1974 Legislative Session: 4th Session, 30th 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)

MONDAY, APRIL l, 1974

Second Night Sitting

[ Page

2093 ]

CONTEN TS

Routine proce edings

Committee of Supply: Department of Housing estimates On vote 111.

Mr. Phillips — 2093

Hon. Mr. Nicolson — 2094

Mr. Bennett — 2094

Division on Mr. Chairman's ruling — 2096

Mr. D.A. Anderson — 2096

Mr. Chabot — 2102

Division on Mr. Chairman's ruling — 2102

Mr. D.A. Anderson — 2103

Hon. Mr. Nicolson — 2106

MONDAY, APRIL 1, 1974

The House met at 11:15 p.m.

Introduction of bills.

Orders of the day.

House in Committee of Supply; Mr. Dent in the chair.

ESTIMATES: DEPARTMENT OF HOUSING

(continued)

On vote 111: housing and development, $50 million.

MR. D.M. PHILLIPS (South Peace River): Thank you, Mr.

Chairman. I was quite interested a few moments ago listening to the

Member for Kamloops (Mr. G.H. Anderson) who stated that we hadn't made

any suggestions in the House with regard to proposals for housing. That

suggestion was reiterated in the hallway by the Premier and Minister of

Finance (Hon. Mr. Barrett); so I would suggest that what we have been

saying all along, that the government has a closed mind, is really

true. I don't know whether the government is tired or whether they are

in a hurry to get to Japan or what the problem is.

MR. CHAIRMAN: Order! Order, please. I must request that the

Hon. Member make his remarks relevant to vote 111 which is the $50

million item under housing and development.

MR. PHILLIPS: Yes, Mr. Chairman, and here we're talking about

a $50 million expenditure of taxpayers' money to provide housing. I was

very pleased to hear the First Member for Vancouver–Point Grey (Mr.

McGeer) support the proposals that were made by the Leader of the

Opposition (Mr. Bennett) and by myself both in the fall and again in

the spring.

This government, if they were really interested in providing housing

in this province, would move swiftly to remove the 5 per cent tax from

building materials. Now there is a positive, clear-cut suggestion, Mr.

Chairman, that would reduce the price of a house by approximately 2.5

per cent.

Building materials run about 40 per cent of the cost of the house

and labour about 60 per cent. Now, if you took the 5 per cent off the

cost of building materials, it would, in relation, reduce the interest

on the loan by 2.5 per cent. Then, of course, the Member suggested and

supported us again in removal of the 11 per cent federal sales tax.

This would go a long way towards assisting in utilizing this $50

million.

How far is this $50 million actually going to go in reducing and

making available to the average wage-earner a new home in British

Columbia? We suggested that one of the highest costs of housing today

is the principal, interest and taxes. The previous administration went

a long way towards providing incentives just to reduce these three

items by a home acquisition grant which comes under the Minister of

Housing; by assisting by the homeowners' grant to reduce the taxes

which is part of the annual payment, which is part of the principal,

interest and taxes which have increased substantially over the years.

We've also made suggestions in the House which would reduce the

price of land to the ordinary individual who wants to build himself a

house. We've also suggested the lease-to-purchase, but this government

seems to be hung up on wanting to lease land, and I don't think in the

long run that that's going to assist housing in British Columbia one

iota.

There must be new methods found. As I suggested in this House at the

beginning of this debate, the price of land is very closely connected

to the supply and demand. But, Mr. Chairman, it's very easy to

understand why the Member for Kamloops (Mr. G.H. Anderson) would not

realize what was going on in this House, because the Members of the

government backbenchers are seldom in the House. They are seldom in the

House.

MR. CHAIRMAN: Order, please! Would the Hon. Member confine his remarks to the vote before us?

MR. PHILLIPS: They're seldom in the House. That's right. They have 38 Members and they run in relays….

MR. CHAIRMAN: Order! Order, please. Just for the guidance of

the Hon. Member I'll just read again the

section from the budget which

delineates the manner in which this money is intended to be spent.

"Additionally, the new Department of Housing will have $50 million for programmes of land assem bly

and servicing, neighbourhood improvements, cooperative housing and

family rental housing. Under this programme, the province has the

flexibility to build houses on government land and either sell them,

using the first mortgage programme, or rent the properties."

This would seem to be the method by which this money would be spent.

I would ask him to confine his remarks to the consideration of these

matters.

MR. PHILLIPS: The Member for Kamloops went on to say that

Ontario was in much worse shape as far as housing was concerned in

regard to that in British Columbia. Well, I'll have to agree with him,

and this goes back to the great heritage that was provided to this

socialist government when they came to power.

[ Page 2094 ]

There was a great heritage. The price of land wasn't that high. The

incentives that had been provided were keeping the price of housing

down. But as I pointed out, Mr. Chairman, what has happened? What has

happened in the last 18 months?

The price of land has more than doubled because of the land freeze,

because of Bill 42 and because of assessments. Certainly, even today we

may not be in as bad a shape as the Province of Ontario, but that's due

to the great policies of the previous administration.

Now, Mr. Chairman, in the financial statement, or the statement

which the Minister provided us and is now public knowledge and

knowledge of the House because they were circulated, statements that

were provided to us with regard to Woodbridge Developments…. In that

statement on page 11 it refers to "certain contingent liabilities." I

would like the Minister of Housing to delineate to the House exactly

how much those contingent liabilities are. Because any financial

statement I have seen always outlines the exact dollars of the

contingent liabilities. We have no idea, no way of knowing how much.

Could it be millions of dollars? What are the contingent liabilities of

Woodbridge Development Corporation?

Maybe the Minister at this time would like to outline that for the House.

MR. CHAIRMAN: Shall vote 111 pass?

MR. PHILLIPS: Well, no, Mr. Chairman. The Minister maybe has

been drinking some milk of amnesia again tonight. Because I think it's

only fair that he table the documents. I've looked at the financial

statement and I think in reality, Mr. Chairman, this contingent

liability could be a debt to the Province of British Columbia. I will

just read you what it says about these contingent liabilities.

It says on page 11, item 11, it says:

"The company is contingently liable:

a) On mortgages assumed by purchasers of properties developed and sold by the company."

Now the company had been in operation quite some length of time.

MR. CHAIRMAN: Order! I would request that the Hon. Member

relate his remarks to the vote before us. I attempted to delineate

those subjects covered by this vote.

MR. PHILLIPS: Well, yes, I certainly will, Mr. Chairman,

because here we are providing $50 million and, for all I know, the

contingent liabilities of Woodbridge Development Corporation could be

$25 million.

They've been in operation for a long time and I presume they've sold

a large number of condominiums. According to the Minister they were a

very successful operator, otherwise he wouldn't have bought them. They

were one of the best in the industry, so he told me.

So how many mortgages; what is the contingent liability of this

company? I think, Mr. Chairman, the House has a right to know and I

would like to invite the Minister to respond.

MR. CHAIRMAN: Shall vote 111 pass?

