1989 Legislative Session: 3rd 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)

THURSDAY, JUNE 1, 1989

Afternoon Sitting

[ Page

7147 ]

CONTENTS

Routine Proceedings

Oral Questions

Knight Street pub investigation. Mr. Harcourt –– 7147

Pit bull attack. Mr. Davidson –– 7149

Sale of Westwood land. Mr. Williams –– 7149

Dumping of dredged material on Westwood Plateau land. Hon. Mr. Dirks replies –– 7149

Property Purchase Tax Amendment Act, 1989 (Bill 10). Committee stage.

(Hon. Mr. Couvelier) –– 7150

Mr. Clark

Mr. Rose

Mr. Blencoe

Third reading

Public Trustee Amendment Act, 1989 (Bill 11). Committee stage.

(Hon. Mr. Couvelier) –– 7156

Mr. Clark

Third reading

Social Service Tax Amendment Act, 1989 (Bill 12). Committee stage.

(Hon. Mr. Couvelier) –– 7156

Mr. Clark

Mr. Darcy

Third reading

Tobacco Tax Amendment Act, 1989 (Bill 13). Committee stage.

(Hon. Mr. Couvelier) –– 7161

Mr. Clark

Third reading

Royal assent to bills –– 7161

Workers Compensation Amendment Act, 1989 (Bill 27). Second reading

Hon. L. Hanson –– 7162

Mr. Gabelmann –– 7163

Hon. L. Hanson –– 7164

Committee of Supply: Ministry of Agriculture and Fisheries estimates.

(Hon. Mr. Savage)

On vote 8: minister's office –– 7164

Hon. Mr. Savage

Mr. Barlee

Mr. Loenen

Mr. Rose

Mrs. Gran

The House met at 2:06 p.m.

HON. MR. DUECK :

June is St. John Ambulance Month in British Columbia. St. John

Ambulance, a charitable non-profit organization, has provided first aid

and health care to British Columbians for 80 years. St. John Ambulance

has provided over 100,000 hours of unpaid public duty to our citizens,

has developed modern programs of first aid and health care to meet the

changing needs of British Columbians and has proved that

safety-oriented first aid reduces the incidence of accidents by as much

as 30 percent.

In the members' gallery today, from this

fine organization, we have Mr. David Johnston, president of the St.

John Council of British Columbia. Mr. Johnston is accompanied by Mrs.

Yvonne Coveney-Boyd, Brig.-Gen. Michael Heppell, Lt.-Col. Maurice

Harries and Mr. Gregory Welsh. Would this House please give them a warm

welcome.

HON. S. HAGEN : It is with a great deal of

pleasure today that I introduce to the House some very close friends

from my riding of Comox: Marg Grant; Gordon Grant; Laurel Grant, who is

graduating tomorrow from the University of Victoria; Shelley Grant; and

Marnie Grant. Visiting with them is a cousin from Great Britain, Clive

Shrubsole, and also a sister of Marg's, Wendy Hoekstra. Would the House

please join me in bidding them a warm welcome.

I would also

like to take this opportunity to introduce to the House Mrs. Norma

Balik and Mr. Maurice Cloutier, who are visitors in our gallery today.

Mrs. Balik is an ardent follower of politics in Ontario, and I'm sure

she'll be very impressed with the fine behaviour of the members today.

Please make them welcome.

MRS. BOONE : In the gallery today are two unique people. I say they're unique because these people actually read Hansard .

One of them is a constituent from Delta and a good friend; the other

one is also a constituent from Delta but a very good friend, and that's

my mother, Anne Chudley — and her friend Don Anderson. Please bid them welcome.

HON. MR. DIRKS :

Mr. Speaker, in your gallery today, visiting from the great

constituency of Nelson Creston, is the administrator of the Regional

District of Central Kootenay, Mr. Reid Henderson, his wife Linda and

sons Todd and Gregory. Would the House please make them welcome.

MR. HARCOURT : I'm going to introduce two citizens from the riding

of the Premier and the second member for Richmond (Mr. Loenen), and I think

you'll understand in a minute why I'm doing this. I would like members

of the Legislature to welcome a strong activist in the United Church who believes

in the social gospel and practises what she preaches, and also one of the finer

salesmen in this province: my mother and father, Frank and Stella Harcourt,

who are in the Speaker's gallery.

HON. MR. PARKER :

In the gallery today is the North Coast region representative to the

British Columbia Youth Advisory Council and a citizen of Terrace,

Nadina Shaffer. Would the House please make her welcome.

MS. PULLINGER :

Monsieur le Prsident, la part de tous mes collgues, et spcialement

le premier membre de Nanaimo (Mr. Lovick) et moi, il me fait grand

plaisir d'accueillir dans cette assemble aujourd'hui le directeur

excutif de l'Association des Francophones de Nanaimo, Anne-Marie

Dryden, et le directeur juste pass, Joel Prvost.

What

I've just said, for those of you who don't understand French, is: on

behalf of all my colleagues, and especially the first member for

Nanaimo and myself, it gives me great pleasure to welcome to the House

the executive director and the recently retired director of

l'Association des Francophones de Nanaimo. Would the House please help

me make them welcome.

HON. J. JANSEN : In the gallery

today are 23 grade 9 students from Timothy Christian School in

Chilliwack, together with their teachers, Mr. Theo Van de Weg, Mr.

Maljaars and Mr. Stam. Among the students is my daughter Theresa. Would

you please make them welcome today.

Oral Questions

KNIGHT STREET PUB INVESTIGATION

MR. HARCOURT :

I have a question for the Minister of Labour and Consumer Services.

Last week in this House the minister said he knew his public official

lied to cover up political interference by the Premier's office. The

minister also said in this House that he didn't see it as his

ministerial responsibility to expose the lie. For the record, how would

the minister characterize his failure to correct the public record when

this official lied?

HON. L. HANSON : That's interesting. First of all, I would suggest that the Leader of the Opposition go back and read Hansard again. There wasn't any discussion from my place that there was a cover-up.

the past few days, this issue has been addressed so thoroughly in the

Legislature that it almost becomes a dull subject. The matter has been

fully dealt with by the ombudsman's report. I guess a historical

subject would be a better description of it. There's been a police

investigation of some six months or in excess of that. The courts have

dealt with the issue; the ombudsman has dealt with the issue; Crown

counsel has dealt with the issue. The story is going on two years in

age, Mr. Speaker. I would suggest that the member go back and read the

record. It's all there.

[2:15]

[ Page 7148 ]

MR. HARCOURT :

Mr. Speaker, indeed the record is there. It's there last week actually,

which is why this matter is back before us. The minister said: "As I

said earlier, the knowledge that I had was different than an answer

that was given there. I guess that would equate to lying." Why did the

minister not expose the truth last year and only admit that he knew Mr.

Hick lied when questioned by the opposition in this House last week?

Interjection. [Laughter.]

MR. SPEAKER : Order, please.

MR. HARCOURT :

Mr. Speaker, the government seems to think that this is a funny matter.

They seem to think that it's no big deal. We happen to think that it's

a very important matter, so I will put the question again to the

minister: why did the minister not expose the truth last year and why

did he only admit he knew that Mr. Hick lied when he was questioned by

the opposition in this House last week? Why didn't you expose it last

year, Mr. Minister?

Interjections.

MR. HARCOURT :

Mr. Speaker, when the RCMP investigated this matter last year, did the

minister step forward to reveal to the police that he knew his public

official had lied about the political interference by the Premier's

office?

HON. L. HANSON : Mr. Speaker, apparently the

opposition is getting old and tired, because they keep bringing up

questions from the past. I'll repeat this, and I'll continue to repeat

it: the matter has been carefully scrutinized by the ombudsman, by a

six-month police investigation, by the courts and by Crown counsel.

Matters were discovered as a result of those; steps were taken. I'd

point out to the members opposite that this is question period, not a

history lesson.

MR. HARCOURT : Mr. Speaker, we have

read those reports that the government made available to the public.

I'll repeat the question: did the minister step forward and reveal to

the police that he knew his public official had lied about political

interference by the Premier's office? Yes or no.

HON. L. HANSON :

Again, I have addressed this issue many times and very thoroughly in

the House The matter has been dealt with by the ombudsman, by the

police, by the courts. The story is almost two years old. There's

simply nothing left to say.

MR. SPEAKER : By the

opposition leader's own admission in the last question, he was

repeating the same question. Before the Leader of the Opposition asks

his next question, I would like to quote from

section 9, page 327, of

Erskine May:

"Questions already answered. Questions are not in order

which renew or repeat in substance questions already answered or to which an

answer has been refused in the current session or fall within that class of

question which a minister has refused to answer. A question fully answered,

whether orally or in print, cannot be renewed, nor can a question which one

minister has refused to answer be addressed to another minister."

If the Leader of the Opposition has a new question, it would be in order.

MR. HARCOURT :

Yesterday the minister was asked if Mr. Lee Doney, who conducted the

internal investigation, had knowledge prior to writing his report of

the phone call between Mr. Poole and Mr. Hick. The minister took the

question on notice. Can the minister now tell the House whether Mr.

Doney knew about the call before or after he wrote the report?

HON. L. HANSON : Mr. Speaker, I took that question on notice, and I believe it's out of order today.

MR. HARCOURT :

The minister has said he knew about the phone call between Mr. Poole

and Mr. Hick when Mr. Doney was preparing his report. Why didn't the

minister advise his deputy about this phone call?

HON. L. HANSON :

Well, Mr. Speaker, I guess this must make the 110th time I've said this

and told the member opposite that the issue has been addressed here in

the Legislature very thoroughly. There has been an ombudsman's report

and a police investigation, the courts have looked at it, and the Crown

counsel has looked at it. We took the appropriate action. The story is

simply history.

MR. HARCOURT : This is the first

opportunity for this Legislature to deal with the matter, whatever

these investigations. If the minister wants to talk about history, we

happen to think this Legislature is a very important place for these

questions to be asked. This is the first opportunity we've had, Mr.

Speaker.

Last week in this House the minister said he might

have been asked some questions about the Knight Street Pub by the

Premier prior to the internal investigation. When the Crown counsel was

further investigating this matter last year concerning political

influence, did the minister offer Crown counsel information about the

questions from the Premier?

HON. L. HANSON : Mr.

Speaker, one more time: the police, the ombudsman, the Crown counsel,

everyone has done a thorough investigation into the whole thing. Any

part of the investigation of any of those agencies that I referred to

I'm sure that the member of the opposition may want to ask them some

questions. But again, Mr. Speaker, this is history.

MR. HARCOURT : Does the minister think waiting a year to correct the public record is in keeping with his ministerial responsibility?

[ Page 7149 ]

HON. L. HANSON :

Mr. Speaker, I don't know, but I think I said 110; I guess this must be

111. The matter has been dealt with in a number of reports by a number

of agencies that I'm sure the Leader of the Opposition would not

impugn. The story and the questions that he is asking have all been

very well addressed in this House, and it's history. Read the reports.

MR. HARCOURT :

The minister knows that his actions were not in keeping with the

parliamentary traditions of ministerial responsibility. Will the

minister do the right thing and resign today?

PIT BULL ATTACK

MR. DAVIDSON :

My question is to my colleague the first member for Delta and the

Minister of Agriculture and Fisheries (Hon. Mr. Savage). Yesterday a

pit bull animal, apparently in an unprovoked attack, caused a young

lady some very serious damage and maybe for the rest of her life. When

the officials went to put down the animal, they were told that the dog

could not be destroyed because it could not be located. The owners

apparently had moved the dog to another location. My question to the

minister is this: what steps has he taken — or have his officials taken — to ensure that this animal is located and put down, and that those responsible will be dealt with in the appropriate place?

HON. MR. SAVAGE : To my hon. colleague, the issue of pit bulls falls partly within the SPCA — which is administered by our ministry — and

the Livestock Act of the Ministry of Agriculture and Fisheries. The

issue is unfortunate; let me first recognize that. Looking over the

police report, I do not like what I read. But we have been following up

with this very closely.

