1986 Legislative Session: 4th Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 27, 1986

Afternoon Sitting

[ Page

8375 ]

CONTENTS

Motor Vehicle Amendments Act, 1986 (Bill 17). Hon. A. Fraser

Introduction and first reading — 8375

Ministry Of Forests Act Amendment Act, 1986 (No. 2), (Bill N121 1). Mr. Howard

Introduction and first reading — 8375

Oral Questions

U.S. shake and shingle tariffs. Mr. Howard — 8376

Export of cedar logs. Mr. Howard — 8376

B.C. electoral boundaries. Mr. Hanson — 8376

Tourism information centres. Mr. MacWilliam — 8377

Purchasing Commission appointment. Mr. Stupich — 8377

Committee of Supply: Ministry of Finance estimates. (Hon. Mr. Curtis)

On vote 28: minister's office — 8377

Hon. Mr. Curtis

Mr. Stupich

Mr. Macdonald

Mr. Lauk

Mr. Rose

Division

Mr. Cocke

Ms. Sanford

Mr. Howard

Mr. Mitchell

Mr. MacWilliam

Mr. Hanson

Tabling Documents — 8400

TUESDAY, MAY 27, 1986

The House met at 2:07 p.m.

HON. MR. CURTIS: Mr. Speaker, in the gallery this afternoon

watching the start of our proceedings is a constituent of Saanich and

the Islands, Mr. John Verlan. Would the House make him welcome.

MR. ROGERS: Would the members please join me in welcoming Dorothy Miller from Ontario, who is here today.

Introduction of Bills

MOTOR VEHICLE AMENDMENTS ACT, 1986

Hon. A. Fraser presented a message from His Honour the Lieutenant-Governor:

a bill intituled Motor Vehicle Amendments Act, 1986.

HON. A. FRASER: Mr. Speaker, I move the bill be introduced and read a first time now.

I'd like to make a few remarks. At the present time a driver

convicted of impaired driving or another serious motor vehicle offence

is automatically prohibited from driving for six months. Amendments

contained in this bill would double the length of time of mandatory

prohibition to one year.

This government's response to impaired driving has always been a

strong one. This measure is intended to further strengthen it. Over the

past five years there have been approximately 16,000 impaired-driving

convictions each year. In 1985, 152 people were killed and 5,450 were

injured in traffic accidents involving alcohol. While we have made good

progress in British Columbia in reducing the costs associated with

drinking and driving, these figures are still unacceptable. While

increasing fines and jail terms have had some effect on impaired

driving, we feel that lengthy and certain prohibitions from driving are

perhaps the most effective deterrents available. This increase in the

automatic prohibition to one year not only increases the deterrent

value of our laws; it also provides the public with an additional six

months' protection from the convicted impaired driver.

Mr. Speaker, this bill also contains a number of amendments to

address deficiencies in the Motor Vehicle Act identified as the result

of recent Charter decisions. In addition, the bill corrects a number of

references in the act to motor vehicle-related sections of the Criminal

Code. Bill C18, which came into force on December 4, 1985, established

new offences and renumbered several existing offences.

Mr. Speaker, this is a relatively straightforward bill, and I'm sure

it will have the support of all the members of the House. I again move

first reading.

Bill 17 introduced, read a first time and ordered to be placed on

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

after today.

MINISTRY OF FORESTS ACT

AMENDMENT ACT, 1986 (No. 2)

MR. HOWARD: Mr. Speaker, I ask leave to introduce a bill intituled Ministry

of Forests Act Amendment Act, 1986 (No. 2).

In moving that the bill be introduced and read a first time now, I would point

out that it would authorize the Minister of Forests, who has the responsibility

by law of protecting the forests and the forest industry in this province, forthwith

of America that this Legislature regrets very much that the President of the

United States saw fit to impose a 35 percent tariff against red cedar shakes

and shingles, and urges the President of the United States forthwith and immediately

to withdraw that tariff and to declare in addition to that that no additional

tariffs or countervailing duties will be put in place by the United States government

during the continuance of the comprehensive trade talks between our two countries;

strategies to obtain both the withdrawal of the 35 percent red cedar shake and

shingle tariff and the declaration from the President that no further tariff

or countervailing duty impositions will be placed against Canadian products

during those comprehensive trade discussions.

Motion for first reading approved unanimously on a division.

[2:15]

MR. HOWARD: Mr. Speaker, standing order 81 prompts me to say

and there exists an urgent and extraordinary situation today. This is

an urgent and extraordinary occasion when the Legislature of this

province should speak immediately, unanimously. In one voice, and tell

them what we think about the action of people in the United States, and

do it immediately and quickly by the passage of this bill. I submit to

you, pursuant to that standing order, that it ought to be permitted to

be advanced in all its stages today. I would therefore move that the

bill be placed on orders of the day for second reading later this day.

MR. SPEAKER: Hon. member, with no copy of the bill before the Chair, the motion cannot be put.

MR. HOWARD: I have sufficient copies for distribution, and I'm waiting for them.

MR. SPEAKER: Hon. members, as is the Chair's usual practice

in matters of urgent and otherwise pressing matters, the Chair will

reserve on it ever so briefly and bring a response back to the House at

the earliest opportunity.

MR. HOWARD: With respect, the custom has been, Your Honour,

that when there are no voices differing from that expressed about the

urgency of the matter and the necessity of proceeding through three

readings in one day, Your Honour has with speed and dispatch, having

heard no opposing voices, agreed to the proposal.

HON. MR. McCLELLAND: On a point of order relating to this

matter dealing with

section 81, there is no question about the urgency

of the matter itself. But

section 81, it seems to me, speaks to the

urgency of handling the matter, and there are other remedies available

without having to go through the legislative process in an unusual

manner such as

section 81 describes. Yesterday in the House during

question period the

[ Page 8376 ]

Premier, in answer to questions from some of the hon. members on the

other side, indicated that actions have already started in regard to

the matter which is before the House now in this bill, and will

continue. The remedy is there and is being taken, so that the urgency

of debating this bill today, in my opinion, doesn't stand in relation

section 81.

MR. HOWARD: I want to point out that it isn't a question of

urgency of debating: it's urgency of making a unanimous decision in

this Legislature. That's what's crucial. I can't believe the minister

is opposed to that.

MR. SPEAKER: Order, please. Hon. members, while there may be

varying points on the matter from either side of the House, the Chair

will nonetheless reserve on the matter and bring a response back to the

House at the earliest opportunity.

Oral Questions

U.S. SHAKE AND SHINGLE TARIFFS

MR. HOWARD: Mr. Speaker, I want to ask the Minister of

Forests a question. When it was drawn to his attention on March 21 of

this year that the United States International Trade Commission had

forwarded to the president the petition recommending tariff action

against the shake and shingle industry in British Columbia, did the

minister immediately advise his colleagues in the cabinet, the Premier

particularly, to take some action with respect thereto? What did he do

when that March 21 decision came to his attention?

HON. MR. HEINRICH: When the decision was rendered by the

International Trade Commission, it came really in two parts. The

international trade administration made a recommendation that a

countervail or tariff in the amount of 35 percent ought to be levied.

That decision was four to two. It was reviewed by the International

Trade Commission. The decision was split three to three. When that

occurred, the information was obviously.... We were aware of that when

it was communicated to us by the Canadian Forest Industries Council,

CFIC, led by Mike Apsey, and the Council of Forest Industries as well

as all other provinces. That communication was reported, and the

decision had to be made on or before May 24. The Premier tabled in the

House yesterday a letter which had been forwarded to the Prime

Minister, dated May 7.

We were very much aware of it, and my colleagues were aware of it,

as I'm sure all members opposite were as well. It seems to me that the

information passed to the members of the House by the Premier yesterday

makes that point abundantly clear.

MR. HOWARD: You did nothing in March and nothing in April.

That's what I asked the minister: what did he do to urge immediate

action with respect to this? He refuses to answer that question, but

recites some history that is of no relevance whatsoever.

AN HON. MEMBER: What did you do?

MR. SPEAKER: Order, hon. members.

MR. HOWARD: I'll tell you, if I was in government I'd have damned well done something more than you guys would have done.

Interjections.

EXPORT OF CEDAR LOGS

MR. HOWARD: The sooner you put that test to the people of British Columbia, the better off we'll be.

I want to ask the Minister of Forests a question, Mr. Speaker. Has

the minister received any applications for the export of raw western

red cedar logs from British Columbia; and if so, what action is he

taking with respect to them?

HON. MR. HEINRICH: Mr. Speaker, it was made abundantly clear

yesterday that we would not entertain applications or permits to export

red cedar. If I recall, very little has been exported in the past. Most

red cedar has been consumed within the province. This note was made

yesterday.

It might be of some interest to the member, Mr. Speaker, that a

request was made for a small volume, but I can't be sure exactly how

much. I have turned it down. I might also say that those who telephoned

me yesterday, who are in a very difficult position — and let's be very

candid about it; there are some market loggers right now who have been

harvesting cedar for the purpose of supplying shake and shingle

operations in British Columbia.... They presently have several thousand

cubic metres of red cedar, which is in the water, and they have some

concern as to what they are going to do. I've inquired as to what the

cost would be to remove that wood out of the water so that it is not

eaten by teredos in three to four weeks' time from now, or whether it

could be put in fresh water. I should say that I've told them that we

will not be entertaining any applications for export of red cedar logs.

B.C. ELECTORAL BOUNDARIES

MR. HANSON: I have a question for the Provincial Secretary in

her responsibility for looking after voter rights and the voting

process in this province. Recently a respected author, T. Patrick

Boyle, completed a book, Elections British Columbia . He concurs with

the view expressed from this side of the House that we have in this

province a gerrymander of electoral boundaries. Will the Provincial

Secretary now, in view of the fact that there's a leadership race in

the Social Credit Party and the opportunity to allow the people of the

province to give that party a clean launch in the next provincial

election, free the Electoral Commission to redefine electoral

boundaries in the province of British Columbia?

HON. MRS. McCARTHY: Not only do I think that the question is

not before the government, but redistribution has been announced and

passed by this House — by all members in this House. In addition, Mr.

Speaker, I think the

preamble given by the member who was just on his

feet was out of order in itself. But the answer to the question is no.

[2:30]

MR. HANSON: Mr. Speaker, the people of this province point

the finger directly at that minister. We have 600,000 people not on the

voters' list. We have gerrymandered electoral boundaries. We have

people who should have the vote and who are not entitled to the vote,

and that minister is in

[ Page

8377 ]

charge. My question, Mr. Speaker: there's a bill before this House

that contains the provisions to give the people of the province of

British Columbia a fair election in the coming election. Have you

decided to bring that bill forward?

Interjections.

MR. SPEAKER: Order, please, hon. members. Clearly, hon. member, that question is out of order.

MR. WILLIAMS: To the Provincial Secretary again: can the

Provincial Secretary advise the House whether, like the former

Provincial Secretary before her, she would approve expenditures for the

Speaker's office of jackets, slacks and shirts totalling $600 —

acquired in Hong Kong?

MR. SPEAKER: Hong Kong? Order, please, hon. members. On

Thursday of last week, on Friday of last week, the hon. member was

advised that that question could best be placed on the order paper, and

was not appropriate during question period, and could better be placed

in other forums. It would not in any way prevent the member from having

a press conference outside the men's washroom in the rear of the

corridor.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Further questions, hon. member?

TOURISM INFORMATION CENTRES

MR. MacWILLIAM: My question is to the Minister of Tourism.

The Ministry of Tourism funding policies have resulted in the closure

of tourism information centres in Osoyoos, Yahk and Dawson Creek. I

wonder if the minister would explain, in view of the importance of Expo

86 and the tourism industry, the reasons for the closing of these

regional tourism information centres.

HON. MR. RICHMOND: I'd be happy to answer that member's

question. First of all, we have an operating arrangement with the

British Columbia Chamber of Commerce wherein they will operate the

tourism information centres throughout the province, not only providing

excellent service but expanding the number of offices throughout the

province. The only places where tourism offices were closed is in areas

where they were being duplicated by chamber of commerce offices.

