1979 Legislative Session: 4th Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, APRIL 2, 1979

Afternoon Sitting

[ Page

239 ]

CONTENTS

Afternoon sitting

Routine proceedings

Oral questions.

Nuclear reactor dangers. Mr. Stupich — 239

Partnership of Premier in federal election. Mr. Stephens— 239

Changes to Canadian constitution — 239

Parks branch layoffs. Mr. Stupich — 240

Acquisition of land for Roderick Haig-Brown Park. Mr. Nicolson — 241

Parks branch layoffs. Mr. Stupich — 241

Sale of Panco Poultry to American company. Mrs. Wallace — 241

Correspondence between provincial and federal Environment ministries. Mr. King

— 241

Budget address. Hon. Mr. Wolfe — 242

Social Services Tax Amendment Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 263

Corporation Capital Tax Amendment Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 263

Parimutuel Betting Tax Amendment Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 263

Revenue Surplus 1977-78 Appropriation Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 263

Vancouver and Victoria Trade and Convention Centres Fund Act. Hon. Mr. Wolfe

Introduction and first reading — 263

Lower Mainland Stadium Fund Act. Hon. Mr. Wolfe

Introduction and first reading — 264

Special Appropriation Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 264

British Columbia Hydro and Power Authority

(1964) Amendment Act, 1979. Hon. Mr. Wolfe

Introduction and first reading — 264

Supply Act No. 1,1979. Hon. Mr. Wolfe

Introduction and first reading — 265

Second reading.

Mr. Stupich — 266

Presenting reports

Rangelands of British Columbia. Hon. Mr. Shelford — 268

Auditor-general's report for year ending March 31,1978. Hon. Mr. Wolfe

— 268

MONDAY, APRIL 2, 1979

The House met at 2 p.m.

Prayers.

HON. MR. GARDOM: Budget day being a day of historic and

ceremonial consequence and custom, I would respectfully ask the House,

and pursuant to an agreement between the Whips of Tuesday last, that

this afternoon we suspend introduction of guests and also suspend

question period, with leave.

Leave not granted.

MR. SPEAKER: Leave was required. Leave was asked. Leave was not granted. The standing orders do not provide any debate on the matter.

We will need a little guidance here from the House as to whether or

not a request for leave with its attending clarification is a

ministerial statement.

AN HON. MEMBER: Of course not.

Oral questions.

NUCLEAR REACTOR DANGERS

MR. STUPICH: A question to the hon. Minister of Mines,

Petroleum and Energy Resources. In view of Robert Bonner's repeated

public support for nuclear energy in B.C., and in view of his

membership in the nuclear-reactor-promoting Canadian nuclear

association, and in view of the nuclear accident in Pennsylvania, will

the minister today request the resignation of Mr. Bonner as chairman of

B.C. Hydro?

HON. MR. HEWITT: To the member for Nanaimo, the name of the

ministry is Energy, Mines and Petroleum Resources. In answer to his

question, the answer is no.

PARTNERSHIP OF PREMIER

IN FEDERAL ELECTION

MR. STEPHENS: My question is for the Premier. In view of his

sarcastic and disparaging remarks in his speech on Friday towards Joe

Clark, the leader of the Conservative Party, I would like to ask him

whether this means he decided and when he did decide to throw his

support behind Pierre Trudeau in the next federal election.

HON. MR. BENNETT: I'm certainly glad the member for Oak Bay asked

me that question. Joe Clark has a much better sense of humour than the member

for Oak Bay. That's why he came out against the provincial leader, the

one he's trying to disown, and supported the B.C. Resources Investment

Corporation to the citizens of British Columbia. He stands for people, even

if the member for Oak Bay doesn't.

CHANGES TO CANADIAN CONSTITUTION

MR. MACDONALD: My question is to the Attorney-General. Last

Tuesday I asked the Attorney-General why the province of British

Columbia had not intervened in the Supreme Court of Canada in a case of

the gravest constitutional importance to this province, namely whether

constitution of Canada with respect to the Senate and its lawmaking

powers. The Attorney-General promised an answer, but the case is over

now. I still ask why the province of British Columbia, unlike other

provinces, did not intervene in a matter of such great importance to

the people of this province.

HON. MR. GARDOM: In response to the hon. member, British

Columbia's primary objective, as has been illustrated in its proposals

at the First Ministers' Conference, is to seek a reconstituted upper

house in the country in order that we can provide a stronger voice for

the province in Ottawa and provide stronger representation for all the

regions of Canada at the centre.

In this score, hon. member, there has been a great deal of

negotiations at federal-provincial level. Insofar as British Columbia

is concerned, they will definitely be ongoing. We obviously have to

presume that as a result of the federal writ we will have to wait the

insofar as B.C.'s position is concerned, it's firm, Mr. Member, and

there's been all sorts of support for the British Columbia position,

not only from the people of this province but the people throughout our

country.

The present reference before the supreme court is really not the

ordinary type of constitutional case to determine whether powers fall

within the provincial or the federal sphere, but really one dealing

more with constitutional custom and usage within the terms of the

existing British North America Act, which in our view is something to

be negotiated rather than dealt with through the courts.

I would also say that the reference relates very largely to the house of federation propo-

[ Page 240 ]

sals

dissolution of the Parliament of Canada, I think everybody in this

country, including the federal government, has very readily concluded

that the proposals in Bill C-60 for a house of federation are totally

unacceptable to our country. So that lawsuit itself would really appear

to be nothing more than an academic exercise on the part of British

Columbia. We don't choose to waste taxpayers' dollars in academic

exercises, Mr. Member.

The last point that I would like to mention, one that we are

strongly advocating, as has been very clearly articulated in the

British Columbia position papers — and if the hon. member hasn't read

them, or has not yet received copies of them, I'm more than happy to

send them to him.... I do believe they were circulated to every member

of the Legislature, so I'm sure the hon. member has gone through them.

But it would appear, hon. member, that under the existing British North

America Act, institutions such as the Supreme Court of Canada and the

Senate can be restructured by the federal government, acting through

the Parliament of Canada and without provincial intervention. We don't

agree with that premise, but it's legally correct.

MR. MACDONALD: If the government of British Columbia doesn't

agree on this important matter, that the federal government should be

able to change the constitution of Canada unilaterally, and there's no

point in negotiations if they have that power, why did it not go before

the court and state the position of the province of British Columbia?

The case is over now. The Attorney-General mentions costs. The

government of British Columbia appears in that Supreme Court on many

cases. Costs are unimportant in a matter of such importance.

HON. MR. GARDOM: I think the hon. member is almost suggesting

— by parallel argument, Mr. Speaker — that labour matters should be

handled in the courts of law, which is not the appropriate forum. This

is a matter, hon. member, for negotiation. There is absolutely no way,

in the view of the province of British Columbia — and I'm sure that you

share this view as well — that the Parliament of Canada can

unilaterally amend the constitution.

