee. A very minor

reduction would have meant losing the same amount of revenue, but it

would have helped those who are not making any net income.

The

minister himself suggested yesterday that he would have preferred to

reduce the costs for those mining industries that were not making any

money, rather than to give more to those who are making substantial

profits. That's the way I heard him. I think that's what he would like

to do, but he hasn't been able, I suppose, to persuade the Minister of

Finance to reduce costs across the board, as he would like to do,

rather than simply increase.... What we're doing is saying to those

that are profitable, "You're going to get higher profits," rather than

helping the ones that have not been profitable.

HON. MR. DAVIS :

Mr. Chairman, the hon. member made reference to $14 million in revenue

collected under this tax. Had we reduced the tax by 1 percentage point,

the revenue lost, at least in his terms, would have been in the order

of a million dollars, not $14 million. If we reduced it 2 percentage

points, it's of the order of $2 million. Yesterday I mentioned a figure

of $1 million to $2 million. Assuming we were to experience a repeat of

last year, and the new tax rate was in effect, that would be a loss to

the treasury of $1 million or $2 million.

He refers to the

water rental fee. We've examined the water rental fee issue carefully,

and unfortunately, the way the fee is structured, it applies to all

users of electricity, so the reduction would have to be across all

categories of use of electricity. A 1 percent or 2 percent reduction

would mean a $5 million or $6 million loss to the treasury — at least, of that order of magnitude.

The only alternative with the water rental fee is to develop, say, a two-step rate that most people pay, and a few

[ Page 4209 ]

would pay a much lower rate — presumably those would be energy-intensive industries —

but we haven't made that decision. I'm only saying that to tinker with

the water rental fee would be to surrender a much larger amount of

revenue than is presently lost, to use his terms, as a result of this

legislation.

Our concern primarily was the overall rate of

profits tax paid by mining operations and companies in this province.

They pay the federal corporate rate, which is currently 26 percent.

They pay the provincial corporate tax, 14 percent — that brings it up to 40. On top of that, mine by mine — and this tax applies to individual mines as opposed to whole corporations —

the tax is 17 percent. So you have a cumulative profits tax of 57

percent. Admittedly, there have been depletion allowances, but they are

being discontinued by the federal government, and we were faced with a

rate of profits tax of 57 percent, which was measurably above any

other province in Canada. Essentially we've brought it down to the

Ontario rate, which is otherwise the highest in Canada.

This

is a marginal reduction in taxation for mining. Any other category of

taxation borne by the mining industry, had we brought about a similar

percentage reduction, would have resulted in a much larger loss of

income to the treasury.

MR. STUPICH : Mr. Chairman,

if I said what the minister said I said, then I'm sorry; I was wrong.

The expected loss from this is $1 million; the expected revenue, after

doing this, is $14.5 million in the year ending March 31, 1989. If I

used different figures, I want to correct that: the expected loss is $1

million.

What I heard as the minister's explanation....

It's difficult to help the people who are in trouble, but the

government wants to do something, so it has come to the decision that

it will give $1 million to half a dozen companies. The ones that are

doing very well will get an extra $1 million. The ones that are not

doing well will get nothing, because it's difficult to work out a

formula for them. It's easy for us, under those circumstances, to

oppose this section.

Section 1 approved on division.

Title approved.

HON. MR. DAVIS : I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 7, Mineral Resource Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

Motion approved.

HON. MR. STRACHAN : Committee on Bill 8, Mr. Speaker.

MINING TAX AMENDMENT ACT, 1988

The House in committee on Bill 8; Mr. Weisgerber in the chair.

section 1.

MR. STUPICH :

Mr. Chairman, I wonder if the Minister of Finance, since this bill

comes under his jurisdiction, could answer the same question I put to

the Minister of Energy when I asked him how many companies would be

taking advantage of this. Can he tell me how many companies will be

benefiting from this reduction in the mining tax?

[11:00]

HON. MR. COUVELIER :

This is a profits tax, of course, so it's anyone’s guess what may

happen. It could impact one or two coal companies and a number of

smaller structural material companies, but the exact number is

difficult to quantify.

MR. STUPICH : Mr. Chairman, I

would suggest that it's not that it's difficult to quantify but that

the minister just doesn't have the information right now, and I can

appreciate that.

HON. MR. COUVELIER : It's based on profits.

MR. STUPICH : It's based on profits, and I'm not sure how many gravel pits are making revenue in excess of $50,000 net income a year.

Interjection.

MR. STUPICH :

Yes, if there's one. There are at least as many as there are coal

companies, but there must be somebody in the coal business making

money, because the minister's anticipating getting $500,000 revenue

from this tax. That was really what I was wondering: which coal company

does he think is going to be making enough money this year to pay

$500,000 by way of this tax? But he doesn't know it and I'm not

sure.... The Minister of Energy might be able to help; he might know. I

can't think of any.

What intrigues me even more, Mr.