MR. MacWILLIAM: A new question to the same minister. The

Osoyoos Chamber of Commerce in fact confirms that they don't have the

financial means to operate the centre. They also confirmed that they

were not consulted in the closure of the Osoyoos centre. Would the

minister explain why this decision was made without consultation of the

local chambers and those individuals involved?

HON. MR. RICHMOND: Mr. Speaker, as usual the member's information

is inaccurate, or at the very least out of date. The information centre in Osoyoos

will be open this summer. We have come to an excellent arrangement with the

chamber of commerce there to maintain the operation of the existing information

office, so I can only ask the member to check his information a little more

accurately. He's totally incorrect.

PURCHASING COMMISSION APPOINTMENT

MR. STUPICH: Mr. Speaker. a question to the Minister of

Finance. There is an order-in-council indicating that a Mr. Jack S.

Waldie was appointed to the Purchasing Commission. Is this the same Mr.

Waldie who was a campaign manager for the Minister of Finance in the

1983 general election?

SOME HON. MEMBERS: Oh. Oh!.

HON. MR. CURTIS: Mr. Speaker, I believe it is.

MR. STUPICH: Mr. Speaker, can the minister tell us whether there were any other applications for the job, or were applications invited?

MR. SKELLY: None on the short list.

HON. MR. CURTIS: Mr. Speaker, the Leader of the Opposition

seems to have his own answer. I would like to introduce him to the

member for Nanaimo, sitting just there.

I indicated at the time the legislation was amended in this House

that an unstated number of individuals would be invited to serve on the

Purchasing Commission as outside members. Mr. Waldie is the first of

such outside members, and there will be other appointments.

Did we post it, Mr. Member? No, we did not. But I invite all

members and interested British Columbians, if they think of individuals

who would enjoy serving as outside members of the Purchasing

Commission. to do so; the list is by no means closed.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

On vote 28: minister's office, $209, 220.

HON. MR. CURTIS: Mr. Chairman, it is a pleasure to bring my

estimates to the committee again for this year. May I take a few

moments to provide some background information in support of the

ministry's estimates for fiscal year 1986-87.

The 1986-87 estimates for the ministry, as members will note,

comprise five votes: number 28 for the operation of the office of the

Minister of Finance: 29 for the operation of the six ministry

divisions. It further provides funding for the B.C. Assessment

Authority, courts of revision and assessment appeal boards. Vote 30

provides for an operating grant and beautification funds for the

Provincial Capital Commission serving the capital area. Vote 31

provides for the operation of the office of the commissioner, the

compensation stabilization program: and vote 32, which the committee

will note is a new vote for 1986-87, provides for the operation of the

critical industry commissioner's office, the office occupied by Mr. Art

Phillips. We can discuss that, I am sure, as the committee progresses

this afternoon or later.

Total spending for these five votes is estimated at $63.5 million. Mr. Chairman, that is up $4.8 million or 8.2 percent

[ Page 8378 ]

from the estimates for fiscal year 1985-86. However. If the

committee adjusts or if one, in looking at this, adjusts the 1985-86

funding base to reflect the newly introduced postal services charge

back, the transfer of staff from the B.C. Systems Corporation and the

fact that the critical industries commission and its office was funded

by statute last year, the real increase in spending is only 3.7 percent.

So excluding these one-time funding adjustments, the majority of the

ministry's expenditure increase is accounted for by the revenue and

purchasing divisions of the ministry. The revenue division continues to

be a priority, particularly in terms of preserving the integrity and

the equity of the tax system and simplifying taxpayer compliance. I

hope I am asked a question or two about that later.

Mr. Chairman, a total of 12 full-time-equivalents were reallocated

from other parts of the ministry for this purpose. Emphasis continues

to be placed on automating revenue systems as marked by the recent

completion of a new land tax information system. Considerable effort is

also being expended in improving communication between taxpayers and

the Ministry of Finance. An example of this latter is the development

of a new series of information bulletins on the property tax system

insofar as the government of the province is concerned.

I also want to speak about the public sector purchasing policy which

was introduced well over a year ago, now firmly in place, ensuring that

our estimated $2 billion in buying power is used to maximize the

creation of new jobs and business opportunities in the province, at the

same time minimizing the cost of services and supplies to government.

In recognition of the Purchasing Commission's vital and expanded role,

13 full-time-equivalents were reallocated from elsewhere in the

ministry.

We will also see in 1986-87 the development of a new supply network

information system called SupplyNet. This system will make an extensive

range of current purchasing information available to buyers throughout

the public sector. The objective here is to help public sector buyers

use their purchasing power to stimulate economic development within the

province of British Columbia. They will be better able to substitute

goods competitively produced in B.C. against those purchased elsewhere.

They will also assist in identifying B.C. companies in developing

products and the promotion of local and regional distribution.

Basically an automated and an expanded data base in this area of

activity means improved economies and a more effective means for

promoting B.C. Jobs and B.C. business opportunities.

Mr. Chairman, aside from the revenue and purchasing divisions, the

Ministry of Finance 1986-87 budget also includes significant funding

increases for the government agents system, and I hope I can speak

about that later, as well as for the Provincial Capital Commission, the

latter on a percentage basis at least. The ministry is continuing with

its program of upgrading government agency offices throughout the

province. In addition, funds have been set aside for the installation

of computer terminals in those offices. The objective here is to

recognize that a very considerable number of British Columbians live

not in Vancouver and not in Victoria, and it is essential that those

other citizens of the province have as much information available to

them as is humanly possible.

The Provincial Capital Commission will be receiving an additional

$255,000 in 1986-87 for that organization's beautification initiatives.

This really represents a partial restoration of the funding which had

to be cut as part of our 1983 and 1984 restraint program.

Members will notice that the 1986-87 estimates for the ministry

include a new Purchasing Commission working capital account, This

account was originally established in the Purchasing Commission Act of

1985 and funds those activities which operate on a full cost-recovery

basis. Concurrent with the introduction of the account, a new

enterprise accounting system was established which promotes the

operation of these commission activities in a businesslike manner.

The new account also allows the commission to be more responsive in

furthering the opportunities identified under the public sector

purchasing program. It should be noted, however, that the account's

transactions do not affect the bottom line of the ministry. All costs

are ultimately recovered from ministries or other public institutions.

In a few moments, that concludes an overview of the ministry's

estimates for 1986-87 fiscal, and I will try my best to answer fully

any questions that come from members of the committee.

[2:45]

MR. STUPICH: I'd like to start by asking a few questions

about B.C. Rail, and I suppose it starts with a press release

indicating that B.C. Rail was going to pay the first dividend ever to

its shareholders, or shareholder — singular. Looking at the balance

sheet of B.C. Rail for the year ended December 31, 1985, the first

thing I note is the Dease Lake extension, which is described in note 2:

"Construction was suspended in 1977, and there are no commitments to

continue. In the event any portion of this extension is abandoned, the

cost less any value covered will be written off at that time."

I saw a story somewhere recently to the effect that the forest

industry was going to make, or had made, requests of the government

that there be some bringing back to life of a part of the Dease Lake

extension. What I'm wondering about now is the cost of $98,020,000 that

was accumulated by 1977 — eight years ago. I would expect by this time

that even the grade 1s in a sad state of disrepair, that most if not

all of the ties would have to be replaced, that some of the rails might

have been borrowed by this time.

I wondered if the minister has, in the last year or so, had any

occasion to ask anyone just exactly what is the current value of the

Dease Lake extension, because certainly I think he would agree with me

that it's much less than $98 million.

HON. MR. CURTIS: Whenever I appear before Committee of

Supply, I try to be as completely helpful as possible. The member for

Nanaimo, however, is asking questions which I respectfully suggest move

beyond my responsibility as Minister of Finance and fiscal agent only

for B.C. Rail. He started out by referring to the dividend which was

paid to the shareholder, and that's fair enough. But I have to remind

the committee that I am not the designated minister responsible for the

British Columbia Railway Company. That rests with one of my colleagues.

In terms of debt, in terms of borrowing, in terms of dividend, I can

assist the member, but I don't feel that I am authorized, quite apart

from anything else, to comment on the book value of a portion of the

rail line, whether it is in use

[ Page 8379 ]

or not, or on aspects of the operation or future operation of the

railway. I'm sorry that right off the bat we run into one where I have

some difficulty, but I am not responsible for the British Columbia

Railway Company.

MR. CHAIRMAN: Before recognizing the member, the Chair must

concur, and I recognize this could maybe be a problematic area inasmuch

as we are dealing with the fiscal agent. The minister responsible to

the Committee of Supply for the British Columbia Railway is the

Minister of Forests (Hon. Mr. Heinrich), whose estimates have been

before us, and operating and administrative questions of the BCR Could

have been asked of that minister. I guess with respect to questions

directed to the Minister of Finance in his capacity as fiscal agent,

they are in order. In terms of the operation of the railway itself,

they would be out of order.

MR. STUPICH: Thank you, Mr. Chairman. I don't think we are

going to have any real difficulty here, but I think perhaps I'll make

the point, then, on my own that I believe that the balance sheet figure

for the Dease Lake extension is very much in excess of the current

value. What I'm getting at is the ability of that railroad to pay, or

even the propriety of that railroad's paying, a dividend at this

particular point in time. The dividend referred to in the minister's

press release was in the amount of $10,307,540. I'm wondering, in part.

about the basis of calculation, how that figure was arrived at. There

may be a very simple answer to that. I'm wondering what the dividend is

going to be charged against. I believe, in all fairness, there is no

balance in retained earnings, it's one were to take into account the

Dease Lake extension write down that I think should properly be made,

that hasn't been done, so I suppose technically the minister could say

that it is coming out of retained earnings. But I think that is

stretching it a bit.

I note that although the railroad is paying a dividend to the

province this year — and everybody's happy that it's paying a dividend

of $10.3 million — the railroad received by way of government

assistance in 1985, some $6.6 million. So something like 65 percent of

the amount that the government is now receiving by way of dividend was

paid to the railroad by way of government assistance last year. I

wonder whether the minister has in mind the amount of government

assistance paid to BCR in 1986, in the same year in which we are

receiving a dividend of $10.3 million.

HON. MR. CURTIS: First of all. Mr. Chairman, the member has

alluded to the B.C. Rail annual report for 1985, and the auditors have

reported to the shareholders, indicating that they feel this is a fair

representation of 1985. So the retained earnings question, Mr. Member,

is a matter that I think the auditors have satisfied themselves with.

However, I do not want to intrude on the area which I identified just a

few minutes ago.

The B.C. Railway as such, Mr. Chairman. Is at once now what we had

wanted it to be: that is, a commercially operated organization. I know

that predecessors in government even the NDP when it was in government

from '72 to '75, would have wanted the same thing. It has a fundamental

duty to serve the province of British Columbia, and to serve it as

closely as possible as a commercial concern would. However, there are

certain other aspects of the railway that are not necessarily something

that would be done commercially. I refer to the Fort Nelson extension

and I refer to passenger service. The questions of what the government

allocates for B.C. Rail to do those things which are not traditionally

commercial and what the railway company felt it could send to the

shareholders. as a dividend. are not related. Now they're all to do

with B.C. Rail; I concede that point. Butthey are not related. We saw,

as did B.C. Rail. that there was an opportunity for the payment of a

dividend; and that was alluded to in the 1986-87 budget: at the same

time, on page 15, about in the middle of the page, is the reference I

made earlier to what will be provided through the Ministry of

Transportation and Highways to the railway for specific non-commercial

purposes."

MR. STUPICH: Mr. Chairman, I appreciate what the minister has

said about the reasons for giving government assistance to BCR: but my

question to the minister was: could he tell us how much that will be in

1986, the year in which we are letting, a $10.3 million dividend —

maybe more: maybe there will be further dividends declared this year.

But for the moment at least, we know that we're getting $10.3 million.