The issue of whether the dog can be

certified as being killed remains questionable. We have done a bit of

research. We know the dog has been moved, as the hon. member asserts.

We need to have assertion by the family to ensure that the dog is

destroyed, and that they approach through the proper procedures: that

is, for the family to launch a complaint asking for a judgment from the

courts that the dog be destroyed.

Through discussions with

our ministry, the complainant and also the Delta police that ensure to

our satisfaction it should be made public, we will encourage that this

dog, in fact, be destroyed. I guarantee you we will follow up on that.

SALE OF WESTWOOD LAND

MR. WILLIAMS :

To the Minister Responsible for Crown Lands with respect to the

Westwood land deal. Were there not indeed offers that would have given

a base guarantee plus a share of the profits?

HON. MR. DIRKS :

I'm rather amused by this question, because I keep getting mixed

messages as to what we really should or shouldn't have done. In

watching the news over the last few days, I certainly understand the

good NDP councillors on city council in Vancouver opposing social

housing. I listened to the Leader of the Opposition the other day on

the Rafe Mair show, and he said he'd settle all the social housing and

housing needs in the lower mainland simply by letting developers go in

and develop land. Now I hear questions being thrown at us about the

disposition of the Westwood Plateau. There are some mixed messages over

there.

MR. WILLIAMS : To the Minister of Crown Lands

again. I can understand him wanting to fog up the issue, because he has

not levelled with the people of British Columbia about the offers he

did get on the Westwood Plateau.

Would the minister confirm

that he received an offer from Westwood Plateau Development Corp.

comprised of Ira Young of the Praxis Group, who developed the Coquitlam

Centre, and Nelson Skalbania of N.M. Skalbania Ltd.? Would he deny that

the offer included fifty-fifty profit-sharing and a base amount and

would, in fact, if they had read it correctly, have a current value

that was very substantial indeed?

HON. MR. DIRKS : I

am glad that this is not going to cost the taxpayers $20,000 to

investigate. We did receive many offers, we looked at them very

closely, and we accepted the best possible offer not only for this

province but for the city of Coquitlam and for the local developers who

will develop that property

[2:30]

DUMPING OF DREDGED MATERIAL

ON WESTWOOD PLATEAU LAND

HON. MR. DIRKS :

I would like to reply to a question that I took on notice yesterday.

I'd like to set the record straight on the fill at Westwood Plateau. An

isolated 17-acre portion of the Westwood Plateau was excavated as a

result of gravel-mining activities over the past ten to 15 years.

Material was placed on the area by the operator to address reclamation

requirements later on.

The origin of the fill material is

not known. However, precautionary testing has been done to confirm its

composition. One of the five test holes showed evidence of material

believed to be asphalt. We have made an extensive review of our records

and find no evidence that the material originated from False Creek. In

fact, material dredged from the creek was either redistributed on the

site or within the creek, or, in the case of contaminated material,

deep-ocean dumped under permit. Only construction debris such as broken

concrete, asphalt and similar material was removed to landfills. In any

case, the Ministry of Environment is fully aware of this situation, and

we will be working with them to further determine the exact nature of

the fill.

In terms of responsibility, we have made it absolutely clear on previous occasions that this govern-

[ Page 7150 ]

ment

takes its environmental responsibilities very seriously, and as owners

of the site during the period when the fill was placed, the province

would, of course, assume complete responsibility for a thorough

investigation and remedial action if necessary. Furthermore, we are now

investigating how this material came to be placed on the site, and if

it was the result of unauthorized dumping, we will move to recover any

reclamation costs from the responsible parties.

It is worth

pointing out, however, that at this stage there is no evidence of a

major problem. The fill is very localized and in an area removed from

the main body of the Westwood site. As indicated, preliminary testing

shows only a limited area of what is likely asphalt. We will have

better information when further testing is completed. However, I

repeat, we will be taking whatever corrective action may be required to

correct any problem that may exist.

This isolated 17-acre

portion of the Westwood site will remain under the control of BCEC

until the Ministry of Environment is satisfied that it meets provincial

standards.

Orders of the Day

HON. S. HAGEN : I call committee on Bill 10, Mr. Speaker.

PROPERTY PURCHASE TAX

AMENDMENT ACT, 1989

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

section 1.

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

section 1 standing under my name on the order paper.

[Section

L (a), in the proposed definition of "related individual" by deleting

", where the related individual is a citizen or a permanent resident of

Canada".]

Amendment approved.

section 1 as amended.

MR. CLARK :

This

section deals with expanding and defining a taxable transaction.

In so doing, I would like to move an amendment to

section 1 which I

will read now, if I may.

"...to include

paragraph (

d) which adds paragraph (

f) to the definition of 'taxable

transaction': (

f) that involves the sale of controlling interest in a

corporation, other than a family farm corporation holding an interest

in land," to a purchaser.

MR. CHAIRMAN : While we're

examining this amendment for a moment, the second member for Dewdney

has asked leave to make an introduction Shall leave be granted?

Leave granted.

MR. JACOBSEN :

This afternoon we have 50 grade 7 students visiting us from Hatzic

Elementary School with their teacher Mr. Toth. There are also some

adults accompanying the group. On behalf of the first member for

Dewdney (Mr. Pelton) and myself, I would like the House to give them a

warm welcome.

MR. CHAIRMAN : While the Clerks are examining the amendment, perhaps the second member for Vancouver East would continue.

MR. CLARK :

Mr. Chairman, essentially this amendment deals with a loophole that

exists in the act. As many members know and appreciate now, the

property purchase tax is a new and rather dramatic tax generated by the

sale of personal property, which raises a lot of revenue for the Crown.

But if a corporation sells shares in a company, that is quite easily

designed to escape taxation.

So you form a company; the

company buys a property. Taxes have to be paid, but then instead of

selling the property, you simply sell shares in the company. That way

you escape taxation. Many millions of dollars have escaped in that way,

especially in downtown Vancouver. It's a technical question, and I will

be the first to admit that this amendment is an attempt to come to

grips with that problem.

There are other ways of doing it.

I've talked to several accountants, for example, who suggest an

alternative way that doesn't exist in this amendment. The alternative

is that when a corporation files corporate income tax, they have to

list their assets and the change of assets every year. It would be

possible therefore to say that upon a change in assets — a change to lands — that a tax would then be paid annually and collected as part of the corporate income tax regime.

I say, there are two ways of doing it. The way that I propose

essentially requires that a corporation whose shares that impact on

land change hands — or land changes hands by way of share transactions — would

pay the tax. Another way of doing it would be that when a corporation

has to list their assets and the change in those assets every year — as they do in corporate income tax — they would also have to list changes in land, and then the land changes could be taxed at that time.

you could either do it the way I am suggesting, which is essentially to

make it illegal to require that the tax be paid, or you can do it

through the corporate income tax regime, which would mean the tax would

be payable at the end of the year, rather than at the time of the

transaction.

Those are two suggestions that I put forward.

This is a simple one; it's modelled somewhat on Manitoba and Ontario. I

tried to change it to fit within this legislation. Essentially the

principle is very clear, and that is a real question of fundamental

equity. If we're going to have a property purchase tax, then

corporations and individuals should pay it equally. No one

[ Page 7151 ]

sh o uld be exempt by virtue of being able to take advantage of a loophole.

What

has happened with this property purchase tax is that individuals who

have the wherewithal to form a corporation to take possession of land

and then sell the shares in the corporation — rather than the land — to

escape this taxation do it routinely. I suggest that loophole is being

escalated, because many individuals can take advantage of it. Major

transactions of million dollar buildings in downtown Vancouver are

changing hands, and no taxes are being paid. But at the same time,

someone with a condominium worth $70,000 has to pay what is essentially

an owner's tax. So it's merely a question of equity. Corporations

should have to pay the tax as well as individuals. This is an attempt

to deal with that fundamental inequity, Mr. Chairman.

HON. MR. COUVELIER :

The hon. member covered a variety of points there. First of all, I

should point out to the House and the hon. member that this approach to

exempting share transactions on property transfers was tried in the

provincial jurisdiction of Manitoba but under a socialist government of

that day. Despite their best efforts to develop a program that could be

enforced, the plan had to be collapsed because it was unenforceable.

The fact of the matter is that there is no such place or registry under

which such a tax could be captured. Furthermore, as has repeatedly been

said, there is no loophole whatsoever in this tax as applied to other

taxes — for example, sales tax. The same exemption exists.

my main point, Mr. Chairman, this amendment would significantly alter

the thrust of the proposed amendment, and therefore I believe it is out

of order at this stage of consideration.

MR. CHAIRMAN :

Thank you, Minister. Hon members, the Chair has listened carefully to

what the second member for Vancouver East had to say, and certainly he

has made some good points, as agreed to by the Minister of Finance. But

our rules require that in situations like this, amendments must.... We

don't slavishly obey these rules, but we must obey some of them. They

require that an amendment must not go beyond the scope of a bill,

particularly in second reading when we debate the principle of the

bill. In this particular case, it is quite specifically laid down in

Sir Erskine May that it interferes with provincial revenue, with Crown

revenue — but that's a moot point.

Interjection.

MR. CHAIRMAN :

On a message, yes. Therefore, I'm sorry, but I have to rule the

amendment out of order. We will continue debating

section 1 as amended.

MR. CLARK : Thank you, Mr. Chairman.

Perhaps

the minister can just clarify, if he could, his view that there is no

loophole, that in fact it's designed to allow corporations to escape

paying this tax and that it was never contemplated that they pay it.

HON. MR. COUVELIER :

Mr. Chairman, this issue has been visited many times; it is repetitive.

The fact of the matter is that when a corporation acquires a property,

it pays the tax, just like everybody else does. The fact is that a

corporation is taxed on its profits and therefore does get its share of

revenue. But the overriding consideration in the treatment of

corporations in this respect is no different than any other kind of

excise tax applied. The provincial sales tax has for a long time

recognized this inability to capture in a fair and equitable way what

portion of a firm's activities might be related to real estate

acquisition or transactions. In the same way, the sales tax act

recognizes the impossibility of judging what portion of a share

transaction might be attributable to changes in asset values or

acquisition prices. So the point made by the hon. member has been

pursued by others over a period of time and has consistently failed on

the basis of unenforceability. For the hon. member to suggest, as he

does, that this is some sort of loophole is totally incorrect and

improper.

MR. CLARK : I appreciate that the minister

agrees that it was never intended to capture share transactions. It

seems to me two things. I understand the sales tax argument. In fact,

I've discussed it with many people, because there is an analogy. It

seems to me that in this case the problem with the sales tax is

determining what portion of the assets would be covered by the sales

tax,

whereas in this case it's very clear. Land is very clear and, in

fact, one could use the assessed value from the Assessment Authority

very easily. So it strikes me as much easier than attempting to collect

sales tax, because one has a measure that's easily identifiable.

[2:45]

If land changes hands or shares change hands where land is involved,

to work out what property purchase tax would have to be paid would be

very simple because of the Assessment Authority figures that we have.

That may undervalue the asset somewhat, but nevertheless, you've

captured the vast majority of it. So I reject the suggestion that it's

not possible. My amendment, I will be quite honest, may not be the best

way, but I suggest that it would be rather simple to do through a

corporate income tax mechanism.... Most likely they've tried to do it

with sales tax, but with land and with the Assessment Authority I think

we could devise a way very easily. It's very clearly, as I said, on

this side of the House a question of equity. I might ask, though,

whether the minister is aware of the extent to which the property

purchase tax is escaped — or whatever the language the minister finds more palatable — by this mechanism of corporate transactions.

I'll be quite honest. It's my view — intuitively — that

this form of escaping of taxation will escalate rather dramatically,

because in the initial sale to a corporation, the property purchase tax

is paid. It's the subsequent sales of the corporation shares where

[ Page 7152 ]

the

tax is not paid. That's the first thing. We initiated the tax only a

year or two ago, so the escapement of revenue through this corporate

mechanism will escalate over time as further transactions go down the

line.

