1989 Legislative Session: 3rd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, JUNE 7, 1989

Afternoon Sitting

[ Page

7279 ]

CONTENTS

Routine Proceedings

Oral Questions

Pub licensing. Mrs. Boone –– 7279

Dumping of Expo site toxic soils. Mr. Harcourt –– 7280

Mr. Cashore

Knight Street pub investigation. Mr. Sihota –– 7281

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

(Hon. Mr. Couvelier)

On vote 25: minister's office 7281

Mr. Miller

Mr. Williams

Mr. Clark

Mr. Rabbitt

The House met at 2:07 p.m.

Prayers.

HON. MRS. JOHNSTON :

In the precincts this afternoon we have a number of municipal

representatives from the Union of B.C. Municipalities who are joined by

their Canadian counterparts from across the country. They're meeting

here in Victoria today in preparation for the Federation of Canadian

Municipalities' convention, which starts in Vancouver on the weekend. I

would ask the House to make them all welcome, please.

MR. CASHORE :

Today in the gallery we have some friends from Coquitlam and Port

Moody. It's always good to have present in the House good friends and

people who support us in so many different ways. I ask members of the

House to make welcome Belle and Dick Barbour and Marian Aabjerg of

Coquitlam and Jenny Wilson of Port Moody.

HON. MR. BRUMMET :

I have some special visitors today in the gallery. They are from

Malaysia. I'd like the House to welcome Mr. Datuk Aziz, who is the

deputy director-general I of the Ministry of Education in Malaysia, and

Mr. Zainul Abidin, who is the deputy director II. Accompanying them is

Dr. Gordon Jones, who is director of Asia-Pacific Educational

Consultants from Vancouver. I'd like the House to give our guests a

very special welcome.

HON. MR. HUBERTS : In the

gallery we have two tremendous veterinarians in British Columbia

visiting with us. I'd like the House to welcome Sandy Jamieson and Ken

Macquisten.

HON. MR. RICHMOND : In the precinct, and

I believe in the gallery at this moment, are 11 supervisors of

administrative services from my Ministry of Social Services and

Housing. I'd like to welcome them to the House. They're here to see how

the democratic process affects their livelihood. They are Margaret

Needham, Diane Winkler, Ken Hamilton, Wendy Lawrence, Angela

Bodnarchuk, Marian Ostojic, Denise Bevan, Barb Garrett, Darlene Jonas,

Jan Dowler and Teddy Watson. Would the House please bid them welcome.

MR. SIHOTA : In the gallery today is a good friend of mine, a member

of the bar in Victoria, Mr. Doug Thompson, someone I graduated with and who

lives in Victoria. Mr. Thompson had a tremendous knack for attending all of

our lectures and I had a tremendous knack for missing most of them. And had

it not been for his attendance and his notes which he passed on to me, I never

would have made it through law school. So I'd like to welcome Mr. Thompson

to the gallery today.

MS. A. HAGEN :

Earlier today, six extended-care residents of Queen's Park Hospital

visited the precincts along with six caregivers. They weren't able to

stay this afternoon, much to their disappointment, but in their absence

I'd like to acknowledge the presence of the Whippersnappers in the

precinct today and to say that we all welcome the fact that they were

able to be around our buildings and have some time with us.

MRS. GRAN :

Mr. Speaker, on behalf of the second member for Langley (Mr. Peterson)

and myself, I would like to introduce to the House today some good

friends and supporters, Helen and Eric Bysouth, from Langley. Would the

House please welcome them.

MR. PETERSON : It's a good

day for Langley, with many good friends visiting us. In the precincts

is Dr. David Paton a very good friend of the first member for Langley

Mrs. Gran) and mine. Also, I might add, he's a veterinarian who has

successfully treated many of my own cattle.

Oral Questions

PUB LICENSING

MRS. BOONE :

A question to the Minister of Labour and Consumer Services. On April

27, the minister announced that municipalities with the necessary

bylaws could oversee referenda as part of the process of licensing

neighbourhood and marine pubs. Yesterday the minister said that an

independent commission will conduct hearings into the process of

licensing pubs. Can the minister confirm that the increased role of

municipalities in pub licensing announced by the minister in April will

not be affected by the changes he announced yesterday?

HON. L. HANSON :

Mr. Speaker, the member opposite obviously hasn't read the press

release. Certainly there is a discretionary right for a municipality

through a bylaw process to take over the referendum process. There has

been no change in that.

MRS. BOONE : A supplementary

to the minister. The minister's own press release stated that all

licences would be given through the commissioner. Clearly political

interference has been a prominent feature of this current system. What

assurances can the minister give that this new commission will be

protected from political interference or influence?

HON. L. HANSON :

First of all, political interference is just not true, but I can give

the same assurance The member gives me the assurance that her research

has been well done and well documented.

In any case, the

process that we are talking about is a process that we haven't fleshed

out in its completeness yet. That's the purpose of appointing

[ Page 7280 ]

the

person to look into recommendations — how we may be able to put those

new licensing procedures in place. The municipalities have, through the

last announcement, the ability to take on the referendum process, which

is the process that gains the opinion of people in the immediate area

of the proposed site. There has been no change in that. The

municipalities must take on that responsibility, via a bylaw, so that

those who have applied will know what they have to conform to when they

are making that application. There's no change in that.

Another

change, which the member hasn't mentioned, is that the decision of

location within a community, as it relates to a school, a park or a

highway, is now going to be the responsibility of a municipality.

MRS. BOONE :

Supplementary to the minister. The minister gave me no guarantees at

all that there wouldn't be any political interference, nor did he tell

me how the people would be protected from political interference. Is

the minister prepared to seek unanimous consent of the Legislature for

the appointment of the new commission?

[2:15]

HON. L. HANSON :

Mr. Speaker, the member opposite is making assumptions, or innuendos,

of political interference. That's just not true. Maybe she's suggesting

that she would like to have the ability of having some political

interference. But I assure you that that won't be the case. It will be

a fair and honest licensing process.

MRS. BOONE :

Supplementary to the minister. If the minister is saying, then, that

unanimous consent of the Legislature is political interference, then I

really think that the whole Legislature should take offence at that. We

are asking, Mr. Minister, if you will agree to having unanimous consent

to the appointment of the commissioner to ensure that there is an

unbiased person in there, and that this person will not be influenced

in any way. This person is obviously going to have a phone, Mr.

Minister. Will he also be told by the government what the term .onside"

means?

HON. L. HANSON : Mr. Speaker, these are

certainly interesting comments coming from the opposition. I guess I

could go back some years and refer to some appointments that had been

made in those days, but we won't get into that, because that's history.

I have a desire to get on with things and not deal with history. Mr.

Speaker, I assure you that this government will make very wise choices

in who will serve on that committee once we have the committee outline

properly in place.

DUMPING OF EXPO SITE TOXIC SOILS

MR. HARCOURT : I have a question for the minister responsible for the

B.C. Enterprise Corporation. Has the minister now managed to locate the misplaced,

destroyed or otherwise missing files that would allow us to know definitively

the location of all the sites where toxic soils from the Expo site were dumped?

HON. MR. MICHAEL : Yes, Mr. Speaker, I will take that question as notice.

MR. HARCOURT : Can the minister provide this House with a list of the dump sites for the Expo toxic soils that he or BCEC is aware of?

MR. SPEAKER : The minister has taken the question as notice.

MR. HARCOURT :

As part of that, a new question, Mr. Speaker. Has the minister

determined yet who all the contractors were that hauled the soil away?

Interjections.

MR. HARCOURT :

That was a question that is of importance to people in the lower

mainland. If the Social Credit government thinks it's a laughing

matter, we don't. Mr. Speaker, I asked the question; I didn't hear a

response from the minister. I didn't hear whether he had taken it on

notice or chosen not to answer the question that's important to the

people in the lower mainland.

HON. MR. MICHAEL : Mr. Speaker, the minister will take that on notice.

MR. CASHORE :

To the Minister of Environment. Did your ministry give permission for

the dumping of toxic soils from Expo off Point Atkinson, at Westwood

Plateau, at the foot of Penzance Drive and at other locations in the

lower mainland?

HON. MR. STRACHAN : First of all, I

think part of the question has been authored by Gordon Wilson, the

leader of the British Columbia Liberal Party. Mr. Wilson has also

responded to me, so I am aware of the ocean dumping part of it.

Waste

disposal at ocean dumping sites is regulated by the environmental

protection service of Environment Canada under the Ocean Dumping

Control Act. They monitor the standards and any dumping that would have

taken place with respect to ocean dumping. With respect to the rest of

the allegations of toxic soils being removed and placed elsewhere in

the province or lower mainland area, my ministry is currently

investigating those allegations and will be providing me with a report

as soon as that information is available. Toxic wastes are covered

under our waste management legislation. Those amendments were made in

1987, and the NDP voted against them.

MR. CASHORE : A

supplementary. That answer wasn't good enough. This minister's mandate

is as big as all outdoors. The question is: does the Ministry of

Environment have records of all the locations at which contaminated

soil from Expo was dumped?

[ Page

7281 ]

HON. MR. STRACHAN : I believe the Minister of Government

Management Services took that question on notice. Yes, we have records

of all movements where people apply for a permit to move toxic

materials, but in this case the allegation is that a permit was not

required. That's why we are having an investigation done now.

MR. CASHORE :

A supplementary to the same minister. Can the minister tell this House

who is responsible for cleaning all sites where Expo toxic soils were

dumped?

HON. MR. STRACHAN : I don't think there's a question there. Maybe the member can repeat it, but it's not following.

MR. CASHORE : Assuming that it can be proven that toxic soils from Expo were dumped at various sites, who is responsible for the cleanup?

HON. MR. STRACHAN : There is a question there. The person who moved that toxic soil — if it's proven — would be responsible for the cleanup.

KNIGHT STREET PUB INVESTIGATION

MR. SIHOTA :

A question to the Minister of Labour. Has the Minister of Labour yet

had an opportunity to discuss with Mr. Doney his knowledge of the

conversation between Mr. Poole and Mr. Hick?

HON. L. HANSON : Mr. Speaker, that's out of order. It was taken on notice.

MR. SIHOTA :

When ministers take questions on notice, there's an expectation they

will reply at some time. When I asked the minister the question for the

first time last Wednesday, he said he would take the question on notice

and "find out."

The minister said in today's press that he

does not intend to reply to this crucial question. Is it the minister's

position that he will not be replying to this pivotal question?

HON. L. HANSON : No, Mr. Speaker. I'll reply in due course.

MR. SIHOTA :

A new question to the minister. Did the minister review Mr. Doney's

report prior to its presentation? It was issued under the minister's

signature at the press conference. Did the minister review Mr. Doney's

report before it was presented?

HON. L. HANSON : Of course. I very seldom sign things if I don't know what I'm signing.

MR. SIHOTA : The minister has conceded that he knew in advance of the

conversation between Mr. Hick and Mr. Poole. Could the minister explain to the

House why he then allowed the report to be issued with this issue not being

corrected or referred to in the report?

HON. L. HANSON :

Again, I have repeated many times in this House that the issue of the

Knight Street Pub was reviewed by the ombudsman. It was certainly

reviewed by the RCMP. I'm sure the member opposite, with his legal

background, would understand that they have the powers of interviewing

whoever they feel is appropriate under those circumstances, and that in

fact the issue has been canvassed and recanvassed. If the member

opposite has difficulty in obtaining any of the material that's been

published, I'd be happy to provide him with copies of the various

reports.

MR. SIHOTA : The minister knew of the

conversation between Mr. Hick and Mr. Poole. The minister knew that the

conversation was not referred to in the report written by Mr. Doney,

and which he signed. Can the minister explain to this House why he

allowed that omission to pass?