Really. I was wondering whether it's associated with the

operating...what

section of the line, or whatever: whether the Fort

Nelson line should be taken into it. Leaving all that aside, my

question simply was: how much is the B.C. Rail going to get from the

government by way way of assistance in 1986? If the minister doesn't

have that figure, well, that's okay for now.

HON. MR. CURTIS: Mr. Chairman, I refer the member, at his

leisure, to page 15 of the budget document for this year. It mentions

$14.5 million; that is for operating and capital requirements of the

passenger service and the Fort Nelson extension. It may also include

some non-passenger capital of a relatively minor nature. That is the

amount.

With respect to a second dividend being declared by British Columbia

Railway in fiscal 1986-87, I have not raised it with the railway

company, nor with my colleague who is responsible. As I say, we saw the

opportunity for one dividend, and that is the extent of my

consideration — up to this point at any rate — but I appreciate that

circumstances can change. I have nothing in mind, though, at the moment.

MR. STUPICH: Mr. Chairman, I thank the minister for that

reference to page 15. I'd missed that in the budget speech, so I wasn't

aware that we will be.... I don't argue against giving B.C. Rail $14

million plus this year, nor do I argue against getting back a dividend

of $10.3 million, but I am raising the question with the minister as to

whether or not it was proper for a corporation whose current position —

and there's a difference between current assets and current liabilities

for others in the House who might be here.... It was in a deficit

position of almost $12 million at the end of the year, and its quick

asset position — that's leaving out the value of materials and other

items included as current assets — was in a deficit of almost $47

million, Did the minister think it fair to ask BCR to pay a dividend of

$10.3 million at a time when its quick asset position was in a deficit

of $47 million? At least it was at the end of the year.

HON. MR. CURTIS: Mr. Chairman, let the committee and the

member know that I did not, nor would I, demand of B.C. Rail a dividend

which the directors and senior management of the railway felt could not

be paid. We don't function that way, and I'm sure the member would not,

were he in this

[ Page 8380 ]

position. The balance sheet shows that B.C. Rail Ltd. operates a

relatively low cash position. They certainly have done so in '84 and

'85 —

relatively low. I can tell you that the decision to give and to

receive a dividend was arrived at through the best of consultation and

with no coercion whatsoever.

MR. STUPICH: Mr. Speaker, I don't use the Clarkson Gordon

report as the definitive source of all information about this, but I do

note one statement in here on page 5. I didn't invite the minister to

bring the Clarkson Gordon report today, but in speaking about Crown

corporations it says: "If the corporation does have cash, the

government has the opportunity to cause the corporation to declare a

dividend." Now it would seem that at the time Clarkson Gordon reviewed

government finances in January 1976 their feeling was that if a Crown

corporation paid a dividend, it was because the Crown or the government

asked — or as the Clarkson Gordon report said, "caused" —

the

corporation to pay the dividend.

There's another liability that B.C. Rail has. I refer now to page 18

of the report, note 4: "B.C. Rail Ltd. must make all reasonable efforts

in each quarter, beginning January 1, 1986, to purchase for

cancellation in the open market ¼ of 1 percent of the series 1-A

preferred shares outstanding at the beginning of the quarter, at a

price not to exceed $25 per share and all transaction costs." Now I

believe that's about $1.5 million, and B.C. Rail was to make every

effort to pay that by the end of the first quarter. I wonder whether

B.C. Rail made that first payment.

HON. MR. CURTIS: Mr. Chairman, I don't have that information

at this moment, but we will have it for the committee in a matter of

minutes. I see the note 4 which the member for Nanaimo has identified,

and we will have that information very quickly.

MR. STUPICH: Mr. Chairman, I think that's as far as I want to

go at the moment on B.C. Rail —

except that it does introduce another

matter, and I'd like to give the.... Oh, I was going to ask something

about the minority interest, and the minister may not have this

information. I don't know, but the minority interest.... Were those

preferred shareholders all British Columbians, or is there any

knowledge as to just who they might be? I thought there was some

particular advantage to British Columbians as opposed to others, but

I'm not positive about that.

HON. MR. CURTIS: Mr. Chairman, we would have to look at the

prospectus for the preferred share issue, which is a public document.

My recollection is that there was no restriction in terms of British

Columbia residency or British Columbia citizenship with respect to

those. I'm subject to correction, but I think the bulk of the preferred

shares were taken by British Columbians. That was a decision made by

British Columbians, rather than a requirement established by the

regulations associated with the preferred share issue. I'm quite sure

that the prospectus, which is available to all members, would show that

there was no restriction.

[3:00]

MR. STUPICH: I'd like to move on a little from looking at BCR

itself, and took to the issue of preferred shares, and to a matter that

was raised in question period by the first member for Vancouver East

(Mr. Macdonald) on March 13. It's about the possibility of a conflict

of interest when the Minister of Finance invested in this preferred

share issue.

I don't make any accusations at this point. I simply raise the

question that it would seem to me there was no one in the province who

knew what was happening in more detail than the Minister of Finance. I

believe that it would be the Minister of Finance who would be

discussing with experts in the field the terms of the issue and what

would likely be the public reaction in pricing them and deciding the

interest rate that was going to be available —

all that would have to

be taken into account. I believe that this came out at the time of the

issue, when the Minister of Finance said that he was very heavily

involved in discussions, with whoever they used for selling the shares,

on the details of the issue —

to make them attractive, because the

government or B.C. Rail wanted to raise $200 million. That would be the

only way to make sure that it was a fair issue. My suggestion is that

the Minister of Finance knew a good deal more about what was happening

than any other possible investor, with the exception of the people they

were using.

In his response, delivered in the House on April 11, 1986, the

minister detailed his acquisition of shares —

how many he acquired —

and it was a nominal investment of 100 shares at $25 a share. He

invested $2,500 and he sold them for $2,712.50, making a capital gain

of $212.50, and I assume he received dividend income of $228 —

$440 on

$2,500; a small thing, Mr. Chairman. The minister didn't argue.... I

think the implication was that it wasn't much of a purchase and he

didn't make very much money on it, so there was no conflict of

interest. As the minister said in responding: "That's the background in

order to answer the member's question. I purchased 100 shares, and I

have computed that to be .0000125 percent of the total issue." I think

the minister was trying to say that it was really a very small thing in

the total financing scheme — and I agree, it was.

These shares were purchased on the open market through an investment

dealer on June 4, 1984, with a settlement date of June 19, and they

were at the issue price of $25. He didn't make any back-door deal to

get them at the special price. That's not the problem. "I held the

shares for approximately 13 months, selling them again on the open

market through an investment dealer. Over the 52-week period, the

trading price varied from 25¾ to 28⅜.

The size of the transaction is not what concerns me. What concerns

me is that the person who knew most about it got involved in it in any

way at all, without saying at the time to the people of British

Columbia: "This is a good deal for British Columbians to invest in. I

recommend to all of you that you do it. I'm going to go out and buy

some myself."

There is a precedent for that in the history of Canadian legislatures.

AN HON. MEMBER: You're a real brick.

MR. STUPICH: I'm not talking about BCRIC. I'm talking about

something that happened a long time ago — in 1944, when the CCF

government in Saskatchewan was first elected, and Saskatchewan

government bonds took a nosedive because there was concern in

financial circles as to the financial stability of the government.

Saskatchewan government bonds went down seriously in price, and the

Minister of Finance of that day went on radio, not on TV, and urged the

[ Page 8381 ]

people of Saskatchewan to back their government and to back their

province. He said that those bonds would one day be worth face value,

he said that he was going to borrow everything he could borrow to buy

those bonds himself, and he urged other people to do the same thing.

[Mr. Ree in the chair.]

Mr. Chairman, I think there's nothing that anyone could attack about

that approach, but the minister didn't do that. In this case the

minister did not advise other people to take advantage of what he

thought was a good deal, even though he didn't invest very heavily in

it.

There's an editorial I saw recently in the Financial Post , talking

about another minister, and the heading was: "The Honourable Way."

"Public office holders have an obligation to act in a manner that will

bear the closest public scrutiny, an obligation that is not fully

discharged by simply acting within the law." I don't know that the

minister broke a law. I can't think of any law that he might have

broken, but that's not my field. Nevertheless, even if he didn't break

a law, I want him to have an opportunity to tell us that there really

was no conflict of interest. He knew all about it; he knew all the

details. He thought it was a good deal to the extent that he invested

$2,500. He made some money on it — not very much — but he didn't tell

the people of the province that it was such a good deal that he was

going to invest in it.

The editorial goes on:

"Yes, they do. Anything less than this eats away at a

fundamental underpinning of our democratic system — the ready consent

of the governed to the laws imposed on their behalf. The example set by

government is crucial to fostering that consent and to maintaining a

high standard of moral and intellectual conduct in the community."

This is speaking of another minister, as I said. "He did not,

technically, breach the conflict-of-interest guidelines." And perhaps

the minister before us now didn't — I don't know those conflict-of-

interest guidelines that they have in cabinet. It goes on to say there

could be an ultimate benefit accruing to him. Perhaps the minister

calculated that it would be a much larger gain than he actually

realized. People make mistakes. Nevertheless, there was the possibility

of him gaining a benefit from his inside knowledge of what was

happening. "Furthermore," the editorial goes on, "there is a

perception that his cabinet position could have been a factor, "

Because of his position in cabinet, because he is the fiscal agent for

BCR, because he is the one who had the opportunity to set the whole

deal — the one responsible for putting it all together and he then went

out and quietly bought some, I have to raise the question as to whether

there was conflict of interest. I would invite the minister to comment

beyond what he did in Hansard when he responded to the question from

the hon. first member for Vancouver East.

MR. MACDONALD: Mr. Speaker, there's no question whatsoever

that the minister made a mistake and forgot the well-known

parliamentary tradition that a minister shall not benefit from his own

office. There's no doubt about that whatsoever.

Prime Minister Thatcher has been in the newspapers in Britain.

Statements have been coming down as to what constitutes a conflict of

interest there, because she invested in some Australian enterprise that

had some remote connection with her government. That was all.

The member for Nanaimo is quite correct in saying that the amount

the Minister of Finance made or might have lost is not the issue. The

issue is that there's an arrogance here, an unwillingness to respect

the traditions of ministerial government. That's a very serious thing.

I haven't heard the Minister of Finance get up and say to the people of

British Columbia: "I made a mistake. Mea culpa. I should not have done

what I did." His failure to do so is to invite other ministers to

profit — maybe not very much — from the knowledge they gain in their

portfolios. Whatever the amounts involved, it is a most pernicious

position for any government to be in.

So what is the minister going to do in his estimates? Is he going

to get up and acknowledge: "I made a mistake, I set a very poor

example. I set a dangerous example." If I hear that, then I say to

myself: this government listens: this Legislature has some command over

the upholding of well-known traditions of parliamentary government. I

haven't heard it, and the minister definitely made a mistake. In

England the minister would be excoriated for his conduct in this matter.

He did not even buy a bond. I don't know whether I agree at all

with.... I recognize that the Clarence Fines situation that the member

for Nanaimo referred to was bonds. These were not bonds; these were

shares. I admit they were preference shares. Preference shares are

shares. In addition to the tax benefit that they very often confer and

in addition to the interest rate that accrues to the holder, preference

shares fluctuate in value and the price range is usually very narrow. A

minister who had knowledge of this particular issue could look back and

say to himself: "With the government guarantee behind these preference

shares. and the interest rate of return and the term of these shares, I

can reasonably predict" — as could somebody outside, to be sure — "that

they will increase in value by one or two dollars — $25 to $26 to $27;

something of that kind — over one month. twelve months." Not too

difficult a calculation to make. People outside could have made that

calculation, but the minister had no business profiting from his

knowledge of that particular issue or getting in ahead of the public

who might have bought at $26. Some of them might buy at $26, $26.50,

$25.50. There is no question that the minister has committed a breach

of the cardinal rule of cabinet government. The question is whether he

will fully acknowledge that and say: "I made a mistake, mea culpa." I

urge other ministers never to go down that particular path, because

that path is a very dangerous one.