MR. MACDONALD: That's what the case is about. Where were you?

HON. MR. GARDOM: Would you listen? If you would just pay me the respect of listening, hon. member, it would be greatly appreciated.

There is no way, in our view, hon. member, that the Parliament of

Canada can unilaterally amend the constitution insofar as the

distribution of powers is concerned, insofar as the rights and

privileges of provincial governments are concerned and insofar as the

rights and privileges of provincial legislatures are concerned. But

under the BNA Act, hon. member, as it now is, which is not the way we

believe it should be, the power is there. So the procedure should be

one of negotiation as opposed to wasting taxpayers' dollars in the

Supreme Court of Canada.

MR. SPEAKER: Hon. members, Beauchesne clearly states that the

purpose of question period is not to be a forum for the expression of

legal opinion.

MR. MACDONALD: One final supplementary. My question to the

Attorney-General is simply this: if he holds the view that the

provinces and without bothering with negotiations, why didn't he go to

the court and say so? Why were we not represented?

HON. MR. GARDOM: Perhaps, rather than take up the time in

question period, if the hon. member, whose eyes might be better than

his ears, could read the Blues after question period, I think that

would help him a great deal.

I'd also draw to his attention that amendments to the BNA Act over

the last 100-odd years have been done with unanimous consent. That's

our position. But insofar as the law is concerned, it's very clear. You

will well recall that the amendments to the UIC legislation in 1941,

the old-age pension legislation in 1954 and the supplementary benefits

in 1961 each required the unanimous consent of the provinces. I do hope

that my answer, hon. member, has satisfied you.

PARKS BRANCH LAYOFFS.

MR. STUPICH: My question is to the Minister of Finance.

Reports have been made public to the effect that hundreds of parks

branch employees have been laid off, presumably so that provincial

government finances could be bolstered and what the Premier described

as a "dynamite budget" could be presented here today. I wonder if the

Minister of Finance could tell us how many parks branch employees were

so affected.

HON. MR. WOLFE: None that I'm aware of.

[ Page 241 ]

MR. STUPICH: Mr. Speaker, as I say, these reports have been

made public and hundreds of parks branch employees alone have been laid

off. I would ask the Minister of Finance, as chairman of the Treasury

Board, if he has issued instructions to any of the ministries to cut

back in their expenses so that the finances could be bolstered, so that

the Premier's dynamite budget could be delivered today.

ACQUISITION OF LAND

FOR RODERICK HAIG-BROWN PARK

MR. NICOLSON: I have a question for the Minister of Lands,

Parks and Housing. I'm sure that members welcome the announcement of

the acquisition of additional lands for Roderick Haig-Brown Park at the

Adams River. Could the minister tell us if these lands were purchased

or donated, and if independent appraisals were made?

HON. MR. CHABOT: Mr. Speaker, I don't know specifically which

lands he's speaking of. There are a variety of lands in the holdings at

the Adams River that were purchased; some were acquired by the Second

Century Fund and leased to the province for 99 years. I think you'll

have to give me the specifics of the land in question. In most

instances when the province is directly involved in the acquisition of

land, yes, an independent appraisal is undertaken.

MR. NICOLSON: Mr. Speaker, a supplementary. I would refer the

minister to the press release in his name which arrived on members'

desks this morning. He's given assurance that appraisals were made.

Will the minister undertake to table those appraisals?

HON. MR. CHABOT: I'd be prepared to give that consideration.

PARKS BRANCH LAYOFFS

MR. STUPICH: Mr. Speaker, if I could come back to the

minister responsible for parks, is he aware of the hundreds of layoffs

in the parks branch?

HON. MR. CHABOT: Mr. Speaker, I'm not aware of any hundreds of layoffs in the parks branch.

MR. STUPICH: Mr. Speaker, is the minister aware of any

layoffs in his department? If he's not aware of that, is he aware of

anything happening in his department?

HON. MR. CHABOT: Mr. Speaker, there've been no permanent employees laid off in the parks branch.

SALE OF PANCO POULTRY

TO AMERICAN COMPANY

MRS. WALLACE: Mr. Speaker, my question is for the Premier,

who is quoted as saying that B.C. Is not for sale. In view of this

statement, can the Premier explain why the government sold the Panco

Poultry plant to Cargill Grain Co. of the United States?

MR. SPEAKER: Hon. member, is this not a question which has occurred before? It appears to me that I have heard this question before.

MRS. WALLACE: Where's my answer?

Interjections.

MRS. WALLACE: I'm waiting for an answer.

MR. SPEAKER: Order, please. Hon. members, Beauchesne strictly

provides that questions that have been asked previously are not

permitted to be asked again, and further provides that we can ask

questions but we cannot insist on answers. The Chair is powerless.

MRS. WALLACE: I have a further question to the Premier in

connection with Cargill which I'm sure has not been asked. When the

government sold Panco Poultry to Cargill, was the Premier aware of the

record that Cargill had in its trouble before the courts in Canada and

the United States? Was he aware of the record of that company at that

time?

HON. MR. BENNETT: The negotiation of the sale of companies

was handled by the ministry on the advice of outside accountants and

experts, who waived the financial proposals and made the recommendation

to government.

CORRESPONDENCE BETWEEN PROVINCIAL

AND FEDERAL ENVIRONMENT MINISTRIES

MR. KING: I asked the Minister of Environment some time ago

if he would check to find out whether any communication had taken place

between his department and Hon. Romeo LeBlanc, the federal Minister of

Fisheries. I would like to ask the minister whether or not he has

checked and, if so, if he would table exchanges of such correspondence

in the Legislature.

HON. MR. MAIR: I have caused an investiga-

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tion, it that's the right word, to be made. So far

I have not been able to turn up any correspondence at all between the

Ministry of Environment and the Hon. Romeo LeBlanc. However, I'm not

prepared to make a final statement on the matter until I've checked one

or two more items.

MR. SMITH: I ask leave to make a short introduction.

Leave granted.

MR. SMITH: I am pleased to announce to the House that we have

a group of students from Fort Nelson Senior Secondary School in the

gallery today. They are accompanied by Mr. Greg Larsen, their social

studies teacher, and Mr. Bill Shmuck. I would like the House to make

them welcome.

MS. SANFORD: I'm wondering if I could also have leave to make an introduction.

Leave granted.

MS. SANFORD: It's interesting that in the galleries today we

have two candidates for the constituency of North Vancouver–Seymour in

the forthcoming by-election. I would like to introduce those two

candidates: Jev Tothill, representing the Liberal Party, and Joy

Langan, the NDP candidate.

Orders of the day.