Secondly, more people would take advantage of it with

the publicity associated with the sale. It won't simply be major

corporate changes or major corporate sales of land. It will be

single-family dwellings incorporated for the purposes of escaping this

tax. I wonder whether the ministry has any analysis done as to what the

leakage might be over time as a result of this mechanism that can be

used now to avoid the tax, particularly in light of what I said. The

frequency of the avoidance will escalate over time as the transactions

continue to change. Has there been any analysis of that?

HON. MR. COUVELIER :

We don't agree with the supposition put forward by the members of the

opposition in this respect. It should be pointed out that the corporate

sector — by virtue of dealing with larger sums of money — is paying double the rate of individuals, generally speaking, by virtue of the $200,000 trigger point.

Secondly,

it should be pointed out that the corporate sector is engaged in only

about 10 percent of the transactions under the property purchase tax,

but contribute 30 percent of the revenue. To suggest that the corporate

sector is getting some kind of a break by this bill is clearly not

appropriate, and it's inaccurate.

MR. CLARK : I was

just wondering if the minister might agree with this then: 10 percent

of the transactions are corporate and 30 percent of the revenue, but

the subsequent change.... If a corporation buys property — but not from another corporation — it

has to pay the property purchase tax. That's what we're seeing now: 10

percent of the purchases by corporations are paying 30 percent of the

revenue.

But subsequent transactions are not captured. What

they will do, therefore, is purchase shares in the corporation rather

than purchase the land that the corporation previously purchased.

That's the point I'm getting at. While initially we're seeing revenue

from the corporate sector on the initial purchase, it seems to me

intuitively that subsequent transactions will escape the property

purchase tax. I just wonder whether the minister would agree with that

or whether they've done any analysis to indicate otherwise.

HON. MR. COUVELIER :

There's no reason to believe that that's the eventuality. The fact of

the matter is that the B.C. economy is growing so well under the

leadership of this government that there are increasing amounts of

investment and increasing amounts of capital improvements. As a

consequence, the revenue base continues to expand at a rate we're all

very proud of on this side of the House.

Section 1 as amended approved.

section 2.

MR. CLARK : Is this

section designed to make relatives pay, essentially? I'm sure the minister gets lots of letters — and,

of course, I do as well, as opposition spokesperson. I'm sure the

minister agrees that this tax is very unpopular. It's one in which

there are bugs being worked out, and this bill represents some of those.

Where a husband and wife own a piece of property jointly and they want to transfer title to one or the other, previously — as I understand it — they

would not have to pay the property purchase tax. Does this amendment,

essentially, make them pay the property purchase tax? Is that correct?

HON. MR. COUVELIER :

The key element is the question of principal residence. As long as one

of them had the residence as a principal residence, they're exempt.

MR. CLARK :

Just so I have it right. If my wife and I owned our home and we live in

jointly, and one of us decides to transfer it to the other for whatever

reason, property purchase tax does not apply.

HON. MR. COUVELIER : That's correct.

Interjection.

MR. CLARK :

No, the minister is saying if there is a change in title to one

individual or the other, it does not apply. What I gather from this

amendment is that this amendment deals with other than principal

residences; that if my wife and I — to use the analogy — owned a

cottage together and one or the other of us transferred it for no money

but transferred title to the other one, this amendment means that we

would have to pay the property purchase tax on 50 percent of the value

of that land. Is that correct?

HON. MR. COUVELIER : No, it's not correct.

MR. CLARK : What is correct?

HON. MR. COUVELIER : I assume it would qualify under recreational homes; therefore it's exempt.

MR. CLARK : I'm sorry, Mr. Chairman. I apologize for being in error there. Let me assume, therefore, it's a revenue property — a second property — but the same facts apply. On that second piece of property — that's not recreational, that is used for revenue potential — would property purchase tax apply?

HON. MR. COUVELIER : Revenue-raising potential. Is this a usurious rent issue? Or are we just dealing with the property purchase tax?

MR. CLARK : Just the property purchase tax.

HON. MR. COUVELIER : Well, in that case, we would tax it.

[ Page 7153 ]

MR. CLARK : Would the minister confirm that that's what this amendment does?

HON. MR. COUVELIER :

No, the purpose of this particular

section is to prevent the artificial

reduction of tax by splitting a transaction. As the hon. member might

be aware, there are a host of professionals who study our actions very

closely in an attempt to save their clients exposure to government

ambitions. As a consequence of all this, we sometimes find some rather

peculiar transactions taking place. Splitting is one of them that was

an issue, and this would enable us to capture that, where it's obvious

that tax avoidance has been the main purpose.

MR. CLARK :

Could the minister then give me some examples? If a husband and wife

purchase partial interest in a second home, or a revenue home or rental

unit, transfers between relatives subsequent to the original purchase

previously were not taxable for the property purchase tax, and this is

what that's designed to close? What specific loophole — give me an example — is this

section of the bill designed to close?

HON. MR. COUVELIER :

The effect here will be that transferees will only be able to take

advantage of the low rate of property purchase tax on the first

$200,000. Family homes, recreation properties are exempt.

MR. CLARK :

So the minister is saying that what was happening was that they were

splitting it up so that each would be less than $200,000, so they would

pay 1 percent instead of 2 percent, and this is designed to close that.

Section 2 approved.

section 3.

MR. CLARK :

This is the major

section of the bill which the government has brought

in that deals with this incredibly complex and tiny tax reduction, as I

understand it. I wonder if the minister could tell me what the estimate

is for the number of people who will be eligible for some reduction in

the tax as a result of this

section of the bill?

HON. MR. COUVELIER :

I'm very proud to tell the hon. member that this beneficial action of

the government will affect 25,000 British Columbia homeowners.

MR. CLARK : Does the minister know what percentage of the transactions it might impact on? As I recall — this is just straight from memory — I

think it's $12 million.... Maybe the minister could tell me: is there a

$12 million tax loss associated with this, as I recall?

HON. MR. COUVELIER : We calculate about $13 million.

MR. CLARK : It's $13 million. What does the property purchase tax raise now, $170 million?

HON. MR. COUVELIER :

Given the increase in real estate values in Vancouver, it's up over

$300 million, but I'm advised that with this amendment it will affect

about 12 percent of the transactions.

MR. CLARK :

It's 5 percent of the revenue, but 12 percent of the transactions will

be impacted. It's not surprising, because they're impacted very

modestly, some of them; but nevertheless it counts as part of the

global numbers.

Section 3 approved.

section 4.

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

On the amendment.

[Section 4.,

(

a) by deleting "and" at the end of paragraph (a),

(

b) by deleting ', "related individual", and "spouse".'

and substituting 'and "spouse", and' in paragraph (b), and

(

c) by adding the following as paragraph (c):

(

c) by repealing the definition of "related individual"

and substituting the following: "related individual" means a related

individual who is a citizen or a permanent resident of Canada.]

MR. CLARK : I just want the minister to explain the purpose of the amendment.

HON. MR. COUVELIER :

The definition of "related individual" is restricted in order that the

provision will apply for exemption purposes solely to citizens or

residents of Canada.

Amendment approved.

Section 4 as amended approved.

section 5.

MR. CLARK : I have another amendment. This amendment — and I'll read it — amends

section 5 by adding paragraph (h): "Add paragraph (

x) to read: '...to a

purchaser who certifies that he is purchasing a principal residence for

the first time, provided that the purchaser has resided in British

Columbia for at least one year."'

Essentially, Mr. Chairman, this amendment exempts first-time home-buyers who have been....

MR. CHAIRMAN : Could the Page come and pick up a copy of this amendment, please, and take it to the minister?

MR. CLARK : Just for the minister's convenience.

[ Page 7154 ]

Mr.

Speaker, if I might speak on this while the Clerks peruse it, this is a

very straightforward amendment. This deals with something which.... I

gather many members of the Social Credit Party have conveniently passed

motions to this effect. Essentially, this amends the property purchase

tax to exempt first-time home-buyers. It is clearly in keeping with the

questions of equity that I talked about earlier. I've moved two

amendments: (1) to tax corporations that make land transactions; (2) to

not tax first-time home-buyers. I suspect it would be revenue neutral

if both those amendments passed.

It's very clear. I don't

have to speak at great length on it. First-time home-buyers in this

province have had a great deal of difficulty, and they're having a

great deal of difficulty right now with escalating land values. There's

very little help from the government, in our view. The property

purchase tax is an onerous tax, and it's onerous because although it

may be 1 percent, it is 1 percent that must be raised on the down

payment. If it is a $100,000 home and they have $10,000 down payment,

they have to come up with $11,000. So it's not 1 percent; it's 10

percent of the down payment.

We find that tax onerous for

first-time home-buyers, and we think this amendment is, in many

respects, in keeping with the amending act. There is in here a whole

series of discussions about who does or does not pay. It fits nicely

under (h). This would accomplish more than about five or six of the

bills on housing that the government has put forward. I think the

minister would realize the politics, if not, the justice, of exempting

first-time home-buyers. That's what this amendment attempts to do.

MR. CHAIRMAN :

Unfortunately, hon. member, this amendment falls within the same

definition as the previous one. Would the Minister of Finance like to

speak to it? Essentially it's being ruled out of order, but you might

like to speak to it, minister.

HON. MR. COUVELIER : I thought I would before asking you to examine the question of whether it is out of order or not.

want to make the point that this government is very proud of the fact

that it is effectively bringing the management of public affairs and

public expenditures under control. I suspect the hon. member knows full

well that the initiative he is recommending here would inevitably

result in a challenge under the constitution and, as a consequence,

would be a make-work project for lawyers for years to come.

[3:00]

This bill does address the question of need; it does deal with

people who need some relief, and it provides it. In any event, it is

out of order insofar as it is a tax measure and we are in committee

stage.

MR. CHAIRMAN : Having heard what the minister has to say, I would rule this amendment out of order on the same basis as the last one.

MR. ROSE :

You were very charitable in letting the minister speak to an

out-of-order amendment. I would just like to comment, though, on his

assertion that such assistance, such affirmative action, would be

contrary to the Charter and invite a challenge. Affirmative

actions — things that make things less difficult for people — are specifically exempted under the Charter. It's possible to discriminate in favour of something, is what I am saying.

doubt very much, in spite of the wealth of knowledge, the great depth

of constitutional law that the minister has at his fingertips every two

or three minutes, that this would be contrary to the Charter. Of

course, we would need to have that tested, I suppose. Can I underline

the point, before the minister's chin hits the floor, that all the

housing assistance we used to have in this province — we had a mortgage assistance plan, a homeowner assistance plan — is

no longer there. This would be very effective, and very simply done. It

would require no bureaucracy; it would require nothing. It would just

put $1,000 into the pockets of first-time home-buyers.

I've

got children; I don't know if the minister does. It's very difficult

for young couples now, especially in the lower mainland, to acquire any

kind of equity. We know how the provincial government is always most

anxious to provide people with property, property rights, land and

houses they can own, because that's what made our country strong.

HON. MR. BRUMMET : On a point of order, Mr. Chairman. How long will the debate continue on an amendment that has been ruled out of order?

MR. CHAIRMAN : Good point, hon. member. The amendment was ruled out of order, and we are now dealing with

section 5.

MR. BLENCOE :

I recognize that in your wisdom, Mr. Chairman, you've ruled my learned

colleague's excellent amendment out of order. I notice, however, that

section 5 refers to a number of exemptions — eight of them, my colleague tells me.

think it's really sad that the Minister of Finance, the member for

Saanich, who, like everybody else, has thousands of first-time

home-buyers — young British Columbians looking for that dream, that vision of a first-time home — cannot

agree to include first-time home-buyers in one of these sections. There

are references here to exemptions for transfers, to changing a joint

tenancy to a tenancy in common. I recognize that, Mr. Chairman. What I

really want to emphasize is that it wouldn't have taken much to send a

message to those young British Columbians who are looking to get into

the market for the first time. This government continues to turn its

back on those British Columbians, and I think it's a great shame.