HON. MR. CURTIS: Mr. Chairman, I undertook for the member for

Nanaimo (Mr. Stupich) to get word back with regard to note 4 on page

18. He in effect said B.C. Rail Ltd. must make all reasonable efforts

in each quarter beginning January 1, 1986 to purchase for cancellation

in the open market. etc., at a price not to exceed $25 per share.

Well, Mr. Chairman, in the first quarter of 1986 the market price

has not been below $25 per share, and therefore we would be unlikely to

have many people tender their shares for the take-up which is described

as: "B.C. Rail Ltd. must make all reasonable efforts...." That is a

demand which I think is appropriate in connection with the preferred

shares. I trust that explanation is of assistance to the member for

Nanaimo.

Mr. Chairman, I dealt with the question of my purchase of a number of B.C. Rail preferred shares when the question

[ Page 8382 ]

was posed by the member for Vancouver East (Mr. Macdonald) and

answered at some length earlier in the session. The member has called

them "preference shares." Let's not engage in semantics, but they are

preferred shares, and they are interest rate sensitive. They are not

sensitive in terms of what the railway company may or may not do, and

the member knows that.

I am distressed when the member says — and Hansard

will show it — the minister got in ahead of the public, or may have got

in ahead of the public. Now that's clearly not the case. That is

clearly not the case. No, the member for Nanaimo did not say thato the

member for Vancouver East did say that. That was his reference just a

few moments ago, that it was possible that the minister got in ahead of

the public. It's not clear. It's not true at all. It's not correct.

MR. MACDONALD: You got in ahead of the person you sold the shares to.

[3:15]

HON. MR. CURTIS: Well, you

see, I have some difficulty. The member was not in his seat as he

interjected, but I have some difficulty. When there is an issue of

preferred shares and they are reported publicly, they are dealt with in

the press. They are not yet but will soon be in the hands of any

interested investor. That is not, Mr. Member, getting in ahead of the

public. I think that in your heart of hearts you know that to be the

case. But you'll have your opportunity. The member will have his

opportunity to pursue this further.

He also said that the minister could reasonably predict whether

these preferred shares will increase or change in value. Well, if you

take that statement at face value, that is also not correct. I don't

say the member is misleading the committee, but the member is not

accurate in that observation. We are dealing with an instrument here

which is entirely interest rate sensitive. Mr. Chairman, neither the

member for Vancouver East nor I can predict with any certainty

whatsoever what is going to happen to interest rates from one clay to

the next or one week to the next.

Indeed, I wish I could, and perhaps the member wishes he could. So

it has to be seen, in my view, in perspective. The preferred shares

were purchased, as I indicated in my statement to the House some weeks

ago, after they were available to any member of the public who was

interested. That is clear. That is not debated, cannot be debated, Mr.

Chairman.

The fact of the matter is that the holding of those shares was

disclosed in line with the disclosure act about five weeks later, the

July reporting date under the disclosure law of this province and

reported five weeks later, reported throughout the period that the

shares were held,

If the member for Vancouver East researched other disclosure forms

which I have made during my time as a minister, let alone as Minister

of Finance, he will see that I have previously held preferred shares.

It is an instrument which I find rather attractive. It is an instrument

which certainly is attractive to a good number of people in the

province. Not common shares. We are not speaking about stock in this

instance; we are speaking about a preferred share which has a value

that will move very narrowly. The member for Vancouver East, who has

left for the moment, certainly knows that.

The member will also note, if he has researched the disclosure

forms, that at one time or another I have held British Columbia Hydro

bonds, and I have disclosed them. I have purchased them, and I have

subsequently disposed of them. The member will also note, if he has

looked, that I have held province of British Columbia bonds: bonds

issued not for Hydro but by the province itself. I have purchased those

on the open market and have disposed of them. I have also held,

admittedly not much, but I did for much the same reason as B.C. Rail,

Mr. Chairman.... I did hold one of the housing and development bonds

issued a few years ago, which have just recently reached the maturity

date.

There was no attempt, at any point.... The member can argue the

point for today and Thursday and Friday. I live here; that's fine. We

can go on as long as the member wishes. He can argue that I should have

announced to the world that I had purchased a preferred share, or some

preferred shares, in British Columbia Railway.

Interjection.

HON. MR. CURTIS: He speaks from his seat. He will want to say

that. But, Mr. Chairman, the fact is that throughout my time as

Minister of Finance it will be seen that as a matter of direct

commitment as an individual British Columbian, I have acquired those

issues — not all, but most — which have been undertaken by the province

as in its own way the very kind of thing about which the member for

Nanaimo spoke, reaching back some 40 years or more to the CCF

government in the province of Saskatchewan.

Mr. Chairman, take it at face value: that is what occurred. You can make all

sorts of other suggestions. That is what occurred; that is why it occurred;

that is why it was disclosed, as required by law; and that is why I cannot accommodate

the member for Vancouver East and say I made a mistake. In my view, in my heart,

I did not make a mistake in acquiring that which was available to the people

of this province and this country at the same time — not beforehand, at the

same time.

MR. LAUK: In this case, with respect to the Minister of

Finance, it's difficult: I have to set aside my personal regard for him

and my respect for his contribution to public life. Certainly the

minister did disclose his holdings; others have not. Some have said

that those who have not have paid the penalty; I say, not yet. This is

an area that I have for many years regarded as one of the most

important areas of the British parliamentary system: not only the

actual honest and clear dealing, as cabinet ministers, but the

appearance of it as well.

I accept completely the minister's explanation. I reject completely the conclusion he draws.

The point is simply this: the British parliamentary system cannot

survive, it cannot operate, with ministers who have that kind of

attitude: that it's okay, or there was not much involved, or a

preference share doesn't go up or down very much, or it's not affected

by the decisions I can make as Minister of Finance. Those are not

reasonable excuses for the Minister of Finance. The reasonable excuses

for the bank manager, the doctor, the plumber and the lawyer are

unacceptable excuses from the Minister of Finance. They are completely

unacceptable.

In terms of actual effect, I'm much more upset at the situation

involving Westcoast Savings Credit Union, which was dealt with in

question period — I'm not going to elaborate on the circumstances —

where the Minister of Finance was directly involved in large government

deposits for that credit union and yet was indebted to that credit

union in some way. It's not enough for a minister of the Crown to say:

[ Page 8383 ]

"Well, how am I going to operate in my community

without having a bank deposit or a mortgage some place, and several

financial institutions have deposits from consolidated revenue? How am

I going to operate?" I'm sorry, nobody said that the life of a Minister

of Finance would be easy. But when a minister, particularly a Minister

of Finance, not just any minister of the Crown, is chosen, there is an

absolute requirement upon the minister to be absolutely sure there is

no appearance of conflict of interest. There is absolutely, then, no

excuse for what has happened. Under the circumstances, the very least

that would have been required for the Minister of Finance was a full

disclosure and an understanding, that.... He could have said: "I

misjudged this situation. Of course I realize it must not happen. It

must never happen."

It's too bad that we've lost the focus of this issue regarding this

minister because of the much more blatant conflict of interest

situations that arose with other cabinet ministers at the same time. I

stood in the House some time ago this session and tried to explain to

the press, who have very little understanding of what conflict of

interest means, what is going on here. The principle in itself is

essentially important, and I don't really care how much of the public

understand it or how much of the press understand it.

What really concerns me is that the Minister of Finance does not

understand it. That's the critical problem. Had the minister made a

full explanation and said, "I have, on reflection, considered the

history of the system, and I admit that I am quite incorrect; it should

not happen again," perhaps his resignation should not have been

demanded. I say the proper and honourable thing for the minister to

have done then and now is to resign.

It's no good to point to someone else who resigned and is still

sitting in this House — the former Minister of Health, former Minister

of....

HON. MR. CURTIS: I haven't pointed to anyone.

MR. LAUK: All right. I'm saying, from the point of view of

discussion, there's no point in pointing to others and saying: "That

was more blatant, this was that, this was the other." The issue is very

clear to me. Yes, of course, it's too bad that a minister who has

acquitted himself very well in his portfolio and has done a job, of

course, enforcing and administering policies that this side has been

very critical of.... That's not the point.

The point is that it's too bad that a good and competent minister is

caught in this trap, but it's for that very reason that he must resign

and set the example. It's for that very reason that he should have

completely done the most honourable and respectful thing to do —

respectful of the traditions of parliament.

Interjection.

MR. LAUK: My hon. colleague from Vancouver East mentions the

Attorney-General. The two portfolios that are critical to the integrity

of government are the Attorney-General and the Minister of Finance. If

we haven't got people that are absolutely meticulous in their roles in

those portfolios. we haven't got parliamentary government.

Parliamentary government does not survive on law and enforcement so

much as it survives on confidence — public confidence, the confidence

of the other institutions of our democracy.

I am most disturbed by the attitude of the minister, and have been

for some weeks now. It is inconsistent with his career as a politician

and his almost compulsion — and I use that in a complimentary way — for

doing the right thing. Yet steadfastly and stubbornly he refuses to see

the important breach of principle that's involved.

The credit union situation is more disturbing. A great benefit has

gone to a.... There is no doubt in my mind personally that the minister

did not use his offices to benefit the credit union because he was

indebted to the credit union. I have no doubt that that was not the

case. That is not the issue. He cannot afford to leave himself and the

government and this institution open even to the accusation, the

appearance, of conflict of interest. It's simply not the issue, because

one day there is going to be a Minister of Finance across the way that

doesn't have that kind of meticulous adherence to doing a good job,

that doesn't personally hold the sway that this current minister has.

That's why the principle must be upheld strictly. The concept in law

is strict liability. It makes me heartsick to see all across this

country the slovenly attitude towards parliamentary traditions and

institutions that is going on in this country, We're the backwater of

the British parliamentary system when it comes to upholding the

traditional values and conventions of these institutions. It's about

time we matured and grew up, because if we're going to make democracy

work, Crown ministers have to adhere strictly to the conventions and

the unwritten rules that have come down through hundreds of years.

[3:30]

I heard one minister say: "What am I supposed to do, not invest in

anything?" There is a question about that. First of all, conflict of

interest, strictly speaking, does not apply to anybody other than a

cabinet minister. We in our democracy keep on floating these phrases

back and forth. It only applies to cabinet ministers. There are

situations involving MLAs who vote — standing orders deal with that —

for or against their own interests, depending on what the standing

order says. That is not conflict of interest. That's under standing

orders. It's a separate situation. It has never been conflict of

interest. MLAs, as individuals, can own and invest in what they like.

They can withdraw from votes, they can disclose their holdings, they

can do what they like. Under our law in B.C., disclosure is applied.

The press has dealt with a former minister who recently was charged

and convicted of non-disclosure as if that ended the matter. The

minister was charged....

MR. CHAIRMAN: Order, please hon. member. I think debate has

probably gone fairly extensively afield in what is normally permitted

under Committee of Supply, and possibly the Chair could bring debate

back to within order. It is not within the purview of the committee to

debate the personal character references of the estimates under debate.

We are possibly getting into character reference, and unless it is of a

substantive.... Matters that could be supported on a substantive motion

cannot be debated under the Committee of Supply, and that's dealing

with character reference. I would ask the member to get back to the

administrative functions of the Ministry of Finance and the minister.

MR. LAUK: Mr. Chairman knows full well that any substantive

motion in this regard would never be called and never be heard in this

chamber, and if we can't defend

[ Page 8384 ]

parliamentary institutions in this chamber, where on earth are we

going to defend them? If you want to muzzle the opposition on conflict

of interest, where on earth are we going to defend them?

MR. CHAIRMAN: Order, please.

MR. LAUK: I'm sick and tired of the attitude of the breach of parliamentary institutions in this chamber.

[Mr. Chairman rose.]

MR. CHAIRMAN: Hon. member, would you please take your seat for a moment.

The Chair has no alternative but to administer the rules laid down

by this House. If the members of this House wish to change the rules,

there is provision for that. In the meantime, the Chair administers the

rules laid down by this chamber, and on that basis I have no discretion.