HON. MR. WOLFE: Mr. Speaker, I would like to move that the

public accounts for the fiscal year 1977-78 be referred to the Select

Standing Committee on Public Accounts and Economic Affairs.

Motion approved.

HON. MR. WOLFE: Mr. Speaker, I have the honour to present the

report of the comptroller general, pursuant to the provisions of the

Audit Act,

chapter 22, RSBC (1960).

ESTIMATES OF SUMS REQUIRED

FOR THE SERVICE OF THE PROVINCE

Hon. Mr. Wolfe presented a message from His Honour the Lieutenant-Governor:

a bill intituled Estimates of Sums Required for the Service of the Province

for the fiscal year ending March 31, 1980, together with

Schedule A; sum required

by Her Majesty to make good certain sums expended for the public service for

the period ended March 31, 1978, and to indemnify the several officers and persons

for making such expenditure, and recommended the same to the Legislative Assembly.

Hon. Mr. Wolfe moved that the said message and the estimates accompanying the same be referred to the Committee of Supply.

Motion approved.

HON. MR. WOLFE: Mr. Speaker, I move, seconded by hon.

Attorney-General (Hon. Mr. Gardom), that Mr. Speaker do now leave the

chair for the House to go into the Committee of Supply.

BUDGET ADDRESS

HON. MR. WOLFE: Mr. Speaker, it is my pleasure to rise now

and present to the people of British Columbia, through this House, one

of the most important budgets in the history of this province. It is

important, because this budget proposes far-reaching benefits for every

individual in British Columbia. It offers each individual, in addition,

an opportunity to participate directly in the exciting growth and

development of British Columbia. This budget marks a substantial

advance in reducing the drag of big government on the individual.

Three years ago, when I stood in this assembly to present our first

budget, we were wrestling with the sorry results of runaway government

spending and debt accumulation. When the previous Social Credit

administration left office in 1972, the incoming administration was

handed millions of dollars in cash and securities to begin work. Three

years later, those millions were gone and we were staring at a

provincial debt of $261 million.

It is a mark of our financial management that this year, after three

years of vigorous budget management, the first of ten yearly payments

will be made that will restore this province to a debt-free position

again.

By 1975 the increase in provincial spending had reached runaway

levels. In the 1,200 days of the former administration, the annual rate

of increase in British Columbia government spending averaged 27.5

percent. What does this rate of growth mean in dollar terms? It means

that expenditures more than double every three years. In other words,

if that annual rate of growth had been allowed to continue after 1975,

the 1978 budget would have been $7 billion, or 64 percent more than the

one I presented one year ago. It also means this extravagance of the

previous government robbed individuals and business of the necessary

room

[ Page 243 ]

for expansion, with the result that British

Columbia was plunged, in 1975, into the worst performance year of the

decade. This excessive growth in government spending built a heavy

burden for the ordinary citizen.

In our first budget, certain tax increases were required to restore

provincial finances. If this corrective action had not been taken, and

if runaway provincial spending had been allowed to continue, the

ultimate burden on the ordinary citizen would have been much greater.

Our first three budgets faced the difficult tasks of regaining

control over excessive government spending and restoring British

Columbia to a solid financial basis. We have been successful in this

challenge. This government has reduced the average annual rate of

increase in provincial government spending from 27.5 percent to 8.4

percent — or by 70 percent. I repeat: we have reduced the rate of

expenditures by 70 percent. At the same time we have increased services

to people and reduced taxes.

The performance of the British Columbia budget between the original

estimates and the actual spending over the last six fiscal years is

revealing. Over the three fiscal years 1973-1974 to 1975-1976, the

Legislative Assembly authorized spending totalling $7.1 billion. Actual

expenditures over that period exceeded the original budgets by almost

$1 billion, or 14 percent. On the other hand, during the last three

fiscal years actual expenditures are expected to exceed the original

budgets by only $193 million on total spending of $11.7 billion, or by

only 1.6 percent.

Furthermore, Mr. Speaker, almost 50 percent of the higher

expenditures in the 1977-78 period represented the transfer to British

Columbia Railway of $81.2 million received from the government of

Canada toward the cost of constructing the Dease Lake line. Removing

these passed-through funds, the higher expenditure over these three

years only amounted to 1

per cent of the original budgets, compared, as I say, to 14 percent in the previous administration.

Mr. Speaker, I would direct the members to the

schedule which

compares the expenditures during that six-year period. This cut in the

growth of government spending has been achieved without denying

services to people in need. I refer to such programs as long-term care,

first home purchase assistance, SAFER and municipal revenue sharing,

which have been introduced, and others that have been improved and

expanded over the past three years.

Mr. Speaker, the growth rate in government spending will be reduced

even further this new fiscal year, in keeping with our commitment to

lighten the cost burden of government upon all citizens and business.

This will leave more money in their hands to develop this province.

Let me illustrate. Between 1972 and 1975 provincial government

spending increased from 12.8 percent of gross provincial product to

17.1 percent. We expect the fiscal year just ended to show a decline to

14.9 percent, and our goal is to reduce the spending level even further

to 12 percent.

The policies of the previous government have been replaced with

responsible budgeting. British Columbia's financial credibility and

investment and economic growth prospects have been restored and

enhanced.

Mr. Speaker, this budget is the most rewarding I have ever prepared

because it represents a maturing of our government's longer-term fiscal

and economic strategies. Our first three budgets have renewed the

provincial government's ability to respond effectively to the needs of

today. While spending restraint and sound financial management remain

primary objectives of the budget, the government is in a position to

employ the dividends of our past efforts for the benefit of all British

Columbians. Consequently this budget proposes dynamic new measures to

stimulate the future growth of British Columbia and to extend and

enhance the services provided to its people.

It remains our belief that the individual in the private sector,

rather than government, is the key to future economic growth and

prosperity. To facilitate such growth, this government's fiscal

strategy has been consciously directed toward opening up economic room

for business expansion.

British Columbia's economic performance in 1978 bears witness to the

wisdom of this approach. The general economic recovery, which began in

1976, continued through 1978, substantially outpacing total Canadian

economic growth for the second year in a row.

Total employment expanded by 4.4 percent, reducing the unemployment

rate below the Canadian average for the first time in the 1970s. With

only 11 percent of the labour force, British Columbia was responsible

for 14 percent of the new jobs created in Canada in 1978.

British Columbia's inflationary performance was also superior to the

nation as a whole, with the Vancouver consumer price index recording

the lowest rate of inflation for any major Canadian city for the second

consecutive year.

However, do not diminish the challenge of the future. Economic

growth must be sustained through further improvements in our inter-

[ Page 244 ]

national competitive performance and the continued

resurgence of consumer demand and capital investment spending. Although

certain inflationary forces appear to be intensifying, we can win the

long-term battle against inflation as long as British Columbians

exhibit responsible moderation in their wage and price demands. Capital

investment can be a substantial source of strength in both 1979 and in

the longer term if we seize the opportunities of our recently improved

competitive performance and transform them into production and

employment gains.