HON. L. HANSON : The

ombudsman's report dealt very clearly with that. The report done within

the ministry was a complete report in the sense that it dealt with the

issue of some concerned ballots. The member is certainly aware of that

report, and it is available to him. I might refer the member to a

question he has put on Orders of the Day

asking that the report be made public. I would suggest to the member

that his research is lacking, because the report has been public for

well over a year.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

AND CORPORATE RELATIONS

On vote 25: minister's office, $316,724 (continued).

MR. MILLER :

Last night I was dealing with the capping issue, and we essentially ran

out of time, I think, in order to allow a fuller discussion of the

problem as it applies to my community and, for that matter, perhaps

other communities as well. The minister's concluding remarks were that

capping was intended to protect industry from undue increases due to

the change in the assessment system. While I can appreciate that, given

the philosophy that there was a need to protect industry, it's now

clear that capping has had a negative impact on the ability of the

municipality of Prince Rupert to collect taxes on an assessment base

which has been greatly diminished because of the capping problem.

Given

that the minister felt that some protection was needed for industry,

would he not agree that there would be a converse responsibility — in

other words, a protection that should be afforded municipalities. Even

more particularly, although we don't like to deal with profitability in

terms of assessment, that has clearly been used as an argument by

industry to appeal their assessments. We see the significant

[ Page 7282 ]

decrease that was given in previous years to this industrial enterprise — namely,

the pulp mill. We now see, of course, that the pulp industry in British

Columbia is extremely profitable. It is probably enjoying, both last

year and this year, some of its best periods.

Given those factors, would the minister not agree that municipalities should be afforded similar protection — in

this case, the removal of the cap on a selective basis to resolve the

anomalies that have resulted, as I described them last night?

[2:30]

HON. MR. COUVELIER :

Mr. Chairman, above all things, I am a reasonable man. I would be very

pleased to find some agreement with the hon. member during his

questions, but my sense of honesty compels me to deal honestly with a

response. Therefore I can't agree with the hon. member.

MR. MILLER :

I like to think that I'm reasonable as well and prepared to listen to

arguments, and I would be pleased to listen to any that the minister

might like to advance.

HON. MR. COUVELIER : I thought I'd done that last evening, but I will do it again.

The

issue of industrial assessments has, in the last ten years or less,

received the close attention of professionals who have made it their

livelihood to challenge some of the longstanding precepts around which

industrial property had been valued. As a consequence of appeals heard

by the Assessment Appeal Board, various determinations were made which

had the effect of seriously distorting the ability of local governments

to recover the cost of providing local service. Over the course of

those ten or so years, the government attempted to provide remedies

which would allow local governments not to distort the tax share

between the industrial and residential sectors.

The first

such device that comes to my mind is the introduction of the variable

mill rate or variable tax rate. The theory behind it was that if there

were appeals by the appellant — that is, the industrialist — which in

the opinion of local council were unjustified or resulted in

distortions of historical taxing practices, being allowed to vary the

rate, the local government, in effect, could protect itself from the

consequences of some of the decisions coming down which were made

basically on technicalities rather than the merits of the argument. As

a consequence, the variable mill rate was introduced, and it was

successful in a large number of cases in keeping the options available

to local government in terms of how they would prorate their cost

requirements to fund their operations.

It developed,

however, that industry was not deterred and continued its onslaught on

the Assessment Authority rules, regulations and valuation practices,

all for the purpose of gaining some short-term advantage, even though

they recognized that a government would in time find accommodations

which balanced the needs of residential property owners and municipal

councils and at the same time recognized the merits of individual

arguments about overassessments from the industrial sector. The

historical balance had been distorted, and that showed every evidence

of continuing at an escalating rate.

As a consequence, this

government, with me as minister, announced about two years ago that it

was time to clarify the whole issue of how we would value industrial

properties. First of all, I announced the government's determination at

a UBCM convention — I believe it was about two years ago — where I

stated that it was the view of this government that property tax costs

should be viewed by industry as a fixed cost, not a variable cost, and

that there was no justification for it to vary by profit levels. The

argument was that industry made its investment decisions with an

existing tax structure, that it would have been possible for them to

have determined their tax burden with quite a close degree of accuracy

before they made their capital investment and that, as a consequence,

they couldn't come back and shouldn't expect to be able to come back

later and, on the basis of technicalities, find little windows of

opportunity that might have the effect of reversing one year's taxation

requirement. When I made that announcement at the UBCM convention, it

was enthusiastically endorsed.

We then embarked on a

provincewide examination of assessment procedures as they related to

valuing industrial properties. Those conversations probably consumed

the greater part of a year, if I remember properly, and involved

industrial-sector staff members, representatives from the Union of B.C.

Municipalities representing local government, and technical staff from

the Assessment Authority. As a consequence of that wide-ranging,

long-running examination, new rules were established.

response to the member's suggestion that Prince Rupert has been abused

by this process, first of all, I could remind the member again, as I

told him last evening, that we in government offered Prince Rupert the

same remedy offered to other municipalities and accepted by other

municipalities; that is to say, a bridging loan from government to

assist them to cover the one- or two-year anomalies that arose from

successful appeals by major industrialists in their community.

Prince

Rupert council have decided that they will not pursue that route and,

as I understand it, they will likely use the variable tax rate option,

which was always there before them to use in any event. I'm not sure

that that's the route they will choose to go, but it would appear to

me, on the evidence available, that that is likely what they might do,

which is their right.

Finally, dealing with the local

Prince Rupert situation, the member might be comforted some little bit

by the fact that had the assessment changes been in place, the Skeena

Cellulose appeal would not have been won. So this new valuation system

does have the effect of clarifying how industrial properties will be

valued so that in the future we will presumably

[ Page 7283 ]

have fewer of these appeals won on technical grounds.

summary, Mr. Chairman, we have provided local governments with a

variable mill rate. We have provided them with the separation of

classes, so we now have a separate class for heavy industrial. The

advantage of that, of course, is that if local councils use the

variable mill rate approach, they need to apply it across the whole

class, but by virtue of the class being smaller in number, they can

target their options more accurately. Then, in recognition of the fact

that this new method of valuing industrial properties would have an

adverse effect on many in the industrial sector — principally, I should point out, in the independent sawmilling area — it

was determined that we should phase in this new assessment increase.

That is to say, we should phase in the increase that resulted from this

new valuation approach and cap assessment increases by no more than 20

percent per year, at least for the first two years of its

implementation. I should also point out to the House that that doesn't

cap the tax rate; it merely caps the assessed value, so we haven't

removed flexibilities from local government.

We're very pleased to advise the House that the government's actions in this whole issue — that

is to say, industrial valuations, and protecting municipalities from

the necessity of imposing horrendous tax shifts from one sector to the

other — have been endorsed by UBCM, and they have been active participants in the evolution of our examination of this vexatious issue.

MR. MILLER :

I appreciate that the change ultimately benefits the municipalities.

I'm not quarrelling with that, and I don't think that I've really

argued in that fashion to the minister. I'm just having some difficulty

understanding. It would seem to me that from your remarks, this

situation is not necessarily an anomaly. In fact, it could have been

foreseen and perhaps was foreseen as a consequence of the capping.

appreciate the effort to protect. You mentioned independent sawmills.

The minister is probably aware of the debate in terms of stumpage, and

the argument presented by independent sawmills that more of that weight

should be carried by the more profitable pulp industry. I agree that

there should be a desire to offer that protection. But the reverse has

in fact happened, because the municipality has now had to increase the

tax rate on industry. In order to recoup the same level of taxation,

they've had to increase the tax rate. In effect, they have taken from

other industry what more properly should have been taken from the

single industry — in this case, the pulp mill. So in some respects, it

has had the reverse effect of what the minister described. I have no

quarrel with the changes to the assessment system and the protection

afforded municipalities from those yearly appeals that made budgeting

very difficult.

Can the minister selectively remove the

cap? Is that impossible? Or is it a question of not wanting to do it? I

keep going back to this fundamental figure, where we have a mill that's

valued at $86 million, yet the municipality can only tax an assessed

value of $34 million. It just seems to me grossly unfair. We're

allowing a major industry that has the ability to pay to get out from

paying.

You said that it's two years. I'll include a couple of questions on this. Is it two years? Then I assume that the cap — the 20 percent — will

also apply in the next fiscal year, so that we have that situation

again. Would it apply to the last year's figure? In other words, would

the municipality have to add 20 percent on top of the $34 million, or

can the municipality next year use the current 1989 assessment figure

for taxation purposes?

HON. MR. COUVELIER : I have to

remind the House, Mr. Chairman, that the difficulty that the member

describes as the cause of concern could have been remedied, had his

local government decided to exercise the option that we offered them,

which is a loan that would have reduced the need for them to tax other

industries in that same class at a rate they weren't prepared to. They

obviously have chosen not to do that. In other words, the council

apparently has decided to use one of the other options available to

them. That's their choice.

I have some trouble responding

to the member, who seems to be suggesting that, despite the fact that

council seemed to have found some comfort in the approach they were

going to take, we should all of a sudden ride to the rescue. We offered

them the choice. They have thanked us for the offer and decided to

proceed with their own course of action. I have no difficulty with

that. I wonder what the hon. member would expect us to do, faced with

the fact that local council appears to have been saying to us: "We can

handle the problem, thanks very much."

The capping is a

device intended basically to deal with the consequences of what would

have flowed in the independent sawmill sector of our economy. But the

isolation of the separate class — the creation of the new class — called

"heavy industrial" did have the effect of giving the municipalities

much more flexibility. I'm pleased that Prince Rupert obviously has

decided to exercise some of those flexibilities independent of any

further action on our part.

[2:45]

MR. MILLER :

Mr. Chairman, I wish the minister would look less on this as me trying

to be antagonistic. I asked a couple of what I thought were very clear

questions that don't require argumentation about the capping: whether

or not the capping applied next year, and whether or not the

municipality would be restricted to adding 20 percent on this $34

million assessment, which is $45 million under the real value of this

enterprise. I think he would have been a lot better off simply

answering the question. If it's a question of getting the information,

and you don't have the answer at your fingertips, that's fine; just say

so, and we can move on to other questions. But I think they're quite

valid.

[ Page 7284 ]

don't criticize the municipality because of the route they chose to

take. They didn't create the dilemma. They had two options: they could

either raise their rates on other property classes to try to collect

the same amount of revenue, or they could borrow money. I see nothing

wrong with any municipality that says: "We don't want to go into hock."

You borrow money; you have to pay it back.

What about

future years? What about next year? Are we going to have in the next

fiscal year the municipality being restricted to adding 20 percent on

to a $34 million value and falling further behind? Surely the minister

would agree that it's unwise in terms of taxation to have big-shock

leaps of tax. It's not a wise system. We see that in the political

raises in ICBC where in election years there is no increase, and then

all of a sudden you've got to have big increases — 20 percent increases — to catch up.

think that kind of politics in terms of taxation is very poor. I'd much

rather have a very gradual, and hopefully small, level of increased

taxes year over year. People can live with that, but not these shocks — in this case the shock of not being able to tax $45 million.

don't want to take too much time on this issue, but getting back to the

specific questions I asked, what are they looking at next year? Are

they, as I said, restricted to adding 20 percent on the $34 million, or

will they be able to tax the full assessed value? What happens in the

following year if the answer is yes to that? When can they get up to

the point where they can actually levy — and it's fundamental to our system of property taxation in municipalities — a tax rate on the true assessed value?

HON. MR. COUVELIER :

I am a reasonable man, and I refuse to get excited by the obfuscation

of the member opposite in response to my responses to his questions.

The

issue of capping surely is a device to prevent unusual tax increases.