Chairman, is that while the cost to treasury in the budget year ending

March 31, 1989, according to the budget speech, was too small to

quantify.... You can't get enough zeros after it. The cost to treasury

in the second year — that is, the year ending March 31, 1990 —

is going to be $1 million. We expect to get a half-million in the year

we're in right now, and by reducing this tax, it's going to cost us a

million dollars. We're going to get a million dollars less from this

source than the half million we're getting this year. I think that

requires some explanation.

Mr. Chairman, it's not fair. I

knew the answer and the Minister of Energy knew the answer but the

Minister of Finance didn't know it.

I just have to ask one more question: for $500,000, why are we bothering? That we're not going to get, even.

Section 1 approved.

section 2.

HON. MR. COUVELIER : I move the amendment standing in my name on the order paper. [See appendix.]

This amendment provides that the rate reduction proposed in

section 1 come into force on July 1, 1988.

[ Page 4210 ]

Amendment approved.

Section 2 as amended approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill

8, Mining Tax Amendment Act, 1988, reported completed with amendment to

be considered at the next sitting of the House after today.

HON. MR. STRACHAN : Committee on Bill 9, Mr. Speaker.

MOTOR FUEL TAX AMENDMENT ACT, 1988

The House in committee on Bill 9; Mr. Weisgerber in the chair.

section 1.

MR. STUPICH :

I just think it's worth getting on the record that it's one more

revenue grab by a government that talks about minimum increases in

taxes. In this case, they're expecting to get an additional $45 million

from this source as a result of this change in legislation. I just want

that noted.

Sections 1 and 2 approved.

section 3.

MR. WILLIAMS : Could the minister advise us what the annual revenues will be as a result of moving this to 3 cents a litre?

HON. MR. COUVELIER :

We're working from memory. The hon. member is aware that we're only

talking about the Vancouver transit area. We will be happy to send that

over. We'll have staff investigate it. We think it's in the area of

about $2.5 million, but we'll verify that for you.

MR. WILLIAMS : I would appreciate the information. It seems clear that the minister does come — as we've seen this morning —

not very well briefed at all on the legislation that he's responsible

for. 1 would hope that in the future he will have more time for that so

that he will be more adequately informed, and that he won't do his

campaigning in the malls and shopping centres, as he is wont to do when

he has these delusions of grandeur in terms of his future.

Let's

look at this business of transit in Vancouver. This is part of the

continuing saga of dealing with the big white elephant known as

SkyTrain. That big white elephant that the Premier was initially

responsible for, and others....

Interjection.

MR. WILLIAMS :

Yes, you bet. Do you have any idea, Mr. Member, how much that thing

costs compared to the rest of the transit system in Vancouver?

Interjection.

MR. WILLIAMS : Yes. Do you know what numbers ride that SkyTrain? Do you want to know what numbers ride that SkyTrain?

Interjections.

MR. CHAIRMAN : Order, members, please.

MR. WILLIAMS : Oh, yes. Sure. That thing soaks up 40 percent of the cost of transit in Vancouver and carries 12 percent of the people.

MR. JANSEN : What kind of equation is that?

MR. WILLIAMS :

You get up, Mr. smart member for Chilliwack and Mr. Minister. The

reality is that you're having to increase all these taxes to pay for a

system that is fumbling and that is not carrying great volumes of

traffic, that is not doing the job that a mass transit system should

do. I am not surprised that the mayor of Vancouver says: "Enough,

enough! We in the city of Vancouver will not keep paying for the

extension of this monster with its incredibly high capital costs." The

surface transit system carries the load.

If you were

anywhere near creative, we'd have a transit system in Vancouver that

provides free service in the downtown and the West End. We don't have

it. We'd have a transit system that has lower fares in the inner-city

neighbourhoods. We don't have it. We have a system that's the most

costly system in the country, because you bungled in terms of that dumb

system going out to Surrey. I don't blame the mayor of Vancouver for

saying: "No more."

You get up and defend it, because you'll

have a hard time doing it. The entire surface system was bent and

twisted to feed SkyTrain — the whole system — and you're

talking about further extensions out into the valley and to the north

side of the river at an incredibly high capital cost for this system

from Ontario. This is a system that Ontario has only used in one little

suburban snitch — I think it's in the Scarborough area — and it's the area they've had the most problems and highest costs in.

opted for this untried system throughout our region, so the penalty is

being borne by the automobile people in terms of a higher tax per litre

on gasoline, and it's borne by the property tax in the area. The city

of Vancouver ends up bearing the bulk of it for a system that doesn't

serve the city very well at all.

Interjection.

MR. WILLIAMS :

No, no. The city should have cheaper transit fares because their costs

are lower, the distances are shorter, the densities of population are

higher; and in the progressive cities of North America, the downtown

areas provide free transit. That makes a lot of sense. But because you

tied your wagon to this thing, SkyTrain, we have a debt load like we

have barely seen on any public project.

Not until year 13

under the Minister of Economic Development's ministry, when she was

responsible for the debt manipulation a couple of years ago, will

anything be paid on the principal of SkyTrain. You compare that with

the mortgage you gave Li Ka-shing, where for the first 13 years he

doesn't pay anything in terms of interest. On the one side,

[ Page 4211 ]

you

give Li Ka-shing a deal where he pays no interest on the mortgage; on

the other side, you and the public sector have a mortgage where you

don't deal with the principal for 13 years, and you have the debt

hanging over our heads for 30 years. For that system we have 30 years

of debt. That's why you're raising the gas tax.