Fortunately, British Columbia is in a position to respond directly

to this economic challenge through the dynamic program of fiscal

initiatives which I will outline this afternoon.

Although certain tax increases were initially required to correct

the financial distress left by the previous administration, this

government has striven to lower the tax burden for all British

Columbians.

They say that taxes always go up — never down. That is not true in British Columbia.

Through our past budgets we have eliminated succession duties and

the gift tax and reduced the property tax burden for senior citizens by

increasing the homeowners' grant by $150 — $50 in each of 1976, 1977,

and 1978. They now receive a total grant of $480 per year. We raised

the exemption level in the personal income tax, so a family of four

with a basic income of $7,726 in 1978 paid no provincial income tax.

We reduced the sales tax — on a permanent basis — back to 5 percent

and eliminated the sales tax on production machinery bought by small

business before March 31, 1979. We eliminated the corporation capital

tax for 13,000 small corporations, completely exempted home insulation

materials from the sales tax, and reduced the sales tax on mobile homes

and on propane fuel used in the home.

We eliminated the sales tax on certain equipment purchased by farmers and fisherman before March 31, 1979.

We reduced the parimutuel betting tax as part of a program to encourage the horse breeding industry in British Columbia.

We encouraged mining exploration by providing additional expense

write-offs against the corporation capital and income taxes. Also, we

replaced mineral royalties with taxes based on profits and reduced the

logging tax.

Our responsible management of the public's money has given us the

financial strength to accomplish these things. This same careful

management will now enable further tax reductions to stimulate consumer

spending and business investment and to dampen inflation. It will also

enable the introduction of important new incentives to encourage

capital investment and enhance the innovative role of small business.

It will enable additional actions to reduce the burden of property

taxation and a variety of new measures to improve the equity of the

provincial taxation system. The benefits of lower taxes proposed in

this budget will be shared by all British Columbians, provide direct

stimulation to the provincial economy in 1979 and help build our

prosperity in the 1980s.

I am proud to say that the tax relief provided by this budget in no

way compromises the province's renewed financial strength. The

proposals we present today are within the framework of a balanced

budget and entail no new debt burden for the people of British Columbia.

Rather, our new fiscal initiatives reflect the benefits of this

government's commitment to spending restraint and to reducing

government's demands upon the individual and business. These benefits

will now accrue to their proper recipients, the people of this great

province.

Nor will spending restraint and tax relief erode our social

programs. Indeed, the broad range of social measures currently provided

will be extended and enhanced. An exciting new dental care assistance

program, enrichment of social assistance payments and increased

assistance to homeowners provide a few highlights of this budget's

commitment to people programs.

We are also marshalling our spending powers to meet our economic

development needs. Significant additional funds will be provided for

investment in our basic resource industries. Ongoing efforts to

facilitate the diversification of the province's economic base will be

intensified. Additional millions of dollars will be dedicated to

upgrading and expanding British Columbia's transportation systems.

Employment opportunities in British Columbia for our young people

will be substantially expanded in conjunction with the private sector,

and exciting new efforts will be undertaken to enhance the development

of our important tourist industry.

All of these spending programs will add to our economic strength in

1979 and help build future growth and prosperity. Mr. Speaker, the

measures proposed in this budget will be pursued in conjunction with

our government's continued dedication to greater expenditure

efficiency. By ensuring the public receives the best value for its

taxation dollar, we

[ Page 245 ]

will again demonstrate that society's demands for

services can be fulfilled and economic growth fostered without

increasing the government's share of production or resorting to deficit

spending, while at the same time reducing taxes.

In short, this budget represents an important step in the evolution

of our government's long-term fiscal and economic strategies for the

benefit of all British Columbians.

Now I would like to summarize the broad elements of an economic

strategy for British Columbians. First, the role of government must

change. Errors and excesses of the last decade must be corrected. The

burden of big government has to be lightened. Our efforts in this

regard have concentrated on three areas: spending restraint; efficiency

and responsiveness in government; removal of costly and unnecessary

forms of government regulations.

Restraint of government spending has been a major theme in each of

my three previous budgets, and it continues as a theme of this budget.

Government must hold its rate of spending growth below that of the

private sector. This will allow reductions in taxes and will provide

individuals more scope for putting our valuable resources to work and

build a secure future for the province.

We are committed to keeping the growth in government spending at

least one percentage point below that of gross provincial product. This

has been British Columbia's fundamental strategy at federal-provincial

conferences on the economy. This budget again meets that goal and goes

much further.

If broadly based economic gains are to be made in Canada, the

commitment to spending restraint must be taken up by all levels of

government. For this reason the government of British Columbia has

successfully spearheaded a move to have other governments in Canada

commit themselves to a program of spending restraint. I particularly

welcome the federal government's conversion to expenditure restraint

even though I remain critical of federal savings at provincial expense.

A cooperative effort from the federal and other provincial

governments in the area of compensation for public servants has also

been achieved. Senior governments in Canada have adopted British

Columbia's proposal that public sector compensation packages should not

rise faster than those in the private sector.

Spending restraint must also be exercised by local governments.

Municipalities, regional districts and school districts in British

Columbia are responsible for the expenditure of more than $2 billion a

year. More than $850 million of this is provided by grants from the

province. These grants have increased markedly in recent years with the

introduction of revenue sharing of major provincial taxes and fees, the

expansion of sewerage facilities assistance, increases in homeowner

grants and the payment of full municipal taxes on provincial government

property.

This government's intention in increasing these grants has been to

reduce the property tax burden on the local homeowner. Unfortunately,

far too often these funds have been used to increase local government

expenditures, rather than to lower local taxes.

To protect the local property taxpayer, the province imposed a

program of spending restraint on local government in January of this

year. Briefly, the program provides for increased scrutiny of school

district budgets, freezing of 1979 municipal mill rates at 1978 levels,

and limiting 1979 budget increases for municipalities and regional

districts to 5 per cent. The Minister of Health (Hon. Mr. McClelland)

imposed a similar 5 per cent limit on spending increases for hospitals.

Exceptions will be made only in extraordinary circumstances.

This program and the province's own spending restraint ensure there

is restraint in all public spending under the provincial government's

jurisdiction. Spending restraint does not necessarily require loss or

dilution of government services. By implementing measures which reduce

waste, inefficiency and excessive and expensive bureaucracy, valuable

programs can be retained and improved.

This government has taken positive steps to improve the

effectiveness of government and to make program more responsive to

peoples' needs. Our efforts have ranged from incentives to encourage

efficiency to reorganization of government ministries.