We just heard a monologue for four minutes on the NDPs avowed desire to

eliminate large tax increases in any one year. I don't mind a

reasonable debate about philosophical differences, but surely to

goodness the hon. member would have the generosity of heart to admit

that a capping does exactly what he just gave us a four-minute speech

saying he desired.

We also desire to prevent unusual tax

increases in any one year and the capping gives us that assurance. It

strikes me that that's a perfectly reasonable position, and the two

sides of the House should be ad idem on it — evidently; I heard a four-minute monologue about the merits of preventing large tax increases.

repeat, the member's local council appears to have found a remedy to

the dilemma that the member seems determined to consume a lot of time

discussing.

Interjection.

HON. MR. COUVELIER :

No, no. just a moment. Oh, maybe there is a basic.... I see. Maybe

that's the problem we have here: basic misunderstanding by the

opposition about the remedy that has been provided to other local

governments in B.C., which they have accepted and applauded. The loan

is intended to be repaid out of the increased taxation, the restoration

of taxation to historical levels by the local government as they deem

fit. So there is no cost involved to residential property owners as a

consequence of this; there is no cost involved in this to other

property classes, unless that is the desire of the local council.

Now

if the hon. member wishes to make the argument that this government

situated in these ivory towers has the presence of mind and wit to

determine property values and taxes for the entire province, I would

like to hear him expound on that thesis. But this government believes

that local government has a role to play, and we believe in

decentralization. We believe that the best decisions are made at the

local level, not in the ivory tower down here in Victoria.

introduced accommodations in our legislation so that the local

government has the maximum flexibility in dealing with the issues of

how to collect their costs of government. Indeed, I will say it again — for the fourth time, I think — the

community from which the hon. member comes appears to have found the

remedy they desired within this range of flexibility that this caring,

sensitive government has provided over the last four years on the issue.

I have some hard time understanding exactly what it is we are talking about. We appear to be ad idem .

We are both opposed to large increases one year to the next, so we

brought in a 20 percent cap. It will be for two years. By that time the

local government will have the tools available to them to deal with the

issues of that day, and we, of course, having been returned to power by

that time, will be able to continue to monitor the situation and

provide good, caring, sensitive management of these important public

policy issues.

MR. MILLER : I am not saying this

because I was a former alderman in Prince Rupert, but I can say, I

think without equivocation, that Prince Rupert is one of the better

managed municipalities in this province. We've got a history of fiscal

prudence. We've traditionally kept our budgets in line year over year.

We've avoided trying to overtax our citizens. We have a good balance

between the classes. I think we've run a very businesslike municipality

for many, many years, and the minister can check the records if he

likes. The consequence of the capping is that the tax rate to major

industry has been increased from possibly just under 24 to about 32.5.

In black and white, that to me is a tax increase, and a fairly

significant tax increase to the property owners in that category.

don't know why the minister takes so long to answer questions. I know

he likes to talk. We've seen that before in this House. I hope he

doesn't end up

[ Page 7285 ]

filibustering

his own estimates, but he's off to a pretty good start. The best advice

I could give you at this point is to be a little briefer, to answer

succinctly. You've finally answered the question I asked about two

questions ago, and you took 200 times too many words to do it.

Interjection.

MR. MILLER :

I don't know who that critic was down there in the Socred back bench

heckling me, Mr. Chairman. Perhaps you noticed who it was. I think it's

the second member for Langley (Mr. Peterson), and I hope he's prepared

to stand in his place and deal with the issues that are critical to the

municipalities he represents.

MR. PETERSON : Always, always.

MR. MILLER :

I'm looking forward to that. He should do it not in terms of trying to

protect the Minister of Finance but to honestly talk about the real

issues that people in his constituency are concerned about.

I'm

prepared to leave this assessment issue for the moment. I do have some

other issues that I'd like to raise with the minister in terms of

assessment in taxation. I'll do that later on.

MR. WILLIAMS :

The whole principle of the property tax is to base it on value. The

minister talks about disruption, but the capping itself has caused

disruption in this circumstance. That's the problem. It's so ironic,

because if you reflect on this particular pulp mill, it's one that was

sold by BCRIC. Remember? You like to forget about it, but it was one of

BCRIC's assets. They sold it off to Mr. Petty and his company, and Mr.

Petty was able to write it up from your book value by $125 million. So

$100 million ended up in Mr. Petty's pocket. Not satisfied with the

$100 million rolling out to Quebec to Mr. Petty, you've decided to cap

his property taxes to boot. There's no end to your largesse when it

comes to some of these players.

Beyond that, a couple of

years ago you removed the machinery tax, if my memory serves me right,

through Mr. Curtis, your predecessor. You've removed the machinery tax,

you put a cap on this when the value was up in the $70 million or $80

million range, and you've gone and put this cap on it. How many gifts

do you have to give Mr. Petty? How many kicks do you have to give the

average taxpayer in British Columbia? In this intermediate period while

the capping is on, and if the municipality doesn't want to borrow, it

means you kick the local taxpayer very hard. That's unreasonable.

That's what the member for Prince Rupert is saying. There's a need for

a better answer.

The principle of the property tax that

we've had in this province is that you base it on value. You've

destroyed that and caused this likely implication on the other

taxpayers in Prince Rupert. Mr. Petty will be laughing all the way to

the bank, as he has done lo, these many years with this administration.

But the average taxpayer can't afford to put any savings in the bank,

given the way you set the ground rules.

HON. MR. COUVELIER : I'm delighted to have the chance to respond to the great forester from the wild and unmanaged forests of Vancouver East.

might make two points. The hon. member talked about the history of that

particular mill. Most of the members on this side of the House weren't

around at the time, nor were most of the members opposite. I'm reminded

of a story I was given last night, seeing as how we're talking about

history. It was alleged that an American tourist came to B.C. in 1974

and said: "Things are great in the U.S. We've got Ronald Reagan, Bob

Hope and Johnny Cash." In response, the B.C. resident said: "I wish we

could say the same. We've got Davey Barrett, no hope and no cash." If

history is the subject of the discussion today, I'm sure it will be a

wide-ranging and challenging debating point.

[3:00]

Notwithstanding the valid points that I've heard expressed so far

this afternoon from the members opposite, the basic truth is that we

have provided a number of changes. We have provided maximum

flexibilities to local governments so that they can deal with the

uncertainties that might flow from frivolous or vexatious appeals that

might be judged on technical grounds. The 20 percent capping provision

is government's effective way of dealing with the fact that we

introduced a totally new system of valuing industrial properties a

couple of years ago and that we deemed it important, in a sense of

fairness and equality — a hallmark of this government's significant policy decisions — to

ensure that they weren't burdened in any one year with, in some cases,

increases in valuation of as much as 2,000 percent. Certainly prudence

seemed to dictate the response that we arrived at. I gather we've

successfully exhausted this particular aspect of my estimates.

MR. CLARK :

I want to begin by apologizing to the minister for missing his opening

remarks yesterday. I know they'll make interesting bedtime reading

tonight. And I was late again today. I guess the problem is that there

are so many allegations being made against the government that just

trying to meet all the people making the allegations creates almost a

fulltime job. I was late arriving again today because we have to meet

with all these people, see what their concerns are and see what

scandals we can uncover next. My apologies for the delay.

MR. WILLIAMS : But it was worthwhile.

MR. CLARK : It was very worthwhile, and there will be more to come as the days and weeks go by.

I propose in estimates here, for the minister's sake, to let him know that we shouldn't be too long — a

week or so. I'm going to try and refrain from making speeches and

rather ask questions. I will make about a handful of speeches, not too

long, ten or 15

[ Page 7286 ]

minutes,

on issues that are important to people in B.C., so that I'm on record

and we're on the record on this side. But I will try not to constantly

speechify and get speechifying responses from the minister.

Perhaps today we could open up this discussion....

MR. WILLIAMS : We've opened up.

MR. CLARK :

Oh, sorry. I could open up my arm of the discussion with some questions

around privatization, which I know is not completely the minister's

responsibility, but in trying to do some investigation about a number

of things, it appears that once something is privatized — maybe the minister can answer this initially — it

then goes to the Ministry of Finance. Is that true in all cases or just

in certain cases? I know it's true in certain cases, and I'm trying to

understand the process the government has with respect to privatized

ventures. I know that in many privatized contracts there's a financial

annual report or something that has to be filed with the government.

Presumably it's filed with the Ministry of Finance, and any ongoing

monitoring of that nature appears to be in the Ministry of Finance. Is

that fair to say?

HON. MR. COUVELIER : No.

MR. CLARK : What would be fair to say?

HON. MR. COUVELIER :

I'm not quite sure. The question was a little ambiguous, so we had some

difficult following it on this side. If I understood the member, he was

curious to know whether the Ministry of Finance had an ongoing

monitoring responsibility in relation to privatization contracts. I

said no. He asked what would be a fair response. I thought "no" was a

fair response; it was accurate. I don't know what fair is, but....

MR. CLARK : Could the minister tell me which privatized ventures are responsibilities of the Ministry of Finance?

HON. MR. COUVELIER :

Only those issues that were under our responsibility. That would be the

staff-training privatization initiative that came out of the

comptroller-general's department. I think it was the only privatization

initiative of our particular ministry.

MR. CLARK :

Are not the Stena cruise lines the ministry's responsibility? Does it

not have some responsibility with respect to that venture?

HON. MR. COUVELIER :

Yes. That's a bit more convoluted. The hon. member might remember the

sequence of events around that issue. There was initially another

cabinet minister responsible for that matter. It's true that at the

completion or near completion of the transfer, sale and privatization,

the Premier assigned me that responsibility. I'm happy to deal with

issues surrounding Stena, but it may be that we'll have to take some

questions on notice so that we can research the material requested. In

any event, I'm quite happy to deal with Stena issues during my

estimates.

MR. CLARK : Thank you. So at the moment we

see only two. The minister says Stena Line is now his responsibility.

It has been rather difficult trying to get that information, and I'm

glad the minister has cleared it up. Could he tell me who is

responsible for the regulation of the slot-machine operations on board

Stena Line ships operating in B.C.?

HON. MR. COUVELIER :

The contract with Stena is with B.C. Steamships. The provincial

government, by virtue of federal legislation, is required to be the

licence-holder for the operation of slot-machines. So we have a

sub-agency or an agency agreement, I suppose, although a lawyer might

choose to use different terms. In a layman's sense, at least, that's

under the control of the provincial government operated by Stena. By

virtue of my ministry having responsibility for B.C. Steamships, we are

familiar with the circumstances around the management of that issue,

although there are aspects of it that relate to the responsibilities of

the Solicitor-General (Hon. Mr. Ree) as it pertains to his gaming

responsibilities. However, I am happy to deal with those issues as I'm

able.

MR. CLARK : We contacted the Gaming Commission

and they said they weren't responsible and they referred again to Mr.

Halkett, who I believe is the Deputy Minister of Finance. From your

answer it is clear that it is your ministry, through B.C. Steamship

Company, that regulates the slot-machine operations on board the ships

of the Stena Lines. Can the minister tell me if there is a limit on the

number of slot-machines which the line is allowed to have in total, or

is it based on a certain number of slot-machines for each ship?

HON. MR. COUVELIER :

I should correct the statement by the hon. member. It isn't my ministry

that has that relationship with Stena. It's B.C. Steamships, which is a

separate Crown corporation for which I am responsible.

There is no requirement in the agreement, I am informed, dealing with the number of machines.

MR. CLARK :

So by that you mean that they can have as many slot machines as is

physically possible to have? Are you saying that there is no

restriction and so each ship can have as many as Stena deems warranted?

HON. MR. COUVELIER :

Yes, it is viewed by government that by virtue of the agency

relationship, that issue can be controlled by government. So there

isn't any fixed number assigned to the specific agreement.