Now that

you've been briefed, for a change, by your Minister of Energy, maybe

we'll get some modest comments from the minister now.

HON. MR. COUVELIER :

I can't believe what I'm hearing. I was a member of the Urban Transit

Authority when we initiated this project. I can't believe a member from

Vancouver is critical of SkyTrain. My goodness, SkyTrain is widely

recognized as one of the most innovative public transit systems

anywhere in the world. It was the talk of Expo; it was endorsed by

other communities in the world. They've purchased a system, as I

understand it.

The member makes a point about surface

transit covering the load. If I understand the criticism that we've

been hearing, it would be that these people, these penny-pinching,

lack-of-creative-thinking individuals would have this system blocking

off every intersection in Vancouver as it crossed the intersections. We

elevated the track so it is fast and efficient; and what we've done is

knit the lower mainland communities together. We have revitalized New

Westminster. The hon. member makes no comment about that, of course.

I'm

just astounded to hear a Vancouver member criticize the SkyTrain

initiative. To the suggestion that it's the most costly in the country,

the operating costs of that system are very economical and compare

favourably with others elsewhere in the world. It's a well-known fact.

For the hon. member to try and make the claim that it isn't seems to me

flies in the face of the facts of the matter.

In any event,

I think that SkyTrain is well received, endorsed and appreciated by the

citizens of the lower mainland. Indeed, all the citizens of British

Columbia take some pride in the fact that it was an innovative,

creative and courageous decision to implement that system. Using the

linear induction motors had a risk factor associated with it, and I'm

very pleased the whole operation turned out to be the success it is

suggest that SkyTrain itself was a bad decision or that we should have

seriously considered the thought that SkyTrain would result in closures

at every intersection as it crossed the various streets of Vancouver, I

find an absurdity. Clearly, that would not have resulted in any

advantage to the riding public. Clearly, it would not have elevated the

economic profile of New Westminster. Talk to your mayor of New

Westminster, hon. member, and find out for yourself what SkyTrain has

done for that community. He talks in a parochial vein about SkyTrain,

as if the whole world should evolve around Vancouver East. The hon.

member certainly must be aware of the fact that all citizens of

Vancouver reap a benefit from the operation of SkyTrain.

This

government is very proud of the SkyTrain decision; and to the

suggestion it has a heavy debt load, I say of course it has a heavy

debt load. We built it during the time we needed some job creation

prospects. We needed to get some employment created in the lower

mainland area. We wanted it to contribute to Expo, which it certainly

did; we wanted it to be a showplace of Canadian engineering and

ingenuity, which it was; and we wanted to see if we could get some

offshore sales for this technology, and we got them. We met all our

objectives.

This is a system that will last 100 years. Hon. member, once the debt is paid off — and that will proceed —

we'll have a system that will last 100 years, and it will be one of the

most economical systems anywhere in the world. We should be very proud

of it as British Columbians, Mr. Chairman, and I can tell you this

government is.

MR. WILLIAMS : It would be a real

pleasure if the Minister of Finance ever analyzed anything at any time.

We just get the wind. Think about it, Mr. Minister. I do hope you'll

listen. Of the volume of the whole system, 12 percent is on SkyTrain.

HON. MR. COUVELIER : Of course, but look at the roads you have to....

MR. WILLIAMS : No, just keep listening. Twelve percent of the volume in the system is on SkyTrain, but it's 40 percent of the cost.

HON. MR. COUVELIER : Of course, but that's still cheaper than making roads.

MR. WILLIAMS : Of course. That's a problem.

Interjections.

MR. CHAIRMAN : Order, please, hon. members.

MR. WILLIAMS :

The minister says that 30 years from now it will be wonderful when we

have paid off the debt. This is Social Credit indeed: it's a debit.

You

talk about this wonderful system. Mr. Minister, do you know that they

have to put grinders out on this system just so it won't sound like the

worst Toonerville trolley in the world? They've had to double the

grinders at night, double the time for those grinders on the system.

HON. MR. COUVELIER : It's a very quiet system.

MR. WILLIAMS :

Anybody who lives along that system knows that the grinders are out on

double time at night now. They've had to cut down on the volume of

traffic in order to make space for the grinders.

HON. MR. COUVELIER : Have you ever ridden on it?

MR. WILLIAMS :

Oh yes, but, Mr. Minister, shouldn't your Treasury Board analysts...? I

know you have trouble handling analysis, and it's asking a bit much,

but you do have Treasury Board staff that carry out analyses of

systems: whether the returns are satisfactory, where the cost-benefit

is, etc. Shouldn't your staff really take a good, hard look at SkyTrain

in terms of extensions? I know they did initially, and they recommended

against it. They said: "Hey, the payoff isn't here. It's an untested

system and it's bad news."