HON. S. HAGEN :

On a point of order, the members opposite are taking a lot of time to

talk about things that we shouldn't be talking about. We're supposed to

be dealing here with some very specific

[ Page 7155 ]

issues. I would ask that they stop abusing the House and stick to the topic.

HON. S.D. SMITH : Their leader abused the House yesterday. They're doing the same thing today.

MR. ROSE : The Attorney-General is imputing motives again.

Interjections.

MR. CHAIRMAN : Hon. members, order, please.

MR ROSE :

Mr. Chairman, I don't quarrel with your great wisdom in terms of

procedural matters; and you've got some tremendously experienced

advisers at each earlobe. But I recall this particular amendment being

put when the bill was first read, and I think we voted on it. Rather

than proceed now, I wonder if it would be possible to stand the clause

until we clear up this point of order. Would it be possible to stand

this clause, go on to another one until we...? We're proceeding rapidly

today, and we're making good progress on legislation, but I'd just like

to have an opportunity to check this particular matter out, because we

did move a similar amendment when the bill was first introduced.

MR. CHAIRMAN :

The opposition House Leader is also very knowledgeable about the rules.

As I recall it, we sat together when they were amended, and one of the

amendments that went through was that a ruling of the Speaker or the

Chairman could not be challenged. I think the amendment was ruled out

of order on that basis, and so I must let it stand at that. We're going

to continue discussing

section 5.

MR. CLARK : This

section of the bill has seven exemptions which presumably weren't in

the existing bill. Perhaps the minister could tell me what the tax loss

associated with the seven exemptions is projected to be.

HON. MR. COUVELIER :

We haven't attempted to quantify any figures from this, Mr. Chairman;

we're merely trying to deal with the abuses that have been exhibited in

the two years the act has been in place.

MR. CLARK :

When you're dealing with a bill that brings exemptions to a tax,

presumably you quantify it. Perhaps it's insignificant and therefore

doesn't warrant a number. Perhaps it's less than $10,000 or something

like that. It seems to me that in a bill that's generating $300 million

in revenue, bringing in seven exemptions might have some impact on that.

I notice that some of the exemptions — for example, (

b) says: "...made

in accordance with written separation agreements or orders under the Family

Relations Act...." Maybe the minister could tell me what spawned this, and whether

divorces or separation agreements can specify that the property purchase tax

is not paid in the event of a separation and one spouse receives the property.

Is that what this is intended to do?

HON. MR. COUVELIER :

This particular paragraph tightens the rules regarding the exempt

transfer of property on the breakup of a marriage. Previously any

property transfers due to the breakup of a marriage were exempt from

tax. This allowed substantial amounts of property to be transferred

between corporations exempt from tax. In order to clarify the intent of

this provision, property transfers resulting from the breakup of a

marriage will only be exempt if the property is registered in the names

of the spouses or former spouses.

MR. CLARK : So you're saying that in the event of a separation, and one spouse held the property — say it was the man — and

there was a separation agreement by which the woman would get 50

percent of the property, she would have to pay property purchase tax on

50 percent of the property. Is that what this says?

HON. MR. COUVELIER : No, that illustration would be exempt. The intent here is to stop transfers between corporations.

MR. CLARK :

Maybe I misunderstood you, but I understood you to say that unless the

name was on the title.... If two people are on the title and there's a

transfer to one or the other, it's exempt; but if they're not on the

title, then they must pay the tax. Is that not what you said?

HON. MR. COUVELIER :

I think I'm agreeing with the member opposite, Mr. Chairman. It was

exempt before, and now we're saying the names must be on the title in

order to continue the exemption.

[Mr. Rogers in the chair.]

MR. CLARK :

So my original hypothesis was correct. That is, if you're a spouse but

you're not on the title and you gain, by way of a separation agreement,

50 percent of the.... If the property is transferred to you as part of

the settlement, you would have to pay the property purchase tax,

whereas before you didn't. If you have joint title, that transfer is

exempt; if you don't have joint title, you'd have to pay. If that's

correct, I wonder what would spawn that. It seems to me somewhat

onerous perhaps on some individuals as a result of a separation

agreement. It doesn't appear to be a loophole that would capture very

many people. It seems to me a rather mean-spirited amendment.

HON. MR. COUVELIER :

Well, I'm not quite sure that I have it clear in terms of the member's

question here. There are a relatively limited number of marriage

breakups which involve corporations. It has evolved that under the

previous wording of the act these settlement provisions were

potentially being manipulated to avoid the tax. And while the number

[ Page 7156 ]

individual cases we're addressing is relatively small, the sums of

money aren't necessarily so. What we're saying here with this change is

that there must be a spouse named on the registration in order to

qualify.

MR. CLARK : Mr. Chairman, my only comment

would be that this is a detailed

section trying to deal with rather

minor, complicated loopholes. When I said to the minister that the

corporations could avoid it, in a rather major loophole, the minister

throws his hands up and says we can't do anything; yet when it comes to

minute loopholes that some people are using, you go to great lengths

and use legal language in

section 5 to try to close or open those

loopholes. Yet no attempt has been made by the government to come to

grips with the fundamental question of justice and equity, which is the

fact that corporations escape paying it. With that, Mr. Speaker, I

think we can move through the rest of the bill.

Sections 5 to 9 inclusive approved.

Title approved.

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

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 10, Property Purchase Tax Amendment Act, 1989, reported complete with amendments.

MR. SPEAKER : When shall the bill be read a third time?

HON. S. HAGEN : With leave of the House now, Mr. Speaker.

Leave granted.

Bill 10, Property Purchase Tax Amendment Act, 1989, read a third time and passed.

HON. S. HAGEN : Mr. Speaker, I call committee on Bill 11.

PUBLIC TRUSTEE AMENDMENT ACT, 1989

The House in committee on Bill 11; Mr. Rogers in the chair.

section 1.

MR. CLARK :

I just want the minister to explain

section 1, which is essentially the

meat of the bill. I wonder what the precise purpose of rearranging the

public trustee's office in this manner is.

[3:15]

HON. MR. COUVELIER :

Section 1 amends the Public Trustee Act in a variety of ways. It

continues the existing account of public trustee and renames it for

greater clarity the public trustee trust fund account. This amendment

does not change the operation of the account.

A new

subsection continues the existing requirement that the specified

receipts of the public trustee shall be paid to the Minister of Finance

and Corporate Relations and shall be held in the newly titled public

trustee trust fund account. This subsection continues the existing

provision concerning the investment of trust funds as permitted by the

Financial Administration Act — that's subsection 12(3). The investment policy and the range of allowable investments for trust funds will not change.

Section

13(

l) establishes a new special account called the public trustee

operating account. This special account will provide the public trustee

with statutory spending authority up to but not exceeding the amount of

revenue received from the provision of services to clients.

So there are a variety of initiatives, Mr. Chairman, under this section.

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 11, Public Trustee Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. S. HAGEN : Mr. Speaker, I call committee on Bill 12.

SOCIAL SERVICE TAX

AMENDMENT ACT, 1989

The House in committee on Bill 12; Mr. Rogers in the chair.

section 1.

MR. CLARK :

I wonder if the minister could explain this section. It seems connected

section 2, but is there any other...? Does the broadening of the

definition of the term "lease" expand to any other goods besides movies

that we're going to see, in the next section?

HON. MR. COUVELIER :

This

section amends the definition of "lease" to clarify that any

agreement under which a person is given a right to use tangible

[ Page 7157 ]

personal property is considered to be a lease and is subject to the tax.

MR. CLARK :

I wonder what exactly that's intended to capture. Maybe the minister

could say what kind of revenue is expected to be generated by expanding

the definition of "lease" for the purposes of collecting this tax.

HON. MR. COUVELIER :

It isn't intended to go after any particular sector in an avaricious

way. The total sum anticipated to be raised by this amendment might be

in the order of $1.1 million or $1.2 million, or something of that

order.

Section 1 approved.

section 2.

MR. CLARK : This is one which I have a bit of trouble with. The theory behind the sales tax — and there are several theories behind it, but this is one which we have a lot of from the federal government — is

to cover everything. In their case they were originally talking about

food and prescription drugs and everything else. The idea is that if

you cover everything, the tax rate can therefore be low. That's the

theory. "Thin and wide," some people call it. What ends up happening is

that it becomes this tremendous cash cow for governments. We've seen

that everywhere, and particularly with the federal government.

Now

here we have a situation where the provincial government, through this

section of this bill, is extending the sales tax onto movies,

essentially That's how I read it, anyway. So now, when one goes to a

movie theatre, instead of paying $5 or $6, you have to pay your tithe

to the Minister of Finance, to the Social Credit government. It's a

nice tax from a political point of view, because every time someone

goes to a movie theatre they'll remember that this particular

administration is now taxing movies. I wonder why the minister felt

compelled to extend the sales tax to moviegoers in British Columbia. It

seems to me rather chippy.

I might say that one other thing

that bothers me is the way in which the government went about doing it.

There was no consultation with the industry, and we've had many

complaints from the few independents that are left in the theatre

business that this was just decreed by the Ministry of Finance.

must say that I have a bit of a problem with the process, and I even

have a bit of a problem with extending the tax to this kind of

commodity. Although I admit it's not an essential commodity, it's one

which average people can take advantage of and it's one which the

government has chosen to.... The long arm of the tax man has extended

to movies.

Maybe the minister could at least, in the House,

attempt to defend why the Social Credit government has decided to tax

people going to the movies in British Columbia for the first time in

history?

HON. MR. COUVELIER : The fact of the matter

is that this is an equity issue. It's an issue which addresses a

previously exposed inequity. This is a government that does believe it

must be uniform and consistent in the way it treats it citizens. It

must ensure that there is fair treatment to all, access to all, in

terms of dealing with initiatives.

The hon. member has

suggested that there was no consultation. I don't know how much

experience the hon. member has had in the area of tax measures, but you

clearly don't embark on a forewarning device that there's going to be

an imminent change in taxation. The fact of the matter is that we did

meet with those affected by the bill after we introduced the bill to

the House. I wonder whether the hon. member would prefer that we do the

slur to the House by having discussions with interested groups on a

taxation measure prior to discussing it with the Legislature. It seems

to me there's a fine point here.

MR. CHAIRMAN : It

seems to me we're back into second reading. The Chair is only away for

a certain amount of time and the discipline seems to fall right away.

MR. CLARK :

Mr. Chairman, I think it's interesting that the minister would be

concerned that someone may gain advantage by this tax change: if we

discussed the possibility of taxing movies, then everybody in British

Columbia is quickly going to go to a movie right away; we're all going

to rush to the movies and see them all before the tax comes in. That

seems to be the only possible benefit that one could derive from at

least discussing this.

The minister talks about equity.

We've dealt with equity in here on many occasions. Corporations don't

pay the property purchase tax, but everybody else does. The minister

says: "Oh, we don't have to worry about that equity." Here he's saying

that video rental people pay tax, therefore movie theatres should have

to pay tax. I think it's a specious argument at best, and so is the

consultation one.

I'm sure the minister has discussions and

debates daily with different interest groups and different sectors of

the economy about the taxation regime that affects them. Yet in this

case, there's nothing. I don't think the government has given a good

enough defence of a chippy little tax that affects working people who

want to go to the movies, and lots of kids.

It's just the

bean-counters in the Ministry of Finance and Corporate Relations

extending their reach to collect more revenue from average people. It's

a regressive tax, because the wealthy and the poor pay exactly the same

amount. It doesn't make any sense in terms of equity; it doesn't make

any sense in terms of the process. There are lots of ways in which the

equivalent revenue could be raised in a more progressive fashion. We'll

be opposing this

section of the bill.

HON. MR. COUVELIER : Mr. Chairman, I must respond. I have had my loyal, dedicated public

[ Page 7158 ]

servants

described as being chippy and as bean counters. It seems to me we were

trying to get the decorum of the House to some acceptable level. I

can't stand idly by and have my staff — loyal, dedicated and hard-working people — take that kind of abuse.