If the member would continue on the administrative functions of the Ministry of Finance.

[Mr. Chairman resumed his seat.]

MR. LAUK: We are precisely, Mr. Chairman, discussing the

administrative functions of the Ministry of Finance. I made it quite

clear what my personal view of this minister was, and it has nothing to

do with the personal character of this minister, which is of the

highest standard. I made that clear when I started my remarks. I'm not

breaching that rule of debate in this chamber. I'm trying to.... I'll

admit to lecturing the minister on his attitudes and his beliefs about

parliamentary institutions with respect to conflict of interest. That's

what I'm doing.

[Mr. Strachan in the chair.]

Well, I've said my piece. Obviously I feel very strongly about this

issue. Perhaps I feel more strongly about it than most, simply because

most are not feeling strongly about it. This is what bothers me. You

and 1, Mr. Chairman, have devoted a great many years of our lives to

this institution and it's our solemn responsibility to take whatever

opportunity we can to defend it. I was referring to the situation of

disclosure, and disclosure statements is a totally separate issue.

That's a separate law requiring all of us to disclose: Crown and

minister, and back bench as well. Conflict of interest is the

substantive problem; disclosure is the breach of a statute. For the

life of me I can't get anybody in the press — or anybody else — to

understand the distinction. The former cabinet minister who pleaded

guilty to a disclosure breach — that's a separate issue. That cabinet

minister's conflict of interest is not that substantive and has not in

that case been dealt with, and has not in the minister's case been

dealt with.

MR. CHAIRMAN: Within the confines of the vote, please. The member is well aware.

MR. LAUK: This is the administration of Finance.

MR. CHAIRMAN: Of the Ministry of Finance.

MR. LAUK: The Ministry of Finance.

MR. CHAIRMAN: Thank you.

AN HON. MEMBER: Can you not use an analogy?

MR. CHAIRMAN: Debate must be strictly relevant, hon. members. We're in Committee of Supply.

MR. LAUK: Mr. Chairman, the minister stood and said: "I

disclosed all of this." Of course he did, and to that extent he's

acquitted himself admirably. I didn't think that would be such a great

thing for somebody to do, but having regard for some of the history of

another person in this chamber, maybe it is a feather in his cap.

The point I'm trying to make is that the substantive issue is

conflict of interest, and there's no such thing as a pro forma breach.

To me, any breach of that tenet of parliamentary institution is a

fundamental and substantive breach. We're losing sight of that. All

across this country we're losing sight of that. The press doesn't care.

A lot of people in this chamber don't care. The press goes running off

and writing stories about people's private lives, but when it comes to

office, where they should be concerned with it, they let it drop. I

confess that some of my own members let it drop. It should not be let

drop; it should be pressed forward. And if you're attacking a good guy

and it's all the more difficult, it's even more important, because if

the good guys are making mistakes, what are the bad guys doing?

MR. CHAIRMAN: To the vote, please.

MR. LAUK: That's the point I want to make, Mr. Chairman. I

repeat: I regret very much that this incident involved this particular

minister especially, because of the role that he's played over the

years and the contribution he's made to public life. Nevertheless, he

must understand that it's a breach.

MR. ROSE: Mr. Chairman, the general subject that has been

going on here for some time has been permitted with some latitude. The

member here was admonished not to stray from the particular vote into

personal reflections. However, the minister was permitted to stand up

and discuss his case and what he did, or what he did not do. I think

that any of us should be entitled to that latitude. I don't think we're

hounding the minister. I deeply regret I have to say anything about it

at all. And I'm not calling for his resignation. But I deeply regret it

because he's personable, he's open, and I've had excellent dealings

with him. I regret very much that he's taken the position that he did.

The Minister of Education (Hon. Mr. Hewitt) got himself into a

little trouble here in estimates the other day, but he had the decency

to say: "Look, I made a mistake. I goofed. I was wrong." That's what we

want. Because you can't be a little bit pregnant. The amount doesn't

amount to anything in terms of the principle.

We're all inclined to be self-righteous. I don't think any of us are

free of that disease. But our aim here is not to get up and to hound

the minister. It's a serious thing, but it reminds me of the Shaw story

at the cocktail party when this man asked a woman if she'd sleep with

somebody for a million dollars. She said, "Well, I might consider it."

And then she was asked: "Well, would you sleep with him for a dollar?"

She said: "What do you think I am?" Shaw was reported to

[ Page 8385 ]

have replied: "We've already determined that. What we are attempting to determine now is the price."

So I don't think it's an issue of size. It's the issue of bad

judgment. I think if the minister would say: "Look, I happen to be a

director of B.C. Rail. It was a dumb thing for me to do...." That's all

we're saying. We're not suggesting that there was anything crooked or

that it wasn't disclosed or anything. But it wasn't very smart. It

wasn't a brilliant thing to do. I don't think that any of us is

incapable of making those errors of judgment — I certainly don't claim

to have perfection — or will not make others in future. I'm not saying

that. But when you do that, I think it's incumbent upon the minister to

stand up and say: "Look, there's nothing illegal about this. There may

not even be anything immoral, but it sure looks awful. On

reconciliation, to me it wasn't worth the trouble,400 bucks."

As I say, I really regret that this thing has happened. because we

have a great deal of difficulty commanding the respect of the general

public, as legislators — not just in this House but all over the place.

People are very cynical about politicians: they're on the make, they're

on the take, they're this, that or whatever they are. So it isn't the

dollar.

If this were coming up, I'd like to see the Attorney-General (Hon.

Mr. Smith) in here helping the minister. The minister's not a lawyer.

Where is the Attorney-General, his colleague?

Just let me say that I have a personal regard for the minister. But

I would like to see him say, "Look, I think that what I did was a

mistake, and upon reflection, if I had it to do over again, I

wouldn't." That's what I want.

HON. MR. CURTIS: Mr. Chairman, recalling your admonition

earlier with respect to the debate and the question of personal

actions, I look to you for guidance. I must correct the member who has

just taken his seat, however. I am not now nor have I been a director

of B.C. Rail. So if the member is concerned about this matter in one

context, then I assume that he is still concerned. But I am not a

director of B.C. Rail. I am fiscal agent for B.C. Rail and have been

during the interval. But he did clearly say a director of B.C. Rail.

MR. ROSE: I'm not reluctant to apologize. I did check that,

and I asked someone. Obviously my source was incorrect. However, you

are the Minister of Finance, and B.C. Rail comes under your ministry.

We'll be discussing it during a vote. Therefore I think you're hardly

at arm's length from B.C. Rail as Minister of Finance, and you are

intimate in almost every financial transaction of the provincial

government. I apologize for the error on your role there, but I think

the main case that I tried to put remains.

HON. MR. CURTIS: I was going to continue with some remarks for the member who has just taken his seat — the member for Coquitlam-Moody.

Let us go back just a little bit. If the members opposite on the committee

are waiting for me to say I made a mistake, as I indicated earlier, in my heart

I do not believe that I made a mistake. I heard what the member for Vancouver

Centre said with respect to the difference between disclosure and conflict of

interest. But you see, some people outside this chamber have been less than

completely accurate over this issue. I don't say they were deliberately

so. But I make the point again.... If I may draw an analogy, if the Minister

of Finance for Canada, having decided that there will be a Canada savings bond

issue, then exempts himself from purchasing them after they are available to

the public of Canada, I think that is absurd. If the Minister of Finance for

Canada quietly pre-orders — you know, phones his broker and says, "All right,

fine, we'll be doing this: I'll be doing that; this is the way I want

to go with an issue that is coming" — that's an entirely different matter.

Mr. Chairman, let me tell you something else that happened. At the

time of the issue of the housing development bonds, I realized with a

shock that just about the last day those were available to the public

of British Columbia I didn't have one. I phoned in a hurry and placed

an order for a $100 bond. Why? Because I wanted to be able to say to

anyone who asked: "I believe in this. I bought one." If anyone had

asked at any point, "Did you, by the way, think that the B.C. Rail

preferred share issue was so good that you put your money where your

mouth is?" I could have said yes.

I have not used the defence today nor previously, inside this

chamber or outside, that it was just a small purchase. Some others have

tried to characterize me as having said that. I didn't say that. And

the recollection of Shaw is interesting, Mr. Member. I could have

placed an order for many more; I didn't happen to have the money. I

simply wanted to show commitment to a preferred share issue — which is

then totally at the mercy of interest rates; not decided in British

Columbia, not decided at the cabinet table, not decided by the Premier

nor the Minister of Finance, but decided by North American and world

interest rates.

I have some regard for the members who have spoken on this — almost

all who have spoken on this — and I would like to discuss this with

them sometime. I'm not trying to shuffle it out of the committee. If

the committee wishes to continue the debate, fine — only, of course, if

it's in order, with deference to you, Mr. Chairman. But the point is a

very interesting one. I hope that sometime we can continue the debate.

Thank you for the Chair's tolerance; I did not take longer than other

members of the committee in discussing the same topic, Mr. Chairman.

[3:45]

MR. CHAIRMAN: While there has obviously been some latitude

allowed, hon. members, the Journals will show that the previous

Chairman took exception to personal allusions to members other than the

Minister of Finance. Of course, our standing orders indicate that

debate upon the conduct of a member of the House can only be dealt with

by a substantive motion. We have had latitude, there's no question

about that; but we should deal with the administrative functions of the

Ministry of Finance.

MR. STUPICH: When I spoke on this issue.... I raised it. I

then invited the Minister of Finance to explain the transaction. I'm

not sure whether it was me or the first member for Vancouver East (Mr.

Macdonald) who invited the minister to apologize. The member for

Coquitlam-Moody (Mr. Rose) invited the minister to apologize. The

minister hasn't done that. He obviously doesn't look on it in the same

light as several members on this side of the House. I treat it as a

serious matter, as some of my colleagues do.

I'd like to move that vote 28 be reduced by the sum of $1.

I'd like to discuss this just a little further, with a couple of

other points. To refer to some of the minister's remarks, he mentioned

B.C. housing development bonds. Well, the interest rate on B.C. housing

development bonds was established;

[ Page 8386 ]

there was no question about what was happening there. I think even

there the minister should have said to the citizens of British

Columbia: "I recommend this to you. I think you're investing in British

Columbia. It's a good investment." In the short time that I was

Minister of Finance and in the three years that I was on Treasury

Board, I bought B.C. parity bonds. I said publicly that I was buying

them, even though we weren't selling as many as had been the case

previously, because we had been warned by the Department of Finance

that there might be a run on these, and it would be bad for the

province. That was all I invested in in the time that I was a minister.

The minister said that preferred shares are interest sensitive.

Well, I would suggest that common shares in a blue chip company — and

while BCR may not be a blue chip company, certainly its earnings record

is well known and it is a well-established company.... The fact that

it is government backed makes it a blue chip company. Preferred shares

are interest sensitive. So are common shares in this kind of a company.

There isn't that distinction. There still is the possibility that

preferred shares will rise and fall in the marketplace in response to

interest changes which can't be predicted. But the fact that they can't

be predicted absolutely does not stop knowledgeable people from

trying to predict them, and one of the reasons they have for buying

and selling preferred shares is that they believe they can do a

better job of predicting what will happen to interest rates and what

will happen to the price of preferred shares than can other people, the

vast majority of those who are buying and selling these preferred

shares.

The minister compared it to B.C. Hydro bonds and said that he buys

those. Well, Mr. Chairman, there is a significant difference. The

minister had absolutely nothing at all to do with the terms for those

B.C. Hydro bonds that he bought, with establishing the terms for those

bonds, the interest rate or the length of time they were going to be

out there, because those bonds were all issued long before the minister

became the minister, long before he became an MLA, if he is talking

about the old B.C. Hydro bonds. This issue he had total control of. He

was the fiscal agent, he was the one totally responsible and the one

most knowledgeable, and that has to be the difference.