The Insurance Corporation of British Columbia is a good example of

successful incentive pricing, introduced by this government to

encourage efficiency. British Columbians now benefit from insurance

rates that are among the lowest in Canada. This has been achieved

without the corporation running as an unmanageable deficit.

There are other examples. Placing operational responsibilities for

transit in the hands of local governments will result in an operation

more responsive to local needs.

My colleague, the Minister of Human Resources, has streamlined

income-support programs. Here is another clear case where we have

created savings which have been directed to those who need the service

the most.

Efficiency is not just a matter of program design. It is also a question of tight finan-

[ Page 246 ]

cial control and better accountability to the

public. Establishment of the auditor-general's office, quarterly

financial reporting, and zero-base budgeting have resulted in a new

attitude within government and a better understanding of the workings

of government.

Treasury Board staff has been enlarged and charged with

responsibility for scrutinizing programs and forcing ministries to

justify their demands on public funds. In preparing the 1979-1980

budget, the Attorney-General and Forests ministries have used zero-base

budgeting: that is, building their budgets from zero and justifying

every dollar requested. This budget process worked well with these two

ministries. It is intended to continue it with Forests and

Attorney-General, and to extend the procedure to at least two other

ministries for the 1980-1981 budget.

The role of the comptroller-general in maintaining control systems and internal audit procedures has been expanded.

The Government Employee Relations Bureau has strengthened the province's abilities in collective bargaining with its employees.

The British Columbia Buildings Corporation, established in 1977, has

improved management and utilization of public buildings. Similarly, the

British Columbia Systems Corporation is improving data processing

services for all ministries. Through these two corporations ministries

are made more accountable for their demands for these services.

Also, in the area of accountability to the public, the public

accounts for 1977-1978, which I tabled at the beginning of this

session, were the first to be reported on by the auditor-general, who

is directly responsible to the Legislature.

Quarterly financial reports, issued by my ministry, provide the

public with up-to-date information on the financial activities of the

province and its Crown corporations.

The Crown corporations reporting committee provides a forum for hon.

members and the public to examine in detail the operations of the major

Crown corporations. Government has no money of its own; it is therefore

important the taxpayers receive the best value for their tax dollars.

The third prong in our attack on excess government is to reduce the

burden of unnecessary red tape and regulation on the economy.

We recognize that every regulation results from an attempt to solve

a particular problem. Nevertheless, regulations have not always changed

to reflect changing circumstances. Upon closer examination we have also

found that regulation is not always the most effective way of handling

a problem.

To reduce the regulatory burden of government we are taking steps to

reduce needless paper flow within government, speed up response to the

individual's requirements for prompt government decisions, and to

reduce the cost of complying with government regulations.

The newly formed Ministry of Deregulation is now taking the lead in

simplifying regulatory activities. Here are examples of the new

ministry's early achievements:

The rights of the individual in dealing with government officials on regulatory matters have been set out.

Numerous redundant forms have been scrapped and pieces of obsolete legislation identified, with many more under review.

Steps are being taken to speed up the process of local government zoning and development approval.

Steps are being taken to coordinate the standards for building

construction and for use and occupancy — with the necessary inspection

systems in ensure compliance.

Steps have been taken with the ministries to speed up payments to

suppliers. In addition, the Ministry of Finance is undertaking a pilot

project to assess the feasibility of making more direct payments from

regional offices.

The benefits of regulation can and will be achieved at lower cost to the taxpayer, the private sector and the economy.

The second broad element of economic strategy concerns the growth

and the development of our economy. Government must do everything to

encourage this growth.

Our review of development options had to recognize two overriding

characteristics of our economy: (1) a traditional dependence on primary

resource industries; (2) a heavy dependence on exports, particularly to

foreign markets.

The abundance of natural resources has been the source of economic

well-being for British Columbians for more than 100 years. It is,

however, an industrial base which leaves us vulnerable to the

boom-and-bust of international commodity markets.

British Columbians will continue to prosper. But we must begin now

to plan for a new phase of development. Our economic base must be

diversified, and barriers to income growth must be removed.

Natural resources continue to be our strength as our employment base

is extended into new activities such as: further processing;

resources-related manufacturing; the service sector; and

high-technology activities related to our resource base.

Achieving our economic goals will not occur quickly and will require the help and coopera-

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247 ]

tion of the federal government. British Columbia

firms cannot thrive and grow on the strength of Canadian markets

thousands of miles overland. They must have access to foreign markets —

in the United States, in Japan, in other countries on the Pacific Rim,

and in Europe. Market access will require changes in policies affecting

Canada's international trade relations. It will require efficient

federal port development. It will require an efficient national

transportation policy and system.

There are other federal policy options which are central to the

economic well-being of British Columbians. Our reliance on exports and

imports makes an effective anti-inflation policy of special concern to

us. The performance of the Canadian exchange rate affects us deeply,

both as consumers of imported goods and as suppliers of goods and

services to the international market. Federal spending policies can

have a decisive impact, and must be tailored to meet the developmental

concerns of this province.

It is concern with these policies, and many others which affect

British Columbians, that has led this government to give priority to

federal-provincial economic relations. Accordingly, British Columbia

has presented detailed and precise policy proposals at the First

Ministers' Conferences on the economy in February and in November of

1978. We have recognized economic relations with the federal government

constitute an important element of provincial economic strategy.

I should add one final point on federal-provincial economic

relations. I refer to this government's proposals for constitutional

reform. These proposals call for a stronger provincial role in the

formulation of federal government policies. If central government

institutions can be made more responsive to our economic policy

concerns, they will contribute directly and substantially to the

economic well-being of British Columbians.

Many developmental economic policies must involve the federal

government. But the provincial government cannot, and should not, be

passive in this area. There are initiatives we can undertake, and I

shall outline a number of innovative developmental programs in this

budget.

Numerous steps have already been taken by the provincial government, of course,

and I would like to close my remarks on economic strategy and the role of government

by citing just a few examples. A Science Council has been created to enhance

the level and quality of industrial research and development activity, and more

initiatives are to come in this area. A number of major programs have been developed

to assist and promote small business, tourism, and regional development. Employment

programs are in place to handle both the longer-term problems of matching

the skills of the work force with the requirements of the economy and the shorter-term

aspects of the unemployment problem. The major revision of the Forest Act will

go far toward increasing the efficiency of our forest industry and ensuring

maximum benefits to British Columbians from their forest resources.

Now, Mr. Speaker, I would like to make just a few comments on the economic situation in 1978 and the outlook for 1979.

The year 1978 was one of accomplishment for the provincial economy.

Despite a difficult international environment, British Columbia enjoyed

a real economic growth rate of 4.4 percent, a full percentage point

better than Canada as a whole. This is the second year in a raw that we

have substantially outpaced the national growth rate. The provincial

economy is expected to display similar strength in 1979.