Secondly,

I'd like to make the point that unlike many other provinces, we charge

no amusement tax in British Columbia. Unlike other provinces, we do not

charge confection sales. The theatre industry in this province is

treated more advantageously than they are anywhere else in Canada. I

don't feel in the least that I have to stand here to defend a

suggestion which is equitable and treats all rental of films and videos

equally.

MR. CHAIRMAN : Having said that, I would tell you I've referred to the Journals , and the word "bean-counters" is not unparliamentary and may be used on any occasion.

HON. MR. COUVELIER : What about "chippy"?

MR. CHAIRMAN : "Chippy" is certainly not unparliamentary.

Section 2 approved on the following division:

YEAS — 32

Brummet

Savage

Vant

Dueck

Parker

Weisgerber

L. Hanson

Huberts

Dirks

Mercier

R. Fraser

Messmer

De Jong

Chalmers

S. Hagen

Vander Zalm

S.D. Smith

Couvelier

Davis

J. Jansen

Pelton

Loenen

Gran

McCarthy

Mowat

Bruce

Serwa

Rabbitt

Long

Jacobsen

Crandall

Davidson

NAYS — 16

G. Hanson

Barnes

Marzari

Rose

Gabelmann

Boone

D'Arcy

Clark

Blencoe

Edwards

Cashore

Barlee

Smallwood

Lovick

Pullinger

A. Hagen

[3:30]

section 3.

MR. CLARK : I know members will be

adjusting themselves accordingly here. I wonder if the minister could

explain why we would need to permit the precollection of the tax on

liquor sold under special occasion licences.

HON. MR. COUVELIER :

I'd be very pleased to do that. The fact of the matter is that the use

of special occasion licences has grown significantly over the years and

has become an issue around which there has been much concern in terms

of tax not paid, and the bill not being enforced properly. As a

consequence of that, it was deemed necessary in the interest — once again — of equity and fairness to others in the industry that we seek this solution to the tax avoidance issue.

MR. CLARK : This is another example, it seems to me, of the kind of chippiness that we've seen in terms of the....

MRS. BOONE : Big Brother.

MR. CLARK : Yes, Big Brother — the

member for Prince George North reminds me. The baseball team wants to

have a dance to raise money, and they have get a special occasion

licence for liquor; that's common. So now they have to pay up front

some tax — on the basis of what? This is what I'd like explained. It

seems to me that when they buy their liquor, they pay tax on it; that's

common. But when they resell it, they have to, as I recall, say how

much they are going to resell it for.

The government has

very strict rules that protect the monopoly of those selling booze in

British Columbia, so you have to charge more than you might like to do

otherwise. I guess what this means is that you now have to pay the tax

on the resale of the liquor in advance. If you buy a 26-ounce bottle of

liquor and are going to charge $2 a drink — I'm not even sure that's allowed; that's probably too low now for the government — that

presumably means it would generate $52. Does that mean that they will

have to pay their 6 percent of that $52, or do they pay it on some

other kind of imputed value? Is that what happens?

HON. MR. COUVELIER :

The tax is paid by the licence-holder in advance. It saves them

subsequent paperwork that had to be done under the old system, reduces

the inconvenience to the special occasion licence-holder, ensures that

there is no tax avoidance as a consequence, itemizes administrative

costs and, as I pointed out in my first reply, deals with this question

of equity as it relates to others in the industry who had consistently

been claiming that special occasion licences were leading to abuse.

MR. CLARK :

Again, I think it's really debatable that there's been abuse of special

occasion licences. Every social service club, every baseball team has

parties for which they have to get by law special occasion licences. I

think it's hardly a threat to the brewery industry or the pub industry.

I just think it's another example of the bureaucratic mind-set in the

ministry that has to extend the arm of government to tax all these

little endeavours. I think it's counterproductive, I don't think it

raises much revenue and I just find it kind of offensive.

I know that lots of groups — baseball teams, football teams and the like — are finding it increasingly difficult to get special occasion licences, and

[ Page 7159 ]

now

it appears that they've got to pay social service tax in advance. Could

the minister tell me how they pay it? Do they have to list the price

they're going to charge per drink in advance, then pay an amount based

on how many drinks they're going to get out of a bottle in order to

work out the tax and payment in advance? Is that how it works or is it

some other way?

HON. MR. COUVELIER : The answer is yes.

MR. D'ARCY : I want to join my colleague for Vancouver East in opposing

this section. The rationale given by the minister simply doesn't wash. I

have canvassed the regular commercial outlets — I won't say all — but a

great many of the owners of lounges and beer parlours....

HON. MR. COUVELIER : A pub crawl?

MR. D'ARCY :

That's right. I crawled around to find out whether they felt that they

were being treated unfairly by the fact that the retail tax at the

sales level was not being paid by the special occasions, and they

certainly did not.

The fact is that in areas like mine,

which I could perhaps properly characterize as typical of small-town

British Columbia, the special occasion licence is commonly used not

just by athletic teams but by service clubs and a great many non-profit

agencies in the social service and community action area. All sorts of

groups, from the Red Cross to the Knights of Columbus, use special

occasion licences for their various social functions, which are common

throughout the year, not just in Trail but in other communities

throughout my constituency

This sort of pickiness

establishing hoops where hoops were never there before that people have

to jump through in order to carry on their special occasions really

makes no sense at all. I could quite categorically say that I haven't

found a single individual who approves of this sort of pickiness on the

part of government. As with the previous section, I see it as a direct

assault on small-town British Columbia and a way to affect the quality

of life in those communities. I wish the minister would reconsider

because, as my colleague for Vancouver East has pointed out, this and

the previous

section really add nothing to provincial revenues, but in

fact have a direct bureaucratic long-arm-of-government impact on

ordinary citizens.

I would also like to emphasize that many

of the people who utilize these special occasion licences and who are

most angry and most directly impacted are the kind of people who are

most community active, not just in my riding but I suspect throughout

the rest of the province as well. These are the sorts of individuals we

need to encourage in order to help the quality of life and improve

activism and volunteerism in general, regardless of the endeavour and

whether it be small towns or medium-sized towns — or large cities, for

that matter. It's these affected people who provide the quality of

life. They're the doers, the people who contribute towards everyone

else's enjoyment in these communities. These are the people being

impacted, making it very difficult for them to go about doing their

job, which is to assist the community in many worthwhile endeavours.

With that, Mr. Chairman, I'll hope the minister has had time to reconsider.

HON. MR. COUVELIER :

I've listened very closely to the points made by the hon. member. He

suggests that he's done some sort of research project. I would remind

him that there are 6,000 licence-holders in the trade, so to speak, on

a permanent basis. He might have made a tour through his own riding. I

wouldn't imagine he hit many in the same evening, or else the quality

of his evidence would decline with each succeeding call. In any event,

by the time he hit 6,000 I suspect he wouldn't be erect; he'd be

prostrate.

We have responded to the needs of the industry;

we have responded to our mail; and we have responded to the complaints.

As I've said — and I don't know whether the member was in the House at the time — special

occasion licence use has expanded dramatically. We now have between

25,000 and 30,000 special occasion licences in the province as opposed

to only 6,000 of those in the business. There is an alarming growth of

special occasion licences. Under the old system there was an inability

to deal with this question of remittance of the tax, and I have no

difficulty in standing before the Legislature and telling members it

clearly is in the interest of equity and in the interest of the

taxpayers of this province to make sure that if we have a law on the

books, it is enforceable. This amendment will have that effect.

MR. CLARK :

Is the minister saying his primary concern is to protect existing

licence-holders, and that they feel special occasion licences are a

threat to their livelihood?

HON. MR. COUVELIER : I'm

not saying we're protecting anybody, and I'm not saying we're abusing

anybody. I am saying we're trying to ensure there is a level playing

field at all times when we administer these kinds of taxes. There have

been numerous complaints; we have recognized the validity of those

complaints, and we are dealing with them with this amendment. The

amendment will have the effect of clearing up what was a growing

avoidance issue.

MR. D'ARCY : Just to clarify a

couple of points here. First of all, as I'm sure the minister well

knows, if one is in regular touch with one's constituents, it is not

necessary to be in a particular place of business to discuss an opinion

or an attitude with the owner. Even if one is in a certain person's

place of business, it's not necessary to buy anything of a particular

nature while you're there.

AN HON. MEMBER : Or accept it free.

MR. D'ARCY : Yes, or accept it free.

[ Page 7160 ]

The

other point I want to make, which the minister is either unaware of or

doesn't seem to want to advise the committee on, is that in my

constituency — and I suspect in his as well — when successful special

occasions are going on, complete with special occasion licences, a

great many people are attracted to the area, and the regularly licensed

establishments in fact do very well on those days; indeed, often they

are packed. That is the principal reason why there are no complaints.

It's not that they're taken advantage of. The fact is, the entire

community prospers when all parts of the community are allowed to,

shall we say, do their thing.

[3:45]

The suggestion that there is lax enforcement, or that people are

taking advantage of the situation, is, I think, a suggestion that the

law enforcement agencies are not doing their job throughout the

province, which I categorically state is absolutely wrong. I don't

think there is a problem here, and when there is a problem, the local

authorities refuse to grant the licences in the first place.

MR. CHAIRMAN :

I would advise members that following the completion of this bill and

the next bill, His Honour will be joining us for royal assent. I will

be sounding division bells to call members to the chamber at that time.

Section 3 approved on the following division:

YEAS — 34

Brummet

Savage

Vant

Michael

Dueck

Parker

Weisgerber

L. Hanson

Huberts

Dirks

Mercier

R. Fraser

Messmer

De Jong

Chalmers

S. Hagen

Richmond

Vander Zalm

S.D. Smith

Couvelier

Davis

J.Jansen

Pelton

Loenen

Gran

McCarthy

Mowat

Bruce

Serwa

Rabbitt

Long

Jacobsen

Crandall

Davidson

NAYS — 13

G. Hanson

Marzari

Rose

Gabelmann

Boone

Darcy

Clark

Blencoe

Edwards

Cashore

Barlee

Smallwood

A. Hagen

Sections 4 and 5 approved.

section 6.

MR. CLARK : I wonder why the government would choose to exempt magnetite

from tax when used for processing coal. I know there must be some logic to it,

but it just seems to be an odd amendment.

HON. MR. COUVELIER :

Once again I am proud to stand in the House and explain that it's a

matter of equity. We have been excluding grinding balls and rods, and

this will ensure that we treat all of these things in an equal way.

MR. CHAIRMAN : It's an explosive issue. Shall we hear from the member for Vancouver East?

MR. CLARK :

We were exempting grinding balls and rods from the processing of

minerals, I assume, and this is the equivalent in the terms of

processing coal. Is that correct?

HON. MR. COUVELIER : That is correct.

Section 6 approved.

section 7.

MR. CLARK : On

section 7, I want the minister to explain the purpose of this. It seems another rather interesting little anomaly.

HON. MR. COUVELIER :

This

section authorizes the commissioner to exempt vendors from the

requirement to collect tax on sales made on board passenger-carrying

commercial vessels while on scheduled sailings from a port in the

province to a port outside of the province, or from a port outside of

the province to a port inside of the province. This amendment places

local operations, such as the Princess Marguerite , on the same basis as other cruise ships operating between points within and outside of B.C.'s jurisdiction.

MR. CLARK : Is the minister saying that sales of goods sold on the Princess Marguerite between Victoria and Seattle will be exempt from sales tax? Is that what he is saying?

HON. MR. COUVELIER : That is correct and, once again, it restores equity — all these bills are equity bills — and ensures that the application of the tax on the Marguerite will be the same as the application of the tax on the Coho , which similarly sails between U.S. ports and the port of Victoria.

MR. CLARK :

The minister is saying that currently the American vessels that travel

between Victoria and Seattle do not pay provincial sales tax. If they

would pay sales tax, it would be to Washington State, the state of

their home port. Is that what you are saying? Or is it that anything

sold on international runs are exempt from provincial sales tax? Is

that across the board for either one?