[ Page 7287 ]

MR. CLARK :

I think this goes to the heart of some of the things I would like to

explore. The B.C. government, through B.C. Steamship Company, holds the

licence, but, as is true in many privatized ventures, the Stena Line

determines the number. It seems to me that this is a very interesting

question, and not just a technical question: the steamship corporation

is in fact responsible — and we can get into that later — and yet Stena

can, it appears, add or take away as many slot-machines as possible. Is

there any kind of approval process before they start up a new

slot-machine operation on the ship? Is there any kind of review

process? Do they have to go to the holders of the licence, the B.C.

Steamship Company, and say: "We would like to add ten slot-machines; is

that okay with you?" Is there any process?

HON. MR. COUVELIER :

Stena understands, Mr. Chairman, that they have to have those kind of

discussions with B.C. Steamships prior to any action in that respect.

MR. CLARK :

Is this understanding just a gentlemen's agreement between the

government and Stena, or is there anything in the contract or any

approval process that the government has to undertake in order to allow

Stena...? Let me put it another way. If they add twenty new slot

machines, do they have to ask you for permission?

HON. MR. COUVELIER : We would expect them to do so, Mr. Chairman.

MR. CLARK : Do they have to ask for permission?

HON. MR. COUVELIER : We would expect them to do so, Mr. Chairman.

MR. CLARK :

So the answer is that they don't have to do it. The minister is saying

here in the House, although there are no Stena people present, that he

would expect them to do that. Is there any penalty if they don't

consult the government on the addition of new slot-machines on board?

HON. MR. COUVELIER :

We will let matters unfold in that respect, and matters will unfold. I

don't anticipate a difficulty. Stena is aware of the government's

interest in the matter, and we have the understanding, I think, as to

how that will be managed.

As a matter of fact, we are very

happy with the relationships we have built up over the last year with

Stena, and they have significantly added to the tourism industry, I am

sure, as the hon. member is aware, in the greater Victoria area. So we

look to them to continue to expand, and at the same time, we expect

them to be good corporate citizens and remain sensitive to the concerns

of the local residents and of this government. So far, it's been a very

amicable relationship.

MR. CLARK : So there are no

regulations governing this. You simply allow Stena to add as many

slot-machines as they want, and there's no regulation presumably? If

they add another ship for any lines, do they need permission to install

slot-machines on that, or does the agreement you have with Stena simply

once again allow them to add as many slot-machines as they would like?

HON. MR. COUVELIER :

I'm not quite sure if that's a repeat. Or does the member think that's

a new question? I thought I answered it. Are you referring to new

ships? Additions to the existing service?

It would be

expected that new ships would have similar gaming opportunities for the

operator as the existing ships. In the opinion of the government, the

issue isn't necessarily the number of slots, but rather how they're

operated, whether they're operated honestly, whether there is an

acceptable payout rate, whether revenues are being accounted for

appropriately and, generally speaking, that it's a responsibly run

operation. We have seen no evidence whatsoever that that's not the

case, and we are monitoring the situation to ensure that it always

remains the case.

[3:15]

MR. CLARK :

Does the existing contract with Stena Line mean that if Stena adds

another ship, the existing contract covers that and therefore allows

them to add slot-machines to that other ship? Does the existing

contract cover any ships that they add and any new slot-machines they

add?

HON. MR. COUVELIER : The answer is yes, Mr.

Chairman. I'm sensing that the hon. member is interested in getting

much more background material on this matter. If it pleases him, I'd be

happy to table that document with the House, so that he's comforted on

the point. That presents no difficulty for me.

MR. CLARK :

We certainly appreciate that, and I've requested that from the

ministry. It hadn't been forthcoming, so I appreciate the minister's

response. That may allay some fears that some people have or may at

least allay some questions.

But I would like to follow

along a little on this question. Apparently the 150 slot-machines on

board Stena Line brought in $9 million last year. How much profit was

made? In other words, how much did not go out in payouts to winners in

this gaming exercise and other costs of business? What was the profit

for the 150 slot-machines on board the Stena Line vessels last year?

HON. MR. COUVELIER :

I'm advised that the total net revenue for the two vessels was $1.1

million with operating costs of $0.2 million to be deducted from that,

so $900,000 profit represents the B.C. Steamship Company's share of the

proceeds of the gaming operation on two vessels.

[ Page 7288 ]

MR. CLARK : Can the minister tell me what that share of the profit is, so we can determine what the profit was to Stena Line?

HON. MR. COUVELIER :

Yes, I'm reminded that the operation I've just described was when it

was under our ownership, and Stena was not involved in that

arrangement. So obviously that's entirely for government's account.

The

new arrangement with Stena returns 30 percent of the net to government

and 70 percent to Stena. With the expanded volumes that we are

receiving, even after only a month's operation, it seems safe to assume

that gaming will bring in more than it did last year. If we talk about

a million dollars net, I suppose Stena will receive 70 percent of that,

and we'll receive 30.

MR. CLARK : We have no figures

for the Stena operation as of yet, the minister is saying. Do we only

have one month's receipts? Is that how it works? Do they remit them on

a monthly basis?

HON. MR. COUVELIER : The answer is yes, monthly.

MR. CLARK : Do we have the first month or two's receipts?

HON. MR. COUVELIER : We haven't received the first month's reports yet.

MR. CLARK : How long has it been operating?

HON. MR. COUVELIER : I was on the inaugural run on May 11 of this year.

MR. CLARK : In bingo, prizes can amount to no more than 60 percent of the gross take, which leaves 40 percent — I think 25 percent goes to charity. Is there some similar arrangement in terms of the prize ratio on the Stena Line?

HON. MR. COUVELIER : I understand it's better than bingo. The pay-out rate on the slots is 93 percent.

MR. CLARK : It's better for the gambler and not as good for the recipient. Is that what the minister is saying?

HON. MR. COUVELIER :

I assumed that we were wanting to ensure that the machines had a good

pay-out, and that usurious taxes were not charged as a consequence,

which is a traditional argument I hear from across the floor. When I

reported the figure of 93 percent pay-out, I assumed that I would get

some comfort from the members opposite. Is it suggested here that we

should reduce the pay-out?

MR. CLARK : I just want to

establish the different rules that exist for bingo operations and for

these kinds of gaming facilities. I'm not at this point passing any

judgment on that. I'm trying to understand how it works.

Could you tell me who audits the operations of the slot-machines to make sure that they're being run in a fair manner?

HON. MR. COUVELIER : We're contracting with an external auditor in that respect to ensure that it's being dealt with professionally.

MR. CLARK : How often do the audits take place? What's the cost of the contract to the government for the audit?

HON. MR. COUVELIER :

I'm advised that the contractual arrangements are that there shall be

an audit once a month and that there shall be an annual report. The fee

that we're paying for this service is $10,000 per year.

MR. CLARK : Will those audit reports and the annual report be public information?

HON. MR. COUVELIER :

I'm not sure what our understanding with Stena is in terms of sharing

their profit information. I'll just have to take that one — how do we say it? — under advisement.

MR. CLARK :

Do the proceeds of the slot-machines or gaming facilities go directly

to Stena, and are they then divided up and shared between the B.C.

Steamship Company and Stena?

HON. MR. COUVELIER : Could you ask the question again, please? I'm not sure I caught it all.

MR. CLARK :

I just asked whether the proceeds from the gambling go directly to

Stena. I see your staff.... Yes, they go directly to Stena, and then

Stena divides up the pie and gives 30 percent of the net to the

government.

HON. MR. COUVELIER : Yes.

MR. CLARK : I wonder if the minister is aware that

section 190 of the Criminal Code — federal government — says

that only a provincial government or a charity licensed by the province

can operate a gaming facility. Can he tell me what legal opinions he

has that this is not a violation of

section 190 of the Criminal Code?

HON. MR. COUVELIER :

I'm advised that that kind of information, Mr. Chairman, is not

normally discussed in public forums like this. Legal opinions,

personnel matters are normally given the courtesy of privilege. I think

that the government has comfort in that respect.

MR. CLARK :

Mr. Chairman, it's quite clear on reading

section 190 of the Criminal

Code that only the province or a charitable organization licensed by

the province can operate a gaming facility. That does

[ Page 7289 ]

not

appear to be the case in this regard. The Solicitor General is here.

Perhaps he can tell me. Surely the province has some legal opinion. I

won't ask for the legal opinion; I'll ask if you have a legal opinion

that this is legal under

section 190 of the Criminal Code. Do you have

a legal opinion?

HON. MR. COUVELIER : Mr. Chairman, I

think it should be pointed out to the hon. member, as I mentioned

earlier, that we operate and we sublicense Stena to manage, which is

deemed by those who practise the profession of law to be an appropriate

method that complies with the federal legislation.

MR. CLARK :

So what you've done is devise a loophole in order to attempt to escape

the provision of

section 190 of the Criminal Code. You've set up a

dummy company and licensed it and contracted it out to Stena. It's

clear to me and to lawyers I've talked to that that's simply a

violation of the Criminal Code. I want to know whether you've got a

legal opinion on that fact, and whether you'll table that legal opinion

in the House. We have legal opinions to say this is a clear violation

section 190 of the Criminal Code.

HON. MR. COUVELIER :

Mr. Chairman, I have been aware for some time that it's possible to get

a legal opinion to confirm any position you wish to espouse, so I'm not

surprised that the hon. member found someone who was able to provide

that assurance to him. We also have legal opinion that is provided us

as part of the statutes of the province, and that legal opinion is

fixed by statute, and every ministry of government utilizes, for the

sake of consistency, the same entity of government to examine these

legal issues. And so we have the comforts we need. I suppose the best

way to deal with the issue is to let the two different points of view

from the legal fraternity meet to discuss the issue. But as I say,

these questions of legality of government actions are the

responsibility affixed by law onto another ministry of government.

The

member seems to be questioning the legality of this issue. I can only

tell him that I have the comfort I feel I need as minister responsible.

If that doesn't satisfy the hon. member, he may wish to raise the issue

when he discusses the estimates of the other line minister who has a

specific responsibility for legal matters.

Interjection.

HON. MR. COUVELIER : Has that already been done?

Interjection.

HON. MR. COUVELIER : So the missive missed the target once again.

would be useful, Mr. Chairman, if members of the opposition having a

point to make would verify exactly who it is they wish to make the

point with, so that matters might be resolved. I have provided the

answer the best I can. If there is some difference of opinion as to the

legality of actions, the hon. member should have raised it when he

looked at the estimates for the Attorney-General (Hon. S.D. Smith). He

obviously missed that opportunity, and that's regrettable. He may wish

to pose a question during question period, or something, so that he

might get comfort from that source. But far be it from me to stragetize

for the members opposite. It seems to me they're capable of figuring

out these options. It can be addressed that way, and the public can be

comforted and the hon. member can be comforted.

MR. CLARK :

Mr. Chairman, I attempted about half an hour ago to determine who was

responsible for regulating gambling on the Stena Line. It was quite

clear from the answers of the minister that it was his ministry. That's

the whole purpose of this discussion. And so he's accepted

responsibility. He accepts that his staff is responsible. He accepts

that he's the minister responsible for B.C. Steamships. I simply asked

whether B.C. Steamships or the minister or the ministry had any legal

opinion that said that it was not contrary to the Criminal Code. We've

not yet had a straight answer to the question of whether they sought

legal opinion on this question of using a loophole to get around the

federal government's jurisdiction in this matter, and whether he's

prepared to table that legal opinion in the House, so that we can have

comfort, as he appears to have, that this is in fact not a violation of

the Criminal Code.