MR. PHILLIPS: Well, Mr. Chairman, this has no bearing whatsoever on the case in front of us. It has to do with the assets of companies.

HON. L. NICOLSON (Minister of Housing): In the first place, he has been referring to some statement of Woodbridge Development.

There's no such statement of Woodbridge Development — as he said you would find in Hansard

— that has been tabled in the House. In fact, I think he's quoting from

something else. I think it's been established that it's not for us to

decide what is sub judice in this matter. It also places the Chairman,

the questioner and the responder in a most difficult position. It's not

for us to decide which is and which is not sub judice in this matter.

We can talk about what they are doing now, projects which the

company has underway at the present time. Certainly his Ajax question

was obviously in order. But getting back into these things is leading

us, I think, into a very dangerous area.

MR. CHAIRMAN: Order, please. On the point of order, the Chair

would rule that any consideration of a matter which pertains to the

evaluation of the Dunhill corporation would be impinging upon the case

which is now before the courts. I would quote again from the 1956 Journals :

"It is not for the Speaker to microscopically sift the

relevant from the irrelevant evidence, but to liberally apply the sub

judice rule in such a way as to prevent the mischief which that rule

was intended to obviate."

We can drift into the consideration of something which would clearly

impinge on the whole matter. Therefore, I would rule that any further

discussion is out of order.

MR. W.R. BENNETT (Leader of the Opposition): Mr. Chairman,

the contingent liability factor is not like the appraisal matters you

ruled out of order previously. On what basis can they be considered in

the same context? I just can't understand your ruling in this matter.

Contingent liabilities are something of the past business of this

company that had nothing to do with the present deal, but carry with

them an

[ Page 2095 ]

obligation. We're just trying to find out that

obligation because it's carried forward to the new operators of the

company. It certainly has nothing to do, necessarily, with those

appraisals.

MR. CHAIRMAN: Order, please. The contingent liabilities

clearly could relate to the value of the shares. Inasmuch as this is

the matter which is under consideration by the courts, I would rule

that any discussion of either appraisals or contingent liabilities, or

anything else to do with evaluation of this company, would be out of

order.

MR. BENNETT: A further point of order, Mr. Chairman. Earlier

you let some discussion continue to do with the deferred income of

$779,000 which is shown as a liability on the original Dunhill

statement, but which was claimed as an asset by the Minister. That has

more relevance with the assets of this company than the contingent

liabilities.

Now you have already shown latitude on that being discussed. Does it

mean that it is only when you think that the government might be facing

some embarrassment that you wish to invoke the rule?

MR. CHAIRMAN: The Speaker has clearly indicated that the

subject matter is out of order, and should be considered to be out of

order in his opinion.

MR. BENNETT: No!

MR. CHAIRMAN: Correction: the Chairman should consider

whether the subject matter is out of order. I am making the ruling that

this matter is part of the subject matter which is part of the main

issue before the courts.

Now if the Hon. Member wishes to appeal the ruling, he may do so.

But I will make the same point again: "It is not for the Speaker" — or

the Chairman — "to microscopically sift the relevant from the

irrelevant evidence, but to liberally apply the sub judice rule." That

is what I am attempting to do, so that there can be no doubt or mistake

in this matter.

MR. BENNETT: Point of order, Mr. Chairman. What you're really

doing is restricting as you see fit, from time to time, the discussion

of the instrument by which this money might be spent.

MR. CHAIRMAN: Order, please. If the Hon. Member wishes to challenge the Chair, there is a procedure.

MR. BENNETT: Just one further point of order. Do I take it,

then, that it is all right to discuss, as you've indicated earlier, the

$779,000 of deferred income taxes which you allowed discussion on

previously?

HON. R.M. STRACHAN (Minister of Transport and Communications):

I would just like to point out that that may have been discussed in

this House prior to the attention of the Chair being drawn to the order

of the whole matter.

MR. BENNETT: No, the $779,000 was discussed this evening,

just a few minutes before the regular 11 o'clock adjournment. It was.

The First Member for Victoria (Mr. Morrison) discussed it. And you

allowed it.

MR. CHAIRMAN: I'm making a ruling on the basis of the

Speaker's observations, and I'm ruling that the consideration of

contingent liabilities, inasmuch as they relate to the value of the

company — and therefore to the value of the shares — are part of the

general subject matter. They are, therefore, out of order.

MR. BENNETT: Well, I will show you the statement. Where does it relate to the value of the company?

MR. CHAIRMAN: Order, please. I would just make the point of

order that you may not debate a ruling of the Chair. You must use the

procedure provided in the standing orders, and that is to appeal….

MR. BENNETT: Well, if your ruling, Mr. Chairman, is based on

the contingent liabilities having a bearing on the value of the shares,

if that is the case, then I challenge your ruling.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, in Committee of Supply, while

considering vote 111, the Chair made the ruling that Members may not

discuss the matter of contingent liabilities in regard to the company

acquired by the government, namely the Dunhill corporation, presently

known as Woodbridge.

I ruled that any discussion of this would be out of order because of

the case before the courts. I ruled that it was sub judice. My ruling

was appealed.

AN HON. MEMBER: Point of order, Mr. Speaker.

MR. SPEAKER: I can't deal with a point of order at this

stage. I can't argue the matter of the point of order. The question is

really before the House now. I merely put the question to the House:

shall the ruling of the Chair be sustained?

Mr. Chairman's ruling sustained on the following

[ Page

2096 ]

division:

YEAS — 31

Hall

Macdonald

Barrett

Dailly

Strachan

Stupich

Hartley

Nunweiler

Sanford

D'Arcy

Cummings

Levi

Lorimer

Williams, R.A.

Cocke

King

Lea

Young

Radford

Nicolson

Gabelmann

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Lewis

Liden

NAYS — 15

Chabot

Bennett

Smith

Fraser

Phillips

Richter

McClelland

Morrison

Schroeder

McGeer

Anderson, D.A.

Williams, L.A.

Gibson

Wallace

Curtis

The House in Committee of Supply; Mr. Dent in the chair.

On vote 111: housing and development, $50 million.

MR. D.A. ANDERSON (Victoria): Mr. Chairman, I said that when

the Minister's estimates were up I'd be speaking very briefly then, and

I believe I did — about eight lines in Hansard . I haven't had

much opportunity since to discuss the Minister's estimates. But I would

like to have a look at some of the difficulties that I think we face as

a result of having the lowest increase in housing starts over 1970 of

any region of Canada.

Certainly, as the Minister pointed out, we had a large number of

starts — 37,000 plus. But in terms of increase we had a smaller

increase over 1970, in the first nine months of 1973, than was the case

in the Maritimes, which had an 88 per cent increase, Ontario, the

Prairies and Quebec. We had the lowest.

This, I think, is important when we're discussing housing, for the

following reason: it's fairly well demonstrated that the uncertainty

we've had in the last 18 months with respect to the housing field has

reduced the number of housing starts.

