1988 Legislative Session: 2nd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, APRIL 28, 1988

Afternoon Sitting

[ Page

4131 ]

CONTENTS

Routine Proceedings

An Act to Affirm the Rights of Permanent Hotel Residents (Bill M202). Mr. Barnes

Introduction and first reading –– 4131

Oral Questions

Sale of Expo lands. Mr. Williams –– 4131

Taxation increases. Mr. Clark –– 4132

Poverty in B.C. Mr. Cashore –– 4132

Report of Shelford falcon inquiry. Mr. Miller –– 4133

Heart surgery waiting-lists. Hon. Mr. Dueck –– 4133

Ministerial Statement

Personal Property Security Act. Hon. Mr. Couvelier –– 4134

Mr. Sihota

Committee of Supply: Ministry of Finance and Corporate Relations estimates.

(Hon. Mr. Couvelier)

On vote 37: minister's office –– 4134

Mr. Jones

Mr. Sihota

Mr. Clark

Mr. Davidson

The House met at 2:09 p.m.

HON. MR. COUVELIER :

As the House knows, it is the intention of this government to forge new

and continuing links with our friends and neighbours in the Pacific

Rim, and I'm very pleased to have with us this afternoon in the House

representatives from the People's Republic of China: Jin Duan,

consul-general; Hou Qingru, vice consul-general; Yan Huimin, commercial

consul-general; and Feng Xu, commercial vice consul-general. They are

accompanied by the secretary of Treasury Board, Mr. Philip Halkett, and

a member of the Ministry of Finance staff who happens to be fluent in

Mandarin Chinese, Miss Janet Lucas. Would the House please welcome our

Pacific Rim neighbours.

MR. DAVIDSON : In the gallery

this afternoon, offering proof positive that this government can make

inroads in even the strongest NDP family, my wife Debbie, and to help

that stay that way, her friend, Paulette Winter.

HON. B. R. SMITH :

I have the honour today to introduce a number of Superior Court

justices from the state of Washington, including Chief Justice Quinn,

who are here with their wives in the gallery. They have been in

Victoria today watching the Court of Appeals in session and some of the

County Court trials. We hope this will be the beginning of a good

interchange between judges and lawyers from Washington state and

British Columbia, as they have had more experience than we have with a

written constitution, and now that we have one, we can use their help.

Will the House make them all welcome.

HON. MR. STRACHAN : The second member for Delta (Mr. Davidson) missed something. Today is Debbie Davidson's birthday. Happy birthday, Debbie.

HON. MR. REID :

I rise today to pay tribute to an outstanding local servant of the

people of British Columbia, in particular the city of Vancouver.

Saturday, April 23, Mr. Halford Wilson, a freeman of the city of

Vancouver and an alderman there for 37 years, from 1935 to 1972, passed

away after a lengthy illness. It is important that we in this

Legislature pay tribute to an individual with a distinguished military

career, a past president of the Union of British Columbia

Municipalities, a life governor of the Vancouver Aquarium, and a former

director of the Vancouver Art Gallery. He was a friend of many and will

be missed.

MR. HARCOURT : I too would like to pay

tribute to Halford Wilson, who served on the Vancouver city council for

over 30 years and knew the city, loved it and served in many

capacities. He will be missed, and I would like, on behalf of our

caucus, to express our regrets and best wishes to Halford's widow,

Anna-Marie.

Introduction of Bills

AN ACT TO AFFIRM THE RIGHTS OF

PERMANENT HOTEL RESIDENTS

MR. BARNES : I am very pleased to have the opportunity to introduce a

bill intituled

An Act to Affirm the Rights of Permanent Hotel Residents, which

is a piece of legislation that, as all members know, is long overdue. In my

15 years in the House I believe it is probably one of the most important acts

that I have taken.

You

might recall, Mr. Speaker, that not much more than two years ago we had

a number of tenants in the downtown east side who were being evicted as

a result of the Expo program coming on site and there was quite a bit

of speculation. I would just like to say that this bill will do

something about that situation, and I hope that the government will, in

a non-partisan way, ensure that it is passed.

It will

protect tenants from unfair rent increases; the seizure of goods where

there are disputes. It will also protect them as far as arbitrary entry

by landlords into their premises and will allow them, believe it or

not, a key to the front door.

[2:15]

Most

of these people are single, elderly and poor. Some of them are

veterans. About 15,000 all told, although we don't have the exact

numbers, are in the cities in the province. There are 10,000 in the

downtown east side. In moving the motion, I would like to say that I am

very pleased that after this long period of time, we're finally coming

up with a piece of legislation that I'm sure the House will support.

Therefore I move that the bill be read a first time now and placed on

the orders of the day for second reading at the next sitting of the

House after today.

Bill M202 introduced, read a first time

and ordered to be placed on orders of the day for second reading at the

next sitting of the House after today.

Oral Questions

SALE OF EXPO LANDS

MR. WILLIAMS :

I have a question to the Minister of Finance, who has been so

fastidious in checking the Minister of Economic Development's (Hon.

Mrs. McCarthy) furniture expenditures. Could the minister advise us if

he has similarly checked her number work with respect to the sale of

the Expo lands?

HON. MR. COUVELIER : I take it the

hon. member is referring to the announcement made yesterday; that's the

issue. Yes, I am happy to confirm that all ministries of government

with an interest in the subject participated in the examination of the

final recommendations.

MR. WILLIAMS : I'm pleased to

hear that. Can the minister confirm that of the stated $320 million,

some $200 million would be in the last three years of the deal — that is, years 18, 19 and 20, or five years earlier if that were the case?

HON. MR. COUVELIER :

I believe the hon. member is fully aware that there is a participation

in the package which makes it very difficult to quantify with any

exactitude, by virtue of the sliding scale of revenue that returns on

the basis of development densities. I don't have that file with me. But

in any event, I don't know that the question would produce much in a

meaningful answer, by virtue of the fact that the deal is open-ended in

the sense that we will share in the success of the development of the

site.

MR. WILLIAMS : At times we despair, in terms of a meaningful answer from this minister, but we'll carry on. It's

[ Page 4132 ]

standard

procedure to review proposals like this where so much of the money is

at the late end, rather than at the early end. When you buy a house,

nobody can buy under these terms, where you make almost all the

payments in years 18, 19 and 20, and only 10 percent down, and no

interest in between. We'd all like to buy a house like that, let alone

downtown Vancouver. But the standard procedure is to discount this and

use standard mathematical formulae. The question, then, is: on that

basis, what is the net present value of the Li Ka-shing offer?

HON. MR. COUVELIER :

Mr. Chairman, as I indicated earlier, the province shares in the

success of the full development of the site, so the proceeds to be

received at the completion of the full development are very difficult

to quantify with exactitude now. Matters will unfold.

The

member has me at a disadvantage. I do not have with me the information

kit that would provide that detail. I'm sure the hon. member has it. In

any event, I'll say it again: the deal was structured to ensure that

the citizens of this province receive the benefits and share in the

proceeds of a successful development. What more could you want?

MR. WILLIAMS :

The vaguer the answer, the louder the voice. Would the minister

confirm, though, that if you applied a standard discount rate of 10

percent, the real number, if it's a 15-year deal, is $130 million, not

the $300 million or $500 million that he minister talked about; it's

just like her furniture. And if you used a 20-year term, which is

possible if demand is not too high, in fact the amount would be $103

million for this priceless asset on the edge of Vancouver's downtown.

HON. MR. COUVELIER :

As usual, Mr. Speaker, the members from the socialist side of the House

have shown a tragic inability to calculate figures effectively. The

truth of the matter is that the immediate benefits exceed book value,

that's for sure. But by how much will depend, as I've said, on the

successful development of the site, which as the hon. member knows — if he doesn't, the member immediately before him would know —

will require the cooperation and sympathetic understanding of the city

of Vancouver council on the issues that the developer will bring

forward in the fullness of time. So none of these things can be

quantified with exactitude until we understand more clearly exactly how

cooperative the city of Vancouver will be in these matters.

MR. WILLIAMS :

The Minister of Finance has now confirmed that he does not know the

price for which we sold the most valuable land in British Columbia.

TAXATION INCREASES

MR. CLARK :

I have a question for the Minister of Finance on a different topic. New

census information shows that the income of the average B.C. family

plunged 9.7 percent between 1980 and 1985 — eight times the

national average. That's the legacy of Social Credit in British

Columbia. Now your new budget makes matters worse.

The specific question — and he has to listen to this carefully —

is this. Is the minister aware that a single parent with two children

under 17 earning $15,500 per year faces a 39 percent increase in the

provincial tax bill because of the medical premium increase alone?

HON. MR. COUVELIER :

Mr. Speaker, the question is so specific that.... The normal courtesies

of the House would expect that on a question that detailed we would

have had some advance notice so we could have responded to the exact

question put.

Let me just remind the hon. questioner that

the issue was exhausted at some length with questions on the same

subject from his hon. colleagues during my estimates yesterday

afternoon and this morning. I can regurgitate my answers given at that

time, at length, but that would consume the balance of the allotted

question period, and I'm reluctant to do that. The issue is not a new

one; I did respond to it at length during the discussion in my

estimates.

If you'd like, Mr. Speaker, with your permission

and the House's permission, I'm pleased to develop the argument. But I

suspect there may be other issues that would interest the hon. members.

I'm a servant of the House, Mr. Speaker, and if it's desired that I

should spend more time on this, I'll be pleased to do so.

MR. CLARK : It's obvious, Mr. Speaker, that he's not aware of the impact of the budget on the working poor of this province.

One more question. Is he aware that a single person with $11,220 in gross income — or $6,500 in taxable income — faces a monthly provincial tax bill increase of 22 percent because of the medical premium increase alone?

HON. MR. COUVELIER :

Mr. Speaker, the thrust of the question, I think, is intended to imply

that during the Social Credit government's administration of provincial

affairs, there has been some sort of negative effect on the economy.

The fact of the matter is that since we have been in office a short

year and a half, we have created 90,000 new jobs. There is more capital

investment being made in this province of ours today than in the

previous five years put together. Our province has got the best record

of inflation control in Canada. Our province is creating more jobs in

Canada, and the budget that the member criticizes in his question is

designed to increase employment in our province by 4.5 percent in the

next 11 months.

MR. WILLIAMS : The minister is a servant of the House! I'd like a glass of water.

POVERTY IN B.C.

MR. CASHORE :

A question to the Minister of Social Services and Housing. It's obvious

from what the Minister of Finance has been saying that he is not

prepared to admit that the prosperity he likes to talk about has not

trickled down to the poor working-class people and the unemployed of

this province. Family poverty has grown faster in B.C. than anywhere

else in Canada in the 1980s. The latest figures from the National

Council of Welfare show the number of B.C.'s families in poverty jumped

from 69,000 in 1981 to 105,000 in 1986 — a 52 percent increase in

poverty. Will the Minister of Social Services tell the House what the

cabinet has decided to do to reverse the trend that his government has

created in causing a 52 percent increase in poverty in this province?

HON. MR. RICHMOND :

If the member would take the time to read the news releases we've put

out in the past few weeks, he would realize there are more positive

initiatives in

[ Page

4133 ]

there to get people off welfare rolls and back into employment than in probably

any other province in Canada.

MR. CASHORE :

Supplementary. The people of British Columbia are not fooled by

bafflegab news releases. Almost half a million British Columbians now

live in poverty, most of them women, children and elderly. The

wealthiest 20 percent of British Columbians pocket almost 40 cents of

every dollar made in this province. These figures are positive proof

that Socred government policies are creating a permanent class of B.C.

poor. The minister has already shown us that he's prepared to dig

deeper into the already empty pockets of the poor. Will he tell the

House why he hasn't introduced measures to raise the income level of

B.C.'s poor, those who through no fault of their own are in desperate

need of help?