[3:30]

HON. MR. COUVELIER : I'm accused sometimes of going on at length — unfairly,

I might add. I provided the best response I could to the previous

question, with what I thought was a very thorough explanation of the

issue. I don't know what more I can add. Obviously the government

received the comforts it required before concluding the arrangement

with Stena, and obviously we have comfort in that respect. The hon.

member keeps trying to claim that we shouldn't hold such comfort and

that he has some legal opinion which seems to give him cause to

criticize. As I said before, if the hon. member has concerns about the

quality of legal advice provided to a ministry of government, then he

might properly address the issue of the quality of advice to that

minister who is obligated to provide it by statute. In this government,

that minister Is the Attorney-General.

MR. CLARK :

Why will the minister not table the legal opinion he claims to have

from the Attorney-General so that we and the public can see that in

fact they are comforted that this is a legal gaming operation in spite

of the appearance that it's a violation of

section 190 of the Criminal

Code? It's a simple question. It would seem to me that if there is a

legal opinion — the minister says there is, so I have no reason to doubt that — he should simply table that legal opinion in the House so that all people can see

[ Page 7290 ]

this is not a violation of

section 190 of the Criminal Code.

HON. MR. COUVELIER :

Mr. Chairman, a question was put to me 20 minutes ago by the same

member who asked if I would table such a document, and I told him that

in my judgment there are some matters of privilege which are not

normally shared in public forums. Those are issues affecting personnel

matters and also legal matters. Twenty minutes ago I told him that. I

also suggested that if he really wished to get comfort on this point,

he ask the person who is responsible for the quality of the opinion,

which is what he appears to be questioning. I don't know what more I

can add.

MR. CLARK : I fail to see what public policy

interest is served by refusing to make public a legal opinion which

justifies the government's action. It seems to me that the government

would want to make that opinion public to allay any concerns that it's

a violation of

section 190 of the Criminal Code.

The

minister might be aware that there is a reason why the Criminal Code

limits gaming to provincial government operations and

provincial-government licensed charities. It's because we in this

country have never seen a proliferation of private gaming operations.

There is clearly a consensus against private operations, and you have

circumvented the Criminal Code. Have you had discussions with your

federal counterparts or the federal government with respect to the use

of this attempted loophole to circumvent an area which is clearly the

federal government's jurisdiction? Have you talked to the people

responsible in the federal government to allay any concerns they might

have about this novel approach to privatizing gambling in B.C.?

HON. MR. COUVELIER :

I appreciate the compliment by the hon. member to the effect that this

government would have the wit to embrace novel approaches to

contentious issues; that's comforting to hear. But I must point out

that in this particular case I don't think we earn the accolade.

There's nothing novel about it. It's customary for provinces, which by

federal law are required to operate and supervise gaming operations, to

subcontract a particular operation to the private sector or others. So

it's not novel in that sense, I don't believe.

MR. CLARK : Did you discuss this proposal with the federal government in advance of its coming to fruition?

HON. MR. COUVELIER :

I'm not quite sure who the hon. member is referring to when he talks

about the federal government. I didn't phone Brian Mulroney, if that's

what he's hinting. I personally didn't have any conversations with any

federal cabinet minister on the matter. So I'm hesitant here, because

he seems to be fishing; for what purpose, I'm not sure. But I can say

it again: this government is satisfied that its actions with respect to

the operation of slot-machines on the Stena Line steamships are legally

valid; they provide no discomfort or do not expose us to any risk from

the federal authorities who might be expected to have an interest in

the subject. The issue of subcontracting and so on has been canvassed

and dealt with at some length by this government. So those issues, as

far as we're concerned, are well in hand — as you would expect any responsible manager of public policy to bring to these decisions.

MR. CLARK :

The responsible manager of public finance appears to have reduced

revenue from this operation rather dramatically by privatization, but

we won't get into that at this point.

HON. MR. COUVELIER : You'd better not.

MR. CLARK :

Well, you have, haven't you? You said they had $1 million last year

from gambling with a publicly owned facility. The private company is

now going to get $1 million, and you are only going to get 30 percent

of that — that's $300,000 — out of which you have to pay increased

costs of regulating. It seems to me not exactly a brilliant move on the

government's part.

I wonder if the minister could tell me

whether he or his staff had any discussions with the industry in Ottawa

responsible for the Criminal Code regarding any approval or

preclearance of this proposal. The minister said he didn't phone the

Prime Minister; I appreciate that. I want to know whether his staff

consulted with the appropriate staff in Ottawa in advance or after this

unique arrangement was made, to see whether in fact they have approved

of this. It appears, in my view, that it's federal jurisdiction with

respect to the Criminal Code and gambling.

HON. MR. COUVELIER :

The remark made by the member before he left the issue of revenue

seemed to imply that the government is losing revenue as a consequence

of the gaming arrangement. I think I should point out to the hon.

member that this privatization initiative has significantly improved

and increased tourism traffic for Vancouver Island, such that the

operators are going to expand the service. So to try to paint some sort

of business loss around this privatization case is absurd.

The

member asked whether we've had discussions with our federal

counterparts related to the gaming issue. His specific reference was:

"Has your ministry done this?" I want to take the member back to my

opening remarks on this matter and point out once again that the

privatization of Stena was initially launched by a different ministry

of government. I came to the responsibility near the conclusion of the

negotiations. I have tried to couch my responses to him by saying that

government has, the comfort government has, government is satisfied, in

order to avoid misrepresenting my ministry's involvement in the issue.

I can only say it again: government has the satisfaction that the

federal authorities are aware of this relationship and that there has

been consider-

[ Page 7291 ]

ation

of the joint government concern, and we have all the comfort we need in

that respect. If the hon. member persists in his belief that we

shouldn't be so comfortable, then I challenge him to question the

quality of legal advice we get from the appropriate ministry, which

isn't my ministry.

MR. CLARK : The government and the

minister having comfort and satisfaction hardly gives the people of

British Columbia comfort and satisfaction, given the track record

around here.

It's always interesting that the government — particularly Social Credit governments, which like to pretend to be good businessmen — argue

that as good businessmen they have to turn over the operations of

government to the private sector. I wonder if they are ever struck by

the contradiction that they are the ones managing government and they

are saying, "We have failed to do a good job in running a government

enterprise, and the private sector can do it better than we can, " when

they are presumably elected on a platform of being able to manage

government. It always strikes me as curious.

It's puzzling

that the minister said we are going to lose in excess of $700,000 on

this one ship by privatizing, but they are going to put on another run

and add tourists. Clearly, the public sector could have put on another

run and generated more tourists; but no, this government didn't have

the wherewithal or the expertise to do that and is relying on the

private sector. It always strikes me as an interesting contradiction.

the early part of 1989, the Minister of Government Management Services

(Hon. Mr. Michael) put out a press release calling for expressions of

interest in the operation of a new cruise ferry service for the Inside

Passage corridor between Vancouver and Prince Rupert. The carrot in the

proposal was the government's apparent willingness to sublease the

existing ferry terminal facilities owned and operated by the B.C. Ferry

Corporation. The call was to close February 28 — just a couple of months ago — but

it was cancelled, I gather, because the received responses didn't deal

with the use of the B.C. Ferries terminals. That's my impression. I

have been led to believe that the most interested party was another

Swedish company.

It appears that the government is in the

process of signing an agreement with Stena again for the operation of

an Inside Passage route, subject to, I gather, some federal tax

concessions. Since it appears that the Ministry of Finance is now the

sole contact with the Stena Line, which operates the only shipboard

gambling presently in B.C. waters, can the minister tell us whether

they will be the sole contact with respect to any new line up the

Inside Passage and gambling associated with that line?

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

MR. CLARK : Can you tell us who is responsible for that operation?

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

MR. CLARK : I didn't catch the answer. Could you tell us who's responsible on the government side?

HON. MR. COUVELIER : The answer is no.

MR. CLARK :

Are you saying that you do not know who is responsible for Stena Line's

proposed operation through the Inside Passage to Prince Rupert?

HON. MR. COUVELIER :

It's just about impossible to deal intelligently with

fishing-expedition questions. I'm not aware of the Stena Line's

proposal to do the Inside Passage. The question asked if I am somehow

going to monitor the Stena Line's Inside Passage proposal. I'm not even

aware of them having one.

I want to be helpful. I genuinely

want to elevate the knowledge and understanding of the opposition

members about my ministry, which I think is an important ministry of

government providing useful service with high-quality technical help

that is unmatched anywhere else in the country. But surely the

questions you put to me have to be questions that have some basis on

which they might be asked.

[3:45]

MR. CLARK : Mr. Chairman, it's impossible. We don't know who's running what on the other side.

The

minister said we had difficulty. I'll tell you what happened with

respect to B.C. Steamships, which the minister is responsible for. We

phoned and said to the Gaming Commission: "Are you responsible for

this?" They said: "No. We think it's the Ministry of Finance." We

phoned the Ministry of Finance, and they said: "We think it's the

Ministry of Attorney-General." We phoned the Ministry of

Attorney-General back, and they said: "It's the Gaming Commission." We

phoned the Gaming Commission, and they said: "It's the Ministry of

Finance." We phoned Government Management Services, and they said:

"It's the Ministry of Finance." We asked the Solicitor-General, and

they said that it was the Ministry of Finance.

We now have

the minister finally saying.... There have been so many reorganizations

with this government that we don't know who's in charge of what, and

neither do they, it appears.

It seemed to me obvious — and I apologize to the minister — that

he's responsible for B.C. Steamships now; he's responsible for the

Stena Line operations that currently exist; he's responsible for

gambling on the current Stena Line operations; he's responsible for

regulating gambling on them. It seemed to me that the new proposal for

a gambling run from here to Prince Rupert would have been from the same

company, and the only contact person we have now with Stena Line would

be the same ministry. The minister is now saying that it's not the

case, and he can't even tell us who is responsible for the Stena Line

operation in the Inside Passage. Can you tell me who on the

[ Page 7292 ]

government side is responsible for this new gambling proposal through the Inside Passage?

HON. MR. COUVELIER :

Golly, I'd like to help, but the question has to be relevant. There is

no gaming proposal for the Inside Passage that I'm aware of.

to the suggestion that the hon. member can't get answers, I understand

that the opposition have a difficulty holding onto research officers.

As a matter of fact, I understand that there's a court case, or

something, dealing with separation or termination of employment. So we

shouldn't be surprised that they have difficulty tracking down an issue.

I've just been advised that my staff — who normally work long hours — did

return a phone call at 5:15 last Friday evening and had some difficulty

finding anybody in the socialist offices. It wasn't payday, you see. So

I'm having difficulty trying to give comfort that we really take your

question seriously. We do. Here one of my loyal staff attempted to

connect at 5:15 and had some difficulty finding an appropriate person

at the other end. If you called my side, I think you'd get responses at

5:15, 5:36 or even 5:37 or 5:38; it's not unusual. So if you're going

to make allegations about the quality of staff work being provided by

this government, at least you should be at the other end of the line

prepared to receive the answers when you put the questions. We are here

to serve.

MR. CHAIRMAN : Just before we continue, members might be interested — if

the member would just take his seat for the moment.... We were

discussing legal opinions during the course of this debate, and

debating is, I think, a learning process all the way through. So I

thought I just might cite from Erskine May, in his nineteenth edition,

when he talks about law officers' opinions. It says: "The opinions of

the law officers of the Crown, being confidential, are not usually laid

before Parliament or cited in debate, and their production has

frequently been refused, but if a minister deems it expedient that such

opinions should be made known for the information of the House, he is

entitled to cite them in debate."

MR. CLARK : The

minister and I entered the House at the same time two and a half years

ago. I'm sure that if we were here longer, we would have picked up

Erskine May and both used it. It seems we can both use it for our

arguments. But I still think the minister's defence is weaker as a

result of the Chairman's drawing our attention to that remark.

HON. MR. COUVELIER : He was supporting me; he wasn't supporting you.

MR. CLARK :

No, he wasn't. Mr. Chairman, as I recall, the last line was that it was

the minister's discretion that he could table those documents. He's

chosen not to do so.