The average in terms of apartment vacancy across the country is

approximately 2 per cent, but in British Columbia it's 0.2 per cent.

That means, of course, that we're in a situation where the private

sector is simply not doing as well in producing housing starts and new

apartments as is the case elsewhere in the country and as was the case

in the past.

This, of course, is reflected in two things: one is a rapidly

increasing price of houses, and the second a rapid increase in rents — which the government has put legislation in on.

The government has gone into the purchase of large amounts of

property in communities. They've created what they consider as some

sort of land bank, and the government has been fairly proud of it. For

example, in the budget debate on February 14, the Hon. Minister talked

of 746 acres purchased in the last year. He's lost four acres, and

perhaps he'll give an explanation of where they went. Nevertheless,

it's a substantial amount of land purchased.

Interjection.

MR. D.A. ANDERSON: I'm told that he's lost four acres in that

six-week period through erosion. Somehow or another some of his land

that he's stored up so carefully has washed away. His landbank has

suffered some attrition.

I wonder whether he could give us an indication of how these precise

figures of 746 acres shrunk to 742. Apparently none were sold. How much

did you buy last year? The two figures being different raises questions

of credibility.

In any event, he's talked about the number of housing starts there

were last year. Roughly, I think they represent something up to $1

billion worth of new housing; $800 million may be a better figure. I'm

not sure of the exact figure, but it's a substantial amount of money.

When we compare it to the amount of money that's going into public

housing through the various votes — and in particular vote 111, which

is $50 million — we see, as the Minister has correctly pointed out, Mr.

Chairman, that the private sector is extremely important and cannot be

ignored. I don't think it can be harmed either, because, after all, it

provides the bulk of our housing in British Columbia. It has done this

in the past, and it will continue to do so in the future.

Mr. Chairman, I'd like to say just a few words at this time about

the price of land and housing costs. First, I think I could remind the

Minister that housing costs are the result not of the increase in

houses constructed. You have a stock of housing in the province. You

add to it about 6 per cent every year. It's not the cost of the new

houses that determines the level of prices of housing; it's the overall

stock of housing that you have. It's not just the purchase of new

housing which creates the new market; it's the sale of old houses as

well as that 6 per cent which are new.

So if you're to do anything about housing costs, you have to

remember that you're not dealing with a commodity which is like ice

cream — which the Member for Vancouver–Little Mountain (Mr.

[ Page 2097 ]

Cummings) knows so well — something consumed at the

time. You are dealing with something where there is a very, very large

backlog or stock, and that is part of the price determinant.

In other words, if you are to have any effect upon price levels of

housing — which have gone up so substantially as our increase in

housing has slowed down — relative to other provinces, what you're

going to have to do, Mr. Chairman, is to make sure that you have a

steady and continuous and a high level of new starts, because you have

to add to the stock to make any real difference.

It's not just the increase; it's the substantial addition to what's

below it which also counts. If you could visualize that in bar-graph

terms, you've got this much that has been constructed already and just

a little bit on the top, which happens to be the new that is

constructed in any one year.

So you've got a tremendous amount already constructed, which helps

in the determination of price. To suggest that the only factor

determining price is the new houses coming on the market is totally

fallacious. In this city you will see this very well where the price of

housing has held up very high; it's not the fact that the houses are

old that determines their price. It's how good they are. And, of

course, new housing simply adds a little bit to existing stocks.

Now construction costs then obviously will have an effect upon the

price of house construction. But changes in construction costs will

have virtually no effect whatsoever on the price of housing — the final

end price to the purchaser of housing. Why? Because it doesn't matter

what you do with that little 6 per cent, Mr. Minister. If you lower the

cost there, you're still faced with the fact that the market level will

be determined, not by the new 6 per cent or 7 per cent or whatever it

may be, but by the sales of the existing 94 per cent as well as the new

6 per cent.

So all this talk about lowering the cost of construction materials

is well and good, but it will not have any substantial effect on the

average price of housing in British Columbia. It's not the new houses;

it's the overall stock that counts.

Now we then get to the question of land prices. Similarly, reducing

the price of land, or indeed increasing it, is of no real effect,

except as it has an influence upon existing housing stocks. Do you see

what I'm, saying, Mr. Chairman, through you to the Minister? I'm making

this point because I think it's particularly important. Unless we have

a very steady and constant and large volume flow of new service lots

onto the market, we won't have any real effect on housing costs in

terms of prices to the ultimate consumer — the home purchaser.

Incidentally, Mr. Chairman, I'm unlike these cabinet Ministers who

own $85,000 waterfront homes. I rent an apartment which is the bottom

half of an old house; it's the type of thing the Minister was talking

about when he said this is what more people should do. I'm a tenant,

and I speak as a tenant when I speak in this debate. I do it by

preference, even though I know full well that I have substantial tax

disadvantages for being in this position. And because I act as a

responsible citizen and rent, I'm constantly behind the eight ball,

thanks to the efforts of people like the Minister. In any event, that's

an aside.

I just wanted to point out that I'm not in any way attempting to

justify any purchases on my part because I haven't done it. And the

result has been that I haven't had those massive increases, inflated

windfall profits, that the Member for North Vancouver–Seymour (Mr.

Gabelmann) talked about in a debate earlier in this Legislature, about

the price of his house going up, the value of it going up. I haven't

had that. I think rental accommodation is part of the overall stock,

and I happen to be a renter.

However, back to cost of land. If you don't have an adequate supply

of serviced land coming onto the market, artificial attempts to keep

the price down, such as the Minister talked about earlier today shortly

after the question period, will not succeed.

Why? The reason is simple. That's only a very, very small fraction

of the overall number of houses that are in the general housing stock,

and fluctuations in that tiny little percentage of the new houses will

not have much effect upon the overall price levels. It may lead to

windfall profits here and there. It may lead to speculation here and

there; it may even lead to subsidies here and there.

But the important thing is to break over the barrier which is, if

you like, the adequate supply level for new lots coming on the market.

If you do not have, Mr. Chairman, through you to the Minister, an

adequate number coming onto the market, you will not have your

construction companies working effectively and efficiently, as they do

at the present time, in constructing housing for other people, or for

speculation on their own account.

It was just a week ago that I attended a meeting, a small meeting,

of a group out in the highland district not far from Victoria — people

who, I might add, were concerned about the Minister's policies for that

area. Perhaps he might say a word about future plans later in the

debate.

The man who picked me up from the corner of Millstream and Finlayson

and took me up to where this little group was gathering, was a man in

the construction business. He said he is now building at Duncan because

of the difficulty of finding serviced lots in the greater Victoria

area. He pointed out that he felt he might have to go into another line

of work.

There is one interesting thing, Mr. Chairman — as a small contractor

he is in and out; he goes and does other things. And if you force them

out, of course,

[ Page 2098 ]

you force down your ability to expand stock because

you've forced out some of the small people who are actually

constructing the new stock of housing that I was talking about earlier.

If you have a shortage of lots, you have developers working at less

than full capacity because lots are simply not available at reasonable

prices.