HON. MR. RICHMOND : I think the member

should be in contact with the 200 additional financial counsellors we

put in the ministry and ask them if they feel like news-release

bafflegab, or if they feel good about the job they are doing to assist

people.

MR. CASHORE : That minister knows full well

that there has been a decline of 19 percent in front-line social

workers in the last six years and an increase of 25 percent in

administrative staff.

A new question, Mr. Speaker; it has

to do with street workers. In November 1987 the minister announced

Project Reconnect, a program for street youth. At present there are

five social workers working the streets of Vancouver. Four more workers

are to be added very soon. That's the good news. Will the minister

assure the House that the four additional workers will be able to work

full-time on this project and that they will not be bringing their

existing caseloads with them? Or is this another case of smoke and

mirrors?

HON. MR. RICHMOND : First of all, it is

quite evident that that member doesn't know the difference between a

financial assistance worker and a social worker. The 200 additional

workers that I talked about are financial assistance workers, who

counsel people and help them get back into the workforce. They work

with them one-on-one to counsel them on how to get off welfare and get

back into the workforce.

I'm glad the member brought up

Project Reconnect. I'm proud of that project, after having visited the

streets and seen the tragedy down there — and the member for

Vancouver Centre can back me up. We have put more street workers on the

street to help these kids, to save lives and to get them reconnected

with society, and we are expanding the program into other cities in the

province as well as Vancouver and Victoria. It is an excellent program,

Mr. Member.

MR. CASHORE : The minister knows full

well that the tragedy he refers to was caused by subsequent Social

Credit governments in this province.

[2:30]

HON. MR. RICHMOND : Although that wasn't in the form of a question,

it was an inaccurate statement to accuse any government, whether it be theirs

or any government, of being the cause of kids being on the streets of our cities.

It's a phenomenon that's happening all over western civilization and

elsewhere, and it is something that we are leading the way in combatting. We

are receiving inquiries from other jurisdictions across this country as to the

progressive way we are dealing with this problem.

REPORT OF SHELFORD FALCON INQUIRY

MR. MILLER :

Mr. Speaker, a question to the Minister of Environment and Parks. With

regard to the Shelford inquiry into the question of the management of

falcons and whether or not there should be a harvest of peregrine

falcons on the Queen Charlotte Islands, the minister has the report on

his desk.

Two questions: will he make that report public so

that the people concerned about the issue can have a chance to review

it; and secondly, will the minister confirm whether he has made a

decision to allow a harvest to proceed for the purposes of falconry?

HON. MR. STRACHAN :

The report has been on my desk and has subsequently gone to the

ministry, Mr. Speaker. It is my intent to release it probably Monday or

Tuesday of next week. I can't advise you on what position I'm going to

take with respect to the question that was put to Mr. Shelford, but I

can advise you that I will be agreeing with what he recommends in the

study with respect to the falcon chick capture.

I can

further tell the members that the reason we are working a bit on the

recommendations and the report of Mr. Shelford is that the report goes

far beyond the peregrine falcon situation on the west coast of British

Columbia and in fact involves sea birds as well. So it's an extensive

report; there's a lot to it. I will be following it to the law, and it

should be introduced Monday or Tuesday of next week.

HEART SURGERY WAITING-LISTS

HON. MR. DUECK :

I'd like to respond to a question taken on notice, Mr. Speaker. The

question was from the opposition leader and was in regard to the

waiting-list for heart surgery and what we are doing about it.

The

overall position on cardiac surgery services has improved significantly

over the last few months in response to initiatives that have been

taken by my ministry. The turnaround in cardiac surgery services has

been due to a significant resolution of the problems relating to the

previously reported shortages of critical care nurses, and also space.

In the Vancouver General Hospital alone we spent $2.7 million on a new

operating theatre.

Increased cardiac surgery is now being

performed at all three referral hospitals, and those are the Vancouver

General, St. Paul's, and Royal Jubilee here in Victoria. Comparative

data for the last quarters of '86-'87 versus '87-'88 fiscal years show

a 20 percent increase in open heart surgery, and that amounts to 360

cases. In addition to this, the complementary treatment for the

coronary artery disease of coronary angioplasty also increased by

something like 17 percent between the '86-'87 and '87-'88 year.

The

combined effect of these increases has, over the last few months,

allowed for the service to keep pace with the new demand and to impact

on the waiting-lists for cardiac surgery by reducing them approximately

10 percent. So what we have is more surgery done and a reduced waiting

period or waiting-list. As of March 1988 the waiting number was 433

[ Page 4134 ]

in total. The total '87-'88 open heart surgery performed was 1,989, and the funded amount was 2,250.

Ministerial Statement

PERSONAL PROPERTY SECURITY ACT

HON. MR. COUVELIER : Mr. Speaker, I beg leave to table an information package on our proposed new Personal Property Security Act.

The

information package contains draft legislation and a detailed

commentary which will provide interested public groups and individuals

throughout the province with a clear understanding of the government's

intentions. I expect that this will lead to a useful and productive

round of consultations over the next five months. The proposed

legislation provides a comprehensive and modern regulatory system for

secured loan and credit transactions in British Columbia.

The

current system governing this important area of commercial and consumer

financing is highly complex. Transactions are registered in three

different registries and governed by the provisions of five separate

pieces of legislation. The rights and responsibilities of borrowers and

lenders differ for different kinds of transactions. It is our intention

to replace this with a single code of law and to establish a single

registry for virtually all secured personal property transactions. This

will simplify the process of registering lending agreements and clarify

the legal rules governing the rights of and remedies available to both

lenders and borrowers. This initiative will facilitate both commercial

and consumer financing in our province.

For example, under

the new registry system comprehensive registration information will be

available through a single registry search. Lenders will therefore have

a better basis upon which to assess the risk of lending. Potential

buyers also benefit since they will be more easily able to check on

outstanding loans and other charges encumbering property that they wish

to purchase.

I would also note that this initiative will

bring British Columbia into line with a number of other provinces and

with the United States. In doing so, it will contribute towards

attracting investment into our province.

It is my hope that

following public consultation, the Personal Property Security Act will

be introduced in the 1989 spring session. Implementation is targeted

for the spring of 1990, following conversion of computer and

administrative systems needed for the new registry system. It is with

great pleasure that I table today the package entitled "Draft Personal

Property Security Act: A Proposal for Discussion."

MR. SIHOTA :

Just in response to what the minister has had to say, first of all, I

want to thank the minister for letting this side of the House know in

advance of the fact that he would be tabling these documents and the

exposure piece of legislation which he's circulated. I haven't had a

chance to take a look at the bill in any detail, simply because I've

been getting ready for estimates. However, the principle of the bill is

certainly sound, and if I recollect properly, other jurisdictions such

as Alberta, Manitoba and the Yukon Territory have similar legislation

in place.

If, indeed, the legislation achieves the goal it

purports to seek, then I'm sure that many law students at universities

in this province will be delighted because they'll find it far easier

to get through their secured transaction courses, which are among the

nightmare courses right now for all law students. Every articling

lawyer out there in the profession will certainly be delighted because

they won't have to go to six different registries to look up on behalf

of clients whether or not a charge exists against various chattels or

other items. I'm sure there'll be a collective sigh of relief in the

various law schools, and with various young lawyers out there.

Nonetheless,

I'm sure most of them will be disappointed to learn that it will be

1990 before it's introduced. But I guess there will be a generation of

lawyers that will profit from it. I know that the Law Society has

looked forward to this type of legislation, and we look forward to

debating it in the House and, hopefully, through that process,

improving it, should that be necessary.

Orders of the Day

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

ESTIMATES: MINISTRY OF

FINANCE AND CORPORATE RELATIONS

(continued)

On vote 37: minister's office, $293,411.

MR. JONES : Good afternoon, Mr. Chairman —

and to the Minister of Finance. I'd like to leave some of the weighty

financial figures that the minister and my colleagues feel so

comfortable with, move to another area of ministerial activity and

provide for the minister, who said this morning that his personality

was not one of arrogance .... I certainly want to accept that on its

face value. I know the minister would certainly not mislead the House

on that matter. However, I do have to agree with the opposition House

Leader, who often describes the minister as having a Couvelier

attitude, which is a problem.

I'd like to provide the

minister, who is certainly a senior minister of the Crown, a minister

whose statements seriously reflect on the government of the day, with

an opportunity to clear the record on some of the statements he's made

in recent weeks. As a member who respects the House and the government,

I sat through the minister's budget speech, as did all members on this

side. Unfortunately, when our Finance critic responded, the government

side did not give the same courtesy to the House or to the opposition.

went home a couple of days later to my hotel room and turned on the

television, and there was the Finance minister again. I believe he was

making a speech to the Victoria Chamber of Commerce or some such body,

and believe it or not, I didn't switch the channel. I listened to the

minister's speech, and I found it valuable and informative,

particularly when the minister was asked a question later on in the

program. The questioner asked about the price of beer. The questioner

seemed quite irate that the government had made a promise during the

last election to lower the price of beer. This particular questioner

suggested that the government had failed in its responsibility to live

up to its promises to the electorate in lowering the price of beer. I

am sure I heard the minister state in that meeting that the government

did lower the price of beer. I know that the Finance minister would

like an opportunity at this point to clear the air and clear the record

and state categorically in this House: did the government lower the

price of beer, or did the government not live up to its promise in the

last election?

[ Page 4135 ]

HON. MR. COUVELIER :

I am delighted that the hon. member had the patience to sit through yet

another dissertation on the budget, although it wasn't personally but

through the tube. In any event, dealing with the question of beer, I

can provide the hon. member, if he wishes, with a chart that compares

markup rates and taxation rates throughout Canada. The information

contained in the chart would illustrate that B.C. has the lowest-cost

beer in Canada, with the exception of Alberta, which, as you know, has

no sales tax. We are very proud of our taxation levels in terms of

their comparability across the country. In short, Mr. Chairman, were a

person to be drinking beer in any other province of Canada, with the

exception of Alberta, he would be paying more for that privilege than

he is in the province of B.C.

Furthermore, dealing with the

specific issue of whether there is a reduction in beer, being ever

sensitive to the possibility of someone quizzing us on that point, the

hon. member might recognize that we have reduced the markup on

low-alcohol beer. It turns out that if an imbiber of brewed beverages

is interested in reducing his alcohol content, he can indeed do so at

less cost than with the regular alcohol content. That's an initiative

to address the question of substance and alcohol abuse, which is

equally a concern of this government and, as the hon. member knows,

resulted in our increasing the spending in that category by $23 million

this year. We are attempting to hit the same target with two different

devices, one a taxation measure and the other a spending measure in

terms of education.

[2:45]

MR. JONES :

The Finance minister is always most interesting in terms of giving

lessons in how to give a tangential answer to a direct question.

The

question was posed by a member of the audience at the chamber of

commerce luncheon. The question was very clear: has the government

lowered the price of beer? The minister goes on about beer prices

across Canada in his answer to me, but in his answer that day — and if the minister wants to check the tape, he can —

he clearly left the impression that the government, through its

initiatives, did lower the price of beer, and he didn't say low-alcohol

beer or any of these other things.

Drug and alcohol abuse

programs are not part of the question. The minister left the impression

in the minds of that audience and the television viewing public that

the government, through its initiatives, had lowered the price of beer.

Does the minister want an opportunity at this point to correct the

record on that misinformation at that meeting?