The minister said that I hadn't asked

him this question. I asked him, and he proceeded not to answer it. So I

thought I would try one more time. Could he tell me who is responsible

for any proposal about an Inside Passage run using the Stena Line or,

presumably, any other gambling operation?

HON. MR. COUVELIER :

Yes, Mr. Chairman, I'm pleased to provide that information. The issue

is led by the minister in charge of government personnel services

division. He placed a public advertisement for proposals, and I do

understand that he received responses to those proposals.

MR. CLARK :

Now can he tell me that if the Stena Line is successful in getting a

new route through the Inside Passage, accorded presumably by the

Minister of Government Management Services (Hon. Mr. Michael), then

does it become the responsibility of the Ministry of Finance in light

of the contract that was signed with Stena, which presumably — and I ask the minister's guidance on this — would allow gambling on any new Stena Line operating in British Columbia? Is that correct?

HON. MR. COUVELIER :

No, Mr. Chairman. A good while ago I pointed out that it's not the

Ministry of Finance which is handling the gaming; it's B.C. Steamships.

the issue of whether gaming will be allowed on the Inside Passage

route, that will be discussed at some point, and some announcements

will be made at some point in a public arena. It is not for me to speak

to that matter, and it does relate to future government policy.

MR. CLARK :

This is not future government policy that I'm asking about. I'm asking:

if Stena Line receives the right to do the Inside Passage route, does

the existing contract with B.C. Steamships, for which you are

responsible, prevail on that route as well as existing routes?

HON. MR. COUVELIER : The answer is no.

MR. CLARK : So the only thing the contract covers is additional ships on the existing routes.

HON. MR. COUVELIER : No.

MR. CLARK :

Can you explain to me why, then, if it covers additional ships on

additional routes, this would not be viewed as an additional route

under the contract, and therefore the contract would prevail?

HON. MR. COUVELIER :

The existing routes do not include a run to Vancouver. When we

announced the privatization to Stena, they announced and we concurred

that there would also be a run to Vancouver. The contractual relations

with Stena relate not only to the existing Victoria-Seattle run but

also, as we announced a year ago, a service from Victoria to Vancouver.

That service does not now exist, but will in the near future.

[ Page 7293 ]

MR. CLARK :

So those are the only two routes which are covered by the existing

contract. The minister is nodding his head. Has the government, in the

proposal from Stena Line...? Oh, I'm sorry, in this case it's the

Minister of Government Management Services. Can you tell me whether the

Ministry of Finance is involved in that proposal as well? For example,

is the Ministry of Finance lobbying or working with the federal

government to seek remission of the particular tax requested on behalf

of the Ministry of Government Management Services, which I gather is

responsible for this particular proposal?

HON. MR. COUVELIER :

I try to listen closely, and I don't want to be guilty of misleading

the House. The member repeatedly seems to be implying that Stena — for some reason he seems to have this fixation — has

some sort of an assurance that the Inside Passage contract will be

awarded to them. I'm afraid that no matter how I answer his question,

he will six months later allege that we misled the House with the

answer to his question. Would the hon. member care to rephrase it so

that I can give an answer that does not confuse him?

MR. CLARK : Am I incorrect — and I could well be — in

assuming that this government asked the federal government for a

certain tax break for Stena Line so that they could operate in the

Inside Passage?

HON. MR. COUVELIER : No. That's the

misunderstanding, I guess. This ministry and I were involved in

forwarding government's case for an exemption of duty on the new ship

Stena are going to bring in to operate the Victoria-Vancouver run.

MR. CLARK :

Can the minister tell me whether B.C. Steamships has any connection

with any proposed new route through the Inside Passage, or is that

being handled solely by the Ministry of Government Management Services?

HON. MR. COUVELIER : B.C. Steamships will have no involvement on the Inside Passage run.

MR. CLARK :

So any attempt to have the duty remitted on any ship which might be

granted that run will presumably be conducted by the Ministry of

Government Management Services.

HON. MR. COUVELIER :

One thing this government does very effectively is mobilize all the

resources of all the ministries in pursuing some of these major

initiatives as they relate to the senior government. As a consequence,

I have made representations on that matter of duty remission on any

vessel that might be used on the Inside Passage, as have some of my

colleagues. That's something we do in a coordinated way, using all of

the powers of persuasion that we can muster. So I've had a hand in that

presentation to Ottawa.

MR. MILLER : For clarification, then — and I seem to get the sense that this is not the case — my

understanding was that the province is supporting, if not leading, a

request for duty remission for a ship that Stena proposes to run on the

Inside Passage, and that the duty remission was requested for a

specific vessel, because I recall the Minister of Government Management

Services making an announcement in Prince Rupert — I think it might have been this year — that

there would be an operation in place; it was a solid commitment. And

the minister talked to me about the duty remission. It was a specific

dollar amount, I believe. I don't know how that could be made, unless

it would be made for a specific vessel. It's based on value, is it not?

And if you have been leading representations on remission.... Perhaps

the minister could just clarify.

HON. MR. COUVELIER : Maybe you could help me, Mr. Chairman, and clarify. Is this relevant to my estimates?

MR. CHAIRMAN : The line of questioning, up to this point anyway, seems to have been reasonably relevant to me.

HON. MR. COUVELIER :

I'll take your sage advice, Mr. Chairman, and attempt to clear up what

evidently is a determined effort on the part of members opposite to

continue to assume that Stena has some particular priority as it

relates to the Inside Passage. I guess the hon. member might have been

out of the House when the previous questioner and I got into some

discussion on this point. I'll say it again. I do hope I don't have to

say it 22 times, as each one files in, one at a time. Nevertheless, we

have advertised for proposals on the Inside Passage, and the minister

in charge — not myself — has vetted those proposals. As a consequence

of discussions with the perceived leading bidder, it was determined

that there would have to be some kind of duty remission by Ottawa on

the vessel they proposed to use. The duty remission requested is

expressed as a percentage of value, so it would vary by ship, because

each ship's value varies as a condition of age, size, suitability,

marketability and a variety of factors.

It is true that I

was part of a group that made representations to Ottawa regarding duty

remission on a specific vessel for a specific sum of terms of

remission. So that's my involvement with the Inside Passage.

[4:00]

MR. CHAIRMAN : I might just mention — speaking again of relevancy, which was mentioned a moment ago — that it would appear to the Chair that over the past hour-plus the matter under discussion has been reasonably well canvassed.

MR. MILLER : Given that the Minister of Finance played a role — and I won't even use the term "key role"; he may wish to say that it was a key role....

[ Page 7294 ]

Nonetheless,

in advancing a proposition to the federal government concerning the

remission of duty, had your ministry undertaken any evaluation of the

impact on or the consequence to British Columbia shipyards? After all,

there is a rationale for having that federal duty in respect of our own

industry; and yet in two cases now the government has taken the

approach that they would like to see that cancelled or withheld, in

order to allow a company from outside the country to bring ships in to

put into service in British Columbia waters. I think it's a good

question in this respect, and I would like to hear what the minister

has to say in terms of any kind of analysis. I don't know the total

value we're talking about in terms of that remission, with the two

ships, but it's in the millions. So perhaps the minister would like to

respond to that.

HON. MR. COUVELIER : I'd be

delighted, Mr. Chairman. The fact of the matter is that the B.C.

shipbuilding industry is an enthusiastic supporter of our request for

duty remission. And it's also, I think, a fair comment that if there is

opposition to the concept of duty remission as it relates to foreign

cruise ships being used on the B.C. coast, it would lie in eastern

Canadian sources and centres. So we have been able to provide comforts

to the federal government that, indeed, local shipyards and shipyard

workers are supporters of the concept. They take this position, Mr.

Chairman, because they understand that many of these vessels that might

come in would require refitting, and that they are comforted by our

government's stated intention; that is, to do what we can to ensure

that refit work is done in B.C. yards, providing jobs for B.C. shipyard

workers.

In addition, it should be pointed out that refit

work is normally done annually. Here again, we would expect that B.C.

shipyards could be competitive and ensure that all succeeding work over

succeeding years would be done here in British Columbia. So for those

reasons we've had no difficulty providing a unified front to the

federal authorities for all interested parties in British Columbia.

MR. MILLER :

I appreciate the minister's response there. Did we make specific

requirements? In other words, the government took the position that

they are prepared to lobby the federal government for duty remission,

and the minister has explained that the B.C. shipyards were supportive

in that they could expect repair work in the B.C. yards. Were there any

other specific provisions that British Columbia sought, in terms of

employment levels on the ships or any of those attendant features? In

other words, were there any economic returns to the province beyond the

simple provision of the cruise line's service? Were there any other

provisions that British Columbia sought from the companies in exchange

for British Columbia going to the federal level and asking for duty

remission?

HON. MR. COUVELIER : I am not responsible

for the Inside Passage decisions; therefore I think it would be

inappropriate for me to deal with that question. As far as the

representations made to Ottawa that I was party to, I can tell the hon.

member that we have learned that Ottawa has certain rather narrow

criteria by which they judge the applications for duty remission. By

virtue of having gone through the exercise with the Stena application

in the Victoria-Seattle-Vancouver triangle runs, we learned a great

deal about how that process is judged in Ottawa. As a consequence, we

were able to speak to them on the second proposal on the Inside Passage

in more narrow terms.

I have no knowledge of what might

have been said in terms of crewing or manning nationalities. As the

hon. member should know, our deal with Stena does require Canadian

manning as it relates to the triangle run. So matters will unfold, and

I don't think I should comment on another minister's responsibilities.

MR. MILLER :

That's fair; I don't want you to stray from your ministry. So the

minister is advising that the federal criteria are fairly narrow in

terms of the conditions that they require to be met for that duty

remission. For example, you mentioned manning on the existing

arrangement with Stena to Vancouver. Is that a federal requirement or a

B.C. requirement? The minister nods his head; it's a B.C. requirement.

I don't know whether my colleague wants to continue on this line or not. I have some issues in terms of the assessment of lands — or

trees, actually, on land. I think the minister is reasonably apprised

of the issue where treed land is subject to being assessed with the

commercial value of the timber crop on the land. It appears that is not

uniformly applied — at least that's the information that I have — throughout the province; that's number one.

Secondly,

it would appear that it creates a situation of an incentive to log

where that might not necessarily be the case. I will leave it at that

for now. If the minister is familiar with the issue, he could respond;

if not, I'll elaborate a bit more.

HON. MR. COUVELIER :

I take it we are now on the issue of the Assessment Authority. It was a

large leap here. If the hon. member has any evidence that Assessment

Authority practices result in requiring logging or hastening the

logging of properties, I would appreciate receiving it.

MR. MILLER : Mr. Chairman, as far as hard evidence — no,

I don't. But I am aware that the Minister of Municipal Affairs,

Recreation and Culture (Hon. Mrs. Johnston) was sufficiently concerned

about the issue that she undertook a study, which I think is ongoing.

She publicly expressed her concern about the issue. She felt, as a

result of representations by municipal and regional officials, that

indeed that was the case.

If the minister is completely

unaware of this topic, maybe the discussion will end. I could elaborate

a bit more, and I could go back and get my notes on my discussion with

the Minister of Municipal Affairs. She took the position — and I think properly so —

[ Page 7295 ]

that

when it came to the Assessment Authority, it was not in her

jurisdiction. We had a brief discussion, and her recommendation was

that it be taken up with you under your estimates.

I would

ask if the ministry is aware of the problem; whether they have

undertaken any studies whatsoever about the problem; whether they have

formed any conclusions about the statement I made; whether there is an

incentive to log; whether they have looked at any alternatives to the

assessment system in terms of land containing commercial tree crops;

whether the assessment system is uniformly applied throughout the

province. I will leave it at that for now.