The export-led recovery, which began in 1976, continued through

1978. The value of British Columbia exports was up 18.9 percent over

1977 levels, with the value of manufacturing shipments posting an even

more impressive 21.5 percent gain.

The forest product sector made an important contribution to this

growth, with renewed strength in pulp and paper shipments augmenting

substantial lumber production. The total value of mineral and fuel

production reached a record level.

While exports continued strong, total 1978 economic growth arose

from a broad base, with both consumer demand and capital investment

displaying increases over 1977. The value of retail trade was up 13.5

percent, indicating a substantial improvement in consumer confidence.

British Columbia's permanent sales tax reduction in 1978 contributed to

this strong growth.

Investment data indicate a 9.5 percent increase in total capital and

repair spending, and a 9.1 percent increase in 1978 business

investment. Preliminary 1979 intentions point to a further increase in

investment; a federal survey of business indicates capital investment

will be 10.5 percent higher this year than last.

Mr. Speaker, this investment growth is broadly based and will

augment substantially the province's economic strength. For example,

over a billion dollars in new spending is planned by forest companies

during the next few years. Included in these plans are a

[ Page 248 ]

modernization and expansion of MacMillan Bloedel

facilities at Port Alberni, Chemainus and Powell River; modernization

of Canadian Forest Products operations at Vancouver; and the upgrading

of Crown Zellerbach facilities at Elk Falls and Fraser Mills.

The British Columbia mining industry is also on the verge of a major new round of development.

Cominco Ltd. is committed to the expansion of its Sullivan Mine and

Kimberley smelter operations, at a total investment cost exceeding $400

million. Climax Molybdenum Corp. is renewing its properties near Alice

Arm at a cost of $135 million. The Fording Coal properties in the East

Kootenays will undergo a major expansion at a cost of $15 million this

year, and more is expected over the next two years. Esso Minerals Ltd.

will reopen the Granduc copper mine near Stewart. Placer Development

Ltd. is developing a new silver, copper, and gold mine near Houston

with an investment of $85 million.

And over $250 million in new northeast British Columbia oil and gas

developments are scheduled by various companies in 1979 alone.

In addition to the basic resource industries, substantial new

investments are planned to improve the province's economic

infrastructure and to expand the primary and secondary manufacturing

base.

Major port expansions are proposed for Roberts Bank, Nanaimo and

Prince Rupert, and Burrard Drydock Company is planning to construct a

new deep-sea drydock facility in Vancouver

In the manufacturing sector, Tree Island Steel Company is committed

to building a steel rolling mill in Richmond at a cost of $50 million.

The continued improvement in the province's investment climate is a

source of great encouragement, since it paves the way for future

production and more employment. This budget ensures that these

investment opportunities are realized.

Businesses incorporated or registered in British Columbia in 1978

totalled 16,290, the largest gain in the last decade. In the last three

years, 43,256 companies were incorporated or registered, 39.1 percent

more than during the years 1973 to 1975.

Last year established record income for the British Columbia tourist

industry. Farm cash receipts expanded at more than double the 1977

growth rate. Important production-value gains were also recorded by the

fishing and secondary manufacturing industries.

Much of the increase in the 1978 consumer price index was related to

higher food and import prices. The depreciation of the Canadian dollar

appears to have run its course and import prices may have less impact

on the rate of inflation in 1979.

During 1978 British Columbians displayed a high degree of

responsible moderation in their wage and price demands. The average

increase in negotiated wage settlements was only 6.2 percent.

Reflecting the termination of AIB controls, there was a modest

acceleration in settlements in the second half of the year to 6.9

percent; but the wage explosion feared by some analysts did not develop.

Continued moderation has occurred in the number of man-days lost

through work stoppages. In the three years 1976 to 1978, the 2 million

man days lost in sectors under provincial jursidiction were almost 1.5

million man days or 42.5 percent less than occurred in the three years

1973 to 1975. It is obvious that better labour-management relations

provide important benefits for employees, employers, and the economy as

a whole.

Responsible, moderate wage settlements were important factors in the

improvement of British Columbia's international competitiveness and the

expansion of provincial employment. Continued moderation will be

required in 1979, so that we can maintain employment at high levels and

open up additional job opportunities.

While our economic progress in 1978 was encouraging, our problems

are not over. The British Columbia economy continues to depend heavily

on the performance of other economies. We cannot be completely shielded

if the anticipated economic slowdowns materialize for some of our major

trading partners.

In the year ahead we shall also be challenged in maintaining the

cost competitiveness of our industries. We should not look to further

devaluation in the Canadian dollar for assistance. Our competitive edge

must now be honed in a more direct fashion. The success achieved in

moderating wage gains must be sustained, and additional efforts made to

modernize and upgrade our productive facilities. If we allow a new

round of excessive wage and price increases, and if we fail to turn

renewed profitability into new investment, then our recent progress

will be quickly reversed.

We should take the opportunity now to lay the foundation for strong

income and employment gains in the 1980s. It is during this next decade

that we can expect to make important progress in expanding the scope of

our manufacturing base and in extending the processing of our natural

resources. The challenge is there, but we must prepare for it today.

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249 ]

I'm optimistic about 1979 even though the overall contribution of

our export sector to economic growth will be more moderate. Lumber

shipments could decline if a slowdown develops in housing starts in the

United States. In contrast, pulp and newsprint production should

maintain the peak levels achieved in 1978 and in the case of pulp may

go higher.

The positive effects of the government's tourist promotion program

continue to bear proof and another good year is expected in the travel

industry. Both consumer and investor confidence in this province remain

high. Consumption and investment spending will make a strong

contribution to 1979 economic growth. Real consumer purchases should

increase by almost 4 percent. The business sector is expected to

contribute more to total investment spending than we have seen in

recent years. Overall, the British Columbia economy is expected to

remain strong in 1979. With economic growth concentrated in the more

labour intensive sectors, the increase in the number of new jobs should

be close to 3 percent. The rate of inflation should continue to

moderate in 1979.

This year is important for collective bargaining in British

Columbia. Attitudes and patterns of behaviour at the bargaining table

will set the stage for our economic performance in the competitive

1980s.

These are the economic challenges of 1979 and the eighties. I am

confident that the measures I am introducing this afternoon will help

us meet those challenges. Hon. members will find the graphs which are

included in the appendix of my budget speech descriptive of British

Columbia's recent economic performance.

Last year's budget speech anticipated a balanced budget of $4.28

billion. The current outlook for last year shows no significant change

from the forecast given in the third quarterly financial report

covering the first nine months of the fiscal year, released in February

of this year. At that time, a surplus of approximately $145 million was

forecast for the full year.