To have any effect upon long-term prices, I think the key element is

the price of lots coming onto the market not in an indiscriminate

fashion, not in the case of surges of large numbers suddenly and then

very few, as has happened in the last 18 months, but a continuous,

large flow of serviced lots. I don't think the government has done what

it should have done and could have done to secure such an adequate flow.

First, the question of the purchases by the government itself: For

every one of those 742 or 746 acres you bought, whatever turns out to

be the right figure, you took land away from the private sector which

otherwise could have been able to buy these lots and perhaps could have

serviced it, perhaps could have used it for construction purposes.

The infilling that my colleague the Member for North

Vancouver–Capilano (Mr. Gibson) mentioned was not taking place. The

filling in of the corners between developments here and there, this was

not taking place because your own department was lifting land off the

market, forcing the price up, creating scarcity conditions which in

turn created the expectation of future scarcity, which is even more

important and has shot up the price of housing right across the board,

old housing as well as new. Thus, of course, the many statistics that

have been given to you, which I will not repeat, dealing with the

substantial increase in house prices in British Columbia in the past

year.

When you add in the effects of Bill 42 which the government entered

into, I'm sure, with good intentions, but when you add in the effect of

Bill 42 on housing which took away possible subdivision areas, took

them right out, prevented even those which were marginal from being

built on until they had passed the Environment and Land Use Committee,

you realize that you did create a real bottleneck, a real supply

problem with respect to serviced lots.

The result was that as people kept on coming into the province at

the rate of more than 3 per cent, and as people's expectations for

housing increased, it had a classic situation of your inelastic supply

and your demand in excess. The result was that the price started going

up and going up to the sky.

There is not a great deal that could have been done about it, or can

be done at this stage except, as I said, for the government to reverse

its attitude, position and policies with respect to assisting the

municipalities to provide serviced lots.

We have, Mr. Chairman, a very serious situation developing which, I think, is not improving at the present time.

I should add that in addition to growing populations, you have a

problem of rising expectations. People no longer live at home — these

are younger people — to the extent they used to. The old folk, the

retired in-laws or parents, tend not to live with the young couple and

young family as they did in the past.

I'll give you a very interesting example of this, Mr. Chairman,

because I can see you are very interested in this, and that is the

municipality of Oak Bay. In the 1971 census the municipality of Oak Bay

found to its horror that the population had varied only 10 people, I

believe it was, from the previous census. They said that this is

obviously wrong, look at all those big apartment blocks we put up,

obviously we have more people.

Mr. Chairman, I can see you shaking your head in disbelief of what I've said.

What they forgot was this: they forgot that each house in Oak Bay, the single-family

dwelling or duplex, had, on the average, fewer people in it than previously.

If previously a house had five people in it, perhaps it had slipped to a 4.5

average — things of that nature. The elderly in-laws or parents had moved

out, the kids moved out at an earlier age to apartments of their own, perhaps

sharing with other young people, but they'd moved out of home at an earlier

age and the old people didn't move in at the same rates. So, despite enormous

construction of apartments you had a situation where the actual number of people

did not increase substantially. The municipality of Oak Bay found to its considerable

surprise that they were at much the same level that they had been 10 years before,

despite large increases in the number of apartments constructed.

That's what I call increase in expectations. There is an increase in

expectations matched with an increase in incomes, and you have a really

very tricky situation where an increase in housing well in excess of

the population increase did not satisfy demand.

The way to get around it is to go back to where we started and deal

with serviced lots, which the Minister and his department, and in

particular his colleague, the Minister of Municipal Affairs (Hon. Mr.

Lorimer) and the Minister of Finance (Hon. Mr. Barrett), through his

influence, simply have not been doing.

I'd like to make one or two other points, Mr. Chairman. First of

all, I think it should be recognized that despite the gloom and doom

that has been spread around by all Members, the shelter costs in B.C.

are not outpacing income and disposable income in particular as

compared to over the last 10 years. We are not in a situation where

housing costs more of disposable income now than it did 10 years ago.

The Attorney-General (Hon. Mr. Macdonald) shakes his head, but it is

an interesting point and I think if he checked it out he would find I

am correct.

[ Page 2099 ]

The problem, Mr. Attorney-General, is, of course, rising

expectations, people demanding more. Shelter itself is going to take up

more disposable income because they want more square footage, they want

the wall-to-wall, they want the big windows, they want the drapes, they

want the expensive things, while previously they were more content with

smaller things. So it is increased expectations, Mr. Attorney-General,

which may have increased the cost of housing. In actual fact in

comparison with 10 years ago the situation is that we are actually

better off. It should be, I think, realized….

HON. A.B. MACDONALD (Attorney-General): What's the percentage of B.C.?

MR. D.A. ANDERSON: I'm sorry I don't have the exact figure. I believe....

Interjection.

MR. D.A. ANDERSON: Well, Mr. Attorney-General mentioned, off

the mike, that in Toronto there was a study and half the income of

poorer people went for rent, and he's right. I'm glad he made that

point because that's the second point I was going to make, and he's

just a little ahead of me.

Generally, I'm right in my general statement of overall disposable

income, but with respect to poorer people, the Attorney-General is dead

right. It is an extremely high expense for such people. But, Mr.

Attorney-General, the area we're in now is a question of income

support, in my view. We're into an area where direct income support

might well be a more clear, effective and more valuable tool than some

of the hidden schemes of price support in the housing field, such as

the Minister of Housing talked about earlier.

I don't dispute the figures you gave at all, Mr. Attorney-General. I think they are probably….

MR. CHAIRMAN: Order, please.

I would point out to the Hon. Second Member for Victoria that when

we're considering this vote, he should be mainly commenting on the

programmes which are being put forward by the Minister of Housing under

this vote. Your own suggestions should be minimal in terms of the….

MR. D.A. ANDERSON: I was sidetracked into a delightful

exchange with the Attorney-General. He's a man who provokes thought,

Mr. Chairman. He provokes thought and discussion in a rational and

intelligent sense. I'm glad I had that little opportunity to point out

to him that problems of income distribution and support are not the

same as problems of housing, and we shouldn't take it out in the

housing field when really and truly what we should be doing is working

at the other end of the scale, at income support and income

distribution. I quite agree with the Chairman's ruling as I apparently

got off the point, but these things do happen.

I would like to speak for a moment or two at this stage, Mr.

Chairman, through you to the Minister, on land banking. I feel that it

is one of the great myths of our time that somehow landbanks are going

to cut down on the cost of housing. I don't believe it. I think you're

wrong in this area and I think the federal Minister, Mr. Basford, is

also wrong in this area. I just don't think it works as simply as you

people would have the rest of us believe.

Interjections.

MR. CHAIRMAN: Order, please. The Hon. Second Member for Victoria, please disregard the asides and continue your remarks.

MR. D.A. ANDERSON: I didn't even hear him this time. He's mumbling. I wonder whether he could speak up.