There is another difference, and again I am not suggesting that he

deliberately did anything wrong, but I think he made a mistake and I

think he should apologize. You will remember — I would have to check my

dates to be absolutely certain on this, and if I am wrong the minister

will correct me — that he bought those shares not too long after

legislation had passed this House making a gift to B.C. Rail of $470

million, although when the amount was actually paid to BCR — and I can

only say arbitrarily because I don't know what the reasoning was; we've

never heard why, and there may be another explanation — it was

arbitrarily changed to $440 million, give or take. So that amount was

changed.

The railroad gets government assistance year after year in varying

amounts, and the decision as to how much government assistance may be

given to the railroad is something that this minister is certainly very

heavily involved in. As chairman of Treasury Board he makes those

decisions. There is a difference between preferred shares and ordinary

bonds. There is the difference when the minister himself is the one a

that set the condition. There is the difference when the a minister

himself has so much authority over the railroad that t he can suggest

to someone that it pay a dividend, or he can out of consolidated

revenue make a gift to B.C. Rail. There is a total difference, and I

believe if the minister had invested in almost anything else we

couldn't have raised this issue in the way that we did today. But he

didn't.

He did invest in others, and there is no question about them.

Nobody's asking about this investment in B.C. Hydro bonds. Nobody is

asking about this investment in B.C. Housing Development bonds. But we

are raising questions about his investment in B.C. Rail preferred

shares where he set all the terms, where he was most knowledgeable; and

while no one can predict with accuracy what is going to happen, he was

in the best position of everybody in the province of British Columbia

to make a value judgment as to just how good an investment these were.

MR. CHAIRMAN: Yes, there is a motion. Would you be ready for

the question on the motion? The motion is that vote 28 be reduced by

the sum of $1.

MR. STUPICH: Mr. Chairman, once again I was hoping hat the

minister would speak on this. It appears as though he feels it's not

something for which he should apologize. He is quite determined that he

did the right thing. I believe he did he wrong thing, and that's the

reason for moving this particular motion. The minister might want to

comment on.... I tried to explain why I see a difference between

housing development bonds and preferred shares, and B.C. Hydro bonds as

opposed to preferred shares. I have raised the question as to the

minister's fiscal control over BCR and the way in which — I'm not

saying he did; for this kind of investment he wouldn't for $2,500 — he

had the authority, and everyone knew he had he authority, to pump large

amounts of money into BCR or to draw large amounts of money out of BCR.

He had all that authority, and at that time he was buying preferred

shares. I would hope the minister would have more to say on the subject

than he has.

HON. MR. CURTIS: Mr. Chairman, I was not taking the member's

comments lightly nor for granted. I felt that there was nothing more I

could say other than what had been said in response to the member for

Nanaimo, the member for Vancouver East and the member for

Coquitlam-Moody on this particular point. I don't want to be accused by

the committee Chairman of being tedious and repetitious. I have

canvassed it as fully as I can. There is nothing more that I can add to

the committee on this issue. I can repeat it, but I don't think that's

what the committee wishes.

MR. ROSE: I wonder if I might ask the minister whether or not

he did tell me in his response that he purchased it as one way of

sending out a signal that these were good investments. Did he say that,

or imply that, in any way in his response to me? I don't have Hansard

ready yet.

HON. MR. CURTIS: We'll all have Hansard soon enough. No, I indicated

that that was the reason.... I didn't attribute — I did not intend to

attribute — that statement to the member for Coquitlam-Moody, but rather to

be able to say quite honestly and forthrightly, if I were asked anywhere: "Do

you think this is a good investment? Do you think this is worthwhile? Do you

think this is important...?" Then I would be able to say yes, I do. I

indicated

[ Page

8387 ]

that was my view at the time, and it remains my view. I did not attribute the

statement to the member.

MR. ROSE: I was asking for a clarification from the minister

because I felt that that's what he had implied by his response to me.

He's clarified that now. The minister, then, made no public

announcement whatsoever that he had great confidence in these shares,

so much so that he was going to buy some himself. He made no public

announcement, no press releases, no announcement from his office,

nothing to show his leadership in the sale of these, and his

confidence, so that other British Columbians might purchase these

shares as well.

HON. MR. CURTIS: That is correct. However, I was asked at the

time of the housing and employment development bond issue, as I recall

in Nanaimo: if I thought this was so great, would I buy it? I was able

to say: "Yes. Indeed, I have. I have made a purchase of that issue."

The same thing could have occurred in this instance, although at the

same time I think that I would be under fire in the committee if I had

issued a press release recommending acquisition of these shares from

the office of the Minister of Finance, because there is a prospectus

with regard to the preferred shares, and we have canvassed previously

in this room what one can and cannot say regarding a particular

investment.

MR. MACDONALD: You're criticizing the Premier now about BCRIC.

HON. MR. CURTIS: That's the member's

interpretation; that's not mine.

[4:00]

Motion negatived on the following division:

YEAS — 18

Macdonald

Dailly

Cocke

Howard

Stupich

Lauk

Nicolson

Sanford

Gabelmann

D'Arcy

Hanson

Rose

Lockstead

MacWilliam

Barnes

Wallace

Mitchell

Blencoe

NAYS — 24

Brummet

McClelland

Segarty

Heinrich

Veitch

Richmond

Pelton

R. Fraser

Schroeder

Passarell

Michael

Davis

Mowat

McCarthy

Curtis

Ritchie

McGeer

Hewitt

Rogers

Chabot

Reid

Johnston

A. Fraser

Ree

MR. STUPICH: Mr. Chairman, I'd like to talk about debt.

MR. CHABOT: Expo.

MR. STUPICH: I don't think this minister is responsible for Expo.

The member for Columbia River, if he wants to talk about Expo, can get in on

this discussion at almost any time, but I want to talk about debt first.

In the years since this administration has taken office, the total

debt of the province, including the contingent liabilities, has

quadrupled. The figure was $4.4 billion at the end of December 1975,

nine days after this government assumed office, and including

borrowings to date in the current fiscal period, we're now up to S 17.5

billion. That's a quadrupling in just over ten years. Even that figure

doesn't include everything, Mr. Chairman. It doesn't include long-term

leases of capital equipment that this government has gotten into since

it took office in December 1975: commitments with respect to the B.C.

Ferry fleet of $50 million, long-term leases; commitments for B.C. Rail

rolling stock, $212 million; SkyTrain cars....

MR. CHABOT: On a point of order, Mr. Chairman, historically

in this House after a vote on a reduction of salary we haven't been

able to continue with that particular vote — that was the end of that

vote and we moved on to another vote. I'm just wondering if we're

breaking a long-standing tradition that existed in this House from the

days that I first came, and I'm sure long before I came as well. So I'm

just wondering whether we're breaking these long-standing procedures

that have been so historical to this chamber.

MR. CHAIRMAN: I think there's another opinion. At least one; maybe more.

MR. COCKE: Mr. Chairman. when you consider the length of

service that that person has "given to this House," and he knows that

little about the rules. I would hang my head in shame, were I the

member for Columbia River. The fact of the matter is, we just voted on

a resolution of the House; nothing to do with the minister's vote,

which can proceed for the next six weeks. If in fact that's what we

would like.

MR. CHAIRMAN: Two very interesting points of order, and I

amendment is defeated the vote passes, although I can't recall it being

our exact practice here.

I will, though, caution the member for Nanaimo (Mr. Stupich), in

that there has been some debate that has discussed previous legislation

which does create debt, and there's been debate concerning Crown

corporations for which the minister is not responsible to this

committee, such as the operations of British Columbia Railway and

British Columbia highways. Other ministers are responsible to the

committee for the operations of those various Crown corporations, and

it would appear to me at first blush. hon. member, that you are

straying outside of the strictly relevant debate with respect to the

estimates of the Minister of Finance.

MR. STUPICH: Mr. Chairman, I really think you should take

another blush — try second or third. The Minister of Finance is a

fiscal agent, and we can't talk to any of those ministers about the

debt that they're piling up. We would not ask the Minister of Education

about the debt that the government is piling up with respect to

building schools, or the Minister of Health about hospital debt. We

talked to him about operating the hospitals, But when it comes to

financing them, then the Ministry of Finance is the fiscal agent for

all of these. He's the one who's responsible for raising the money,

[ Page 8388 ]

and he's the one who tells them when they may spend borrowed money. I don't think there's any question about that. Mr. Chairman.

I did add up capital leases of $369 million by way of commitments.

Then, of course, there's the $200 million more that we talked about

with B.C. Rail preferred shares, which is really a debt instrument, as

the minister suggested in an earlier debate.

In addition to the quadrupling of the debt there is another $569

million in obligations of one kind or another — debt obligations that

are not included in that figure. I wonder, where is the end, Mr.

Chairman?

The deficit this year is just $15 million less than the deficit

projected for the previous year. The minister talked about the budget

which we debated in March of this year providing for a reduction in the

deficit — I think he said for the first time, but I'm not sure. It did

provide for a reduction in the deficit of $15 million below the budget

estimate of the year before. I appreciate that the revised figure shows

a higher figure for last year, but it may well be that the revised

figures for the current year will be higher as well. Comparing budgets

with budgets, there's a reduction in the deficit of only $15 million

out of almost $1 billion.

[Mr Ree in the chair.]

On top of that the minister has found it possible to give to

corporations — and he has, in most cases, selected those that have the

ability to pay, and that has entered into our other discussions — in

excess of $1 billion over a period of three years. It's more than that

now, but last year programs were announced that gave to corporations a

total of $1 billion over three years.

It would seem to me, Mr. Chairman, that we're accumulating a very

heavy debt load at a very heavy rate. It's going on and on, and the

minister's response to all of this is to say, "Let's give the

corporations another handout," instead of trying to deal with the

deficit situation and bring it under control.

MR. CHAIRMAN: Order, please, hon. member. If you're talking

of the provincial budget, there is a budget debate, as the member well

knows. Here we're talking about the administrative functions within the

Ministry of Finance. The budget debate has been held and dealt with.

Now we're talking about the specific budget for the Ministry of Finance

for the fiscal year.

MR. STUPICH: Mr. Chairman, I'm not sure what you're trying to

do to me. I'll find out, maybe, later on. I'm dealing with the Minister

of Finance now. I'm dealing with the minister who is responsible for

controlling the purse strings of government, I'm dealing with the

minister who has brought in seven budgets, every one of them a deficit

situation. Surely that's all within his administrative office, I would

think; but I'll try it and see how we get along.

I'm expressing the concern that our debt load in the province is

going up so fast, getting so large, and instead of dealing with it in a

positive way, the minister is adding to it by making further handouts

to corporations.

I have to ask what he has in mind. Is he concerned at all about the

debt load that, as Minister of Finance, he is piling upon the people of

the province? Does he have any plan to try to do something about this

some time other than what we've seen so far, which seems to be to let

the debt go on growing and do nothing constructive to stop it?

HON. MR. CURTIS: Mr. Chairman, I trust that I will not offend

the Chair in answering the questions put by the member for Nanaimo. May

I speak about debt generally? The member asked earlier on: "Where is it

going to end?" Mr. Chairman, that's a question that we should ask — I'm

not speaking in a partisan sense here as Canadians, and citizens of

other nations should ask that too, in terms of the piling up of debt.

I won't take a great deal of time to say that which I've said before

about controlling the debt. Mr. Chairman, the deficit, whether in

British Columbia or Ontario or Quebec or Manitoba, is one thing. The

member will know, and the committee will agree, I trust, that the other

debt which relates to undertakings of governments — so-called

commercial debt in the context of government, commercial debt in our

context being B.C. Hydro, B.C. Rail; non-commercial debt being that

which is not related to an enterprise of government....

[4:15]

I think it's reassuring — certainly I find it reassuring — to notice

that our non-commercial deficit, the cost of operating all the services

for the province of British Columbia and her people, is declining from

a previous high. That was dealt with well in the budget, so I won't

dwell on it. It shows that the deficit, the operating debt of the

province, is declining.