Those earlier studies have been

proven correct, and now the question is: are we going to pour good

money after bad? This legislation is encouraging more good money after

bad. We could use existing rail systems. You can try to give us an

elevated speech, as you did just a few minutes ago, about this system;

it didn't lift very far into the air. But there are existing

[ Page 4212 ]

systems

that are fairly separate now, like the Canadian Pacific Railway line on

the north side of the river. There aren't many crossings on that system

at all, particularly through Burnaby, where there is a bluff and no

cross traffic whatsoever. There you have existing infrastructure in

place and capital already expended, and it is just a matter of

developing a train system and a

schedule for it. Those are very modest

capital costs compared to what we face with SkyTrain.

HON. MR. COUVELIER : How little you know!

MR. WILLIAMS :

I just wish this minister knew a little bit more than what he got from

his briefing from the Minister of Energy (Hon. Mr. Davis). The

unmitigated gall of this windbag is just incredible. There has been no

briefing whatsoever on the legislation before us today. He knew nothing

about the horse-racing act: "That's the Attorney-General's statute." He

really didn't have anything much to do with it, because the A-G goes to

the horse races and he knows the details.

The staff might be briefed, but you can be sure the minister isn't. Quizzed

in other matters by the first member for Nanaimo (Mr. Stupich), he had absolutely

no understanding of the statutes. And then you have the gall to call out: "How

little they know!" There's a level of arrogance there that is exceeded only

by ignorance.

It's

high time you carried out a detailed analysis of SkyTrain by your

Treasury Board staff. Look at how many people are riding on the thing.

Other than in the peak periods, that train is empty.

HON. MR. COUVELIER : The whole system is empty other than in peak periods.

MR. WILLIAMS :

If that's the case, then maybe you should have your people look at how

you might fill it up. That's why you might have a free system in

downtown Vancouver.

Interjections.

MR. WILLIAMS : You laugh. A free transit system might be the most sensible

system we could have in downtown Vancouver and the West End and that new city

of Li Ka-shing's. It would make all the sense in the world to eliminate as

many cars as possible from the downtown peninsula, ye of little imagination.

You don't really understand the overall system involved here. You're

increasing fares and taxes....

HON. MR. COUVELIER : The local commissions increased the fares. Don't say we have.

MR. WILLIAMS : Yes, and you're increasing the taxes. You burdened them with a system that doesn't make sense economically.

HON. MR. REID : It's the best system in North America. What are you talking about?

MR. WILLIAMS :

Well, Mr. Member from Surrey, have you ever been to Montreal and seen

their system? Have you ever been to Toronto and seen their system? Can

you see what the Yonge Street subway cars carry compared to your

little Toonerville trolley with closet-sized trains? Come on now,

wake up and understand what the rest of this country, let alone the

rest of the world, is doing. Face up to the fact that you have a

failure on your hands, and you better stop putting good money after bad.

Interjections.

MR. CHAIRMAN :

Perhaps before we recognize the next speaker, just a word of caution on

relevancy. I think we're getting into a rather wide-ranging debate here

on transit systems, and that doesn't seem to be the issue at hand.

Perhaps we could get back to

section 3.

MR. BLENCOE :

I wanted to join in this debate because the impact on local government

in terms of financing of the SkyTrain operation is astronomical. If

there was ever a need for investigation, Mr. Chairman, for a full-blown

inquiry into the financial mess that's been created around SkyTrain....

Interjection.

MR. BLENCOE : No. It's a similar kind of situation that we had with the Coquihalla — estimated at $279 million or $280 million.

HON. MR. STRACHAN :

On a point of order, Mr. Chairman, your admonition just a few moments

ago about relevancy was well taken. Some latitude has been allowed the

member for Vancouver East, who brings his concern — parochial as it may be —

to this assembly on this issue of the 2.5-cent-a-litre transit tax

going to 3.5 cents a litre. The same latitude was allowed to the

Minister of Finance in his response. But I believe we have as a

committee really extended our latitude as far as we want to extend it,

and I think we should become more relevant now and speak to the

section

itself, which deals with an increase in gasoline tax. If we can caution

members to avoid reference to Coquihalla and other unrelated issues, I

think the committee will be well served.

MR. CHAIRMAN : Your point is well taken, Mr. Member.

Section 3 approved.

section 4.

HON. MR. COUVELIER : Mr. Chairman, I move the amendment to

section 4 standing in my name on the order paper. [See appendix.]

Amendment approved.

Section 4 as amended approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

[ Page 4213 ]

Bill

9, Motor Fuel Tax Amendment Act, 1988, reported complete with amendment

to be considered at the next sitting of the House after today.

HON. MR. STRACHAN : Mr. Speaker, I call committee on Bill 10.

SOCIAL SERVICE TAX AMENDMENT ACT, 1988

The House in committee on Bill 10; Mr. Weisgerber in the chair.

Section 1 approved.

section 2.