HON. MR. COUVELIER : Yes, it's an equity issue. The fact of the matter was that I tried to collect from the Coho .

I'd be down there when they docked, I'd visit the ship and check the

registers, but I just couldn't get the sales tax out of them, so I

decided it would be more equitable in the interests of fairness

[ Page 7161 ]

to all that we similarly extended the exemption to B.C. ships.

MR. CLARK : Does Washington State collect sales tax on that vessel or anything sold on it?

HON. MR. COUVELIER : No, Mr. Chairman.

MR. CLARK : I know this is a small matter, but it seems to me that people aren't affected. No passengers are not going to sail on the Marguerite because there is a sales tax on the candy or whatever it is that is sold on the Marguerite .

I just wonder what the extent of the tax.... The tax is not at the

margin; the tax is not going to impact on them. The minister is saying

equity, but it seems to me that travel on any vessel should be treated

the same, but they probably should pay tax.

I wonder what the tax loss is associated with this. it's got to be insignificant.

HON. MR. COUVELIER :

Once again it is a question of equity: liquor, souvenirs, all of those

sort of things are impacted here. The truth of the matter is that it

applies not only to the Marguerite but all cruise ships as stated.

am just trying to understand. I take it the hon member is opposed, is

saying in effect that what he would prefer to do is leave this anomaly

in place and put the Maggie at a disadvantage. That surprises me.

MR. CLARK : So any ship that travels between a foreign port and British Columbia from now on, including the Princess Marguerite or any ship, does not have sales tax applied to any of the sales, including liquor. Is that what the effect of this would be?

HON. MR. COUVELIER : That is correct. They are not required to collect the tax.

Sections 7 to 13 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 12, Social Service Tax Amendment Act, 1989, reported complete without amendment, read a third time and passed.

HON. S. HAGEN : I call committee on Bill 13, Mr. Speaker.

TOBACCO TAX AMENDMENT ACT, 1989

The House in committee on Bill 13; Mr. Rogers in the chair.

Section 1 approved.

section 2.

MR. CLARK :

I just want an assurance from the minister that increasing the tax rate

on loose tobacco products by the formula which the government has

chosen here makes it the equivalent to a tax on tobacco products that

are not loose. Is that the intention of this?

[4:00]

HON. MR. COUVELIER :

No, Mr. Chairman, the effect of this would be to bring loose-tobacco

tax up to something in the order of 50 percent or 60 percent of the

cigarette tax, in that range.

Sections 2 to 9 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 13, Tobacco Tax Amendment Act, 1989, reported complete without amendment, read a third time and passed.

MR. SPEAKER :

Hon. members, I would like to advise that His Honour the

Lieutenant-Governor is in the precincts and will shortly enter the

chamber.

His Honour the Lieutenant-Governor entered the chamber and took his place in the chair.

CLERK-ASSISTANT :

Statutes Repeal Act, 1989

Trade Development Corporation Act

Budget Measures Implementation Act, 1989

Home Owner Grant Increase Act, 1989

Income Tax Amendment Act, 1989

Land Tax Deferment Amendment Act, 1989

Motor Fuel Tax Amendment Act, 1989

Property Purchase Tax Amendment Act, 1989

Public Trustee Amendment Act, 1989

Social Service Tax Amendment Act, 1989

Continuing Care Act

International Trusts Act

Home Mortgage Assistance Program Act

Tobacco Tax Amendment Act, 1989

[ Page 7162 ]

CLERK OF THE HOUSE : In Her Majesty's name, His Honour the Lieutenant-Governor

doth assent to these bills.

His Honour the Lieutenant-Governor retired from the chamber.

HON. S. HAGEN : It is with great pleasure that I call second reading of Bill 27.

WORKERS COMPENSATION

AMENDMENT ACT, 1989

HON. L. HANSON :

I rise to move second reading of Bill 27. This bill reflects the

cooperative efforts of representatives from government, labour and

employers to develop a workers' compensation system that meets the

needs of all British Columbians.

I would like to extend my

congratulations, and certainly my appreciation, to the committee

members who worked so hard to reach this unanimous decision in their

recommendations. With a few minor changes, those recommendations have

been totally incorporated into this bill.

The bill before

the House reflects the common objective of all interested parties: that

is, to ensure that workers and employers are able to participate

effectively in the initiation, development and approval of the

policies, programs and procedures of the Workers' Compensation Board.

This will be accomplished through the creation of a part-time board of

governors. That board will consist of 13 voting members appointed for

up to six years. It will consist of a neutral chairman, five employer

representatives, five employee representatives and two public interest

members. There will also be two non-voting governors: the president and

chief executive officer and the chief appeal commissioner.

The

governors will be responsible for the setting of general Workers'

Compensation Board policies on compensation, assessment,

rehabilitation, occupational safety and health. The governors will not

have a day-to-day involvement in Workers' Compensation Board

operations. Instead, the daily running of the organization will be left

up to the responsible officers, administrators and other personnel,

under the direction of the chief executive officer.

Consultation

and consensus, and the decision that was reached by consensus, will

continue to be essential in putting the new WCB structure into place

and will certainly be key in the selection of the people who will serve

on that board. This process is especially important since the

composition of the new board of governors will be responsible for

determining the future direction and credibility of the system. The

bill requires that the minister responsible must consult with employer

and worker governors in appointing the chairman.

The

selection of a highly qualified and motivated individual to serve as

chairman is a serious crucial element to the success of the new

structure. The same process of consultation will also apply to the

appointment of the two public interest governors. The governors will

have the responsibility of selecting and defining the functions for

both the president and chief appeal commissioner. This will ensure that

the day-to-day operations of the Workers' Compensation Board reflect

the policy and directives set by the governors.

A very

important aspect of the bill is that the responsibilities of the

president and chief executive officer will be clearly defined as

separate from those of the chief appeal commissioner. There may have

been a perception that the final appeal in the old Workers'

Compensation Board system was to the same people who established the

policy and, in fact, hired and administered the operation of the

Workers' Compensation Board. The chief appeal commissioner and the

president will each have their own area of operation, but they are not

accountable to each other. They are both accountable directly and

exclusively to the board of governors.

The chief appeal

commissioner will be responsible for developing the actual practices

and procedures for the conduct of appeals consistent with any policy

guidelines provided by the governors. The appeal commissioner can

establish one or more panels which have the same power and authority of

the appeal division. The appeal commissioner will be responsible for

hiring and overseeing other appeal commissioners. The appeal division

will have the power to compel attendance of witnesses, examine them

under oath and compel production inspection of books, papers,

documents, etc.

The appeal system for claims will be

significantly modified. The existing external Workers' Compensation

Review Board function is functioning well and will remain unchanged to

handle initial appeals from the Workers' Compensation Board decisions.

The new internal appeal division recommended by the advisory committee

will replace the commissioners as the final level of appeal on claims.

This internal appeal division will hear appeals of review board

decisions.

Workers, dependents, employers or

representatives of any of them will have a 30-day period to apply to

the appeal division. The appeal period will be reduced to 30 days from

the current 60 days in order to cut down on the current system's

delays. The appeal division will be required to make its decision

within 90 days unless extended by the chief appeal commissioner.

The

appeal division will also hear employer appeals of WCB assessments and

safety penalty levies. Appeal decisions will be final and binding;

however, the appeal division will have the power of reconsideration if

substantial and material evidence arises or is discovered subsequent to

a hearing.

The proposed quasi-judicial separation of the

appeal division will address past criticism from some claimants and the

public that the process of appeal to the commissioners could be subject

to conflict of interest. Although employers and workers will still be

able to appeal any review board decision to the WCB appeal division,

the power of the Workers' Compensation Board to reopen, rehear or

redeter-

[ Page 7163 ]

mine

matters ruled on by the review board will be limited. The WCB president

will be limited to initiating on his own motion a repeal of a review

board decision only if there has been an error of law or an error in

interpreting the published policy of the governors. This change will

protect the policy-making integrity of the board of governors. It will

also give due recognition to the weight of review board decisions in

adjudicating on factual and other appeal issues.

The Munroe

report pointed out that the case of Guadagni v. Workers' Compensation

Board made it clear that the legislation needs to more clearly spell

out the process of implementing a review board finding by the Workers'

Compensation Board. That decision required the board to pay both

prospective compensation payments and often very large retroactive

compensation payments. They were to be paid immediately, even if that

decision was subsequently appealed or referred to the commissioners.

Bill 27 addresses this problem.

[4:15]

The new provision will continue to require periodic payments to

begin after a favourable review board finding. In those cases, where

the review board decision is appealed to the appeal division or

referred by the president, retroactive payments will not take place

until the appeal division has made a decision. If that appeal is

successful, retroactive compensation plus interest will be paid to the

complainant.

The bill provides flexibility to the governors

in determining interest rate policies. As I mentioned earlier, the

appeal period has been reduced to 30 days, and the appeal division will

have 90 days to make that decision. These changes not only reflect the

position of the review board as an appellant body, but they should also

result in fewer system delays.

The Workers Compensation

Amendment Act is truly the product of consensus and cooperation between

all parties of interest to build the best possible workers'

compensation system — a system that will serve the needs of all British

Columbians. The sound structural changes being made will result in a

stronger, more responsive Workers' Compensation Board. I am confident

that worker, employer and public interest representatives who are

appointed to the board of governors will work together to monitor and

modify the new system so that it will meet the changing needs and

expectations over time.

Mr. Speaker, Bill 27 reflects what

can be accomplished when labour, management and government work

together towards a common goal.

Mr. Speaker, I move that the bill now be read a second time.

MR. GABELMANN :

The opposition members of the House are in full support of this

legislation. It is a good piece of legislation, and it deserves speedy

passage by this Legislature — in fact, enthusiastic passage. This is

an essential first and major step in redressing decades of

mismanagement and horror stories at the Workers' Compensation Board.

The

minister talked, particularly in his closing words, about how the

cooperative process between business, labour and government can produce

good work, and this is clearly an example of that. In parenthesis and

out of order, Mr. Speaker, may I say that I only wish Bill 19 had been

a product of the same kind of process. We would be far better off — and I am out of order.

We will have in committee stage a few questions, which are more appropriate at that stage — nothing

of any consequence. I want to just go through two or three issues, and

perhaps in closing debate the minister could respond. If not, then

perhaps during committee stage he could make some response to these

issues.

As the minister has noted, the Munroe committee recommended a board of governors comprised of 13 voting members — five,

five, two and one. The process of determining who the five labour or

employee representatives are, and who the five management employees are

is one that I would be interested in having the minister comment on.

It's a process that can be subverted, and on occasion in the past,

comparable models have been subverted by governments who wish to not

pay close attention to the wishes of the — in this case — management

or labour representatives. I would like the minister to give us some

ideas as to how this process would work in determining who these people

will be.

In particular, I want to say that the two public interest representatives should be — and as Don Munroe and the committee makes clear in their report — public

interest representatives and not government interest representatives.

It would be inappropriate, as the report notes, to have the government

represented. The government, of course, can be represented in various

ways. The most obvious way would be to have an executive council member

appointed to the board of governors, or in fact a member of the

government caucus appointed. Clearly, that government has no intention

of doing that, I'm certain.

But the government can be

represented in other ways as well, by having partisan people who will

do the bidding of the government appointed to these positions. At this

stage, I trust that the intent of the Munroe report that these be

public interest representatives and not government or partisan

political representatives will be adhered to strictly. Otherwise this

whole process may well be off to less than the good start that I expect

it will.

Munroe's report, unless I misread it, does not

deal with the suggestion that a

section pertaining to regulations

should be added to the legislation. This makes it appear as if all WCB

regulations, which heretofore have been massive and approved by the

board itself, will not have to be approved by order-in-council. I

wonder why now it appears as if we're going to go through a process

where it becomes an order-in-council process, rather than an internal

WCB process. In other words, could the minister give us some idea of

why 101.1 is included? I recognize it's simply "may" make regulations,

but that's standard

[ Page 7164 ]

legislative

language. I'm really curious about why the government would want to get

into the business of making regulations in respect of health and safety

matters.