As a percentage of gross domestic product, it might help to examine

B.C.'s commercial debt figure as of March 31, 1984. It would show the

same or better — in the true sense of the word "better" — for 1985:

17.8 percent of GDP is commercial, 13.1 percent is non-commercial, for

a total of 30.9 percent of GDP total debt. If you want a per capita

number — $5,172.

Now I am not going to just mention Manitoba. I will mention

Manitoba, but I will mention one or two other provinces in order to

give the committee and those who are interested in the committee's

discussion a little bit of comparison, if we are at 30.9 percent. For

Quebec — the percent of GDP commercial, 20.7 percent; we're 17.8

percent. Non-commercial in Quebec, 22.4 percent — we are 13.1 percent

for a total of 43.1 percent of GDP in net debt.

I will go to Nova Scotia as another large province: commercial, 12

percent; non-commercial, 38.7 percent; for a total of 50.7 percent. One

more: Manitoba — commercial, 22.6 percent; non-commercial, 19 percent;

41.6 percent total. In terms of debt per capita, British Columbia is

the fourth lowest behind Alberta, Ontario and Prince Edward Island, and

in terms of non-commercial debt per capita — that is, our true debt if

one excludes the commercial about which I've spoken — British Columbia

is second lowest behind Alberta, notwithstanding the very severe impact

that the recession had on us.

MR. CHAIRMAN: Hon. minister, the Chair has a great deal of

difficulty keeping debate within the ambits of the subject matter that

is before the committee at this time. We have somehow strayed on both

sides extensively into budget debate, which has been held in the House

and is a forum for dealing with provincial debt and provincial budget.

Possibly the hon. minister could, and I'd hope the opposition likewise,

enter into debate on the minister's functions within his office and not

the budget.

The member for Burnaby North on a point of order,

[ Page 8389 ]

MRS. DAILLY: I've been here a number of years now, and I know

the minister has, and the member for Nanaimo (Mr. Stupich), who is our

financial critic. I must say that we've never before been so

constrained in the parameters of debate as we are being constrained by

your statement just now. I simply want to say that it's most difficult

to debate the Minister of Finance's estimates and budget if we're not

able to discuss in detail and specifically the statements which he just

made.

It's impossible to have a debate. We might as well close up shop and

forget about debating with the minister on his budget if we're going to

be this constrained. I have never seen this before, and I just ask the

Chairman, who is I know a very fair-minded Chairman, to please give

reconsideration to the parameters you are setting here.

MR. STUPICH . Mr. Chairman, on the same point of order, you mentioned

the budget debate and said we're not going to have that all over again.

But the budget debate is not in committee, such as this is. There isn't

the opportunity in the budget so-called debate or any debate at all....

There isn't the opportunity then to ask questions of the minister and to

have the minister respond. There is an opportunity, for all of us who care to,

to make speeches, but not to ask questions and possibly get answers. This is

the only opportunity we have to discuss the principles guiding the Minister

of Finance. There's no other opportunity to do this.

I think, Mr. Chairman, that there's nothing wrong with the way things are going, except that the Chairman keeps interrupting.

MR. CHAIRMAN: Both points are well taken. Standing orders do

provide time for budget debate. The Chair has observed that a great

deal of the debate so far under the minister's estimates is on the

overall budget and not relating to the minister's functions as such.

The Chair is only trying to facilitate the conduct of the committee,

and apologizes if the members believe there is an excess of

interruption. If the member stayed within the ambit of the Ministry of

Finance, and debate was relevant, the Chair would not be obligated to

take such action.

MR. COCKE: Mr. Chairman, I was listening to this from my office, and I'd just like to add my two bits' worth to this point of order.

The fact of the matter is, the minister is responsible for the

budget. The budget debate is a debate not in the committee of the

House; it's not a give-and-take debate at all. The budget debate is

where members get up and make their speeches, with all sorts of

breadth, almost to the extent of the throne debate. This minister is

responsible for the budget, is responsible for the estimates; that is

his area of responsibility, totally. Therefore anything with respect to

dollars and the Crown is his responsibility. The member for Nanaimo

(Mr. Stupich) has not only been within the parameters; he's been well

within the parameters.

HON. MR. CURTIS: Mr. Chairman, with the greatest of respect

for the Chair, vote 81 is one of the votes in my estimates; that's

management of the public debt. That's what I was attempting to respond

to. Whether a program in another ministry should or should not be

increased or decreased is not something that we're trying to discuss

here. But I do feel I'm responsible for the management of the public

debt, whether commercial or non-commercial: and that was a theme that I

was developing with the committee and in direct response to the member

for Nanaimo.

MR. CHAIRMAN: The Chair has no objection with respect to that observation of the minister. Does the minister wish to continue?

HON. MR. CURTIS: No, Mr. Chairman, I have made my response. But there may be other comments.

MR. STUPICH: Mr. Chairman, the minister in his response

talked about the difference between commercial and non-commercial debt,

and then started comparing British Columbia favourably with several

other provinces. But the goalposts changed — change, not changed; they

changed, but then they change from time to time. Included in the list

of Crown entities — I won't say Crown corporations — are a number of

new ones that may or may not exist in other provinces. It would seem to

me, Mr. Chairman, that a comparison of commercial debt within British

Columbia, compared to non-commercial debt from one year to the next, is

hardly relevant if you in the meantime establish a new Crown entity

that goes out and borrows to raise money for some activity previously

included in non-commercial enterprises. To compare them with other

provinces where they may be doing the same thing, or maybe doing

something totally different — I don't know. The minister. If he looks

at the list, as I am doing now roughly.... I find there are eight new

Crown entities in the past ten years, which owe a total of something

like $1.7 billion. All of them are conducting activities which, prior

to 1976. were what the minister would call non-commercial activities.

Really, I think the comparison is not relevant.

HON. MR. CURTIS: I think the lexicon is pretty standard from

province to province. In terms of what is commercial and what is

non-commercial. Clearly a Hydro in any province is going to be

commercial. B.C. Transit, well, it's relatively new. It's clearly

described as commercial. I'm sorry, I am corrected by my official: it

is non-commercial. Anything that gets a subsidy is under the heading of

non-commercial. Therefore a number of the Crowns to which the member

for Nanaimo has referred would fall into that category. But when you

are doing an interprovincial comparison, I think that, as I say, not

only what individuals in this ministry or officials in this government

do but also how external observers would categorize commercial and

non-commercial debt, whether they be analysts associated with major

houses, banks or whatever.... So I don't think the comparison is of

apples and oranges — I think it is pretty much apples and apples.

MR. STUPICH: Well, I don't want to belabour this much longer,

but I would have to ask about B.C. Buildings Corporation, for example

with a debt of $474 million. Now perhaps it doesn't get a subsidy, but

it gets all of its revenue from government now, and to say that

anything which gets a subsidy.... Well, B.C. Rail we discussed earlier

as getting a subsidy, but I think it must be considered commercial. I

think that description doesn't tell the whole story. It may generally

be true, but some of this list of new ones.... I don't know. I just

can't say without having the lists from the other provinces. We don't

know whether it is fair to compare

[ Page 8390 ]

them or not. I don't know if the minister wants to say more about this.

HON. MR. CURTIS: Mr. Chairman, the B.C. Buildings Corporation

is considered commercial because it acquires premises or leases

premises at the market rate. It is not subsidized. If the member is

interested in receiving a list of those rather than taking the

committee's time, I undertake to provide it. If you don't get them by

Monday, would you remind me. I can give you the full list of what we

describe as commercial and what is non-commercial.

MR. STUPICH: Well, Mr. Chairman, now that B.C. Buildings

Corporation has been mentioned specifically, it currently has a debt of

$473.7 million, of which $205 million was to pay for the construction

of B.C. Place Stadium. So its building occupancy charges are really

paying for the financing of B.C. Place Stadium. I have seen reports and

suggestions in the press as to what might happen at that site after

Expo. It would seem as though there is a distinct possibility that the

government will embark upon a substantial building program in that

area. I wonder whether or not it is contemplated that B.C. Buildings

Corporation will be absorbing the debt on further capital investment at

the B.C. Place site. Maybe the minister doesn't know at this stage, but

I just....

HON. MR. CURTIS: Mr. Chairman, as a member of the executive

council I do know, but it is not within my ministerial responsibility.

That's one of the problems we have. However, I can tell the member that

any activity which takes place at B.C. Place will certainly be

minimized in terms of additional debt. It is not foreseen as something

which will add significantly to the public debt — that is not the

intention.

[4:30]

MR. ROSE: I have an ongoing and perhaps a consuming interest

in the established programs financing acts. I am probably one of the

few in the whole world, besides the minister, who cares a great deal

about them. It concerns federal transfer payments of one kind and

another that come from the federal government under that agreement. I

would like to ask a few questions about it, but I don't want to ask

questions if the minister is unprepared for quite detailed answers. If

the material is not here, then I would prefer to wait and ask my

questions when it is. But if the minister will give me an indication

that he will either be prepared to answer some of these questions — and

I have a series of them — or be prepared to go and get the proper

information for me, I will wait and place my questions later.

HON. MR. CURTIS: Mr. Chairman, as the member would hope, I am

reasonably familiar with EPF. We can discuss the actual moneys which

are transferred to the provinces, or the cash and points which are

transferred. I won't, as the member has not asked, discuss the programs

which are delivered as a result of EPF, but we have the information and

we have the officials available to deal with EPF. I can't guarantee that

it will be to the full extent that the member would like, but in terms

of the money which flows to the provinces and the tax points, yes, we

can discuss that.

MR. ROSE: I'd like to ask the minister first of all whether

he is aware or it is true that the federal government calculates the

health and educational grants and tax points separately, even though

since 1976 we've had legislation that really allots it in blocks, or

block funding. Does he know whether the practice is to continue the

previous practice of separating the grants before they're sent to the

province with a so-called tag on each of them — health on one

side, education grants and tax points on the other?

HON. MR. CURTIS: Mr. Chairman, to the member for Coquitlam-Moody, yes, the answer to the member's question is that the national

government has firstly informally, and then later — a couple of years

ago; I'm sure the precise time doesn't matter to the member — by

passing a bill, unilaterally split the health and post-secondary

portions. Now they finally passed a bill, I think because the provinces'

respective ministers of finance and treasurers, and ministers who

administer the money and tax points which come, were very upset about

that. It was initially established as a block amount.

The member is correct, and he and I have discussed EPF before in

these estimates. It was a block amount, and then whether that occurred

by design or by accident I cannot tell. Gradually we noticed a change

on the part of the federal government to somehow create an imaginary

split, later ratified by legislation. So now in any discussion, in any

reference, in any transfer that occurs, the two are split.

[Mr. Strachan in the chair.]

Quite apart from political affiliation, as the member will know, Mr.

Chairman, the provinces, almost without exception, if not without

exception, have been strenuously opposed to that. It is block funding —

at least that's what we thought it was, Mr. Member.

MR. ROSE: Does the minister not agree that the reason the

government took the action it did in splitting these was because of the

possible diversion of funds tagged for health into other general

purposes by some provinces, and that under the new Health Act there was

a clause which indicated that should certain fees be charged in extra

billing by medical people, the amount raised through that would be

subtracted from the grants which were destined for medicare? And so the

minister, I think, is fully aware of that. I don't think I need to go

through the business of the courtroom cross-examination technique on

that one, but I would like to know what....

The other thing is how some sort of imaginary line could be

sanctified in legislation. That is really reaching for it. I couldn't

understand that one. Nevertheless, aside from the quibble, how much

money does British Columbia receive from the federal government in this

budgetary year which is tagged by the feds, whether you like it or not,

Mr. Minister, for post-secondary education; and also incidentally, for

the benefit of the record, for paying half our grade 12 schooling costs

as well?