MR. STUPICH : Mr. Chairman, when the minister was speaking about this — perhaps in the budget debate more so than in second reading —

I think he said that because of all of the harm the consumption of

alcohol does, we're raising revenue from that source in order to make

better use of it. There's an extra $68 million expected to come from

the increase in the sales tax rate from 6 to 10 percent on liquor other

than draft beer. I wonder if the minister can tell us anything at all

about how this is being used to counteract the ill effects of alcohol

consumption.

HON. MR. COUVELIER : Mr. Chairman, we've

increased funding in the area of alcohol and drug abuse by about $23

million this coming year, the 1988-89 fiscal year.

MR. STUPICH :

We're sure lucky we have this problem, aren't we, Mr. Chairman? We're

netting an extra $45 million because we're punishing the people.

draft beer, the minister is expecting to gain $27 million. I know we

can't talk about the fact that the exemption for draft beer has been

deleted — that regulation is not part of this legislation. The

budget speech did indicate that the 10 percent does apply to draft

beer. During the election campaign the Premier promised to reduce the

price of bottled beer. May I ask whether it's the intention of

government to raise more money from draft beer over the next two years

so that in an election year the Premier will be able to make good on

his promise and effect some modest decrease in the price of bottled

beer? That's just for information.

HON. MR. COUVELIER :

As I mentioned during the discussion in second reading, beer drinkers

in Canada will pay more for their beer in any other province —

other than Alberta. In B.C. we have the second-lowest beer price in the

country, in terms of prices to the licensees. If the hon. member from

the opposition is trying to imply that our government is out of step or

out of line with what is occurring elsewhere in the country, then that

statement is not supported by the facts.

[11:30]

The

issue, of course, is one that many people like to make speeches about.

We have been in office a year and a half, and beer prices have changed

considerably over that time. As a matter of fact, I'm advised that the

breweries themselves increased the price to the licensees by over 20

percent in the last year. We as a government are not philosophically in

agreement with controlling the end-product price of beer. Therefore it

is very difficult, if not impossible, for us to guarantee that whatever

devices we might employ to reduce the cost — that is, reduce markups or sales tax — are passed through as savings to the consumer.

For

that reason, it would be virtually impossible for any government to

guarantee that beer would always be a certain price — unless, of

course, we wanted to mandate it. That gets us into the whole question

of whether we're prepared to subsidize B.C. breweries. Clearly, at the

rate other breweries are charging across the country, we would rapidly

get into that situation if we weren't careful. I can remember a period

of time, shortly after we were in office, when we were able to ensure

that there was a lower-priced product on the shelf. Admittedly, it

didn't last for long. It was by a series of devices, as I've explained

earlier. that we were able to do that, but it was only short-lived.

The

other point I think I need to make here is that there was a lower

government markup on low-alcohol beer. This is a device on our part to

attempt to promote the diversion, if you like, from one class of

product to another. We make that not for the purposes of a tax grab.

The reverse is true; we are reducing our tax grab, if you want to

describe it in those terms, on low-alcohol-content beer. We think that

that is a socially responsible thing to do. If the hon. member wishes

to make the argument that we should not be in the business at all, then

of course he's free to do so, and that would be a different debate.

I take exception to the suggestion that our government is treating beer drinkers — in which I include myself —

unfairly. Certainly, as I've said, if they lived in any other province

in this country. they would be paying more for their beer than they're

paying here. The only province cheaper than us is Alberta.

MR. STUPICH :

The minister has admitted on several occasions that he's a beer drinker

himself. I'm not pleading for myself right now. because I'm not a beer

drinker; I drink, but I don't drink beer. I wasn't asking what the

charge is in other provinces, or other parts of Canada except Alberta.

I wasn't asking for any of the explanation, other than that the then....

HON. MR. COUVELIER :

You can't have it both ways. You can't criticize that I'm not doing my

homework and then when I give it to you, say you didn't ask for it.

MR. STUPICH :

Mr. Chairman, the point I was trying to make was that the Premier made

a promise. The Minister of Finance says it's difficult to predict....

It was very easy for the Premier, when he was travelling around the

province, to make a promise. He didn't at that time consider any of the

difficulties. Did the Minister of Finance at any time hear the Premier

saying that he was going to change the price of beer relative to what

it was anywhere else? Or did he simply hear, as I did, the Premier's

promise to reduce the price of bottled beer in British Columbia? That's

all I heard. Did the Minister of Finance ever caution the Premier and

say: "Look, you aren't going to be able to deliver on that promise, or

if you are, it will be very short-lived." If he did, he did that

privately and he may not want to say — I don't know.

All

I'm saying is it's one more broken promise, and I am sure people

campaigning in the next provincial by-election or general election will

remind the people of the province that this Premier that's going around

making promises is the same one who made this particular promise

without any thought at

[ Page 4214 ]

all

as to how he would do it, how he could do it, how much he would do it

or what was going on in other provinces. He didn't hear or didn't seek

advice from any of his cabinet colleagues as to what he was saying; he

simply thought it would be a good election promise and so he tossed it

off. The moment he was elected, it was forgotten.

That's

all. I'm not opposing it or supporting it or anything else; I'm simply

saying that it's a broken election promise, and that's the point that I

want to make.