Finally, I note the omission of a major element of the ombudsman's report — report number 7, I think it was — relating

to the appealability, if that's a word, of board of review decisions

being referred to a medical review panel. The ombudsman argued that one

should be able to appeal the decision of a review board to a medical

review panel. It's now not permissible. The legislation does not

reflect that recommendation. It appears to me and to others as if that

was a major recommendation, and I'm just curious as to why that

recommendation of the ombudsman was not followed.

Mr.

Speaker, I have no other comments to make, other than to note that

during committee stage we will have a few other particular questions,

and to say once again to the government, on behalf of working people

and employers across this province, good work, and let's have this

style of government leadership demonstrated in many more areas in the

days and months to come.

HON. L. HANSON : I appreciate the remarks of the member opposite.

The

process of selecting the representatives of worker or management

interests is always an interesting one. I know that there are a number

of other processes that happen where various interests are mandated by

the legislation to sit as representatives in some particular area, and

it is always an interesting one. I don't suppose there is a method you

can lay down on paper that completely deals with that in all its

various intricacies and those sorts of problems that arise in trying to

get a representative of any particular part of a community. The

consensus of that total community is always a difficult task, but

obviously we look to the two areas of interest for a lot of assistance

and advice as to who those selections may be. I suppose we can develop

that process through the committee stage a little more. But I think the

member opposite, with his experience in labour relations and some of

those representations that are required to be representative of a

particular body of interest, understands the difficulties and so on.

The dedication is certainly within the legislation to have those

representatives truly representative of those communities of interest.

would agree with the member that the public interest reps are not

necessarily representatives of the government's interest; but maybe

there is an individual who has the interest of the public at heart. I

guess I would have to say to the member that quite often the interests

of government, whoever it may be, should quite often reflect the

interests of the public. Again, it's an interesting procedure.

The

member is quite right that in clause 101 there is a regulation-making

ability by the L-G-in-C. But the policy-making is really not to be

established by regulation; it is more to be established by the board of

governors, as the WCB policy. I suppose that that

Is there

not as a mandate that everything has to be done that way but that there

is the possibility of doing it to give it some more emphasis.

I appreciate the member's remarks, and I look forward to the committee stage process where we can get into detail on the bill.

MR. SPEAKER : The question is second reading of Bill 27.

Motion approved.

Bill

27, Workers Compensation Amendment Act, 1989, read a second time and

referred to a Committee of the Whole House for consideration at the

next sitting of the House after today.

MR. SPEAKER : The first member for Okanagan South seeks leave to make an introduction.

Leave granted.

MR. SERWA :

A few minutes ago a group of students were in the Legislature from

Springvalley Secondary School in Kelowna. I would like to read into the

record a welcome. On behalf of the second member for Okanagan South

(Mr. Chalmers) and myself, I would like to recognize the presence of 15

grade 10 to grade 12 students from Springvalley Secondary School in

Kelowna. They are accompanied by their teacher Fritz Hein and

chaperones Bob and Mary Hardy. Springvalley School is a senior high

school that excels in a variety of activities. They have been quite

aggressive in making sister-school contacts in Beijing, and are

striving to make similar contacts in Thailand as part of their Pacific

Rim initiative. Would the House please join me in welcoming these

students from Springvalley School.

[4:30]

HON. S. HAGEN : Committee of Supply, Mr. Speaker.

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

ESTIMATES: MINISTRY OF

AGRICULTURE AND FISHERIES

On vote 8: minister's office, $249,374.

HON. MR. SAVAGE :

I'd like to say, Mr. Chairman and hon. members, that it's indeed a

pleasure for me to present the 1989-90 estimates of our ministry.

consider my job a particular honour this year, because I'm presenting

my estimates as part of our provincial balanced budget. I believe the

balanced budget is an achievement of the decade. Very few governments

anywhere, in fact, have been able to match that achievement in recent

years.

Agriculture and fisheries is B.C.'s second-largest

resource industry. It is a $10-billion-a-year industry that employs

nearly 200,000 British Columbians. This

[ Page 7165 ]

$10 billion comprises $8.8 billion on the retail side and some $1.2 billion in food exports.

These

industries are strong and healthy, Mr. Chairman, and it's by no

accident; it is the result of hard work and extreme dedication. For one

thing, our fishermen, our farmers and the people involved in the

aquaculture industry have shown themselves to be resilient and creative

in the face of challenges. Credit should also go to our dedicated

ministry staff, both in the field throughout the province and, of

course, at our headquarters here in Victoria. They have proven

themselves to be very adaptable in meeting the new challenges in the

food-producing industry and also in the private sector.

Mr.

Chairman, ministry staff have a very clear idea of what the ministry

aims to achieve. The ministry's mission statement spells out the

principles we will build our programs on. It says that the Ministry of

Agriculture and Fisheries will encourage sustainable growth and

development in the food industry. We apply that encouragement to

British Columbia producers, processors, distributors and marketers of

food and fish products. The encouragement is designed to meet the

demands of our domestic markets and, increasingly, our opportunities in

export markets. How we apply that encouragement is in keeping with the

three principles this government has established as the foundation of

its initiatives: protection and enhancement of the environment;

education for progress; and economic development based on

sustainability. In the case of Agriculture and Fisheries,

sustainability means protecting the resources — that is, land and water — so that our province is always able to produce an abundance of wholesome food.

From these foundation principles flow several operating principles, principles that we employ daily.

accept the fact that we are living in a global economy. Our food

products must compete with the rest of the world. Product quality wins

competitions. The growth and development of our food industry depend on

its ability to produce products that are safe, wholesome and of the

highest quality.

Mr. Chairman, the ministry is committed to

the highest level of service. We're ensuring that all our clients are

served efficiently and with a high degree of professional courtesy.

We're

also committed to supporting the government-wide initiative of regional

development. There is a significant transfer of responsibility for

development and extension in these regions. We're placing renewed

emphasis on understanding and meeting the unique needs of all our

province's economic regions.

We're committed to a team

approach to meeting challenges. This is the best way to draw consistent

first-rate performance from my ministry's professional and support

staff.

Mr. Chairman, we're committed to management by

objectives. We're setting achievable goals and working towards those

from day to day.

I'd like to take the opportunity to say a

few words about our constituency, Delta, which is a great example of a

thriving agricultural community. The municipality of Delta is one of

the most productive farm districts in British Columbia. There are 195

census farms, containing some 6,814 hectares of farmland, some under

crop, some in improved pasture, and some in summer fallow. They

comprise 121 individually owned farms, 28 partnerships, 44 corporations

and two other forms of ownership.

The municipality of Delta

has a diverse agricultural economy. Grain, hay and other fodder for

cattle account for the major part of our crop production. Major cash

crops include potatoes, peas, beans, corn, berries, and greenhouse and

nursery production. There are 92,000 square metres of greenhouses and

mushroom-houses used for flowers, vegetables and vegetable transplants.

Livestock

is an important sector of Delta's agricultural industry. Dairy and beef

make a major contribution to farm cash-flow. There are over 6,300 head

of cattle in Delta, and in excess of 2,200 are dairy cows. Of that

6,300 head, 2,400 are registered.

There are also eight

food-manufacturing firms that operate within the bounds of the

constituency of Delta. They process both domestic and imported

products. These operations paid wages and salaries of some $6 million

to 265 employees. The value of shipments from these operations exceeded

some $46 million, with a value-added component of $13.8 million. I'd

also like to say that farmers in Delta produce approximately $25

million in farm-gate value. They also purchase inputs in excess of some

$20 million.

Mr. Chairman, hon. members, in beginning

debate on my ministry's estimates I would like to touch on a number of

important areas. I want to discuss first where we are today; that is, I

want to outline briefly the market environment that British Columbia's

agricultural and fisheries industries are facing. Similar factors are

influencing both sectors.

Next, I would like to present an

economic snapshot, if you will, of where these sectors stand today in

terms of production and sales. I would like to detail for the House the

progress made through some existing programs of the ministry and some

new directions we will be taking to stay a step ahead of our changing

marketplace. I will turn now to a brief discussion of what is happening

in our market through agriculture and fisheries products.

Consumer

demand for wholesome food obviously is intensifying. This trend is part

of a growing global concern for the environment, and it comes with many

implications. We anticipate wholesome and high quality foods to capture

a larger share of the food market. Consumer demand for assurances of

food quality and safety will increase. The public will continue to make

greater demands for input into decisions involving land use. We

anticipate a greater need to coordinate our efforts with other

ministries and with other levels of government to satisfy public

expectations about environment and food quality.

The

agriculture and fisheries industries have always had to cope with

unpredictability. Today our global competition means we must find

better ways to adapt to unpredictability in markets, in production and

conditions and prices, because all have a factor of

[ Page 7166 ]

unpredictability. Unpredictability also comes with its own set of implications.

Producers

will try to minimize unpredictability by investing in controlled

environment production systems. I am referring to new technology in

aquaculture, greenhouse growing, food storage and processing. An

adjustment to programs will have to be considered in conjunction with

our federal colleagues as we move into the era of free trade with the

United States.

Complicating all the concerns for production

in sales in agriculture and fisheries is the heightened public

awareness that our natural resource base — land and water — does, in

fact, have limitations. Our food industries are mature, and increased

production will come primarily through more intensive use of the land

base and technological breakthroughs. This means, for example, there

will be a greater need for creative long-term solutions to challenges

such as water management, quality control and waste disposal.

Industry

operations will become more intensive. Management skills will obviously

have to be increased. We continue to develop access to the best

technology in the world to increase our ability to compete in the world.

have outlined some operating principles and sketched briefly some of

the characteristics of the market environment we are operating in

today. Formulating the principles and assessing the environment led

naturally enough to our setting down a list of priorities. Our policy

initiatives will promote a competitive marketplace. We will work to

achieve freer trade and greater access to other markets for British

Columbia products.

We will maintain the integrity of our

resource base as a foundation for sustainable growth and development in

food production. We will need to consider our financial programs in

conjunction with industry, to move the industry toward

self-sufficiency. We will enhance public awareness of the significance

of our food industry.

These are some of the factors facing

our food industry today. How is the industry doing in the face of such

pressures? Overall, the picture is good for our $10 billion industry.

Last year, farm cash receipts increased for the fifth consecutive year.

I had forecast it would increase by 3 percent. I should have been much

more optimistic because, in fact, the increase was 6 percent. The

picture for total net farm income last year was even better. It was up

17 percent, to $212.4 million on sales of $1.1 billion.

fisheries, the sales of wild seafood products reached $447 million last

year. That equates to approximately 200,000 tonnes of product.

Aquaculture

is a major success story. Salmon farmers harvested some 6,000 tonnes

last year. The fish had a wholesale value of over $30 million. Value

and volume of production of oysters and clams are also on the increase.

the dairy and livestock sectors, growth has also been very strong. Last

year the value of dairy products rose some 3.4 percent to $139 million.

Livestock

sales rose 3.7 percent to $192 million. There is more good news in the

number of small specialty markets that British Columbia producers are

now entering. We refer to this area as our niche markets. It's in these

niche markets that some of the fastest growth is taking place.

Horticulture

is a good example. I am proud to report that the B.C. greenhouse sector

is flourishing. Consider this: B.C. is now exporting greenhouse grown

cucumbers and tomatoes to California.

Also in the area of

the niche markets, our floriculture and nursery industries are

prospering. Sales of cut flowers and nursery plants rose almost 14

percent last year to some $80 million. Believe it or not, we're selling

edible flowers to Japan. These are a few examples of how our farmers

and fishermen are already responding to the challenges of the

international marketplace.