MR. CHAIRMAN: I would request that the Hon. Members not interrupt the Hon. Second Member for Victoria.

MR. D.A. ANDERSON: Well, I don't object, because I find his interjections up to now have been helpful and thought-provoking.

But we're on the question of landbanks and why they don't really

work. Well, what, first of all, are the objectives? Perhaps if we start

there we can have a look at this.

The planning objective: there is a suggestion here that if you have

landbanks — and the Minister had made it clear that he believes this — you can somehow plan better. Well, I just don't see how, and I don't

think it's proved elsewhere. The difficulty you face, of course, is

that under normal planning you have your rezoning, you have your

regulations, you have your local people involved, and you can, I think,

zone, plan and organize very effectively.

I don't think that in the planning objective you've talked of, Mr.

Minister, the need for landbanks is at all proven. There really is

nothing that the landbank can do in the planning field which cannot be

done by existing mechanisms through private enterprise, and probably

done better.

The big advantage, of course, of the private system is its

dispersion of decision-making. If you have a centralized bureaucratic

organization which…. I might add at this point that I have great faith

in your advisers, the present ones in the room. I think this is the one

little ray of hope that we have, that you have such fine people with

you. But that doesn't alter the fact that your policies are wrong.

[ Page 2100 ]

The planning objective, I think, can be met quite well by

intelligent use of good municipal officials, and given guidance by the

Department of Municipal Affairs when necessary. If you have this

decentralized decision-making, the chances of making a really

tremendous error that you see so often in government-sponsored

programmes — and I've seen government-sponsored programmes that house

60,000 in one estate — will not occur.

I just don't think, Mr. Chairman, that this suggestion that public decision-making is better has been proven.

The second objective of your landbank, as I think I can reconstruct

it, Mr. Minister, is the price objective — cost. Somehow this is going

to reduce costs. I just don't believe it at all. I told you, in the few

minutes I've had up to now, that it is supply of serviced lots which is

the key bottleneck which is going to determine price levels. It's the

overall bulk of the entire housing stock and the changes in ownership

within that bulk of stock which will determine price levels. Land

banking is not going to have any major effect upon that.

The only thing you've been able to tell us, with the dilemma that

you face in North Vancouver — where you have a $30,000 lot and you are

trying to figure out a way of selling it for $15,000 without giving

somebody a $15,000 windfall gain…. The thing you're up against is a

dilemma which I don't think you are going to be able to solve, and

certainly you have not given us any indication that you are going to

solve it.

You are talking about an opportunity cost, or holding cost, and

you're talking about the government taking losses, a straight subsidy — a hidden subsidy if you like — which is, of course, like saying that

there's a saving. But of course you're losing $15,000 in one pocket as

you pay it out in the other. You pay out a subsidy; you lose $15,000.

There's no way you can get around that, and you haven't indicated that

there's any real price advantage to land banking.

Instead, and we go back to the proposal of the Attorney-General — and I once again thank him for his generous contribution to my speech — we go back to the question of price support and maintenance. Why not

put a direct subsidy to the individual? Why not go ahead and do

something similar to the homeowner grant on a massive scale or similar

to some of these mortgage schemes where the first few thousand are

forgiven?

Well, anyway, we're back to the problem I was taking about where

it's much better to give a direct subsidy which is calculable — which

comes up neatly in votes — instead of some loss of money through your

land-banking scheme, or funds being thrown into the land-banking

scheme, and the public and the public's representatives having no real

opportunity to analyse or evaluate the subsidy programme.

Take, for example, Ontario's Home Ownership Made Easy — the HOME

plan. Now a lot of people did rather well under that scheme, and it did

have an effect at a very, very high cost. It had an effect on housing

starts in Ontario. But the people who really profited were those who

were lucky enough to get in on the scheme. They made a killing. They

made a very, very nice windfall profit, thanks to the fact that they

were dealing with the government. And the government, in turn, made a

windfall loss every time they sold a house under that type of subsidy

programme.

It is not the best way of going about it because it's not clear and

it's not obvious; it's not desirable from the point of view of public

policy, Mr. Chairman, which is that subsidies such as this should be

clear and calculable and able to be scrutinized by the people's

representatives. If we want to subsidize housing, fine; but let's make

it clear. Let's not get lost in this hassle which the Minister

described quite well, I thought earlier because he simply did not

provide any suggestion as to how he is going to handle this particular

problem.

It may well, for example — bearing in mind my initial premise that

housing costs are based on the overall stock — simply result in a

builder's profit, a builder's windfall profit, by selling these lots at

a lower than market rate because, of course, it's the market rate of

overall housing which will raise the cost of the new houses upwards.

Now land banking is said to be better because the holding costs will

be lower. Well, I have yet to discover it. If public land speculation

is to replace private land speculation, there will be holding costs;

and I simply do not think that you can ignore them, Mr. Minister, as

you have up to now in the statements you have made.

There is a social cost in holding land; there's a holding cost

involved, and to simply pretend that it doesn't exist is to cheat and

defraud the public. There is such a cost. It is borne at the present

time by private speculators, and some of them, it is true, make a

killing. Others, of course, have to sell out to Daon because they start

to go broke.

But the fact of the matter is, if you ignore holding costs, as you

have done, you destroy the effectiveness of any proper evaluation, and

I don't think you should continue to do it. I think that's not fair,

that the true cost of government land banking is ignored. So the

holding costs are not lower when you have public speculation by way of

landbanks instead of private speculation.

In addition you have the problem of alternative costs — what else

might have been there had the government not held the land. I don't

know what you're going to do about that. You may wish to comment on

that as well. Certainly there is no

[ Page 2101 ]

indication that alternative costs will be any less

for society as a whole when government holds land as opposed to when

private people hold land.

You know, the whole concept of landbanks is based upon the idea, Mr.

Chairman, that somehow the public sector has superior knowledge than

the private sector and can get in there firstest with the mostest. But

this does not tend to be borne out by facts. As the president of

Dunhill said a short time ago, dealing with another case which has been

referred to already: "We have to be very careful when we spend public

money, and the flexibility that a private outfit has is superior." He

made that very clear in his statement.

So you have a situation where with land speculation exactly the same

thing holds true. You have the public sector generally moving slower

because of the need to make sure it's a first-class deal. They

generally are unable to anticipate speculators and the speculators make

the money anyway. The public landbank is generally a less effective

speculator than the private sector.

So the private developers are there already. The other thing, Mr.

Chairman, is that when you have the public agency buying in a certain

area you at once begin private speculation on the boundaries of that

government purchase. So on the one hand you're generally not as

effective overall as a private speculator; on the other you generally

provide an extra area of speculation adjacent to government purchases

which otherwise would not have taken place. So I don't think there's

much there.

Now let me give you an example. Say you buy land at $100,000 and you

hold it. The government does this — the Minister does this — not you,

not me, not private citizens; the Minister does this. He holds it and

the holding cost is $40,000 — cost of interest lost, et cetera, et

cetera. But the value of the land, say, five years later is $200,000;

so there is a $60,000 windfall profit.