MR. WILLIAMS : I thought that the

minister might respond. Those are reasonable questions. We all remember

the pre-election headlines: "The price of beer will go down." Those

were the promises of the Premier, and this is exactly the opposite.

It's a different sales tax structure for the workingman's drink. How

come?

MR. JANSEN : Who sells that?

MR. WILLIAMS :

Sir, quite a few people, including breweries and all the rest. 1

thought the Premier's promises meant something. We now know that they

mean exactly the opposite. When the Premier gets up and gives a speech

and says that the price of beer is going down, that's a warning,

working folks out there, that the price of beer is going to go up.

MR. JANSEN : It did go down.

MR. WILLIAMS :

It's doublespeak and double tax. My gosh, that member from Chilliwack

is getting so chatty; he just can't wait for August, when some of those

other ministers that have been so leaky go down. He is just trying to

establish his credentials for the next opening of the cabinet door;

that's pretty clear.

MR. CRANDALL : He's at least got a shot at it.

MR. WILLIAMS :

He's got a shot at it? Yes, he's going to have to shoot the Minister of

Economic Development (Hon. Mrs. McCarthy) and maybe the

Attorney-General (Hon. B.R. Smith) and a few others.

The

point is that a promise from the Premier is bad news. If he is

promising us any goodies, we had better watch out because the end

result will be exactly the opposite. The warning is out there. If he

threatens to reduce the price of beer again, then absolutely none of us

will be able to afford it.

HON. MR. COUVELIER : Mr.

Chairman, I wish to put on the record that we have reduced the price of

beer. I don't know what's the matter with these hon. members across;

they just refuse to listen. We have reduced the price of beer — the markup —

a dollar a case on low-alcohol beer. Do you want us to reduce the price

on the higher-alcohol beer? Are you in favour of promoting the use of

this product? Is that what you prefer, hon. members? What we're saying

is that the price is down. It's down a dollar per case of 12 for

low-alcohol beer. That's a fact. I don't know where these members are

coming from, trying to make a mountain out of a molehill. They clearly

are not saying that they want to promote the increased consumption of

high-alcohol beer.

MR. STUPICH : Mr. Chairman, the

Minister of Finance tells us quietly and calmly that we've reduced the

price of a specialty item by a dollar a case. When we add 10 percent to

the cost of that, will he tell me that the price is still lower?

think the Minister was distracted for a moment there. I'll ask him

again, Mr. Chairman. The price of a specialty product in bottled beers

has been reduced by one dollar. When you increase the tax to 10 percent

on that item, is it still a reduction?

HON. MR. COUVELIER :

Mr. Chairman, I don't know what's the matter with these hon. members. I

don't know how we can make it any plainer. The fact of the matter is:

we've reduced the markup on low-alcohol beer by a dollar for a case of

12. We don't regulate the end price of beer, but I understand that that

dollar-a-case reduction is reflected in the end price in the stores.

That's the fact. I don't know how differently I can say it. The fact of

the matter is: it is cheaper for low-alcohol beer. That's by design,

and we think that's socially responsible. We certainly deny any

allegation that we've not followed through with any promises to the

public.

I say it again: are the hon. members wanting us to

promote the use of higher-alcohol beer? You can't have it both ways, my

friends. You can't, on the one hand, criticize one thing and then, on

the other hand, try to take the high ground and say you're not for this

but you're for that. The fact of the matter is we're reducing the price

of low-alcohol beer. Isn't that marvelous? Isn't that a desirable

thing? Are you opposed to that? Are the hon. members telling us they're

against that? I didn't hear that. I heard some sort of effort to

confuse the facts and the truth. As a consequence, 1 think it's

important for us to straighten the record out.

MR. STUPICH :

When the Premier was going around the province promising to reduce the

price of draft beer, I didn't hear him say "and on some items of

bottled beer."

HON. MR. STRACHAN : That's what he meant.

MR. STUPICH : I wonder who was the first to tell him what he meant.

question to the minister was: if you reduce the price of light bottled

beers by $1, then put a new tax on, are you further ahead or further

behind? That's what I was asking. He gave me a speech. I'll tell him

what the answer is. The increase in tax for bottled beer is not 10

percent, it's 4 percent. That's what he was supposed to have said, but

I guess he just doesn't realize that. He's a beer drinker and he

doesn't realize. I suppose that what he pays for beer doesn't affect

him too much, so he doesn't notice these things.

Sections 2 to 4 inclusive approved.

section 5.

HON. MR. COUVELIER : I move the amendment standing in my name on the order paper. [See appendix, ]

Amendment approved.

Section 5 as amended approved.

Title approved.

HON. MR. COUVELIER : I move the committee rise and report the bill complete with amendment.

[ Page 4215 ]

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill

10, Social Service Tax Amendment Act, 1988, reported complete with

amendment to be considered at the next sitting of the House after today.

HON. MR. STRACHAN :

I call committee on Bill 11, Taxation (Rural Area) Amendment Act, 1988,

printed in the name of the hon. Minister of Finance and Corporate

Relations.