If we add it all together from

primary production to transporting, processing, packaging, storing,

distributing, retailing, cooking, serving and exporting, our industry

is a $10 billion food industry. The marvel is that we still enjoy some

of the cheapest food in the world and also one of the widest selections

of locally grown products. The programs of our ministry have helped

facilitate these healthy conditions in our food industry.

are working with the fish inspection branch of the Department of

Fisheries and Oceans to introduce a regulatory framework that will

allow fish-farmers to capture the markets in seafood products.

B.C.-farmed salmon recently placed first against competition from

eastern Canada, Scotland, Norway, Chile, Washington State and Alaska in

an international taste test held earlier this year in Los Angeles.

[4:45]

means to ensure sustainability of production of our wild fish catch and

salmonid enhancement programs. We've taken steps to help B.C. growers

of commodities such as beef cattle, lambs, hogs, apples, honey and

horticultural produce to ensure access to new world markets. Through

the Canada-B.C. crop insurance program, we've helped farmers maintain

their incomes in years when natural hazards reduced their crop yields.

Mr.

Chairman and hon. members, overall the industry is in good shape, but

of course, there will always be challenges. I now want to outline how

our ministry will apply its energy and funding in the coming fiscal

year to meet the demands. Some of the initiatives I'm about to outline

were first presented in our government's Speech from the Throne this

spring. That speech committed our government to address the issue of

chemicals in food production.

B.C. producers are

continually looking for ways to improve their practices and increase

their productivity, efficiency and profitability without the use of

chemicals. The ministry has encouraged them in every way possible

through our extension efforts. For example, to achieve a reduction in

pesticide use, the ministry has assisted in the development of several

integrated pest management initiatives including the

[ Page 7167 ]

ladybug, the parasitic wasp and mite releases for greenhouses and the testing of resistant varieties of grass and tree fruits.

1992, all pesticide applicators will have to be certified before they

will be permitted to buy pesticides. We want to make our safe, healthy

foods even safer. The $104.46 million budget includes these initiatives

and maintains the infrastructure needed to ensure a strong food

industry in this province.

The government's fiscal programs

have given us the flexibility, for example, to make the grape and wine

industry a major beneficiary of this year's budgeting process. The

grape and wine industry adjustment program has been allocated $12

million in this budget. The funding will be used to implement this

year's activities under the $28 million federal-provincial grape and

wine sector adjustment program. No one denies that this sector will be

affected by free trade with the United States, but we are doing our

best to prepare the at-risk producers to cope with the impact of free

trade. The ministry is working closely with industry to develop a

quality wine niche market for this province, and we believe we can do

well at it.

The agricultural and regional development

subsidiary agreement, better known as ARDSA, will receive an additional

$6.7 million for a total of $14 million this year. The additional

funding will be used to maintain programming through all regions of the

province in keeping with our strategy of regional development. ARDSA

projects will continue to focus on soil and water development — sustaining

the resource for future use, in other words. Other ARDSA projects will

be enhancing the competitiveness of the food processing sector.

will be improving our framework for orderly and responsible aquaculture

development by establishing a new licensing scheme. Additional funds of

$250,000 have been assigned to begin a joint federal-provincial

research program regarding aquaculture and fisheries interactions. We

will also be helping industry to establish systems to diversify their

product lines and enhance product quality.

Our regional

development extension program will receive $250,000 in new funding.

Four additional staff will be hired and trained to enhance extension

programs for farmers, especially in animal health.

Responsibility

for the game-farming sector has been added to our ministry. This is

another of the niche market industries with bright prospects.

Investment in this two-year-old industry is already $8 million and

growing rapidly.

The ministry is looking forward to working

with the new Trade Development Corporation, which has been given

responsibility for export market development of British Columbia

products.

The feed grain development program, which was so

successful in encouraging B.C. ranchers to use B.C. feed grain to feed

their cattle and keep them here rather than shipping them to Alberta,

has been allocated $1.3 million to continue it until July 31, when it

will expire.

[Mr. Rabbitt in the chair.]

The

farm income insurance program will be maintained, as British Columbia

producers adjust to national income stabilization programs. These are

called tripartite, because they represent a three-way sharing of costs

between producers and the two levels of government. The ministry is

actively promoting tripartite insurance programs for farmers. These

programs are based on sound insurance principles.

I can't

leave the matter of insurance without commenting on the world subsidy

war that is taking place. Even as we enter the free trade agreement

with the United States, our moving away from subsidy programs and the

erection of self-financing insurance programs for farmers must be a

gradual process. We well realize that. As some hon. members know, some

of the challenges British Columbia's food industry faces are a direct

result of the subsidy war between the EEC and the United States. The

subsidies are distorting the world marketplace. Let me tell you, hon.

members, we are caught in the middle. Until there's an end to that

subsidy war, we must and will protect our producers. This ministry will

do whatever it can to help create a more level playing-field without

the distortions of subsidies.

Hon. members, in the Ministry

of Agriculture and Fisheries, our responsibilities now focus on

substantial economic development in both domestic and international

business. In fact, that is exactly what agriculture has become. The

forces of supply and demand will ignore borders. Free trade is an

opportunity. Closer links with the Pacific Rim offer still more

opportunities.

Our food products are of world class; our

producers have proven that. We will continue to encourage them. We are

ensuring our future ability to produce excellent food in great

abundance. I will conclude now, and I look forward to answering

questions from the members opposite.

MR. BARLEE : Mr.

Chairman, perhaps I should clarify my personal feelings towards the

minister before I criticize the ministry. He happens to be a decent

guy. I'm in a bit of a classic dilemma, because the minister also has a

longtime friend of mine on staff who happens to be a Red Tory, but

happens to be a very decent and honourable Red Tory, which is a rare

fish indeed. That is, of course, Dr. Lorne Greenaway. We have been

friends since about 1944; it goes back quite a few years.

When

I look closely at the state of agriculture in the province, there are

certain danger signals. I realize that there are some sectors that are

definitely at peril; there's no doubt that they are.

think most people realize that one of the fundamental bases of the

industry is the survival of the agricultural land reserve. The ALR

really is the heart of the industry. Without it, the province loses

much. First of all, we'd lose the industry, which is very important.

Secondly, we'd lose the quality of life. I've gone over the record of

the industry, especially in the

[ Page 7168 ]

last three or four years, considering the ALR, and one of my first concerns is the state of the ALR.

When

the ALR was brought in in 1973, it was a social contract between the

government of the day and the farmers that essentially said this: for

preserving the agricultural greenbelts, the government promised to

guarantee a decent income for farmers. Does the minister believe that

the original contract has been honoured by the government?

HON. MR. SAVAGE : Yes, Mr. Chairman.

MR. BARLEE :

The minister has stated on a number of occasions that the Social Credit

Party is still committed to the land reserve. I wish that were true;

unfortunately it isn't. If one looks through the back issues of Country Life from 1980, this statement was made by the Premier of the day, W.R. Bennett. He made the statement to the Smithers Interior News

that it was his opinion that the Land Act was too tough on land

developers wishing to develop lots in the ALR He went on to say: "It's

tough to get land out of the ALR. I don't think anyone has to worry

about losing agricultural land. There is plenty of land around here."

Then he elaborated on that statement: "Bennett said the province had

lots of agricultural land available, and land developers should be

allowed to take good residential property out of the ALR." He seems to

have followed up on it, because between 1974 and 1987 the agricultural

land reserve shrank by 25,204 hectares. That's 60,000 acres

approximately, give or take a few acres; almost 100 square miles of

some of the best agricultural land in the province.

couple of things I find interesting, and one of them is that when some

of these lands are taken out, some very peculiar things come to mind.

In late 1987, Gerard Kapchinsky wanted to take 107 acres out of the

ALR. He was called an on-side guy. His land was classified mostly 3 and

4, which is fairly good agricultural land. He bragged to his neighbours

that he was a good supporter of the government, and he'd have no

problem getting it out. But the ALC turned down his application, so he

applied a second time The ALC turned it down the second time, so he

applied a third time — this guy's very persistent. They turned it down

a third time. Did he give up? Not a chance. He applied a fourth time,

and they turned it down again.

But Gerard knew what to do:

he appealed it. And who did he appeal it to? He appealed it to the

Environment and Land Use Committee — that's a real misnomer — and what

did they do? They overruled guys who knew all about the land. Lo and

behold, Gerard Kapchinsky got his land out of the ALR after being

turned down four times — not once, not twice, not three times, but four times — by the ALC.

Then

we have another case, one which I find very puzzling. In fact, an old

friend who's sitting on the opposite side and I wandered over this land

as kids. It's in Westbank. You'd like it to be an area that you're

familiar with. Well, I'm fairly familiar with Westbank

One

of my neighbours there was a guy called R.J. Bennett. R.J. Bennett

happens to be the brother of the former Premier of this province. Now

R.J.'s a nice guy. He's very keen on horses; he's a good neighbour;

he's very convivial. I've known him since he was a kid; he used to play

hockey with me. So I'm not unfamiliar with R.J. I know Lois, his wife,

as well. Their political philosophy varies slightly from mine.

I've wandered over this land a lot. He had 19 hectares of very nice benchland — that's

almost 50 acres. Fifty acres in that location in Westbank, which is

only about two-thirds of a mile from the main street, is worth millions

of dollars. Most of it is class 3, which falls into prime agricultural

land categories. Some of it is class 6, but most of it is class 3; and

I believe it is, because I've wandered over it many times. He applied

to the ALC. There was no on-site study; no reasons were given for the

approvals. But lo and behold, R.J. Bennett got his 50 acres out in the

fall of 1987.

[5:00]

I'll tell you what happened. Some of his neighbours, who are not by

any stretch of the imagination socialists or even left of centre, were

very concerned because they had viable orchards. In fact, these

orchards and vineyards border the property; they're right next door,

and it's very, very good land. But R.J. Bennett had no problem getting

it out of the ALR, while other people had a great deal of difficulty

and never got their lands out, lands that perhaps could have been taken

out.

I came across another case, and this case again

involves the Kelowna area in the Okanagan, where the ALR is under a

great deal of pressure. If I tell you afterwards why it's under

pressure. There's an old property in the Okanagan that a couple of us

know well. It's the old Paddy Cameron property, called Aberdeen

Holdings now. It used to be the Guisachan Ranch. This is very

interesting, because the two holders of this particular piece of land

are — guess! — R.J. Bennett and R. Stewart. Well, R. Stewart would be

Dick Stewart. So here we have R.J. Bennett again, and we have a

longtime friend who is also onside; this is Dick Stewart. Now they

don't have 50 acres, they don't have 60 acres near the centre of

Kelowna, they don't have 70 acres; they have 90 acres. Very

interestingly, out of the 90 acres, 72 acres was classified as 2 or 3.

This is prime agricultural land.

So we have 72 out of 90

acres; 80 percent of that land was prime agricultural land. So they

asked the ALC to have this land released from the ALR. The Agricultural

Land Commission turned them down. But these guys didn't wait like

Kapchinsky; they didn't apply two times, three times or four times.

R.J. Bennett knew exactly what to do. He went straight to ELUC, and he

appealed it. You know, the ELUC had no problem in taking 90 acres of

the finest land in the Kelowna area — and that's by your own figures; classified 2 and 3 — out of the agricultural land reserve.

What

I am saying here is this, through you, Mr. Chairman, to the minister:

you have stated that the government is committed to the ALR. I think

you are

[ Page 7169 ]

personally,

and I think your deputy is personally, and I think you guys are in a

classic dilemma, because you have a real problem. You're personally

committed, I believe, to the ALR. I believe you are committed to

agriculture. But I don't think this government is committed to

agriculture. If you study the record over the last five or six years,

in fact the last ten years, it will bear it out. So is the minister

working towards the depoliticizing of the system? Does the minister

believe that the Agricultural Land Commission should be overruled by

ELUC?

HON. MR. SAVAGE : Mr. Chairman, first let me

give my hon. critic some stats that might be interesting. The ALR

actually remains quite stable at some 4.7 million hectares. Of the

100,312 hectares that have bee