I shall table in the House today the interim financial statements

for the 1978-79 year prepared by the comptroller-general. Hon. members

will see there is an overall surplus of $226 million for the first ten

months, but this is expected to decline sharply in the balance of the

fiscal year due to expenditure commitments.

The budgetary revenues of the province for the ten-month period are

reported to be $3.7 billion and reflect variations for the same period

in 1977-78. Firstly there is an increase of $115 million from the

forest industry, resulting mainly from the very strong demand for

British Columbia lumber, especially in the United States. Revenue from

the forest sector for the entire year is expected to exceed the

original budget estimate by more than $150 million. An increase of

$72.2 million in corporation income tax revenue will be sharply reduced

in March. Personal income tax revenue will increase by $165.6 million,

including $117.4 million from the federal government under the sales

tax reduction arrangement. A decrease of $79.4 million in social

services tax revenue reflects the reduction from 7 to 5 percent in the

tax rate in the budget of last year. For the full fiscal year, sales

tax revenue is expected to be more than $50 million above the original

budget estimate.

Provincial budgetary expenditures for the ten months amount to $3.46

billion. This figure reflects additional spending on highways under

authorizations of $85 million made during the year after the increase

in revenues was noted. Additional spending authorizations also were

made for the following programs: $21.7 million for Hospital Programs;

$36 million for the GAIN program; and $4.2 million for new forestry

programs required under the new Forest Act.

There has been a considerable saving in Ministry of Agriculture

expenditures due to higher farm product prices which have reduced

demands upon farm income support programs. There have also been lesser

savings in the programs of other ministries.

There were no non-budgetary revenues in the ten months.

Non-budgetary expenditures totalled $20.7 million including $11.7

million for reconstructing British Columbia Railway's extension to Fort

Nelson in accordance with the government's commitment made last May.

[Mr. Rogers in the chair.]

This is the fourth budget introduced by this government. Therefore

it seems an appropriate time to review the results of the previous

three budgets.

First, there is the question of budget surpluses. It is true we have

recorded a budget surplus in the first two fiscal years of this

administration. And we will record another surplus in the third fiscal

year which has just ended. Three years, three surpluses.

We do not apologize for this record, however unpalatable it may be

to the critics who would like the record to read: three years, three

deficits.

Mr. Speaker, I would like to summarize our budget performance over the last three fiscal

[ Page

250 ]

years to show how the people of British Columbia have benefited and will benefit

from government surpluses. I would refer the members to a

schedule of these

three surplus years and the disposition of these surpluses.

In the first fiscal year of our administration there was a surplus

of $76.1 million. That surplus was appropriated for spending in this

past year on 11 special programs designed to create direct employment

for an estimated 10,000 people. This I outlined in last year's budget.

In the second year of our administration there was a surplus of

$140.5 million. As I shall explain in more detail in a few moments,

this second-year surplus is also being used for special programs, some

of which will create additional employment and one of which will

provide tax relief to the people of this province. The full second-year

surplus will be allocated to these special programs.

The financial accounting for the third year, which is the one just

concluded — 1978-79 — is not yet complete, but it was a year in which

significant tax reductions were made. The sales tax was the largest of

those tax reductions; but we mustn't forget such things as the

reduction in corporation capital tax, exemption of certain machinery

from sales tax and exemptions in low-income tax rates.

I am also proposing measures today which will utilize a portion of

the surplus of $145 million expected in our third year of operation.

Last year, when we made our tax reductions, the hon. members on the

other side of the House called our budget an election budget, Mr.

Speaker. Strange.

HON. MR. BENNETT: Anything that isn't a deficit is an election budget.

HON. ML WOLFE: I know. That's right.

Mr. Speaker, we do not — like some governments — cut taxes only in election years. We like to do it every year.

The important point to note is that we have now established a

practice of returning surpluses as soon as possible to the people of

this province. We will not build up huge surpluses intentionally. Every

surplus dollar will be returned to the taxpayers — and this is along

with tax cuts. This procedure ensures the provincial government is

following the same policy for the use of surplus funds as municipal

governments. It is true we have waited until the surplus funds have

been received before spending them. This may have confused our critics

who are more accustomed to governments which spend first and hope to

receive matching revenues later.

Most of the revenue surplus has been produced by strong growth in

natural resource revenues. Two years ago the revenues from the natural

gas industry were much higher than expected. Last year it was

unexpectedly strong growth in forestry revenues which produced the

major part of the surplus.

The pricing of the province's natural gas for export is outside the

control of the provincial government, being the responsibility of the

federal National Energy Board and Cabinet. While striving to maintain

low prices on natural gas used by our citizens, the export price of

natural gas has increased from $(Can.)1.60 per thousand cubic feet at

the end of 1975 to $(Can.)2.55 today. It is this government's policy to

obtain additional price increases for our exported natural gas. It is

reported that the National Energy Board recently recommended a further

increase in the export price.

We as a government are making sure the people get full value from

our resources. We don't want to repeat the story of the low

resource-income period of 1975.

The natural resources revenue which we are receiving today is more

than 75 percent higher than that received in 1975. The province is

receiving increasing value from its forest, mining, coal and petroleum

resources, and this allows us to reduce taxes. Our policies should

provide steadily improving revenues from our resources over the long

term.

In the past two years the strength of these natural resource sectors

was greater than anticipated by the industry or independent

forecasters. It would have been very foolish for the government to

prepare its budgetary estimates on an optimistic basis which may not

have materialized.

In recent years there have been several examples of

overly-optimistic estimates of revenues by governments in Canada. For

example, the government of Ontario received over $800 million less in

the fiscal year 1977-78 than had been estimated in their budget

forecast. In 1978-79 it is expecting a revenue shortfall in excess of

$400 million and a budget deficit of $1.8 million. The government of

Quebec reported a revenue shortfall of $154 million for 1977-78 and is

forecasting a decrease of $320 million from budgeted revenues in

1978-79, with a resulting deficit of $1.4 billion. The government of

Canada has committed the same error. In recent years, federal budgets

have consistently overestimated revenues. In 1977-78, for example,

actual revenues were $1.9 billion below the original budget forecast

and the budget deficit, $10 billion. This can only lead to cut-

[ Page 251 ]

backs in programs or the creation of more deadweight debt. We do not intend to follow that road in British Columbia.

Now, Mr. Speaker, for a few comments on the effect of debt on our

national economy. The achievement of our goals is profoundly affected

by the economic policies of the federal government and events which

affect the national economy. For these reasons the government has

devoted much time and effort to the First Ministers' Conferences on the

economy and on the Constitution. In many ways the results of these

efforts have been gratifying. British Columbia now has a much improved

presence in national affairs. However, our government remains concerned

with a number of developments at the federal government level which

significantly affect British Columbia's ability to achieve its economic

objectives.