TAXATION (RURAL AREA)

AMENDMENT ACT, 1988

The House in committee on Bill 11; Mr. Weisgerber in the chair.

Sections 1 and 2 approved.

Title approved.

HON. MR. COUVELIER : I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 11, Taxation (Rural Area) Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 12, Mr. Speaker.

TOBACCO TAX AMENDMENT ACT, 1988

The House in committee on Bill 12; Mr. Weisgerber in the chair.

Sections 1 to 3 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 12, Tobacco Tax Amendment Act, 1988, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 13, Mr. Speaker.

[11:45]

TOURIST ACCOMMODATION

(ASSESSMENT RELIEF) ACT

The House in committee on Bill 13; Mr. Weisgerber in the chair.

Sections 1 and 2 approved.

section 3.

MR. STUPICH :

I realize I'm skating on rather thin ice, because I want to talk about

something that isn't in

section 3 rather than what's in it. I made the

point yesterday, and the minister didn't comment, that while this does

relieve seasonal tourist accommodation operators of a tax imposed a

year ago, it does nothing for those seasonal tourist operators who do

not provide accommodation, who are going to be hit with a substantial

increase in tax in September this year.

Regulations may

provide for some change. I don't know whether regulations can be

stretched that far. I wonder if the minister has thought about that and

given any consideration at all to the possibility of widening the scope

of this by regulation, if that's possible, so that seasonal tourist

operators who do not provide accommodation will not be hit with that

substantial tax increase in the month of September.

HON. MR. COUVELIER :

This bill is intended to address those operators that were affected by

the change we talked about bringing forward last year. So this only

deals with the tourist operators. as it should. The other operations

stand untouched, as they originally were. In other words, we're only

targeting the operators providing tourist facilities.

MR. STUPICH :

From what the minister said, I have no problem. As I understand what he

said, the increase that was imposed last year is not going to affect

the operators who do not provide accommodation.

Sections 3 and 4 approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Pelton in the chair.

Bill 13, Tourist Accommodation (Assessment Relief) Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 15, Mr. Speaker.

EDUCATION EXCELLENCE

APPROPRIATION REPEAL ACT

The House in committee on Bill 15; Mr. Weisgerber in the chair.

section 1.

MR. STUPICH :

I'm not sure if I said this yesterday, but I was invited by one of our

staff members to ask what's happening to the money that's left over in

this fund. I'm not going to ask that question, Mr. Chairman, because

it's another BS fund. There was no money in it except as was provided

each

[ Page 4216 ]

year

in estimates. There was nothing provided this year or last year, so

there's nothing to transfer anywhere; it is just another BS fund now.

HON. MR. COUVELIER :

Mr. Chairman, we have many tender, sensitive ears in the gallery, and I

just think the hon. member should always be cognizant that we not abuse

The

fact of the matter is that we have collapsed these accounts because we

have indeed spent more than the funds provided; so there's nothing left

over in them.

MR. STUPICH : Mr. Chairman, I'm

thinking about what the minister said. We spent more on these

purposes than the funds provided. He's not saying that we went beyond

the scope of the legislation, I hope. I take it he's saying that we

exhausted the money that was provided under the legislation, and then

spent more funds out of the appropriate ministry. What difference does

it make in the end, eh?

HON. MR. COUVELIER : The hon. member has the story correct, Mr. Chainman.

Sections 1 and 2 approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 15, Education Excellence Appropriation Repeal Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 16.

HEALTH IMPROVEMENT

APPROPRIATION REPEAL ACT

The House in committee on Bill 16; Mr. Weisgerber in the chair.

Sections 1 and 2 approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 16, Health Improvement Appropriation Repeal Act, reported complete without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 18, Mr. Speaker.

SPECIAL ACCOUNTS

APPROPRIATION AND CONTROL ACT

The House in committee on Bill 18; Mr. Weisgerber in the chair.

Sections 1 to 3 inclusive approved.

section 4.

MR. STUPICH :

This particular fund, referred to in

section 4 as the Crown land

account, has been quite large. I did look it up and have forgotten. I'm

guessing — it's somewhere in the neighbourhood of $300 million to

$400 million. Up to now it's been used specifically by the government

for acquiring land to be used for park purposes or for improving

parkland. We sell Crown land and then put the money into this fund to

buy back land that will be Crown land, or to improve land that can be

used for park purposes.

Under the

section before us, the

cabinet may transfer any amount out of this fund into consolidated

revenue. That's almost a total reversal of policy from the past, and I

would appreciate some explanation from the minister as to why he is

abandoning the original concept and using this specific money simply to

build up his consolidated revenue fund.

HON. MR. COUVELIER :

The hon. member assumes we have abandoned the concept. We haven't

abandoned the concept. The fact of the matter is that there are a lot

of idle dollars here, and it just seems like good fiscal management to

initiate this action.

MR. STUPICH : I would like the

minister to talk to people in the province who feel that there are

examples of parkland that should be acquired. I'm not talking about

something like Strathcona Park; I'm talking about the people in the

province who would like to see improvements made in parks that we now

have. I wish the Minister of Tourism (Hon. Mr. Reid) were here to say

something as to what he would like to see done with respect to

parklands we already own, where capital improvements could be made. The

minister says we're not abandoning it; we're just taking the money away

from it so we won't be able to do these things to the extent we would

otherwise be able to.