If I use figures, perhaps I can illustrate this a little better, Mr.

Chairman, because you and I are a little weak in intellectual concepts,

and we're perhaps a little stronger on concrete examples. Anyway, I

speak for myself.

So you have $60,000 of so-called windfall profit, Mr. Chairman:

$100,000 original cost; $40,000 holding cost; $200,000 sale price;

$60,000 of windfall profits.

If you sell that land at $140,000 you're giving somebody else, the

developer, the new owner, a $60,000 windfall profit. If you sell it at

$200,000, you're first subject to abuse because your landbank isn't

achieving the purposes which you claim it will, which is reducing costs.

Secondly, Mr. Chairman, you are not achieving any other social

objectives. You simply are not achieving very much by creating a

situation where the government goes in there and starts handing out

land based only on original cost and holding cost, because a $60,000

windfall profit that they give to somebody else is $60,000 taken out of

the taxpayer's pocket. It has to be made up from the taxpayers' pocket

and it is not a speculative profit in that sense. It's actual money

lost to the taxpayers of British Columbia.

Again, I go back to the homeowner grant principle. In the homeowner

grant you had the example of the fixed, certain amount of money. You

could tell who it went to. You could even calculate later on the

effects of such a thing; but in the type of thing that you proposed for

us, Mr. Minister, we simply don't have that type of fixed and clear

cost — or that fixed and clear subsidy.

Now, there's an extra problem which I haven't mentioned which I will

now and that's to do with the cost of zoning, the cost of delays in

putting land into the situation where it can be built upon.

It's not generally recognized what a tremendous extra social cost

delays are — and I congratulate the Minister, through you, Mr.

Chairman, and I congratulate the officials with him for having dreamed

up this idea of the expediter whose job it is to cut through red tape

when it comes to zoning changes so that more land can be brought on the

market more quickly.

As soon as you delay a decision on zoning, which may go for months

or even years, you add substantially to the cost of the ultimate

project. There's no way those delays are free. There's no way that

those delays can be ignored in your calculations. They are part of the

actual cost of land and let nobody think otherwise.

It's been in this province a substantial handicap in many areas when

a person arranges financially, when he arranges architects and the rest

of it, when they proceed before civic councils and the municipal

authorities, that they find all too often that they are not met with

decisions; they are not met with a competent analysis they would like.

They are met simply with delay which goes on and on and on until

finally a compromise is worked out involving substantial alterations.

The result is, of course, that the original cost of design and the new

costs of design have to be added on to the single, final building that

might be built.

Now, Mr. Chairman, it's early in the morning and….

Interjection.

MR. D.A. ANDERSON: Oh, I'm sorry. The Member for Peace River (Mr. Phillips) has very poor eyesight.

MR. CHAIRMAN: Order, please! Would the Hon. Member confine his remarks to the vote?

[ Page 2102 ]

MR. D.A. ANDERSON: The big hand is just past 12 and the little hand — I'm sorry, the other way around. (Laughter.) It's 12:20, Mr. Chairman.

MR. CHAIRMAN: Would the Hon. Member relate his remarks to the vote before us?

MR. D.A. ANDERSON: Yes, certainly. Private developers have in

British Columbia proved that they have, by working through sometimes

until three in the morning, got the ability to put together deals and

to produce the serviced land which has been necessary to keep our

housing stock at a relatively decent level. The public sector, if we

can judge from the last 18 months, has been full of delay, indecision

and uncertainty.

MR. J.R. CHABOT (Columbia River): I've just gone to the library seeking out some information to assist me in this debate. I was looking for the National Housing Act and Bill C-213 and there is no one there to assist me.

MR. CHAIRMAN: The point of order is well taken. I'll send a note to the Speaker of the House asking him to inquire….

MR. CHABOT: Well, I want this information now. This Member

might take his seat and I might have to debate the issue almost

forthwith and I think you should take some action.

MR. CHAIRMAN: Order, please. On the point of order, obviously

the Chairman is unable to leave the chair so I will send a note to the

Speaker of the House.

MR. CHABOT: Well, I suggest something be done.

MR. CHAIRMAN: The matter will be attended to as soon as possible.

MR. CHABOT: Well, let's attend to it now, Mr. Chairman. I didn't raise the point....

MR. CHAIRMAN: Order! Would the Hon. Second Member for Victoria continue?

MR. CHABOT: Mr. Chairman, on a point of order.

AN HON. MEMBER: How about the appraisals as well? Why doesn't he turn

them over?

MR. CHAIRMAN: Order, please. It is not a point of order. Would the Hon. Member for Victoria continue?

MR. CHABOT: Mr. Chairman, on a point of order.

MR. CHAIRMAN: Order, please! Would the Hon. Member state his point of order?

MR. CHABOT: My point of order is that the library facilities

are not available to the Members of the House at 12:20 a.m. I suggest

that they be available before we proceed any further.

MR. CHAIRMAN: Order, please! It is not a point of order in this debate.

MR. CHABOT: In other words, no longer do the library

facilities have to be open to the Members of this House while the

session is in sitting. If it's not a point of order, Mr. Chairman, I

have no alternative but to challenge your ruling.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: A point of order was raised by the Hon. Member

for Columbia River (Mr. Chabot) in which he stated that the library

facilities were closed. I made the ruling that this was not a point of

order in talking about the debate taking place. Rather it was an

administrative matter and he challenged my ruling.

Mr. Chairman's ruling sustained on the following division:

YEAS — 31

Hall

Cummings

Lockstead

Macdonald

Levi

Gorst

Barrett

Lorimer

Rolston

Dailly

Williams, R.A.

Anderson, G.H.

Strachan

Cocke

Barnes

Stupich

King

Steves

Hartley

Lea

Kelly

Nunweiler

Young

Webster

Sanford

Radford

Lewis

D'Arcy

Nicolson

Liden

Gabelmann

NAYS — 15

Chabot

Richter

Anderson, D.A.

Bennett

McClelland

Williams, L.A.

Smith

Morrison

Gibson

Fraser

Schroeder

Wallace

Phillips

McGeer

Curtis

MR. N.R. MORRISON (Victoria): Point of order. I particularly have something

I'd like to look up. Could you get someone in the library for me, please.

MR. SPEAKER: I'll certainly try; but I assume what has

happened, from my own investigation just a minute ago, is that the

staff quite naturally presumed

[ Page 2103 ]

at 11 o'clock, when the Speaker's procession went

by, that they were adjourned for the night and they went home. Now the

question is whether the Legislature wants me to summon one of the

library staff, wherever he may be, in his bed, to come back. Is it that

important, or…?

MR. MORRISON: Well, Mr. Speaker, just a few minutes before

the vote, I was in the library and the lights were all out. I rang the

bell, I shouted, I asked for anyone present, and there was no one there.

MR. SPEAKER: So did I. May I suggest to the Hon. Member that

I have nothing to do and I used to work in the library once a long time

ago. I'd be glad to help in any way. I put myself at your disposal.