HON. MR. COUVELIER :

I am very pleased to have the opportunity to address that issue. The

government doesn't set the price of beer in that sense. As I think the

hon. member understands, it's a question of markups that the liquor

distribution branch might choose to levy and also a question of sales

tax that might be levied from the revenue branch of my ministry. It's a

combination of those two things, neither of which could have a direct

influence on the price of beer to the consumer. Indeed, that's one of

the reasons many of our taxation policies are indexed: so that there is

no incentive among the prime producers to preempt market niches without

at the same time recognizing that government wants a piece of that

action also.

In any event, I have asked a staff member to

produce a copy of that comparison for the hon. member, because I am

sure it will be an important part of his speech package for his use in

the future. That will be here shortly.

MR. JONES :

Let me get it straight. Going into the last provincial election. the

Social Credit Party and the Premier of this province very clearly said

to the electorate: "We will lower the price of beer." To me that says

the government will take specific initiatives on its part to bring

about a reduction in the price of beer. Very clearly the minister has

indicated that it's not government policy to do that; that's different

than what was said in the election. He says it's not the government's

role but the role of the marketplace to determine the price of beer,

and the only influence the government has is sales tax. The minister in

this last budget has, in fact, increased the sales tax to beer. Draft

beer, in particular, got a healthy whack. In the last election we had a

promise which the minister is saying cannot and should not be delivered

by government. He has done just the opposite to the price of beer in

his budget than what was said in the last provincial election. Do I

have that straight? Isn't that the scenario, Mr. Minister?

HON. MR. COUVELIER :

Mr. Chairman, the hon. member has a selective memory; I suppose we're

all guilty of that offence. I had specific responsibility for the

liquor distribution branch early on in our mandate. I suppose, given

the fact that I obviously didn't do a very good job of it, the Premier

took it off me and assigned it to the Labour minister. During the brief

period I had the responsibility, I gave fair attention to how

government might ensure a lower price of beer.

As a matter

of fact. the "selective memory" comment I opened the statement with

deals with the fact that we did in fact lower the price of beer during

the period that I held the portfolio; I take some pleasure from that.

The

difficulty, of course, is that by government's action to lower markup

and other initiatives, the trade can fill a vacuum in a price-setting

sense and subvert government's desire to see a lower priced product.

The fact of the matter is, we don't regulate the end price of beer.

Because of that, it would be very difficult for any government to

guarantee a low-priced beer for evermore, unless they were prepared to

bite the bullet and regulate end price.

In answer to the

member's question, if you check the record, you will find that early on

in our mandate we were able to deliver, through a variety of devices, a

lower priced beer to the marketplace. It begs the question of how long

government must stick to a commitment to do something. After you do it,

how long are you pilloried — for ensuring that it stays in place

forever? This is a rapidly changing world with different dynamics and

circumstances, and as long as a government practises a philosophy such

as we do, which is that the industry, trade and marketplace should

determine most of these features, rather than ourselves intervening to

create artificial situations, then we would not embrace the philosophy

of setting the end price of beer.

We have addressed the

question, spent a lot of time on it and we did deliver a lower priced

beer through our imaginative taxation and markup devices.

MR. JONES :

I'm sure it wasn't the lack of ability on the part of the minister that

that portfolio was taken away from him; perhaps the Premier was afraid

he might get drunk with power as a result of having too many

responsibilities.

[ Page 4136 ]

1 would like to ask the minister just to clarify — perhaps he said it and I missed it —

saying that he delivered on the promise, that we did lower the price of

beer. Of course we couldn't carry on; the marketplace must prevail. But

there was a period in time when the government and the minister did

deliver on the promise of lowering the price of beer. I'm not exactly

clear — maybe it's just a poor memory rather than a selective one —

on how that happened. Perhaps the minister could just elaborate a

little bit on how that promise was delivered on. How did the government

go about delivering on their initiatives, leading to a lower price of

beer? Did they lower the sales tax? Were there other ways they assisted

the industry to lower that price?

HON. MR. COUVELIER :

We used a variety of methods to influence the end price of beer, and

I'm pleased to say they were successful, albeit only for a limited

period of time.

Interjection.

HON. MR. COUVELIER :

Personal representations on the minister's part, in-depth discussions

with the trade and their problems, some accommodations by the LDB in

terms of operating styles that might result in efficiencies to the

trade. We pursued a number of initiatives that would have the

consequence of enabling the brewers to pass on a lower priced product.

MR. JONES :

I think the minister has confirmed my description of what happened: the

government did not deliver on its promise. It took no initiatives that

produced a lower price of beer. Perhaps the marketplace did for a small

period of time. The minister has really not given any concrete examples

of how their initiatives led to a lower price of beer. In fact, all the

government has done is increased the sales tax, which has increased the

price of beer.

Very clearly I say to the minister that I

wouldn't try that one again in the next election. I don't think it

would be very effective. I don't think you delivered on that promise;

better not try that one again.

That was one comment the

minister made. I'd like to give him another opportunity to clear the

record in terms of statements he has made. I'm sure this one was poorly

reported and taken out of context, and that the minister really didn't

say to Times-Colonist

reporters: "Remember, I lied to them last year as well. You can't put

too much credence in what a politician says, you know." I happen to be

a politician, and I hope that my word can be taken. I'm not a senior

minister of the Crown, but I hope my word has some credibility. When I

say something in this province, I hope it's believed.

I'm

sure that was taken out of context and that the minister did not say

those words, and I know he would want an opportunity to clarify for the

record how he was mistreated by the Times-Colonist on that occasion.

HON. MR. COUVELIER :

Mr. Chairman, I'm not sure that the media took it out of context, but

certainly the hon. member has. The subject we were discussing was the

media's attempts to get out of me what the coming budget would contain.

Of course, it's traditional that they be denied that piece of

confidential information. The media, as is their bent, will come at an

issue in any of a hundred different ways, all intended, of course, to

realize their goal of disclosure. When the recipient of their interest

is not inclined to disclose, then great byplay takes place and we have

much fun together.

The comment I made certainly was true in

the sense of discussing confidential budgetary matters. I alert the

media that they should not take great stock in the kind of information

I might transmit to them either directly or indirectly by omission or

by specific mention. The member, I'm sure, in the fullness of time,

will find himself in the same situation at some point, and then can

properly appreciate the gamesmanship that takes place in that kind of

setting.

MR. JONES : I certainly appreciate the

difficulty that the Finance minister faces under those circumstances.

However, I've never found the Finance minister to be short of many more

words than I think are necessary, and he is often quite capable of

wrapping his tongue around a variety of ways of expressing himself. As

I said earlier, he's most capable of giving a hundred different

tangential answers to questions without coming up with a statement that

says he tells lies to the press.

I'm quite disappointed

that the minister came out with that statement. I don't think it does

any member of this House any good, and I think the minister is most

capable of relaying to reporters the sensitivity with which financial

information is held prior to budget time. There was absolutely no need

to come out with what I think is an absolutely ridiculous statement

that does discredit to all members of this House.

I'd like

to pursue another comment that the minister made in a post-budget news

conference. The minister indicated at that time that B.C.'s jobless

rate was high because "so many people do not want to work," and that in

fact: "Many of those listed as unemployed aren't...interested in

getting a fulltime job." They are only interested in finding an income

source "while they pursue their...goals of self-realization." It seems

to me that when we have an unemployment rate that's twice as high as

Ontario's, when the minister brags about the number of jobs that have

been produced in this province, he must realize that every one of those

jobs was filled by a unemployed British Columbian who wants to work and

make a full contribution to society and pay taxes and be a

self-fulfilled citizen — not through whatever course of action

while collecting social assistance or unemployment insurance. They want

a job. People identify themselves as working people and as having their

identity fulfilled by having a job.

For the minister to say

that the unemployed in this province are a bunch of lazy bums and are

not interested in working does a disservice to the government, to this

House and to that minister. Mr. Minister, I don't know why you choose

to come out with these outrageous statements. You are quite capable of

defending yourself to reporters and explaining things clearly. Do you

really believe that the unemployed — over 10 percent of the working population — are

not interested in working? Is that what you really mean? Is that what

you mean when you say to reporters that unemployed people in this

province are a bunch of lazy bums?

[3:00]

HON. MR. COUVELIER :

The hon. member is very soft-spoken and gentle, but he certainly has

taken my comments out of context and expanded them and changed the

words. It's not a very gentlemanly thing to do, Mr. Chairman.

What I have said — and I have said it often because I believe it to be true — is that I have great suspicion of the

[ Page 4137 ]

figures

produced on unemployment for this province. I believe that there is a

structural unemployment problem inherently built into those figures. I

also believe that there are many young people.... One hon. member was

quoted as saying that I said "most." I certainly did not say "most."

Not only young people — I'd include myself among the older people — would not be offended were they not to find 40 hour-per-week employment. There is an emerging — if you like —

west coast lifestyle that sees personal self-development and life

enrichment as being higher priority issues in a personal sense than

punching a clock on a 40-hour-a-week basis. I think that's a fact.

don't attempt to quantify it and suggest that it is the majority, and

that there is anything wrong with it. As a matter of fact, before I got

back into politics, I tried to talk my wife into doing exactly the same

thing. So I don't think there is anything shameful about it. I think

it's a fact of our modern society, and something that our successors

are going to have to deal with in some sense that can quantify it. I

think that we are comparing apples and oranges in many instances when

we look at these unemployment figures.

For the hon. members

opposite to twist my remarks to imply that I was speaking in a

derogatory sense, they absolutely and totally misunderstand the thrust

of my comments. It deals with the whole purpose of life, and that's a

subject that we can get into while discussing my estimates, but I think

it's a misstatement to imply that I was speaking in any negative sense

of people who don't wish to march to the drummer of the majority.

MR. JONES :

The minister should know that I did not misunderstand his statements. I

totally reject his statements; I think his statements are absolutely

false.

What he does is take a very small percentage of

people in this province who are unemployed and who perhaps share his

value in terms of the work ethic and do— as he suggests — accept

income from the government while pursuing goals of self-realization. I

suggest to the minister that that's a very small percentage of the

thousands of unemployed people in this province.

When that

minister suggests that we should be satisfied with a 10 percent

unemployment rate and not consider improving upon that, that's an

outrageous statement for the minister to make. As a senior minister of

the Crown, representative of the economic development and financial

policy that this government is going to take, it is absolutely

shameful, and it really bespeaks the kind of thing that the minister

should hold as a private citizen. But for a minister of the Crown to

come out and say to the people of this province: "We don't give a damn

about the fact that you're unemployed...." That's what it says to me:

"... because you're having such a good time there finding your self

realization." I really think that that kind of statement is even

beneath the dignity of the Social Credit government.

really think the minister has passed up an opportunity he had on behalf

of the government to make a much more reasonable statement of the hopes

and aspirations of British Columbians, who probably in the vast

majority through no fault of their own end up unemployed and unable to

provide for their families the standard of living that that minister

has probably always enjoyed and takes for granted.

When he speaks in such a cavalier manner and so casually about a 10 percent

unemployment rate — when we know that Ontario can do twice as well as that,

having something like a 5 percent unemployment rate — that must tell the minister

at least that he's wrong by 5 percent and that he's disparaging half

of the unemployed people in this province. I think it's despicable for the

minister to take that kind of attitude. It's fine to hold those views personally,

but as a senior minister of the Crown, you've got to do better and your

government's got to do better. You've got to work harder. That kind

of attitude is not going to lead us to a lower unemployment rate in this province,

and I think it's shameful.