HON. MR. COUVELIER :

We have had discussions on the issue even in this House. One of our

MLAs who has well-recognized experience in forestry matters, the member

for Cowichan-Malahat (Mr. Bruce), put a question to me some months ago

about this issue. To the best of my knowledge, the issue focuses and

arises almost exclusively as it relates to timber values on Lasqueti

Island, and the question put to me in the House dealt with the Lasqueti

Island situation.

In that respect, we held public meetings

on Lasqueti Island, which I do believe had the effect of calming fears

on this issue. It might be useful for me to advise the House that the

assessment of standing timber as an interest in land is not a new

policy. Timber has been long held to be an interest in land by the

courts.

In a 1931 case before a five-man panel of the Court

of Appeal of B.C., Mr. Justice Macdonald stated that before severance,

the owner has title to an interest in the timber which is part of the

land. It is that root case which has evolved in the long-held belief in

assessment circles that value of timber should be recognized in

assessed value of land.

The issue seems to me to be not

whether the value of the timber is included in assessed value, but

rather at what value that timber is priced. If, for example, you have

full market value of the timber on the assessed or appraised value and

you were to have a very nominal mill or tax rate, the taxes paid on the

standing timber would not be of significant import in terms of any

property owner's decision to log or not.

All the focus on

this issue, to the best of my knowledge, arises out of Lasqueti Island.

Lasqueti Island is renowned for its ability to grow all types of

greenery.

MR. MILLER : I hope that your remark is mailed to Lasqueti Island. I'd like to correct the record. My copy of Hansard

indicates that the question was put to the minister by the member for

Mackenzie (Mr. Long) on April 17. When I read the response, I am a bit

surprised, given the minister's initial reaction to my raising the

issue here in these debates, because when the member for Mackenzie

raised it during question period, the minister said: "It's certainly

timely, urgent and appropriate...." I hope he has the same feeling now

as we prepare to discuss this timely and urgent question.

Interjections.

HON. MR. COUVELIER : What was the date of that?

MR. MILLER : The date was April 17.

The

failure of the member for Mackenzie to follow up on this timely and

urgent matter is really none of my concern; nonetheless, it doesn't

detract from the importance of the issue. Perhaps if the member for

Mackenzie is in the precincts, he might wish to rush in and join me in

discussing this and trying to get some clear, concise answers from the

minister.

Nonetheless, we have looked at the issue, and our

research people have discussed it with a person in the Assessment

Authority. We are informed that there is nothing new and that this

ability to assess has been on the books for some time, but there is a

key question, and that is the applicability. I believe I've asked this

a couple of times, and perhaps the minister would like to respond. Is

the assessment practice being applied uniformly and consistently

throughout the province? I think that's fairly fundamental.

[4:15]

HON. MR. COUVELIER :

I'd certainly agree with the member's contention that it would be

fundamental that there be uniformity throughout the province as it

related to Assessment Authority practices. It is certainly the whole

basis on which the Assessment Authority was brought under one level of

management. It used to be in this province, about ten or 12 years ago,

that the assessment requirement was best provided by local governments

in local jurisdictions.

By virtue of the constant claims

that there was inequity and lack of uniformity, the Assessment

Authority was created. As a consequence of an all-party committee, it

was agreed back in 1974 that we would address these variances between

jurisdictions. That was the same year that the American tourist

dialogue that I referred to earlier occurred.

It certainly

is important that there be uniformity, and to the best of my knowledge

such uniformity does exist. If the hon. member has any information that

would indicate it does not exist, I would appreciate receiving it,

because I will get on that question immediately.

MR. MILLER :

I will leave it at that. I don't have a specific. It's not my field, as

you know. In a way it is, because it involves cutting trees down, but

as the Forests critic I haven't made it a practice to be informed in

depth on other ministries. Certainly it has been drawn to my attention.

I would have thought that the ministry would have raised that query

with the Assessment Authority, which could very quickly report back as

to whether or not it is being applied uniformly, as opposed to my

ferreting out information or going on a hunt. Given the resources at my

disposal, I'm simply incapable of undertaking that kind of

investigation. I think it would more properly be the purview of the

Assessment Authority to question the assessors in each

[ Page 7296 ]

district

in the province to determine if they are, as a matter of practice, in

terms of the efficient administration of the authority....

I'm pleased to note — and the minister has already noted — that

that change was brought in, I believe, in 1974 or '75, and it did a

great deal to rectify the disparity that existed, where each

municipality conducted its own assessment. Some were being done well,

and some weren't being done well.

Moving on on the issue of

assessment of timbered land, I am advised that there are two cases to

consider in dealing with the issue: where a person with residential

land has this happen and where a person with farmland has this happen.

It really points out the disparity, I think, between the different

classes, where it may not in fact be an incentive in some cases but

might be in others.

I'm informed that in the first case, in

terms of residential land, it would be an incentive to cut the timber

and reduce the assessed value of the land because unless the taxing

authority makes an adjustment — and it's unlikely, I would think — to a

lower tax rate, the owner's tax clearly will rise as a result of having

that valuable timber on his or her property. In those circumstances it

would be an incentive, and really the only resistance to that incentive

would be the wherewithal of the persons owning the property if they

considered it of sufficient importance to retain the trees and they

could afford to do so, then they would. But if on the other hand money

was a factor, then I would assume that it be would an incentive to log,

which would not always be desirable for people in the area.

In addition, if they have the wherewithal — this may depend on the size of the land — they

can apply to have the land put in the managed forest class, which gives

them a big tax break and also allows them to reap the possible windfall

from the sale of the timber and a continued tax break from a lower

classification once the timber has been removed from the land.

they don't put the land into a managed forest, they can still cut the

timber and sell it. Here we come upon a problem that's arisen in some

areas, not just Lasqueti Island but I believe in the Squamish area and

on Vancouver Island. There are really no regulations governing logging

on private lands, with the exception of the right for municipalities

and regional districts to bring in bylaws, which can only deal with

questions of public safety or runoff but essentially can't deal with

aesthetic questions and reforestation questions. It seems to me that it

is a serious problem. It may be localized to some extent; I don't

suggest that it's widespread throughout British Columbia. But it seems

to me a bit of a problem and one worthy of some attention.

The

minister might want to respond to what I've said. I would ask the

minister whether any other systems have been looked at. There are other

ways of collecting tax; for example, at the time the trees are cut.

Rather than having the land assessed and the tax collected yearly, it

might be possible to devise a system where the tax would become payable

if the property owner chose to remove the trees from the property. If

he doesn't choose to do that, then the tax is not payable. There are

some areas that could be looked at and maybe some unique or inventive

approach taken.

I suggest that it could get worse. We've

seen two or three outbreaks this year of local residents up in arms

about the inability to control this kind of activity. I think taxing is

simply one component; it's not the complete component, obviously. I

believe the government should look at regulations, at least in terms of

municipalities being able to control aesthetic features and, as well,

being able to have some say in forestry practices.

I would ask the minister to comment on those issues.

HON. MR. COUVELIER :

I don't know that there's much I can say, Mr. Chairman. I'm not aware

of any pressing issues that need addressing at the moment in terms of

anomalies or inconsistencies. I would repeat that if the hon. member

has evidence of such, I would very much appreciate receiving them,

because it's our ambition to always eliminate them to the maximum

extent possible.

On the query as to whether we revisit the

basis on which timber is managed on private lands, I guess my answer is

yes, we do. I just want to remind the member, there is no perfect

system of taxation that I am aware of anywhere in the world. Every time

you impose a tax, you create aggrieved taxpayers; and every time you

move the goalpost on an existing system, you create a new class of

winners and a new class of losers. I suppose I come at the

philosophical question with the belief that you should use great

caution in tampering with a system that has been in place a long time

and to which people have become accustomed and find workable. On the

other hand, it is our ambition to always be fair and equitable, and

were there a better suggestion, we would be the first to embrace it.

I'm

pleased that the member has an ongoing interest in this subject. That

gives me the comfort of knowing there will now be two of us monitoring

the situation — he and me. That's useful to know, and certainly it's in the public interest.

MR. MILLER :

It is indeed encouraging, Mr. Chairman. We could perhaps hold hands on

this issue. But you've left out your colleague the Minister of

Municipal Affairs, who expressed concern to the point where she set up

a little task force of her municipal officials to study the issue. And

if I find anomalies that I think need attention, then I will bring them

to your attention. Again, I would hope that the minister would advise

his officials — perhaps the head of the Assessment Authority — to

simply ask every person in a district office in the Assessment

Authority to ensure that the system is being applied uniformly. I

gather from the minister's last comments that he or his officials are

monitoring the situation, and there it lies.

[ Page 7297 ]

There's

perhaps an opportunity here for you to get together with your colleague

in the Ministry of Municipal Affairs. You seemed somewhat reluctant

earlier in the debate to give full credit to the administration of the

day for bringing in the Assessment Authority. You didn't look too eager

to mention the fact that it was a New Democratic Party administration.

HON. MR. COUVELIER : It was an all-party committee.

MR. MILLER : You've just repeated what you said when you were

on your feet. I happen to agree with you, Mr. Minister, that all-party

committees are good vehicles for examining issues in this province.

They can approach these issues in a non-partisan way, and as a result

of their investigations they generally come up with good

recommendations and become more informed members in the process.

Perhaps the minister, with his strong views on the benefits of

all-party committees, would agree that this little item might be

appropriate for one of the existing standing committees of the House. I

would simply ask the minister to take that under advisement.

I have one more minister to pursue

this with, and that's the Minister of Forests (Hon. Mr. Parker). There

are two strikes so far. I've drawn a blank with your colleague in

Municipal Affairs. I wouldn't say that I've drawn a complete blank with

you. We'll see what happens with the Minister of Forests. Maybe all

three of you might want to get together after comparing notes. I

actually think it's a fairly decent recommendation that an all-party

committee take a look at it They might come up with some very useful

recommendations.

MR. CLARK : We're moving at breakneck speed here — positively

glacial, I think would be more appropriate. I think I'll start the

notes that I prepared for these estimates. In the first two hours we've

canvassed two items that I can cross off my list, so we should be

finished in a couple of weeks. Maybe for the rest of the day we'll

start with some relatively easy things and move on to more difficult

ones in the days to come.

Some time ago — I don't recall the date — the

minister said he had hired a consultant to look at setting up our own

provincial income tax structure. I wonder if he could first of all tell

me the status of the consultant's report — if it's done or not done — and the rationale, essentially, that the minister had behind that proposal.

HON. MR. COUVELIER :

As always, Mr. Chairman, this government is interested in pursuing new

ideas, new ways in which we might invigorate the economy and maintain

the tremendous growth that we've exhibited over the last couple of

years, and we are anxious to do everything we can to improve our

position nationally and internationally.

It had always been

of interest to me to observe how the province of Quebec had been able

to move forward in an economic sense in such a well-coordinated

fashion. It had occurred to me that one of the significant differences

between the Quebec situation and the rest of Canada is the matter of

them administering their own tax system, as opposed to all the rest of

us who rely on the federal government to do that for us. Of course,

there are many other differences between ourselves and Quebec, not the

least of which are language and certainly lifestyle. Nevertheless, that

was one of the differences that was under my purview, and therefore I

felt justified in having some impartial professional look at whether

that was a tool that had been used by Quebec in its economic

development ambitions.

[4:30]

The approach was to be in two stages; to use the term of my hon.

colleague the Minister of Regional Development (Hon. Mr. Veitch), we

would have a pre-feasibility study and then a feasibility study. So we

determined that we would do a pre-feasibility study in very general

terms. That study was completed, and as a consequence of that, it was

considered appropriate that we would consider inserting it at some

appropriate time in future discussions with the federal government in

the interests of carrying forward our own provincial ambitions as they

related to Canadian fiscal policy, tax policy, economic policy. That's

where the matter sits.