The House in Committee of Supply; Mr. Dent in the chair.

On vote 111: housing and development, $50 million

MR. D.A. ANDERSON: Mr. Chairman, in the short time before we had our

interruption for that vote, I was talking about the problems of land banking,

and the Minister was showing his usual and courteous attention to this.

I was outlining some of the difficulties that are faced and how in

actual fact, Mr. Chairman, the use of a short-term landbank such as we

apparently now have, in all likelihood will not prove to be effective.

At this stage, I'd like to make a few comments about the time spans,

because time spans and land banking are particularly important.

For example, the Minister has purchased either 746 or 742 acres in

all municipalities in B.C., or at least in many of them, last year. Now

the City of Saskatoon, with a population of 135,000 more or less, has

over the last 10 years purchased 7,000 acres of land. You can see that

really and truly in terms of land banking we aren't anywhere, and the

City of Saskatoon is about the only city which has a decent landbank

scheme in our country; I don't know about others in North America. So

it has, as my colleague worked out for me, 10 times as much.

I'm so glad he carries a pocket computer with him. These things at this stage of the morning are beyond me.

But they have 10 times as much as we have for the whole of British

Columbia. The reason, of course, is that they're doing land banking in

a lengthy time frame, while we have heard from the Minister not one

word about the time frame of our land-banking systems and schemes for

British Columbia.

There is no point in having anything that approaches a landbank if

you're simply out there one month bidding against the private

developers or private individuals who wish to purchase a house, taking

the land off the market at a higher price than it otherwise would be,

turning around and handing it out to someone else at a subsidy

programme. It does nothing at all.

To be effective, of course, you have to have a lengthy period of

time. Now this has grave disadvantages. First of all, you tie up a

tremendous amount of capital, and tying up a tremendous amount of

capital reduces your ability, for example, to build homes. Fairly

simple, even in your own department.

The opportunity cost of increasing the housing stock is reduced by a

landbank scheme which ties up large amounts of land over the long term,

because it costs money.

Now the argument is of course that because it's the government,

somehow this land will be cheap. It isn't. You can expropriate it if

you wish to, I guess, but even then the price of expropriated land will

be virtually equivalent to market value, or you'll have the lawyers and

judges around your neck trying to make sure that it is and it should be.

There's no reason in the world that you should be able to take away

land from private citizens and simply transfer the value from one

citizen to another by expropriation and direct confiscation in fact. No

reason that you should be able to do it, and I doubt indeed whether you

would want to, yourself being a man devoted to fairness in these

things. So I'm quite sure that the price the government pays is going

to be identical to the price that the private developer or speculator

would pay.

You're going to have to sock in large amounts of money — money for

years hence. To this they're going to have to reduce the number of

houses to, say, 99 per cent of demand, you've got 1 per cent of the

population running around trying very hard to find a house or an

apartment. And if you have that with an inelastic supply, you're going

to have rapidly increasing prices.

Yet, you, Mr. Minister, promised to try and do something about

reducing prices. Now you're not going to be able to reduce unless you

increase the supply in the short run and increase it substantially, and

continue to increase it in the short run, year after year, until

eventually you have a long-run situation.

What happens is that you create a situation where expectations on

the amount of land coming onto the market are changed, and this in turn

will lower the overall cost of future expectations for land sales, and

stop this nonsense, as the Member for North Vancouver–Seymour (Mr.

Gabelmann) has pointed out, of people simply buying property, holding

on to it because they know that a year from now it will be $10,000 more

valuable than it is at the present time.

If you don't break that philosophy, Mr. Minister, we are in for an

inflationary spiral in the house prices which will continue and

continue and continue, and

[ Page 2104 ]

you will never break this inflationary psychology

unless you do something very much different from what you're now doing

to increase the number of lots which should indeed come forward to the

public.

The second advantage of increasing the number of lots in a short

run, through you, Mr. Chairman, to the Minister, is that you will of

course increase the number of housing starts. By doing that, you'll

take up the slack in the building trades, the building industry, and

you will perhaps increase the productivity of that industry and the

number of people involved in it. And you will start making an

appreciable dent. But as long as you're substantially behind the

demand, as we are at the present time, you're going to have this rapid

escalation in prices. So it's the continuous supply, and we haven't

seen any indication of this at the present time.

I should mention to you that too often debates of this nature take

place between the present situation and system as it is and some

Utopian or future system which someone would like to bring in. And

that's fair enough. But the real decision should not be that between

that type of Utopian situation and the present one with all its

failings. It should be what can be obtained through the landbank system

and what can be obtained through the improvement of the present system.

In other words, not something new in the future, assuming nothing

else changes, but the two courses that I suggested. One is improving

the supply, the other is the landbank concept; one is the reliance upon

the private sector, the other the reliance upon the public sector. And

you have to think of how improvements could be made in the private

sector to create a situation which would undoubtedly be superior to

what we have at the present time. So I hope the Minister will comment

upon that as well.

But now I come to the problem, Mr. Chairman, that I face, and that

is that despite my words, which I'm quite sure the Minister's listened

to attentively, he doesn't appear to have agreed with me. He shook his

head. Huh, his head is stationary. Goodness!

The fact is that he's embarked upon this course, and I'd like to

know whether or not he's going to encourage some municipalities. He's

talked a great deal about the municipality of Penticton where he's had

good cooperation from the mayor, as he's talked about, and we certainly

all applaud the mayor for cooperating with the Minister. But how much

is going to be done by the municipalities and how much by the

provincial government?

I suspect from the budget and the estimates in other areas that the

municipalities are going to get the short end of the stick once more.

They are not getting adequate funds for them to really get involved in

ambitious new programmes. And if they don't, of course, we then take

the land away from the one authority which is closest to the people,

best able to cater to their needs, best able to understand the local

situation.

This is a great problem with the Minister's estimates, and indeed

the overall budget of the government. It's the level of government that

should be doing the work that I talked about and the work that you've

talked about, Mr. Minister, which is not now equipped to do it because

of financial constraints.

Neither you nor any other Minister, in particular the Minister of

Municipal Affairs (Hon. Mr. Lorimer), have given us any encouragement

that the municipalities would be able to take on any of the land

banking suggestions you have talked about.

Another point I'd like to make is the need for continuity. You

cannot have a system of this nature which is an on-again, off-again

tap. This is where the City of Saskatoon has had great success. They've

had a system which was set up and which extended beyond the normal term

of office of the municipal officials or, indeed, the provincial

government. It survived changes in the administration because of this.

We've had no indication from you about the type of long-range thinking

that you have for any proposals such as you have made.

I'd like to say a word or two about the planning objective. If you

were going to sue — and you talked about this in glowing terms — the

government ownership of land for planning purposes you are going to

have to own a great deal more than you presently have. There is no way,

with the relatively little amount that you have now, that you are able

to achieve planning objectives. I wonder whether the Minister would

indicate how strong these planning objectives are. He's not going to

achieve any real success if he does not either get into this thing in a

much greater way or, indeed, opt out and allow the private sector to

handle it properly.