MR. CHAIRMAN :

Just before I recognize the Minister of Finance, I'd like to take a

moment, if I can have the attention of the hon. members, to remind all

hon. members that I'm hearing things that were well canvassed in the

budget debate, and to suggest that perhaps we could stick to these

estimates as opposed to canvassing those items that have already been

fairly well canvassed.

Also, I might mention that I have

noticed on a number of occasions.... It's very seldom and probably

inadvertently done, but I'd just like to bring the hon. members'

attention to the fact that profanity of any kind is not permitted in

the House. Having said that, I'll recognize the Minister of Finance, if

he would like to respond to that last statement.

HON. MR. COUVELIER :

I don't think I'll bother, Mr. Chairman. My comments are on the record

and will speak for themselves. I won't bother dragging this out any

further.

MR. SIHOTA : At this stage of the estimates,

I want to raise my concerns about the activities of the Vancouver Stock

Exchange and spend a fair bit of time this afternoon going carefully

through those concerns. I will do this with a view to eliciting from

the minister at the end of the day an indication of where he stands on

certain salient weaknesses within the stock exchange structure as it is

in this province and on certain activities as they relate to the

Vancouver Stock Exchange.

I want to talk about the

activities of brokers and brokerage houses, the activities of promoters

and the activities of those trading on the floor. I want to talk about

specific stocks. I want to talk about the weaknesses within the current

Securities Act and regulations. When I'm talking about stocks — because I anticipate this from him —

I want the minister to understand that I'm talking about instances that

have occurred both before and after the implementation of the act,

partially in an effort to develop the thesis, which I think is true,

that very little has changed despite the new act.

I should

at the outset indicate for the record just where our party stands on

the matters of the Vancouver Stock Exchange. Our party recognizes the

need for a vibrant and active exchange. We recognize, and I firmly

believe, that there is a role for a junior exchange in British Columbia

and in Canada. We believe that that should be happening out of

Vancouver. We believe that a properly functioning exchange could play a

pivotal role in the development of Vancouver as a major financial

centre.

The thrust of my comments today is not to urge that

the stock exchange be shut down, as others have suggested, but more

importantly that we begin to emphasize quality not quantity with

respect to listings on the exchange, that we begin to emphasize

regulation, that we make sure that regulators move quickly, that

sanctions are effective and timely, and that we begin to address the

matter of the exchange's image which, whether the minister wants to

admit it or not, is a

[ Page 4138 ]

negative

one. I can quote at length, which I won't do at this stage. But if we

want to debate it, I could quote at length from international articles

that have been written in the last year as to the exchange. The reason

I mentioned last year is that it's really been over the course of the

last 18 months or so that both the minister and I, being newcomers to

this House, have engaged in an ongoing dialogue as to the activities of

the stock exchange.

I want to start off by going over some

of the comments the minister made last year. I don't intend to put a

lot of time into it, because I think there are other issues that I want

to get to that are a bit more important, and I am somewhat sensitive to

the amount of time that remains today, although we will have time

tomorrow to pursue the matter as well.

Last year I brought

to the attention of the minister all sorts of activities on the

exchange that were of concern to me. I brought to the attention of the

minister the activities of certain promoters and governors within the

stock exchange, inequities with respect to the application of

regulations, and changes in the act that didn't seem to be

accomplishing what they were designed to do.

We had last

June, if the minister will recall with any level of accuracy, what can

be described as a heated exchange. I went through a whole series of

individual stock transactions and indicated to the minister where I saw

problems. It's interesting to note that if you go through every one of

them — and I don't intend to — I think it's fair to say that

we were fairly accurate in terms of my predictions as to what was going

to happen with various stocks.

One in particular, which I

think has been a notable activity in the stock exchange, is where I

would like to begin. This stock, when we talked about it in the course

of our exchange last year.... The minister picked out two stocks on the

exchange to use as an argument as to where my arguments had failed. The

two examples were Axiom and Jolt Cola. I just want to refer to what the

minister had to say. I know he has officials here from the exchange, so

I am sure they can counsel him appropriately on this matter.

want to remind the minister what he had to say about Axiom, because it

was a stock that I mentioned. Believe you me, I am not being selective;

I am just picking the two that the minister mentioned last year. I

think they indicate what is problematic about the exchange. What's

really problematic about the exchange is that very little of the money

ever gets into the so-called product, but a tremendous amount of money

goes into promotion and hype to drive up the shares of various stocks,

to the benefit of those inside who know what's happening and to the

detriment of the investor, who seldom knows what's happening.

the regulatory system was doing what it ought to be doing, clearly the

investor should know what's happening and the insider ought not to be

able to profit. More importantly, in the context of a functioning

venture capital market — a proper one — a greater percentage

of the dollar that's invested ought to be going into the product.

Inevitably it seems as if that doesn't happen in the Vancouver Stock

Exchange.

One of the stocks I raised last year was Axiom. The minister said:

"A review of our files has failed to disclose any signs

of questionable activity by Axiom. No investigation file has ever been opened,

indicating no complaints or inquiries have been received as related to the company's

activities. No cease-trade orders have been issued, indicating timely filing

of all financial data, and insider filings appear to be up to date."

"Unless evidence of wrongdoing is presented, Madam Chairman,

we have no cause or reason to become involved with that company."

Yet

if you take a look at what transpired over the year, precisely what we

said was going to happen has happened. Over the last year or year and a

half, Axiom has issued releases with respect to ventures in Hong

Kong — I believe a hotel development in China. Yet the certificate

of deposits that was filed or was to be part of the transaction's

underpinning turned out to be false.

[3:15]

Stock had gone up to somewhere between $5 and $6, until the Financial Post exposed in a story the extent of the failings of Axiom, and now the stock sits at about 25 cents a share.

The

Vancouver Stock Exchange stalled the company and its individuals on

certain aspects of the deposits, but interestingly, Mr. Chairman, as

far as I can ascertain from a review of that file, the public has never

been, informed that the certificates of deposit were false — no

public disclosure of what had transpired. But perhaps more worrisome to

me, Mr. Chairman, is that the VSE still hasn't taken any regulatory

sanctions against the company for those falsehoods, and not even a

press release has been issued by either the company or the exchange to

say that the original stock certificates were false. That example alone

certainly makes one wonder whether or not the Vancouver Stock Exchange

is capable of investigating itself.

With respect to the

Axiom situation, I would like to ask the minister, first of all, to

explain what improvements have been made to each of the VSE regulatory

agencies in the time since I first raised the Axiom matter in the

House, to ensure that such regulatory oversights are never repeated.

HON. MR. REID : Mr. Chairman, with leave, I'd like to make an introduction.

Leave granted.

HON. MR. REID :

It's with a great deal of pleasure that I give a special welcome today

to 55 or thereabouts grades 5 and 6 students from the Jessie Lee

Elementary School in my constituency of south Surrey, accompanied by

Ms. Bergstrand and Mr. Hollett. Would the House make these students

very welcome.

MR. CHAIRMAN : Does the Minister of Finance wish to respond now?

HON. MR. COUVELIER : Yes. I'd forgotten what the question was, Mr. Chairman.

seems to me there was some talk about a number of stocks that the hon.

member had been discussing last year. I don't know that I'm prepared to

or even should comment on specific stocks anyway. The hon. member knows

that these issues on specific stocks quite often deny me the

opportunity to comment, so that in an abundance of justice we not

create false impressions in the marketplace or, conversely, limit the

options that may be available to investigators to handle highly

confidential issues. So I have constraints placed upon me, Mr.

Chairman, in terms of responding to specific instances.

Let me just remind the hon. member of the progress we have made in the area of securities regulation in this province

[ Page 4139 ]

the last 12 months. The hon. member is aware that we have made some

personnel changes, some legislative changes and some regulatory

changes. The changes we made had the effect, of course, of involving

the VSE board of directors and officials, but it has taken some time

for all of those things to mesh and meld into a cohesive team approach.

I'm impressed with the progress made in that respect, and I believe

that the incidence of disciplinary actions and court actions and

decisions in recent months would support my contention that we are

making good progress and developing a high degree of cooperation

between both the VSE and the IDA and the Securities Commission.

Dealing with the philosophical question of whether it's appropriate for the VSE — which is the example the member chose —

to be a self-regulating organization, my view is that it is appropriate

that it should do that in the same sense that IDA does that and in the

same sense that every stock exchange in the world that I'm aware of has

a similar self regulatory mechanism. The advantages, of course, are

that it imposes some sense of discipline by a peer group, which is

always desirable as opposed to government interference. Another

advantage is that it allows for much quicker actions— and much quicker

reactions to situations. The partnership that has been developed

between the Securities Commission and VSE officials is one that will

show continuing results. So I have no difficulty in supporting the

excellent work being done currently, and also confirming that everyone

expects to do an even better job in the future as that partnership

identifies weaknesses and works on solutions.

MR. SIHOTA :

The minister prefers to deal in generalities. I want to tell the

minister that we will be going through each one of the points he makes

with respect to personnel changes and regulatory changes. I will

demonstrate to him during the course of the next three or four hours

how in each instance those changes haven't changed the nature of the

market at all. There are simply too many questionable activities on the

Vancouver Stock Exchange.

What's really happening on the exchange — and I'll return to the matter of Axiom in a minute —

is best exemplified by another stock that the minister mentioned last

year. Last year I asked the same question, and last year I got the same

answer from the minister. The minister said last year: "I have full

confidence in the system. The regulators are trying to do the best job

they can. We made personnel changes." He accused me of picking out

isolated cases to magnify the argument that the exchange was not doing

its job properly. That's what the minister tried to do last year, and

of course, that's what he's going to try to do again this year.

That's

not acceptable. I'll show you why. I'll go through each one of your

arguments and I'll give you enough examples of failings that there's an

inescapable conclusion. I'm not picking isolated examples at all. I

would say to the minister: take a look at the top ten companies that

were listed on the Vancouver Stock Exchange last year and ask yourself

where they are today. I've got the statistics here somewhere if the

minister wants clarification, but I'm just working from memory. I think

one of those ten has actually increased in value. The remainder have

fallen somewhere between 10 and 40 percent in value.

The

example that the minister used last year in the Legislature was Jolt

Cola. If I could paraphrase him right: "The member is not pointing to

good examples." He used the example of Jolt Cola, and he said: "Who

would have ever thought that a company, a promotion that goes against

all the dietary and good health trends of the day, would do so well."

He pointed to Jolt Cola as an example of what it is the Vancouver Stock

Exchange does in promoting and developing a product.

I want to say to the minister that his example was a good example. The example that he raised last year of Jolt Cola — and I would encourage him to raise others this year — reinforces

the point that I made. Jolt Cola has gone from $4 to about 30 cents

right now on the stock exchange. It's made all sorts of money for the

promoters of the enterprise. There was very little in terms of product

development. The bulk of the money went into hype, promotion and press

releases to hype up the project so as to drive up the share price. As

innocent investors came in to buy up the shares, out went the

investment which came in at pennies for the insiders. I can't point to

any wrongdoing in the case of Jolt Cola, but I can give the minister

oodles of examples of other situations where there have been violations

of insider-trading reports, violations of Securities Act provisions in

which the press releases have been false and the brokerage houses have

participated in frauds.

But Jolt Cola serves as a perfect

example. It's now down to 30 cents. The money went into promotion. The

general modus operandi on the exchange is that people aren't getting

involved in ventures on the exchange to make the venture go, but rather

to make a personal profit. Money is spent on hyping the product and

raising public expectations in order to get a higher price.