HON. MR. CURTIS: Mr. Chairman, I think the supplementary

material that was presented on budget day would answer the question

posed by the member regarding precisely how much comes by way of cash

and tax points to the province of British Columbia. But let me give

what is I hope a more useful response to his question. It is that,

insofar as I've been able to determine, there is no hard evidence that

any

[ Page 8391 ]

province diverted the cash and tax points that it received for

health and post-secondary under EPF to uses other than those two

program areas. And the member will know, Mr. Chairman, that this

government and his party disagree on many, many issues, and

Conservative and Liberal governments disagree with the New Democratic

Party on many, many issues. One that brings us together, at the

provincial level at least, regardless of political affiliation — NDP,

Conservative, Social Credit in British Columbia or Liberal — is the

smoke that surrounds the federal view of EPF. The room is full of smoke,

very thick and difficult to get through. Yet now, with the present

federal government and its predecessor, with three Ministers of Finance

nationally. we have argued this point, and we have said: "Show us the

evidence." The leader of the national Liberal Party has come to British

Columbia often on his own agenda, saying that we have been diverting

money, but he presents no evidence. None of my colleagues in any

province across this country, including Manitoba, has ever felt

threatened by any hard evidence that the diversion has occurred. The

accusation is made repeatedly for federal reasons, but not supported,

not backed up.

MR. ROSE: How much did you get?

HON. MR. CURTIS: If the member has other points to make, we'll have that....

MR. ROSE: I started out this whole thing by saying that I

intended to ask some detailed questions about EPF, and asking whether

the minister was prepared to answer them. I laid the groundwork; I said

that the feds separated the two after the health act. Therefore,

whether you like it or not, it is a fact. Secondly, if they have been

separated — health in one part and post-secondary education in another

— how much did we get that the feds tagged specifically for

post-secondary education?

HON. MR. CURTIS: We will have that information. The member

prefaced these questions by saying he was going to ask some specifics.

The member also knows that it is a very complicated formula. In my own

defence, I have to point out that in the interval since the last time

my estimates were debated the member has not, to my recollection, been

in to sit down and discuss EPF — has not suggested discussing it. It's

appropriate to discuss it here — I'm not suggesting otherwise but the

member knows, having served in the federal House and having served in

this House, that you don't simply pick up one page of paper and say:

"This is EPF — X, Y and Z equals X dollars or Y dollars or Z dollars."

It isn't that simple, and the member knows that. We will provide that

information, and if the member has other questions to ask regarding EPF

or other points in my estimates, then I would be happy to answer those

to the best of my ability — in the interval.

MR. ROSE: I wonder if the minister could confirm that the

total amount from the feds for 1985-86 from EPF amounted to something

like $517 million. Could he also confirm, from his own budget, from his

own estimates, that the total figure to be spent on post-secondary

operating is something like $511 million? What we're spending on

post-secondary institutions is at least $6 million short of what we get

tagged by the feds for EPF, and that might account for the cutbacks at

universities and colleges, the larger classes and also the rapidly

escalating increase in fees.

That's the question I'm asking. and I don't think any kind.... Talk

about the smoke at federal-provincial meetings. There's lots of smoke

around here too — lots of smoke but no fire. I think the fire is being

smudged and smothered. The total operating budget for post-secondary

institutions in this province is something like $511 million. The total

EPF tag — if the minister doesn't know. I think I do, and he can

confirm or deny — is $517 million.

As far as the diversion of funds is concerned, we've had a study

into that, a virtual royal commission headed by former CBC director Al

Johnson. Al Johnson said that B.C. was one of the worst. We're the only

province in Canada that's making money out of EPF. University budgets

are made up mainly of two sources: about 80 percent from the feds — now

more than 100 percent — and about 16 percent from the students. We have

one of the lowest participation rates in Canada. I'd go into that, but

I would perhaps be ruled out of order. So I won't go into that: I'll

merely assert it.

Anyway, if the minister is not prepared to answer that one....

HON. MR. CURTIS: You finish and I'll give some response. Go ahead.

MR. ROSE: Okay. I hope you'll be in order.

MR. CHAIRMAN: It's delicate. The EPF is clearly the Minister of Finance: health budgets and education budgets are other ministries.

HON. MR. CURTIS: Mr. Member, I'm astonished. I'm surprised. I can't believe....

AN HON. MEMBER: Shocked and dismayed.

HON. MR. CURTIS: Not dismayed; delighted. The member has

referred to the Johnson report. Oh, Mr. Member. If we can put our hands

on.... I thought I read it to you last year, but maybe you want to hear

it again. The finest critique of the Johnson report, the finest attack

I have ever read — which described its phony arithmetic; a discredited

report, hastily conceived and executed — came from a New Democrat

former Minister of Finance in Manitoba, Victor Schroeder. A devastating

letter, a letter with which I agreed completely; an absolutely superb

letter. It dismissed the Johnson report with a wave of Schroeder's

hand, and he was right on.

[4:45]

Mr. Member, I am surprised. Not attacking a legislative colleague,

but I am surprised that you, in your effort to suggest that the amount

of money and tax points which comes for post-secondary education and

which is then spent by the province for post-secondary education is not

the same, would turn to the Johnson report. I thought I helped you out

of that trap last year. I intended to help you out of that trap last

year. Did I not read — or present when the committee rose — the

Schroeder letter? We'll have to get it to you, Mr. Member, because it

is right on.

I haven't heard anybody mention the Johnson report in the last many

months. I think Mr. Johnson realized that he really blew it, and he

just sort of crawled back somewhere, from wherever he came.

[ Page 8392 ]

Interjection.

HON. MR. CURTIS: He's what? Oh, God save us. He's teaching at a university.

That was a bad report, Mr. Member, and I'm not saying that because

we're on opposite sides of this chamber. Talk to your colleagues in

Manitoba. Talk to others in other provinces who are of the same

political persuasion as yourself. They'll tell you bad report, and

certainly not based on accuracy. Embarrassing, it was so bad — not to

us but to the author, and to those who were associated with him in it.

The member thought that he was developing some.... He referred to

courtroom technique. We've never found in any province that the amount

of money and tax point values transferred to a province under

established programs financing has been spent on anything but those

programs for which it was originally designed and which are still

served by it. I can stay here as long as you want and argue the point.

The fact of the matter is that there has never been anything

conclusive, anything credible, to suggest that that accusation is

correct.

MR. ROSE: Well, ridicule is always one excellent rebuttal

technique. The fact is that two or three years ago, when we had Monique

Begin as health minister, she put a clause in the Health Act because of

diversions, because of extra billing, because of lots of other

finagling that went on under the block funding. That was to protect the

federal government from having the funds diverted to some other

purpose. There is no question about that. Now the minister is going to

tell me: "We spend all that money on education." I didn't say you

didn't. What I am concerned about is the fact that where you once had

to put in 50 percent for those dollars, you guys don't put in anything

anymore. You get a virtual free ride on the backs of the kids and the

feds.

The old story used to be: he who pays the piper calls the tune.

You're calling all the shots and all the tunes, but I don't see that

you're paying the piper. If you get $570 million in EPF, and your

operating grants for all your institutions are $511 million, and the

students' fees have gone up.... I won't bore you or make this tedious

and repetitious, because I don't want to abuse the Chair or its

sensibilities, but the fact is that we've had a constant increase in

fees, larger classes, downsizing universities — and the money, of

course. Why don't you use the argument of the former minister of

post-secondary and universities: "Well, really that's not the feds'

money anyways; it's B.C. money here. All we're doing is we're just

getting back our own." That's the argument they used to use. The fact

is that the feds....

HON. MR. CURTIS: On a point of order, Mr. Chairman, the

member is now talking about his view of class sizes and other matters

that relate directly to the Ministries of Health and Post-Secondary

Education. I have been trying to limit my discussion to EPF, the

transfer of money and tax points from the federal government to the

provinces — the provinces, plural. I'm quite prepared to try to assist

the committee in that regard, but not to discuss how big a classroom

should be.

MR. CHAIRMAN: The minister's point of order is very well taken,

and the Chair has indicated to the committee earlier that the minister is responsible

for established programs funding, but the minister is not responsible for the

expenditures of the Ministries of Post-Secondary Education or Health. The member

for Coquitlam-Moody will speak to the estimates of the Minister of Finance.

MR. ROSE: I think the minister will agree that pre-1976

there was accountability for those funds. If a dollar came from the

feds under EPF — so I'll be clearly in order — for health or education,

there was an auditing or an accounting system, which meant that the

province had to contribute equally, or another dollar. After 1976 — and

I can go into the reasons for that; I don't think there's any

particular purpose in that, to educate the people that are here — for

whatever reason, there were motivations on the part of the feds to do

this, agree to this, and the provinces as well. So it was agreed to;

there would be block funding. When we got block funding we lost the

accountability, so there was no way of checking whether the province

has committed dollar for dollar.

All I know is that it has been estimated that if we were spending

what the other provinces are, we would probably have something like

25,000 more kids in post-secondary institutions; and we're not getting

a break for it, because the money is not being spent there, even though

it comes from there.

I want to know whether the minister would agree that the recent

cuts, first started under Finance minister Allan McEachern during the

six-and-five period, where those cuts amounted to $14 million in

1983-84 and another $31 million in 1984-85.... What was the minister's

position at that time, when the Liberal government, under Allan

McEachern, embarked on those cuts?

HON. MR. CURTIS: Mr. Chairman, I think the best way I can

respond to the member and to the committee is to read a letter which I

can then table, if the House wishes, from the NDP Minister of Finance

in the province of Manitoba, to Finance minister Michael Wilson, the

MR. ROSE: Point of order.

HON. MR. CURTIS: Oh, he doesn't want the information. Okay.

MR. ROSE: Mr. Chairman, I asked a particular question: what

was the posture of the British Columbia government when Allan MacEachen

first proposed cuts, amounting to millions of dollars, under EPF? I

don't want a recitation of what some minister from some other province

has said; I want to know our posture in this government when those cuts

were proposed in 1983 under the six-and-five program. Did the minister

oppose or support the cuts at that time? What was the province's

position? That's what I'm asking. You can table anything you like; I

don't mind. I'm not averse to that. But please do your best, Mr.

Minister, to answer the question.

MR. CHAIRMAN: It's not a point of order.

HON. MR. CURTIS: It's more than just tabling a letter, Mr. Member, because you've made some accusations with respect to provincial policy.

MR. ROSE: I'm asking a question.

HON. MR. CURTIS: Asking a question and making an accusation. Earlier you spoke about kids in classrooms and

[ Page 8393 ]

so on. The Chair has told us all that we should not discuss that.

One of the best explanations of EPF, vis-Ã -vis provinces and the

hear a letter from a political colleague?

MR. ROSE: I want you to answer the question I'm asking.

HON. MR. CURTIS: Well, I'll answer that question, happily. We strenuously opposed those cuts. Okay?

Now may I, while I have the opportunity, just read some of the

letter from Mr. Schroeder, then Minister of Finance. It's a very fresh

letter in terms of federal-provincial relations. It's last year, May

of 1985.

MR. ROSE: Is it in French?

HON. MR. CURTIS: No, I meant in terms of.... Not five years ago.

MR. ROSE: Just happened to have it with you?

HON. MR. CURTIS: Just happened to have it around, Mr. Chairman. This is addressed address to Michael Wilson:

"With your letter dated April 4, 1985, you enclosed a

copy of the Johnson Report on Post-Secondary Education and invited

comments.

"I must, at the outset, express some disappointment

that your government chose to release the Report without providing

provinces with any pre-publication opportunity for federal-provincial

consultations to ensure a reasonably accurate portrayal of the

Established Programs Financing Arrangements and the public services

those arrangements help finance, health and post-secondary education."

Continuing to quote from the letter:

"I note that federal ministers have taken every

opportunity to distance the federal government from the Report by

referring to it as 'a personal report! However, its release and

subsequent federal comments suggest that it could become a focal point

for federal — provincial discussions. Also, unfortunately, in the

absence of specific comments by either level of governments, the Report

appears almost by default to be becoming accepted as 'factual'

information which, of course, it isn't."

The letter continues, Mr. Chairman:

"As you know, the Established Programs Financing

Arrangements began in 1977 as a block funding mechanism for health and

post-secondary educatio