The Minister stated early on in his speech which he gave in the

budget debate: "Our task is not to understand the world but to change

it." I'm a little alarmed by that statement. He didn't say where the

quote came from. I'm sure it's by some excellent philosopher but it

worries me. The only way to make change intelligently is to understand

the problems that you have at the present time.

The Minister I think has embarked upon a number of interesting ideas

without trying to really relate them to the present world. I think he's

failed to analyse some of the problem areas of the present time, what

has led to them, and what is still continuing to cause them to be a

problem. He has instead leapfrogged into the future with Utopian

concepts, which may be splendid in a Utopian sense but which are not

relevant particularly to the traditions of British Columbia and to the

way that we have gone along in the past, which may well be in need of

some change that the Minister will like but

[ Page 2105 ]

cannot be reversed overnight. I think he's going to

have to make some attempt to understand the present world. I think he's

going to have to make some attempt to put his finger on some of the

difficulties and not to say: "It's not up to me to understand why we

don't have enough apartments; it's not up to me to understand why we

don't have enough houses."

MR. CHAIRMAN: Address the Chair. If you haven't anything more to say, take your seat.

MR. D.A. ANDERSON: I will continue. The Minister and I, however, are now having an interesting discussion.

MR. CHAIRMAN: That has no bearing on it.

MR. D.A. ANDERSON: What has bearing and what doesn't is, I think....

MR. CHAIRMAN: I will remind the Member that you are on vote 111! Address the Chair!

MR. D.A. ANDERSON: Right on, Mr. Chairman! Now, the question,

Mr. Minister, is that you're going to have to start understanding the

problems that we presently have instead of ignoring those and vaulting

into the future and changing the world, as he described it. What we're

going to have to do at the present time is try and figure out why we

don't have enough apartments, in particular in the major cities of

British Columbia. We're going to have to figure out why the price of

ordinary single-family dwellings has escalated so high, and why the

price of condominiums has gone up so much despite the efforts of the

Minister of Lands, Forests and Water Resources (Hon. R.A. Williams).

We're going to have to start understanding before we can get any

improvement in the situation. Your quote that our task is not to

understand the world but to change it fills me with a great amount of

concern.

The question on apartments I think is fairly clear. With the

Canadian average vacancy rate of 2 per cent, we in British Columbia,

because of a reduction in construction and matched by rising

expectations, rising disposable income and rising population are simply

not getting the new supply that we need. The amount of construction in

apartments relative to single-family dwellings has declined

substantially since 1969, when it reached I think a high point. The

Minister, I'm sure, is aware of this. He's going to have to understand

that and try and do something about that instead of sending us off into

sort of visions of the future, which apparently he is more interested

in.

We're going to have to get that vacancy rate up to over 1 per cent,

if at all possible. If we don't do it you can bet your bottom dollar

you're going to see the same thing in British Columbia as I have seen

elsewhere in the world. You're going to see the phenomenon of key money

where people have to pay to get the initial lease. It may be illegal

payment, it may be a payment related to some other product or service,

but it is essentially a tax to get the key to get into the apartment.

If you think, Mr. Minister, that you're going to be able to succeed in

avoiding that situation through legislation you're dead wrong.

Let me give you an example. You turn up at the door of an apartment,

you discuss with the landlord or the caretaker the lease and he says

the rent is fixed at $205 this year....

MR. CHAIRMAN: Order! I think you're dealing with legislation and you should be dealing with the estimates under vote 111.

MR. D.A. ANDERSON: I'm dealing with the number of houses of

British Columbia. The legislation has nothing to do whatsoever with key

money. If you can find the words "key money" in that legislation I

would be just delighted to agree with you.

MR. CHAIRMAN: It's not that. It's not the words exactly, but you are speaking about Bill 75 instead of the….

MR. D.A. ANDERSON: I am not speaking about Bill 75.

MR. CHAIRMAN: Will you confine yourself to vote 111?

MR. D.A. ANDERSON: Yes, Mr. Chairman, just hold on. Mr.

Minister, the situation develops whereby the rent will be a certain

amount but to get the key to the apartment you're going to have to make

a separate payment. It can easily be disguised. You can be told that

the bedroom needs repainting and it will cost $5,000 to repaint the

bedroom. You are told that the cat goes with the apartment and the

cat's going to cost you $5,000. No matter how you try to get around

that illegal payment it's going to take place. I can assure you of this

because I have been in jurisdictions where this happens. If you have a

supply situation which is short and you have demand which is excessive

you will get a situation such as I have described. On the apartment

side you're not going to get away with it until you do something about

supply. I have gone into how you can improve supply all you like.

Now, you see, Mr. Chairman, how that had nothing to do with the bill

that you had in mind. With respect to regular housing, you're going to

have to do something there. Again, the key to the whole thing is the

supply of serviced lots. If you can increase your overall number of

houses by a steady and continuous flow going onto the market, you will

[ Page 2106 ]

increase the number of housing starts you have and

you will decrease expectations of future profits, which will in turn

bring more land onto the market. But if you create a situation where

there's the expectation of future profit, you've created a situation

where people are not likely to put land on the market at the present

time because they feel that if they hold off they will get a return

which will be greater than a return that you get by selling the land or

property and investing it, for example, and getting a return on their

money elsewhere.

So it's tremendously important for you to realize that only if you

go into the supply question are you going to have any hope of dealing

with the overall problem.

I've got a few more notes here, Mr. Chairman, through you to the

Minister. I trust the Minister will tell us how between February 19 and

March 29 he lost four acres of land which he purchased last year.

You've found that out, have you? Was it erosion? It got washed in the

river, or what?

HON. MR. NICOLSON: The provincial land acquisitions are

742.65 acres. There are also 71 lots, I believe, most of which are in

the Strathcona area in Vancouver.

I think what the Member has described as expectations…. Certainly

the change of the utility of the number of persons per unit is

changing. People leaving home at a younger age and seeking their own

accommodation and independence and many other things are leading to

this phenomenon which he described in Oak Bay. Certainly studies and

information which we have indicate this to be part of the problem.

The Member has outlined some arguments on land banking not

dissimilar from those of Dr. Stan Hamilton of UBC. However, I do feel

that perhaps sometimes the extent of what we are doing or the intent is

misunderstood. We appreciate the holding costs of land and we try to

treat it as if we were paying 11 per cent interest rates. It's that

philosophy, at least. We don't kid ourselves that it isn't costing

money to hold land. That's the reason we want to turn it over as

quickly as possible.

The Member has mentioned the success of land banking in Saskatoon,

and that does go on side by side with private land banking at the same

time. There has been a fairly moderating influence on the cost of lots.

Certainly I've always said that the major key solution is supply, as

the Member stressed time and time again throughout his speech. I look

at that as a more permanent solution.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports progress and asks leave to sit again.

Leave granted.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 12:50 a.m.

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