That

shouldn't come as a surprise to the minister. During the course of last

year, I brought to the minister's attention the Brown and Jefferson

report, which the minister said he had read. I don't know if he had

read it or not; the report was done some eight years ago. That report

demonstrated the extent to which money went into promotion and not into

the development of a real enterprise.

On this side of the

House, we say that the money must go into the development of the real

enterprise. We don't want money going into hype and promotion. We want

a market that makes a return for the investor, not the insider; that's

what's happening with examples like the one the minister pointed to

last year of Jolt Cola.

If you take a look at what the

purpose of the market is supposed to be and what's happening to a large

measure on the Vancouver exchange, it isn't dovetailing. It isn't

happening, Mr. Minister. I'm using the examples you referred to last

year, both in terms of Jolt Cola and Axiom. Axiom, as I've indicated,

was one of the biggest scams on the Vancouver Stock Exchange, which was

revealed last year.

Last summer I questioned the Axiom

promotion. The company's purported letters of credit of deposit for

over $20 million have been proven to be frauds, and the stock has

collapsed. What's amazing about the whole thing.... I'll give you more

examples of this, because I know what you're going to say, Mr.

Minister. You're going to say what you said last year: "Don't talk

about what has been; talk about what is happening." I'll get to those

later on.

What I find amazing is that the Vancouver Stock

Exchange has placed no sanctions or fines and has taken no action with

respect to the falsehoods and false press releases on the Axiom

transaction. Could the minister explain why, as the minister

responsible in this case — which was the only one last year, other

than Jolt Cola, that the minister pointed to in the course of all of

our discussions...? They went on for

[ Page 4140 ]

some

two days. Could he explain why in this instance the Vancouver Stock

Exchange hasn't taken any action against those involved in running up

the price of that stock for their own personal profit and leaving the

investors out to dry?

[3:30]

HON. MR. COUVELIER :

The hon. member has obviously made a decision that he will be

capitalizing on the situations that exist on the VSE. That's his right.

Indeed, there are many situations that arise on the VSE which are cause

for concern.

The hon. member conveniently forgets that

every exchange in the world has its problems and embarrassments. The

hon. member forgets that we require, I understand, less allowance for

promotion and introduction costs than Ontario does, for example. The

hon. member, when he makes his rambling comments, wraps a whole lot of

irrelevancies into his statement and makes good copy, of course, but

doesn't do a great deal for accuracy.

The fact is that if

you look at the top ten.... The member made some comment about "look at

the top ten companies of the VSE a year ago," and implied that because

it's not the same ten this year, there's something wrong. My goodness,

you could look at the top ten on any stock exchange a year ago and find

quite a turnover; it has nothing whatsoever to do with the issue. But

in the interest of consuming time and trying to create the worst

possible scenario, he keeps embellishing and exaggerating.

say again: I believe we are making very significant progress in

building a strong team approach to these regulatory issues. As I've

said, it has taken actions on government's part, staffing, legislation

and regulations. It has also taken time for that team, between the VSE

officials and us, to build and solidify. I'm very comfortable with the

state of the current degree of cooperation. I'm very comfortable with

the level of funding the government has provided to the commission to

do its job. I'm very comfortable with the fact that the commission will

be a ten-dollar vote now, and that never again will I have to stand in

this House and listen to any charge that the government, by virtue of

shortchanging the commission, is denying them the right to do their

job. That now is clearly going to be funded by the industry, as it

should have been all along.

I think we've got everything in

place to ensure that we continue making good progress on this issue. I

can't remember whether the member had a specific question before he sat

down or whether he was just tired.

Interjection.

HON. MR. COUVELIER : Axiom. My memory of that situation is — and I haven't checked the records here this afternoon — that the hon. member raised the name of the stock, and I responded to a question he asked at that time.

all of the discussions that I have had with the hon. member on the

question of the VSE, I'm not aware of him providing one single piece of

information to us that we didn't already have. He picks up rumors and

tips on the street and then brings them to the House as if he is the

discoverer of the information.

The fact of the matter is

that regulators have to follow due process, Mr. Chairman. The

limitations and constrictions that creates are sometimes frustrating,

but nevertheless, in the interest of justice, they are necessary. As I

said, we are making continued, good progress in the question of

monitoring and regulating, and I have no hesitation in saying that a

year from now, it will be even better than it is today. We've come a

long way in the last 12 months already.

MR. SIHOTA :

I'm astonished at what the minister has to say, in the sense that I'm

trying to have an intelligent conversation here with the minister with

respect to the need for reform on the stock exchange.

want to go back over each of the arguments that the minister just made

to drive home the point. The minister says: "The member has not given

us one piece of information that we didn't already have." Last year,

that's exactly what the minister said when I raised a whole series of

stock transactions on the Vancouver Stock Exchange which were rigged

deals. The minister said: "We know all about those. Will you tell us

about something that we don't know about — some new ones?"

Then I stood up to the minister, and I said "Axiom" and "Vault," and I think I said another one. Hansard

has the record, but I know I said Axiom and Vault, because the

minister, with his chest out, came into the House the next day and

said: "We've looked at Axiom." I don't want to quote it in its

entirety, but he said: "A review of our files has failed to disclose

any signs of questionable activity by Axiom."

He asked me

last year to tell him about one that they didn't know about that was

questionable. I told him, and he came back with a report from his own

staff which said that there was nothing questionable about Axiom. I

told him that there was. Now he turns around to me and says: "Tell me

something new." I told you something new last year, Mr. Minister, and

the reason I'm using Axiom as an example is that it is the only one you

replied back to from any of the new examples I gave you. I told you it

was something that you ought to look at in order to protect the

investor. You chose not to look at it, or at least you chose to accept

your own advice, saying that there was nothing questionable about it.

What I told you was going to happen happened in the sense that it

turned out to be a false or a rigged deal.

You can't have

it both ways. You say: "Tell me something new. " I'll give you some

more new later on as we get into this debate. But I want to go over

what you said last year when you said the same thing to me. "Give me

something new." I gave you something new. You came back, and I have to

wonder what your regulators were doing when I'm telling you that this

is a questionable transaction. You came back, and you said what you

said, and now I'm standing here in front of you ten months later

telling you that the one you pointed to has indeed caused a problem.

Let's

not play that game. I'll give you some more by the time we are finished

debating. I want to talk about the new ones first that I gave you last

year, which you refused to act on and which have now caused investors

somewhere — either in Canada or elsewhere in the world — a

significant loss through effectively a fraudulent scheme. The one I

told you about last year turns out to be the biggest scam on the

Vancouver Stock Exchange. Believe me, if you had investigated some of

the others I mentioned, you would have come to the same conclusion. We

can go through the whole list.

The minister goes on to say

that I'm just capitalizing on certain problems of the VSE. The reason

I'm raising these matters for your attention is that we believe there

is a need to begin to bring about much-needed reform on the stock

exchange. We want to make it work so that the money goes

[ Page 4141 ]

into the venture — the product — and not into the pocket of the investor. It's not enough to say that everyone has their own problems.

Let

me bring to your attention one

article that came out in the OTC Review,

a major financial letter with respect to exchanges. It's entitled: "A

Little Better Than A Crapshoot." Very early on in the paragraph — it might be of some interest to the minister to hear this —

it says: "At the end of 1986, eight of the VSE's ten most active stocks

had dropped at least 60 percent from their highs for the year." So it

happened in 1987, it happened in '86, and I'll bet you it will happen

in '89 when we take a look at '88. The minister says every exchange has

that, but nothing in the same fashion as the VSE has, because again the

money in this exchange is going for a purpose other than that the

investor intends it for.

This is what this

article says:

"'Tell your readers to avoid most Vancouver Exchange

stocks,' responds a well-known, veteran NASDAQ market maker. 'The

market makers are more like underwriters, and they don't play with a

full deck. They show bids, but try to sell any significant quantity to

them and they often disappear. Worse, there are few real companies that

will prosper in the long run on the exchange. It's like our Salt Lake

City penny stock market. Who is smart enough to find the few

exceptions? It's not worth your time to try. There are too many scams

and information is poor. With the superior disclosure and information

available on U.S. domestic stocks, I can't see why Americans should buy

Vancouver stocks unless they are masochists and want to lose money.'

There you have it, OTC Review readers. You have been warned, and if you don't

heed our friendly trader's advice, you deserve whatever happens to you."

What

I'm standing up here saying to the minister is that there ought to be a

concern in the mind of the minister when this type of information is

circulated to those that invest in the market. If you truly want to

create a vibrant financial centre in British Columbia, you've got to

have a stock market that's got a clean reputation.

This is the kind of stuff, whether I'm saying it in this House, Mr. Minister —

and I know what you're going to do; you are going to blame me for all

of this. But whether I'm saying this or whether the experts are saying

it, the point still remains that the information is getting out there

and this is the impression. Write that down, Mr. Minister, because I

know that you're going to take a cheap shot now about experts and my

opinion. I know exactly where you're coming from.

Let's

take a close look at what this

article says. It says that there is a

need for superior disclosure and information, as they have in the

American markets. I'm not saying that we have to go to the extent of

the American situation, because I recognize that we have a particular

quality of exchange here, which is a sort of junior exchange. But the

point is well made in the

article that there has to be better

regulation, better information, better disclosure than what we've got

right now. If you don't, then what happens is you have an axiom. The

one example that you referred to last year, after all of my examples

that I gave you of a new stock — let me remind you there, Mr. Minister. You know what you said, and look what happened to that stock.

I'm

not asking you to comment on Axiom per se, but what is being done here

is I'm asking you to address the matter of the regulatory oversight.

What does it matter what other exchanges do? What matters is what our

exchange is doing.

I asked you the question which you

conveniently forgot. This was one of the biggest scams this year, and

yet no action was taken. I'm asking the minister why — a simple

question. Why was it that the so-called new staff that you brought in,

the so-called new regulatory changes that you brought in, these new

personnel change~ that you made.... Why were they not able to catch

this stock when I tipped you off — and I'll tip you off on some more this year — that there was going to be a problem?

HON. MR. COUVELIER :

The hon. member has flights of fancy. His tips wind up to be

unsubstantiated rumours that he picks up on the street from a variety

of unreliable sources. The fact of the matter is that this government

has to act, the Securities Commission has to act and the VSE governors

have to act under due process. We don't react in some sort of situation

that would allow unsubstantiated allegations to be the basis for some

disciplinary action to be taken. We happen to believe in the process,

Mr. Member, and let me just remind the member that his information is a

long way short of our being able to use it in terms of....

Mr.

Chairman, I asked the hon. member more than a year ago to share with us

any information that he had that would be of use to us in expediting

resolution of some of these disciplinary issues. Not once did he bring

anything forward. All he brings forward, as I said, are street tips and

rumours. In his naive assumption, it seems to be something we should

jump to attention about. My goodness, we have many competent staff

members equally able to tap that kind of an information source. As a

matter of fact, we do and we monitor it. But due process is required,

and certainly someone from the profession the hon. member is from

should understand that best of all.

The hon. member opened

his argument a few minutes ago by quoting an

article dealing with

NASDAQ, if I understood him properly. He knows full well that NASDAQ is

a competitor of the VSE. He knows full well that for that kind of

comment to come out of a competitor is like McDonald's attacking

Wendy's.

He is suggesting that we should all of a sudden be

concerned that two competitors are having these kinds of dialogues

about their respective virtues. My goodness! Then he started to lay the

groundwork so that I would be denied an argument. He says that I am

going to now blame him for causing more problems. It didn't occur to

me, because I used that argument last year and I don't like to repeat

myself.