MR. CLARK : I'll translate

what the minister said, and maybe he could confirm for me. You did a

cursory overview of the issues and the policies which might be pursued,

and that preliminary study is completed. Did you move on to do a more

detailed feasibility study after that?

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

MR. CLARK : Is it possible for the minister to table the original overview, so that we might all review this exercise?

HON. MR. COUVELIER : It's certainly possible.

MR. CLARK : I wonder if, while we know it's possible, the minister is prepared now to table this document in the House.

HON. MR. COUVELIER : No.

MR. CLARK :

Well, perhaps maybe he could tell us why he's not prepared to table it.

Quite honestly, I think it's a worthwhile endeavour, and I wonder,

depending on certain assumptions.... But the principle I don't have any

problem with, and I'm very interested in seeing what the consultant

came up with. We could see it, presumably, in a couple of years when

we're on that side of the House, and use it to go forward, or we could

see it now.

Actually, let me pursue it a different way. Let

me first start off by asking why you're not prepared to table that in

the House for all members to peruse.

[ Page 7298 ]

HON. MR. COUVELIER :

There's certainly no reason why it shouldn't be tabled in front of the

House at an appropriate time. As I indicated in my response, it is, or

at least I intend to make it, the subject of some future discussions

with the federal government, and therefore it isn't in the interests of

the people of the province to discuss it publicly at this time.

MR. CLARK :

I don't want to belittle the efforts of the minister, but by saying

that, are you saying really that this was an attempt to try to exercise

some leverage on the federal government system and that's why it hasn't

moved on to a real feasibility study? While you might in principle like

the provincial scheme, it's too ambitious, and rather than that, you

use this review to try in your negotiations to exercise a little more

control over our tax regime within the federal system. Is that really

what you're doing?

HON. MR. COUVELIER : I wouldn't

want it to be alleged or have it described that our motives would be

that crass, but nevertheless it is something that's worthy of public

discussion at some point in the future. Certainly when that time comes,

we would intend to present the document to the House. At the moment, I

think it's more useful to use it in the way that we're contemplating.

MR. CLARK : Of course the primary drawback — and I'm sure the minister agrees, and this is an important political drawback — is the paper burden that one would impose if we had two tax forms — one

which the Quebec people apparently stoically endure. It strikes me that

it would be unfortunate if all citizens in British Columbia had to fill

in two relatively complex tax forms. I think that drawback in general

outweighs some of the benefits which one might pursue.

wonder if the minister could inform the House whether there is any

specific rationale. Was it just that Quebec has one, and it might give

us a little more control over our destiny? Or were there specific

concerns you had about the tax system that you wanted to see redressed — whether

in the tax system as we have it now, or whether it required provincial

tax manoeuvres? In other words, some people would argue that certain

federal tax breaks unduly favour manufacturing facilities over

resource-extraction facilities, and in order to get around it.... Were

there specific tax breaks or increased taxes that you sought to

alleviate or explore through this process, or was it just a general

question as the minister previously described?

HON. MR. COUVELIER :

No, it was a general inquiry attempting to understand the rough

parameters of the options and the flexibility that might be provided if

we administered our own tax system and the advantages that might ensue.

think it's fair to advise the House that it is no secret that the

existing federal income tax system has many problems, in terms of its

enforcement and collection. Indeed, much has been written on the

subject in journals, even in the last 12 months. There was an

appreciation of the fact that we don't have a perfect federal income

tax system, and also that a tax system might be used to provide a more

effective public policy response to social issues and concerns; levels

of support provided to those in need; the ability to provide incentives

to the industrial manufacturing sector and the ability to deal with

that challenging public policy issue of how much of the tax burden

should that middle class absorb. Those are all issues which are subject

to great debate.

In any event, the report's done, and we'll be happy to table it at some point in the future.

MR. CLARK :

I didn't hear anything specifically that couldn't be accomplished under

the existing tax regime dealing with provincial tax credits. All of

those seem to be accomplishable. I am quite curious as to what federal

tax inhibitions there are on provincial action, and where the

government saw that it was so seriously flawed that we would even

consider setting up our own income tax system.

While I

probably don't share any of the concerns the minister has, I have

concerns about the federal tax system and us being a part of that. I

think it clearly constrains our action. The minister has not given us

any indication as to what in particular he's concerned about.

The

minister referred to Quebec having their own income tax system, and of

course, they do. But my recollection is that not only Quebec but

Ontario and Alberta have broken away or opted out of the federal

corporate tax side. I wonder if the industry or the minister has given

any consideration to the corporate tax side. Did this study encompass

the corporate tax side or only the personal income tax side?

HON. MR. COUVELIER :

No. As a matter of fact, we did give it some study and spent many

sleepless nights staring at the ceiling wondering about that weighty

issue. Neither of those two provinces have used corporate income tax

flexibilities in any manner that's significantly different from

existing federal legislation. We did consider it and look at it. It

doesn't appear to have been used by those two provinces in any novel

way.

MR. CLARK : Could you tell me whether this feasibility study encompassed a review of the corporate tax side as well?

HON. MR. COUVELIER :

I don't remember; it was so long ago. Certainly the issue was discussed

at length with the authors of the report and myself. I can't remember

whether it was the subject of specific comment in the report or not,

but I had many discussions on the subject with experts in the field.

We'll table the report in due course, and I'm sure it will provide useful bedtime reading.

MR. CLARK : I appreciate that the minister....

MR. CHAIRMAN : Government House Leader.

[ Page 7299 ]

HON. MR. RICHMOND :

The Minister of Finance and Corporate Relations has some urgent duties

elsewhere in the buildings, so if it's all right with the critic

opposite, I would urge him to maybe carry on with the questions he was

going to ask the minister, and I will take them as notice for the

minister. When he returns from this urgent business, I will be able to

give him a list, with some possible suggestions for how best to answer

the questions. Then we can get on with the estimates. If the member

cares to get up and give me a few pertinent questions which are very

germane to the Finance minister's estimates, I'd be more than willing

to listen with both ears.

MR. CLARK : I see that it's

fallen to me to fill the time. I thought the government House Leader

was going to perform. I thought that was part of the duties of the

government House Leader, but he's asked me to rag the puck, and my

throat is incredibly hoarse as well. It makes it much more difficult

for me to do. I know some of my other colleagues could rag the puck or

dribble the ball or....

Interjection.

MR. CLARK : Dribble is a bad term in the context in which we're filling this time, so I won't pursue it.

Interjection.

MR. CLARK :

In this context, Mr. Minister of Energy, Mines and Petroleum Resources

(Hon. Mr. Davis), I'm not quite sure what that echo means.

will not break new ground in his absence but will perhaps discuss or

review the first area I have written down for us to cover. It's quite

interesting that we've been here for two and a half hours, and I'm just

on point one of my notes. I know things will move more quickly as time

goes on. I know that the Minister of Finance has been parsimonious in

his responses.

AN HON. MEMBER : Untypically so.

[4:45]

MR. CLARK :

Very untypically so. That has allowed us to expedite the discussion to

such an extent that we're almost through the first point. I know that

if he continues in this manner, and particularly if he continues to

take these lengthy absences from the House, we'll get through this by

some time in September.

I see the minister is here. I'm

sure he shares with me the view that the government House Leader's role

is to fill these absences and not to defer to the critic the....

MR. LOVICK : Let Hansard note that the minister returned with a sigh of contentment.

MR. CLARK :

That's right. I know that the minister's remarks might be lengthier now

that he's more comfortable in his chair and is more relaxed in the

chamber. Rather than having the House Leader do that job, he relied on

the opposition critic. I hope Hansard records that.

[Mr. Rogers in the chair.]

won't belabour the first point. As I mentioned a minute ago, we're

almost through the first point in my notes. We're moving quite quickly.

I just would like to make the point that it seems to me that the paper

burden on individuals from setting up a separate provincial tax system

would be onerous, particularly for the people the minister professed a

minute ago to want to help. However, it seems to me that there may be

merit on the corporate income tax side in opting out of the federal

scheme. I don't want to be punitive on the corporate side with respect

to that paper burden, but it does seem to me that the federal corporate

tax changes have had quite an impact on the corporate tax revenue side.

Even without any reduction in corporate tax rates on the provincial

side, I think our revenue will potentially have shrunk because of some

of the changes.

It seems to me that rather than pursuing

the personal income tax side, opting out of that.... I appreciate any

attempt to use that to lever more control from the federal government;

I strongly support it. But I'm quite sure I would oppose any real

attempt to do that in the provincial context. I think the paper burden

is just too much to merit it.

On the other hand, I think

there's much merit in pursuing a separate corporate income tax regime

for British Columbia. I think the Alberta government.... I don't want

to emulate them and the tax regime they brought in, but they clearly

recognized that the corporate tax at the federal level had certain

impacts which were based primarily on the industrial structure in

central Canada, and that our industrial structure here is quite

different; it's much closer to Ontario's. The Minister of Energy, Mines

and Petroleum Resources, who is here in the House, would, I think,

appreciate that we may want to design tax policies on the corporate

side that are different than the tax policies which exist uniformly now

in central Canada and in British Columbia.

While the minister has said that the Alberta government has not pursued that in an innovative or imaginative way — I'm not sure they would agree with that, but I might agree with the minister in that respect — it

does seem to me that there is some merit in at least pursuing the idea

and studying the notion of opting out of the federal corporate income

tax side, setting up our own corporate income tax regime and dealing

with the tax policy, giving us much more flexibility and creativity to

deal with our unique problems and structure.

Although the

minister said they're really not doing anything major, I don't really

support studying in any great detail the opting out of the provincial

income tax side. But I do encourage the minister, and I do so here in

the House today, to pursue the corporate income tax side more

diligently than he appears to have done, with all due respect. It just

[ Page 7300 ]

seems

to me that there are options and possibilities that might open up if

the provincial government controlled their own corporate income tax

side, which might help us advance our industrial structure, or at least

advance our industries that exist today, because they clearly are

different than other provincial governments. In fact, they're quite

different and, in terms of structure, are much closer to Alberta than

anywhere else.

I'll leave that first point. I just wanted

to encourage him to continue studying the corporate income tax side and

to not pursue the personal income tax side anymore; and I gather from

the minister's answers that he's not likely to do that.

With

that, Mr. Chairman, I move on to a different topic. At this time I'd

like to briefly canvass with the minister some questions regarding the

budget process in British Columbia, in particular the committee of

Socred caucus, which — I'm not sure that this is any praise at all — certainly

appears to be unique in Canada. I wonder if he could give us a little

more information on how that process worked. I know we've had sketchy

reports in the press. It seems to me that the idea has some merit. I

have some concerns about it. But I'd like the minister to give us an

understanding of the role of the committee of the Social Credit caucus

which involved the budgetary process.

HON. MR. COUVELIER :

I'm pleased that members of the opposition agree that we should keep

open this issue of provincial administration of income tax, and I note

the members' comments about corporate income tax. It's comforting to

know that there is unanimity in this House on that matter.

Dealing

with the truly unique approach we took to budgetary discussions this

past year and the involvement of the caucus committee, I'm pleased to

advise the House that it worked extremely well. The member alluded to

sketchy press reports, and I trust that the description of it as

sketchy didn't imply any lack of willingness of government to share

information, but rather the diligence which the media might have

brought to the issue. In any event, the structure and style of the

concept have proven to be an outstanding success. To the best of my

knowledge, it's unique in the western world. It's certainly unique, to

the best of my knowledge, in the parliamentary world, where caucus

members would sit down, with dedicated commitment, to do the thorough

job that was done.

The member may be interested to know

that the caucus committee met for 17 days, examining budget expenditure

options, and that the days frequently started a