I look on these almost as if they

were trust funds; that the government is entering into an agreement

with itself, I suppose, to use the funds that are coming to government

from the sale of Crown land for the purpose of acquiring and developing

Crown land for the people. The minister says he's not abandoning that

concept. I don't know how to look at it other than to....

wonder if we could take a bit of time to think about this, Mr.

Chairman, I'd like to move that the committee rise, report progress and

ask leave to sit again.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

[ Page 4217 ]

Ministerial Statement

DIAMOND RESOURCES DRILLING

ON SOUTH MORESBY ISLAND

HON. MR. DAVIS : I'd like to make a ministerial statement.

rise to clarify a matter of public concern, one raised in today's media

reports. It relates to the issuance of an exploration permit by my

ministry to Diamond Resources to drill half a dozen exploratory holes

on South Moresby Island. The issuance of a permit in this case is

consistent with the process agreed upon by British Columbia and Canada

for the establishment of a full-fledged park on the Queen Charlottes.

The

memorandum of understanding between British Columbia and Canada clearly

recognizes the existence of valid mineral tenures within the proposed

park area, and provides a process for the extinguishment of these

claims. Other than the lands described by the remaining claims, a

reserve is in effect on South Moresby until the park is established as

a legal entity.

With respect to existing claims, Canada and

British Columbia have mutually agreed that the lands in question, the

claims, would remain with the province until these charges were

extinguished. The lands could be transferred free and clear to Canada.

To implement this, it was agreed that normal procedures for permitting

mineral exploration would be followed. This procedure was intended to

ensure, firstly, that the park would be established wholly free of

third-party interests, to avoid the situation which has existed in

Strathcona Provincial Park since its creation in 1911; and, secondly,

to minimize compensation claims from tenure holders.

It is

our expectation that exploration will not prove up economic ore bodies

and that these claims will lapse and move into the park at no cost to

the taxpayer. However. if there is no opportunity for exploration,

governments could be liable for costly settlements. The memorandum of

understanding does give the federal government the opportunity to

acquire mineral interests. with compensation, should they wish to do

so, to preserve valuable park features. In the unlikely event that an

economic ore body is discovered. British Columbia and Canada would

review their options at that time. If Canada did not wish to see a mine

developed, British Columbia would certainly cooperate to achieve that

objective.

With respect to the current permit issued to

Diamond Resources, I would like to make the following points. Although

the permit is issued by my ministry officials pursuant to the Mines

Act, the permit application was referred to and approved by Parks

Canada, Environment Canada, Fisheries and Oceans Canada. as well as by

the British Columbia Ministry of Environment and Parks.

The

permit covers a limited exploration program involving geophysical and

geochemical testing and line-cutting on up to five drill sites.

Stringent conditions must be met. These include helicopter access, no

machinery to cross the Salmon River, containment of drill muds. and

other reclamation and clean-up measures. A bond has been posted. The

work was expected to commence within two weeks and be completed before

July.

To summarize then:

(1) Diamond Resources and other

companies have rights to conduct mineral programs; (2) activity only

occurs after all environmental agencies have reviewed and approved the

specific applications; and (3) these programs are within the terms of

the long-term plan in the federal-provincial memorandum of

understanding for the establishment of South Moresby Park.

MR. GABELMANN : I'm not certain of this, but I don't know that any member on our side was given prior notice of this.

HON. MR. DAVIS : My critic was.

MR. GABELMANN :

Apparently the critic may have been given prior notice. He's not here

at the moment and I wonder, Mr. Speaker, if we might reserve an

opportunity to comment until following question period today.

MR. S.D. SMITH :

Mr. Speaker, it's my understanding of the rules that when a ministerial

statement is made, there is an opportunity for the critic to respond. I

think that if that is going to be done other than immediately after the

statement, it would have to be done by way of leave.

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 12:02 p.m.

Appendix

AMENDMENTS TO BILLS

8 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No.

8) intituled Mining Tax Amendment Act, 1988 to amend as follows:

SECTION 2, by adding the following section:

Commencement

2. This Act comes into force on July 1, 1988.

9 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No.

9) intituled Motor Fuel Tax Amendment Act, 1988 to amend as follows:

[ Page

4218 ]

SECTION 4, by deleting the proposed subsection (2) and substituting the following:

(2) Section 3 shall be deemed to have come into force on April 15, 1988 and

is retroactive to the extent necessary to give it effect on and after

that date.

10 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 10) intituled Social Service Tax Amendment Act, 1988 to amend as follows:

SECTION 5, by adding the following subsection:

(3) Notwithstanding subsection (2),

section 3 (a), in respect of a bona fide farmer, comes into force by regulation of the Lieutenant Governor in Council.

[ Return to Legislative Assembly Home Page ]

Copyright 1988, 2001: Hansard Services, Victoria, B.C., Canada