[3:45]

Let me just remind

the member, however, that it was he, sitting in that seat a year ago,

who tried to take credit for the progress we'd made to date in cleaning

up the VSE and the Securities Commission. As a matter of fact, I had to

deal with that in the House, making some rather disparaging comments

about his sense of self-worth.

In any event, I can assure

you that we are dealing with these issues as they come to light. We are

working closely with the VSE in those matters. Unfortunately we find

ourselves requiring a little more than rumours and street tips in order

for us to take actual disciplinary action.

MR. SIHOTA :

I want to deal with that matter of due process and street tips. We're

not talking about street tips here, Mr. Speaker: we're talking about

actual facts about

[ Page 4142 ]

what

transpired with respect to this stock. I'm not telling you what the

talk on the street is; I'm telling you what I told you last year when

you asked me: "Tell me some that we should watch. " I told you which

ones you should watch. The only one you responded to . . . . I am

telling you what has happened in the past year with respect to the

stock.

Interjection.

MR. SIHOTA : I'll deal with that, too, with a lot of pleasure, Mr. Minister.

I will repeat that that stock has gone from about $5 to $6 down to about 25 cents. That's fact. The reason it has gone down — now that it has been revealed as fact —

is that the certificate deposits in that instance were fraudulent.

That's fact. When that happens, there is a process. You're quite

correct. I am trying to ask the minister: could he explain, given that

process and given the fact that this was one of the biggest scams on

the exchange this year, why there have been no sanctions, why the stock

still trades and why there have been no fines?

There has

not been even a press release put out to the public by the exchange

indicating that these falsehoods had occurred. They have been reported

in the Financial Post. But that's the process: when one of these things

goes sour, someone is supposed to be in there to investigate. I am

prepared to respect that process, but when all those facts happen, I

want to know why no actions were taken. It's a simple question. You

say, Mr. Minister, that your regulatory system is superior to that of a

year ago. We're just beginning to deal with these things.

want to know why no action was taken on this stock. You can respond

with as many cheap shots as you want and I can give you more quotes

from the

article that didn't come from members of NASDAQ. There are

lots of others in this article, and I will table it. But I don't want

to stand here for two hours and quote the whole

article for you. I just

want to know. There is a process; I understand that. Why in this case,

then, has no action been taken?

I will tell you, Mr.

Minister; I will tip you off to where I'm going. I'm going to

demonstrate to you that there are a lot of other situations where the

same thing has happened and there has been no action. The

self-regulatory system isn't working, your act is not working and your

regulation system isn't working. We're only dealing with the first one.

I just want to know — since this was one that you yourself asked for a study on after I raised it in the House — why, still to date, no action has been taken by the exchange. It's not a difficult question.

I respect that process. I want to know why still no action has been taken, given the process that you put so much credence in.

HON. MR. COUVELIER :

I'm not certain I understand the question. Is the member objecting to

the fact that the stock fell? If he could be more specific it would be

helpful.

MR. SIHOTA : There has been no action taken, Mr. Minister. The stock still trades —

that's fine. But there have been no fines or sanctions against the

company for these falsehoods, and not even a press release either by

the exchange or the company to indicate what actually transpired so the

investor knows what happened with the company.

That's the

question, Mr. Minister. If you had been listening, you would have

understood that 20 minutes ago when we raised the topic.

HON. MR. COUVELIER :

I'd appreciate it if the member could be a bit more specific. I gather

there is some allegation of falsehood here. Could he explain exactly

what he is referring to?

MR. SIHOTA : Again, Mr.

Minister, we'll go through the evidence. The company's purported

letters of credit for deposit were over $20 million. They have now been

proven to be frauds. The stock has collapsed in price, but the VSE has

not required the company to disclose to the public the curious

circumstances surrounding its financing of hotels in China; nor have

any sanctions been taken against the group for its issuance of a false

news release.

Does the minister understand that we're talking about these false certificates and the false news releases?

HON. MR. COUVELIER : That's clear. I thank the member for that.

MR. SIHOTA :

Mr. Chairman, I asked the minister a question. He asked me to go back

and clarify what I said. I have done that. Now can I have an answer to

my question? I learned from the Principal Trust situation that we have

to take everything step by step with the minister. I want to ask the

minister the question again. In light of those facts, could the

minister explain why there has been no action taken with respect to

fines and sanctions against the company? There hasn't been so much as a

press release issued to indicate that the original certificates were

false. Could he explain why his regulators or the VSE has not taken

those actions?

HON. MR. COUVELIER : I'm sorry, Mr.

Chairman. The member understands full well that I can't deal with these

specifics. I told him that three-quarters of an hour ago. It has the

effect of either confirming or denying that something may be imminent.

It has the effect of either confirming or denying that something may be

under investigation. I can't violate my office by telling him or the

public what may or may not be in the works on specific cases.

It's

all well and good for the member to go on at length about these issues,

but frankly, I can't. That's the limitation of the office I hold.

MR. SIHOTA :

Mr. Chairman, let me make an allegation. It's not so much that it's

under investigation. That's not the point; the point is that the

minister is not familiar with the situation. If he says that, that's

fine. I'll accept that, and we'll move on. I don't want that type of

bafflegab; I want to engage in a debate here with respect to this

exchange. I'd like some specifics that relate to that exchange which

point out.... As I said, this is the first one, and as we work through

the others, we'll point out the situation.

It's not

acceptable for the minister to hide behind the shield and suggest that

something is under investigation, when I would submit — and here's the allegation — that the minister doesn't even know whether the matter is under investigation.

reminds me of another matter that I raised in this House. I asked the

minister some time ago about a stock called American Canadian. The

minister said that I had "hit on one that was currently under

investigation." I then contacted the superintendent of brokers' office,

and they indicated that it wasn't under investigation. I then contacted

Canarim, because I asked the minister to investigate, and

[ Page 4143 ]

Canarim

said it wasn't under investigation. Mr. Brown confirmed that to me, and

then Mr. Harwood, president of Canarim, confirmed that as well. For

reasons of convenience, when he can't answer the question, the minister

uses the assertion that the matter is under investigation. This stock

collapsed some time ago. If the regulatory system is working quickly,

as it should be — and even if it's working as the minister says it should be — then there ought to have been some resolution of this matter of Axiom.

The minister — and I think this will be demonstrated more so as we go through —

is just not on top of the problems of the Vancouver Stock Exchange. Let

me try to give the minister an out on this one, and we'll move on to

another one. Here's the out: are you now telling the House that you are

investigating Axiom?

HON. MR. COUVELIER : I don't

know how much plainer I have to make it for the hon. member. If he'd

take the wax out of his ears, he might understand, Mr. Chairman. The

fact of the matter is I am not in a position to either confirm or deny

what we or the VSE may be doing on any stock; to do so could be

damaging to that stock's action in the marketplace. There could be an

unfair consequence of any comment I might make; or, adversely, it may

tip off some firm that we are actually undergoing an investigation. It

may have the effect of limiting the effectiveness of the investigation,

if such a thing is taking place.

The member is a member of

the legal profession and knows that full well. I understand he's

probably got an obligation to consume a certain amount of time on the

clock, but we have conferred at length here, and we can find no way

that I can deal with specific questions on specific stocks. It would

have the effect, as I said, of creating a string of consequences that

would flow from any answer I may give that might be inappropriate. In

some cases it might be appropriate; in other cases it would not be

appropriate. And I cannot start that kind of exercise. The member knows

it full well.

I have offered the member in the past the

opportunity to bring to us any information he may have which would have

the effect of hastening any action we might take in a disciplinary

sense. He has failed consistently to take advantage of that offer. He

proposes to use this public forum for his own political devices, I

suspect. The consequence of that, of course, is to further put into

public question the efficacy of the Vancouver Stock Exchange and its

operations, despite the member's statements when he opened his comments

about the fact he supports the VSE and agrees that there is a need in

North America for a junior market to exist; yet, he repeatedly consumes

hours on the clock to do exactly the very thing he opened his comments

by saying he didn't want to do — that is, destroy the credibility of the VSE.

what he desired to do was to clean it up, then he must give us some

specifics so we can act on it. He knows full well, Mr. Chairman, I am

not able to deal with specifics, and yet he's indicated he's going to

continue to do that: deal with specifics. When he knows in advance that

I am not able to deal with those specific questions, surely it must be

clear to even the most dense observer that he can only have therefore

one motive. If (

a) he denies me the right to that information on a

confidential basis, so we can deal with it, and (

b) he knows I am not

able to respond to him in a public forum, what possible good does it do

for him to consume the interest and the focus of observers on these

issues when he knows I will not respond? It would only serve one

purpose, Mr. Chairman, I suspect. And I leave it to all people to judge

for themselves what that purpose might be.

MR. SIHOTA : I forget what the second member for Vancouver East (Mr.

Clark) said about the minister getting loud when he gets vague — and that's

all we're seeing here, Mr. Chairman. On one hand, the minister says he wants

specifics; on the other hand, when I give them to him, he's not prepared

to respond, to explain why it is that his own officials haven't taken any

action. If he wants to huff and puff, that's his prerogative. But the purpose

of this exercise is to try to get this minister to do what he has refused to

date. The purpose of this exercise is not to kill time on the clock, Mr. Chairman;

the purpose of this exercise is to get the minister to understand — and I won't

use the word "dense" — in his head that there is a problem here that

he has an obligation to deal with.

These

aren't things that I'm just saying. I invite the minister to take a

look at the comments made by Mr. Rupert Bullock, the former gentleman

in charge of the exchange. He talked about the role of shell companies

and about the purpose of many activities on the Vancouver Stock

Exchange, and said it's doing exactly what I'm saying it's doing:

fattening the pockets of the insiders, at the expense of the investors,

and not to have very much money to go into the product itself. That's

what Mr. Bullock said. He pointed out that problem. He's the one who

put forward the argument, which I embrace, that you've got to support

quality over quantity on the exchange, in terms of the type of stocks

that we have.

I want to turn to another situation which,

again, has been well documented. If the minister doesn't want to

comment on this, that's fine, but, again, it highlights what happens on

the exchange. It is a case — let me tell you, Mr. Chairman —

that the minister has commented on in the past. And because he had

commented on it in the past, in the course of deliberations in an

exchange between myself and himself in this House, I would expect again

an answer from the minister, in terms of where his officials are going.

It's the Technigen case.

[4:00]

I'm sure the minister remembers the Technigen case, because it

demonstrates all the things that are wrong. This was the case, Mr.

Minister, you may recollect, which I raised in the House some time ago,

where a company was selling golf simulators. It said it had entered

into an agreement to sell millions of these golf simulators —

which is a little ball that you hit with your golf club, and on a TV

screen it shows you where it goes, so you can practise your golf in

your office. It said it had made a deal to sell a couple of hundred

thousand of these to Japan and the United States.

Last

year I pointed out again to the minister that there was a problem with

this stock. Since then that stock has fallen from $16 to $1, and the

company has now admitted that contrary to its press release, in which

it said it was going to.... I can't remember the numbers off the top of

my head, but I think it was 20,000 to the United States and a like

number to Japan. The company has admitted that instead of producing

that many, it has only produced six of these machines and they've been

models, and they're $60,000 to $80,000 in arrears to businesses.

The

individual, the promoter, Mr. Nesis.... The minister may remember,

because the. minister took great comfort last year in suggesting that

Mr. Nesis was going to sue me in

[ Page 4144 ]

light

of comments that I'd made in the House. I want to remind the minister

that nothing came of that suit. Mr. Nesis, who was the inside promoter,

as the stock went its way up to 16 bucks, was unloading his stock as it

worked its way up. He was hyping through false releases, vetted through

the Vancouver Stock Exchange — I want to emphasize that —

that they had sold these machines to Japan and the United States. Up

went the stock, out went Mr. Nesis's stocks, which he had bought as

pennies. Mr. Nesis recently purchased an $830,000 home in Vancouver.

The other two principals have also benefited immensely. By the way,

there was a $570,000 down payment on that house.

What

happened in that incident? Again, because of Technigen, the insider got

all the profits, got all the money. The promotion on the Vancouver

Stock Exchange was a scam. The investor who took it all the way up to

16 bucks lost out.

You have to ask yourself: are we

achieving what we're trying to achieve on the Vancouver Stock Exchange,

which is to get legitimate money into a venture? I want to remind the

minister — because he said he read the report — that the

Brown-Jefferson report has indicated conclusively that money on the

exchange is put into promotion; it doesn't get into the venture. The

minister may recall that I brought that report to his attention in this

House and he told me he had read it. Again, there has been no

regulatory action. The minister can tell me that it's under

investigation if he wants, and that's fine; we'll leave it at that. But

it serves as another example of what happens. It's like Jolt Cola; it's

like Technigen; it's like Axiom, Mr. Minister.

I want to

know from the minister whether or not this matter has been investigated

and what sanctions, if any, have been taken against Mr. Nesis and the

other principals of the company. My information, which is the

information that comes from the documents, is that none has been taken

to date. Has there been any? If you want to say its under

investigation, go ahead and say that, and we'll go out and verify it,

Mr. Minister, as we did in American Canadian, when it turned out that

that wasn't the case.

HON. MR. COUVELIER : Once again, the member rambles on and on and embraces a whole host of issues before he puts a question.

The

Brown report that he referred to, if I remember rightly, is ten years

old. If that's the report he's referring to, Mr. Chairman....

Interjection.

HON. MR. COUVELIER :

Well, exactly. Why would he mention it? That's the point. He raised the

issue and uses it to embellish his argument that somehow or other we're

not doing our job here. He's quoting a ten-year old report, and when I

remind him it's ten years old he says: "What's that got to do with it?"

What on earth did he raise the issue for, Mr. Chairman, if it's got

nothing to do with it? It seems to me the hon. member is clearly under

some constraint to consume time and therefore has to grope as best he

can to fill the time available.

In any event, the issue

here is that he's asking me to confirm the status of an individual

corporation. As I said earlier, I find myself unable to respond to that

specific question, in the public interest, Mr. Chairman.

MR. SIHOTA :

Mr. Chairman, I try to restrain my frustration with this minister. The

fact that the report is one or ten years of age has no bearing on the

matter. The point I was trying to make to the minister, if he would

take a moment to hear, was that the conclusions of that report are

still intact. I just gave you the example of Technigen. That's

precisely what has happened with Technigen. What evidence do you

have — whether it's a one-year-old report or a ten-year-old report —

to tell me that the conclusions of that report were wrong, or that

things have changed? You can change as many acts and regulations as you

want, but you haven't changed the basic effect of the market, and I'm

telling you that the effect seems to be the same, and I'm giving you

examples.

Give me examples of the contrary, Mr. Minister,

if you've got them. Let's hear from you. If you think that my examples

are selective, let's hear some alternatives from you in terms of some

of the other ones. The age of the report has nothing to do with the

argument. The conclusions of the report do, and the conclusions of the

report are clear, and it seems to be the case that the trend is still

the same. If you've got some better evidence, let's have it, Mr.

Minister. If you haven't, then answer the question: is Technigen under

investigation?

HON. MR. COUVELIER : Once again we

have trouble, this hon. member and myself, identifying exactly what is

the matter he wants addressed. When he introduced this whole issue of

the ten-year-old report, he made some comment about promotion expense

and implied that nothing had changed since then. I'm advised that it's

a ten-year-old report and we have changed those requirements. The VSE

have changed the amount of money that may be spent on pre-promotion,

and therefore ensured that a larger sum is available for the purpose

stated in the stock flotation in the first place.

Dealing

with the specifics, once again, of Technigen, I tell the hon. member I

am not going to deal with or confirm one way or the other exactly what

the status of that particular issue is; and I do that in the public

interest.

MR. SIHOTA : It's strange that the minister

was quite prepared to comment on it last year, but now that he realizes

that he is not in a position to.... It is now evident that he doesn't

realize what's going on, and I think that will become apparent when we

move away from specific stocks and talk about general terms.

think it will also become apparent that the minister doesn't know

what's happening on the exchange. If he did, he'd have some direct

answers with respect to these matters which are at the leading edge of

the problem. I'm not picking the obscure case here; I am picking the

cases which are noteworthy cases, ones that have gained a lot of

notoriety, and if the minister was on top of what was happening on the

exchange, he'd be very familiar with these incidents.

any event, I'm going to defer now to the member for Vancouver East for

a few minutes and then be back to the minister for further questioning

on this matter.

MR. CLARK : Can the minister tell us

whether the privatization of B.C. Hydro, the gas division and others,

will occasion the renegotiation of series EJ bonds, due 1996, a $500

million placement with several major institutional investors? As you

know — you should be familiar with this — the privatization

committee's original report indicated that there was potential default

with respect to selling a certain percentage of the assets of B.C.

Hydro. I have reviewed that; several lawyers have. I think like the

minister we had several

[ Page 4145 ]

different

responses to the complex formula in those bonds. I want to know whether

that question has been resolved and what the ministry staff's position

is on that matter.

HON. MR. COUVELIER : The member is

quite right. That is an issue that has had close scrutiny. To the best

of my knowledge, the issue has not been resolved. That will await the

receipt of the proposals because the deals that may be put together are

many and varied, and until they are identified specifically it's

difficult for us to go much further on the question of that particular

series of bonds. It will depend on how the sales deal is put together.

MR. CLARK :

I suppose the minister is saying that there is still a possibility,

maybe a slim one, that certain segments won't be sold because the

appropriate price won't be got, etc. I think if you assume that the

research and development division, the railway division and the gas

division are sold or will be sold, then it has certain implications for

these series EJ bonds, it seems to me.

Maybe the minister can tell me — as I understand it, and the staff might know this, it's a 9.75 percent issue —

what the problem is with renegotiating such a loan with only three or

four major institutional investors. In other words, it seems to me the

current borrowing rate for something of that size — $300 million — is comparable; therefore renegotiation wouldn't pose such a penalty. Maybe the minister can clarify that.

If you can borrow currently at less than 9.75 percent — although I'm not sure if a $300 million placing roughly would need to take place in order to cover that — in order to renegotiate those bonds, what's the problem with renegotiation?

HON. MR. COUVELIER :

First of all, none of us here has the specifics on that particular bond

in terms of its interest rate, notwithstanding the fact that one of my

colleagues actually worked on the issue in an earlier life. In any

event, the specific responsibility for this matter, as I believe the

member knows, will lie with the task force. I am not brought up to

speed daily in terms of their deliberations. If the hon. member wishes,

we'd be happy to provide him the information he's asked for, but I

don't have it here.

MR. CLARK : I would appreciate it

if the minister or the ministry would undertake to give me some

information with respect to the loan - more than simply the details. I

know the details; I have them in my office. I think it's 9.75 percent;

I think it's $320 million left to be paid out; I think there are only

two or three major institutional investors. What I don't understand— I'm sure it's just my lack of experience in this area —

is what the problem is with simply renegotiating with those three or

four major institutional investors in order to get out from underneath

the potential default problem in the existing bonds. I'd just like some

information on that, because I'm not sure how big a story or problem

this is.

Maybe the minister can simply clarify that for me,

since he's raised the matter of whose responsibility it is. It's my

impression that it is a treasury responsibility. As the minister has

shown me the operations of the treasury, these kinds of major

borrowings are not done by the privatization group; they're done by

your ministry. Therefore it seems to me that you're responsible. I'm

not casting or throwing arrows at you or anything. I just want to make

sure that it is your responsibility to deal with this problem.

HON. MR. COUVELIER :

The hon. member is quite right, Mr. Chairman. It is the responsibility

of the Ministry of Finance to handle these financial affairs. It is,

however, a different group's responsibility to pursue the privatization

initiative. The member has quite properly identified the series EJ

bonds as ones that could affect the style and substance of the sale. It

may well be that we may not be in a position to provide the hon. member

with the specific information he's looking for, because that might be

the very substance — I'm beginning to suspect it is — of

negotiations in any eventual sale. Therefore, if he already has the

specifics of interest rate, term, denomination and that kind of thing,

he may be asking for something that it would not be in the public

interest for government to provide at this time.

[4:15]

MR. CLARK :

I'm trying to read between the lines of what the minister said. Can he

confirm that one possibility, if I were to purchase the gas division of

B.C. Hydro for $600 million, would be — and we know that there is debt attached to the gas division —

that the government might negotiate with a potential purchaser to

simply assume that portion of the debt which is the series EJ bonds? In

other words, he may say to the potential purchaser: "Go and talk to

CIBC and whoever holds those bonds, and negotiate to take that over as

part of the sale." Is that the kind of thing you're talking about?

HON. MR. COUVELIER :

Mr. Chairman, that is one of the possibilities. In a generic sense,

another issue is: does Hydro transfer net or gross proceeds to the

province? If it's gross proceeds, does the province absorb and make

whole the debt obligations? So all of that is still a question of

examination and will, to some extent, depend on the proposals received

as a consequence of the tender call.

MR. CLARK : Okay, I understand that.

Can

the minister give us any indication, then, whether the question has

been resolved? I understand that there will be debate on the

privatization benefits fund at a later date, and we can deal with it

then. But I've wondered, and I asked the minister this question; it

hadn't been resolved last year: what happens to the money? If you sell

the gas division, does it go to B.C. Hydro? Does it go to pay off the

debt? Will the province, as the Minister of Energy has intimated, only

put into the privatization benefits fund that which is over and above

the assets sale and the debt portion? In other words, if we were to

sell the gas division for $600 million, the privatization benefits fund

would in fact get about $50 million, because it would be absorbed by

Hydro in order to keep the debt percentage the same. Anything other

than that would mean that electricity rates would go up, because the

debt would still be there and the money would be taken by the

government.

When I asked the minister that last year, he

may recall that he said that this was a very interesting question which

had been debated at cabinet and they hadn't resolved it. Are we coming

closer to resolving it, and is my

interpretation of it correct —

that, in fact, the debt obligation for B.C. Hydro will be the first

priority for money from a sale in order not to impact electricity

rates, and that only the net proceeds over and above that will go into

general revenue or the fund?

HON. MR. COUVELIER : In answer to the member's question, we are closer to resolution. I think the government

[ Page 4146 ]

will wait until the proposals are received before dealing with the issues the member raises.

MR. CLARK : We're closer to getting the answers, but we don't know what they are yet.

I want to take a little time, having dealt with those specific questions, to deal with a broader subject for the minister —

until the member for Esquimalt-Port Renfrew (ML Sihota) comes, at

least, to continue the Vancouver Stock Exchange question. One of the

things that concerns me on this side of the House is the question of

income distribution. I know members on the other side of the House or

from that party are less concerned about the distribution of income. I

don't mean that in any cavalier way; they don't see it as necessarily

the role of government.

I have taken the liberty of interpreting a model from an economist from The Netherlands named Jan Pen — he's Dutch, interestingly enough —

who talked about an income parade to try and give a pictorial

representation of the income distribution. In this case he looked at

Britain, and I'm going to use those numbers to look at British

Columbia. The same kinds of assumptions that Mr. Pen used for Britain

I'm going to use for British Columbia. Essentially what they are is

simply this: if all of the wage earners in British Columbia were in a

one-hour parade — so that they all passed the reviewing stand in one hour —

and if their height represented their income, what would the parade

look like? Essentially, the time it takes to pass the reviewing stand

and the height of the individuals tells you in a pictorial

representation what the income distribution is in British Columbia.

It's quite interesting, because it gives you a better feel than simply

the raw numbers.

If you take the average income in British Columbia — this is from Statistics Canada; at least, it's the information they provided me —

$19,198 is the average income of an individual. If the average person

is 5 feet, a person one foot tall would have an average income of

$3,490.50. If you were standing in the reviewing stand and all of the

workers in British Columbia were passing in front of you, for the first

six minutes the height would be one foot. We're talking tens of

thousands of people one foot tall passing the reviewing stand, and

interestingly enough they would almost all be women and they would

almost all be single women on welfare.

If you were standing on the reviewing stand for the next ten minutes — so 16 minutes have gone by —

then the height would now be two feet tall. You're standing there for

16 full minutes when tens of thousands of people one foot and two feet

tall are passing the reviewing stand.

The minister is leaving. These kinds of things don't interest them, because it is too frightening when you really look at it.

have been standing on the reviewing stand for 25 minutes and the

tallest person who has passed the reviewing stand is four feet tall. It

would take 35 minutes of standing there, with tens of thousands, now

closer to hundreds of thousands, of people passing, before we reached

the average height of the average wage-earner in British Columbia.

Then

for the next two minutes it starts to move. The people get taller and

they are almost all men. For the next two minutes, the average height

is six feet tall, and then for the next three after that, they are

seven feet tall. For the next eight minutes after that, they are ten

feet tall, until finally — this is 60 minutes we are waiting on the reviewing stand — for the last four minutes the height goes up to 286 feet. That's a millionaire. If a millionaire — and there are dozens of them in British Columbia — passed the reviewing stand in the last four minutes, they would start at about 14 feet and go up.

What we see is that for the first 20 minutes the average height is about two and a half feet — and they are almost all single women on welfare and some working poor in British Columbia — and then for the last 10 minutes the average height is well in excess of 14 feet, and they are almost all men — in fact they are all men — and they're all making in excess of $80,000.

For

the last 30 seconds or so, we have individuals who are the height of a

30-storey building, but for the first six minutes, we have tens of

thousands of people less than one foot tall. What I am getting at is a

pictorial representation of the income distribution in British

Columbia. The fact is that in British Columbia over the last ten years,

the distribution has gotten wider. That's not true of just British

Columbia; that's true of Canada and certainly of Great Britain.

What

I and many people fear is that we have growing what some economists

call a "dumb-bell economy." It looks like a dumb-bell. At one end there

are very wealthy people, and at the other end there are very poor

people. We have in fact a shrinking of the middle class, of what is

traditionally the view of Canadians — a desirable goal. When you

look at it in a pictorial representation, you get a graphic

illustration of what is happening in the British Columbia economy.

That

brings me to the minister's budget. I know we've had the budget debate,

but I want to look at it just briefly because I asked in question

period some questions that were a bit unfair because they dealt with

specifics. What happens with medical service premiums and taxes like

that is that they widen the gap; they make more people one foot tall.

The

taxes that the government has imposed on British Columbians are all

imposed on these little people who are one foot tall. They're not

imposed at all on those who are 14 feet tall or taller. What happens

when you charge someone a monthly fee increase in medical premiums of

about $20 or more is that it's $20 for those who are one foot tall and

$20 for those who are 30 storeys tall.

It doesn't sound

like very much, and quite frankly, it's not very much to me. But to

those individuals at the margins.... What 1 tried to demonstrate today

in question period was that those just above the subsidy level, because

the government has taken the most regressive aspect of that tax out by

increasing the subsidy available.... But if you make $1 more than

$6,500, you pay the same tax as those who are 30 stores tall. That

means that the tax burden goes up between 20 and 40 percent, because

somebody making $6,500 in taxable income pays only a couple of hundred

dollars in provincial income tax. That is only about $20 a month in

income tax. If they're paying $20 a month in provincial income tax and

you increase the medical premiums they pay, you have effectively

increased their tax rate dramatically.

You must know, Mr.

Minister, that in British Columbia all of us are getting letters from

those people at the margins. I want to end this by asking the minister

a question. It is an open-ended one. He can get up and make a bombastic

speech, as the minister likes to do, and he can be quite good at it.

But I want to be very serious about it. I would prefer it if he gave a

serious answer, because what has happened with fee increases and

particularly with medical services premium increases is that those at

the margins are facing dramatic increases in their taxes. Those who are

well off, it doesn't

[ Page 4147 ]

hurt

at all. The gap gets wider in British Columbia. I don't think that's

healthy; I don't think the minister thinks it's healthy.

How

can the minister justify a I percent cut on the corporate income tax

which costs the taxpayers $32 million, and yet increase the tax burden

on the poorest people in British Columbia — the working poor —

from 20 to 40 percent? I would appreciate hearing the kind of rationale

and how the minister justifies this very regressive taxation.

HON. MR. COUVELIER :

Mr. Chairman, I enjoyed that presentation. I thought it was very well

done, and I would very much appreciate a copy of the march. It would be

something I would like to keep in my desk as a constant reminder of the

valid point raised by the hon. member. It is a good, graphic way of

illustrating a social issue worthy of debate. I think the hon. member

is quite appropriate in raising it.

I couldn't help but

wonder, however, if the one-foot-tall category might be those who have

received some assistance from our $12 million extra that we provided

for MSP assistance programs. Maybe it's not the one-foot-tall category

that he's describing, but the two- or three-foot category. I'm not

sure. In any event, I would appreciate having that material.

History

is full of results from various governments' efforts to redistribute

income. I know that the hon. member's political philosophy is different

from this government's in that respect. We have a very basic difference

of opinion, in philosophical terms, about whether government can

effectively redistribute income. I'm persuaded by the argument that

governments cannot effectively redistribute income in the fullness of

time, and that all we can do is temporarily influence that question,

but we certainly can't provide any assurance. I've not seen any

government anywhere in the world — even the Soviet Union, which is probably the best illustration of a socialist philosophy — being able to effectively redistribute income.

However,

to the question of the MSP premiums, the hon. member knows that we were

sensitive to the possibility that we were burdening British Columbians

who would not be able to absorb the burden. As a consequence, we spent

considerable time in the ministry designing the MSP premium safety net,

in an attempt to minimize financial hardship on those who could not

afford to pay. Admittedly, any safety net system has bench-marks or

trigger points where support is merited or not merited, and that raises

the issue of the equity in that. I know the hon. member has the wit to

appreciate that no matter where that trigger point is set, there will

be some abused by the setting. I have no remedy for that.

any event, I enjoyed the presentation and would appreciate receiving a

copy of his material so that I may have it as a constant reminder of

the good job he did this afternoon.

[4:30]

MR. CLARK :

Let's take some of the things the minister said. He said that

governments can't affect the redistribution of income. That's simply

not correct, and it's not correct if you look around the world. Let's

assume it is correct, just for a minute— and I don't agree with it,

but let's assume it is. Let's say that it should not be government

trying to redistribute income but government trying to keep the same

distribution of income that they have when they come into office.

Let's

assume that the simple job of government is not to redistribute income

but to keep the same distribution of income. You haven't done that.

Those medical premiums have exacerbated the gap between the rich and

poor in British Columbia. They have made it worse. So it's not a

question of trying to redistribute income from one to the other; it's a

question of trying to keep the distribution we had.

What

else has the minister done? The first thing this government did was cut

the 10 percent wealth surtax. That cost us $34 million. They've cut the

corporate income tax 2 points, and that has cost us $64 million. How

can the government justify cutting taxes on the wealthy at the same

time as they raise taxes on the working poor? That's what I don't

understand. It's not even philosophical question; it's a question of

consistency.

[Mrs. Gran in the chair.]

The

government repeatedly says: "We don't have the money. You want to feed

hungry schoolchildren? We don't have the money." Some people in the

public say: "Well, we've got to watch that deficit, you know." They

say: "Oh, they can't raise welfare rates; we don't have the money.

Medical costs are out of control; we’ve got to raise premiums

because we don't have the money." But the same government has cut taxes

on those who can best afford to pay them. So it's not even a question

of saying that it's a socialist who wants to redistribute income using

the tax system; it's a question of the government making the matter

worse by deliberate tax changes that have exacerbated the gap between

rich and poor in British Columbia. In fact, the fixed costs the

government has imposed on those least able to afford it are costs that

hurt, and the government cannot plead poverty, it seems to me, when the

same government is cutting taxes. And the minister is quite proud of

this.

If you look through the list of tax cuts over the

last several years, aside from the corporate income tax and the wealth

tax, we see a list of tax cuts that amounts to $600 million a year. If

you look at it cumulatively, in the last three years we've cut taxes to

corporations by $1,024,000,000. We're cutting taxes on corporations at

the same time that the government says, "we've got no money," and poor

people have to pay more. It's no longer a question of the minister

saying that it's just socialists on that side who want to use the tax

system. Was a question of a deliberate strategy of the government to

shift the burden of taxes and to make more people one and two feet

tall, and more people 14 feet tall. I think it is, as the minister

said, a difference between their party and our party. It is a

philosophical difference; I accept that, and that's an acceptable

answer.

It seems to me the government has to come clean and

say at some point that yes. we are going to cut taxes on corporations,

we are going to cut taxes on the rich, and we're going to make poor

people pay more money. It's a bit like what Jesse Jackson said; the

problem in British Columbia is that the poor have too much money and

the rich don't have enough. That's what we're seeing in the kind of tax

system that's being developed by this minister and this government.

the minister would, I'd greatly appreciate it if he could try and

defend those corporate tax cuts and those wealth tax cuts at the same

time as the government says we have to balance the budget, and at the

same time as the poorest people in British Columbia are forced to pay

very serious increases in terms of their taxes, fixed costs, with their

disposable income shrinking in British Columbia.

If he could try, even in a philosophical way, I would appreciate it if he would defend for us how he can in the same

[ Page 4148 ]

budget

cut taxes for the mining industry, in the same budget cut taxes on

corporations, in the same budget or the last budget cut taxes for

wealthy people, but at the same time is prepared to tax those who can

least afford it — a 20 to 40 percent increase in the tax burden of

those who are the working poor in British Columbia. If he could defend

that, I would appreciate it.

HON. MR. COUVELIER : I

would be more interested in entering this philosophical debate were the

state of the B.C. economy to be such a concern that we had to rethink

what we were doing and what our goals were. I have some trouble

treating the member seriously. The fact of the matter is that this

province has rebounded very strongly in the last couple of years with

the very policies that this member is deriding.

There will

be a time for such a philosophical discussion when and if the economy

has a downturn and there is time for us to enter a discussion about how

to get it moving again. But the fact of the matter is that we've

created thousands of new jobs; we've got hundreds of millions of

dollars of investment being made in the province to create more jobs;

we anticipate nearly a 5 percent increase in further jobs created in

the coming year. Our economy in all sectors shows surprising strength.

does seem to me.... I don't want to get into the philosophical

discussion because, as I say, the time to visit that will be when we

need to. Frankly, things are so good that if we have a problem it's

going to be, I suspect, a shortage of skilled labour in the urban parts

of the province.

The residential house construction is a

principal driver of our economy and has been for years in a growing

province like B.C. There's a very strong likelihood, it does seem to

me — as a matter of fact we've seen evidence of it already in greater Vancouver —

that there will be some difficulty in maintaining the rate of

residential construction in the province because the skilled labour

workers will b