In particular, these concerns relate to the increasing burden of the

national debt and the impact of the federal spending restraint program

upon the province's finances.

deficits. For six consecutive years these deficits have increased

sharply from just under $1 billion in fiscal year 1973-74 to an

estimated $13 billion in this year. These deficits undermine investor

confidence in Canada and British Columbia, and have contributed to an

increasingly burdensome debt cost and the rapid accumulation of

national debt. At March 1979, the national debt was about $64 billion,

or nearly $2,700 for every man, woman and child in Canada.

With deficits of between $12 billion and $13 billion forecast for

both last year and this year, and little hope for a significant

reduction in the size of the annual federal deficit in the short term,

the national debt will continue to increase sharply into the 1980s. The

payment of interest on this debt will also increase sharply from the

estimated $8.4 billion this year. This debt cost represents 16.5

percent of Canada's budget spending this year — one out of every six

tax dollars. As the national debt increases into the 1980s, these

annual debt payments will take even more tax dollars from Canadian

taxpayers and make it increasingly difficult for the federal government

to reduce the deficits and restore balance to the federal budget.

Mr. Speaker, a large national debt and continuing annual federal

deficits exact a heavy toll on current and future taxpayers and on the

national and British Columbia economies as well. The dangers are

evident.

First, as economic recovery continues into the 1980s, business will face increasing

competition from the federal government for available investment funds. This

competition will drive up interest rates, force out prospective business borrowers,

and jeopardize the capital investment necessary to fuel Canada's and British

Columbia's medium-term economic growth.

Secondly, there is the danger the federal government will be forced

into tax rate increases to meet these debt obligations. This would also

act to undermine the prospects for medium-term growth.

Thirdly, there is the danger the federal government will be

pressured into financing its deficits the "easy way" — by printing

money — thereby worsening inflationary pressures.

Finally, there is the danger that the federal government will shift

an inequitable share of the burden of federal deficits on to the

provinces either in the form of further reductions in federal

government transfers to the provinces or reduced federal program

expenditures.

This is in sharp contrast to the treatment we accord our

municipalities. Instead of slashing back payments to municipalities, we

have cut local government in on the richest revenue-sharing program in

the country, and have begun to pay full general property taxes on

provincial government buildings throughout British Columbia.

It is our view that government spending restraint, combined with

balancing revenues and expenditures over the economic cycle, is the

most satisfactory means of avoiding dilemmas such as that now facing

our federal government. It was to avoid such a dilemma that this

government acted quickly in 1976 to restore balance to the province's

finances and to provide for accountability and the sound management of

provincial expenditures.

As an aside, I would like to inform the members that I'm about to

make some comments on our expenditure proposals for 1979-1980. Last

evening I enjoyed a Chinese dinner and I opened the fortune cookie and

the slip of paper said: "Avoid extravagance".

Some comments regarding the expenditure proposals for 1979-1980. The estimates

I am presenting today propose expenditures for 1979-1980 of $4,567.5 million.

This is an increase of only 5 percent from the revised estimate of $4,350 million

for last year.

This government has previously committed itself to restraining spending to

a growth rate 1 percent below the growth rate of the economy. This budget goes

much further. A 5 percent increase in spending means a real reduction in the

impact of government, since ex-

[ Page 252 ]

penditures are increasing at a lesser rate than

inflation. This increase is more than 50 percent lower than the ceiling

allowed by our minimum spending restraint program. This reduces the

ratio of provincial expenditures to gross provincial product to 13.9

percent, one whole percentage point below last year's level and more

than three percentage points below the level of three years ago. This

is a note-worthy achievement.

This reduction will provide immediate tangible benefits for all

taxpayers in British Columbia. Furthermore, hon. members will note this

spending restraint has been accomplished with no reduction in the high

level of services to which the people of this province are accustomed.

It should also be noted that the budget is able to absorb the impact of

the federal spending cuts upon British Columbia, which are estimated at

$56 million for this fiscal year.

In addition to the regular budgetary estimates of $4.5 billion, I'm

introducing today special appropriation bills which will dedicate some

of the surplus funds accumulated over the past two years to create jobs

and build facilities which will contribute to our future social and

economic well-being. These surpluses have been earned by the government

as a result of buoyant natural resource revenues and careful spending.

Benefits from these past successes will be felt this year and for years

to come.

The first of these special appropriations will apply the revenue

surplus for the 1977-1978 fiscal year, which amounts to $140,488,978,

as follows:

First, $26,100,000 is required for the first instalment payment on

the $261.4 million in deadweight debt arising from the 1975-1976 fiscal

year deficit. Nine further annual instalments will be required to

retire the principal of this outstanding debt, which is a legacy from

the previous NDP government.

Second, a permanent increase of $100 in the annual homeowner grant will be

given to all homeowners in B.C. Hon. members opposite don't seem to applaud

that increase. Perhaps they didn't hear. A permanent increase of $100 in

the annual homeowner grant will be given to all homeowners in British Columbia.

This is the largest single increase made since the grant was introduced in 1957.

This increases the basic grant to $380 and the grant for senior citizens and

persons receiving the handicapped or war veterans allowance to $580. These increased

grants, coupled with the municipal mill rate frozen at the 1978 level and the

5 percent growth limit on municipal budgets, should provide a substantial reduction

in local property taxes for homeowners.

This government is determined that British Columbians will not be

taxed out of their homes. This determination is reflected in the fact

that the special $100 increase in the annual homeowner grant will

require $55 million more this year. This is the fourth successive year

the homeowner grant has been increased by this government.

Thirdly, $25,388,978 will be allocated to an accelerated highway

construction program to augment already extensive highway construction

activity. Also, the British Columbia Railway Company will receive $14

million for reconstruction of the Fort Nelson extension. These funds

will provide for the second year of a three-year upgrading program

designed to continue operations of this vital transportation link to

the north of the province.

While British Columbia does not yet have a formal agreement with the

federal government on the Alcan pipeline, we fully expect, to sign such

an agreement under which the federal government will pay 50 percent of

the cost of the Fort Nelson extension. I note, however, that there is

no money in the federal government budget for this purpose. Therefore

the British Columbia government will have to pay the full cost this

year.

An additional $10 million is for the intensified forest management

program to improve the management of our precious timber resources.

Five million dollars will go for an accelerated job experience program

to prepare young people for work. This will provide them with valuable

experience leading to future permanent employment. Five million dollars

are also allocated for an accelerated recreation facilities program to

raise the quality of life in our communities. These special programs,

excluding the debt repayment and the homeowner grant increase, will

create an estimated 8,000 direct jobs in 1979 and have lasting value

for the future.

How will last year's revenue surplus be allocated? As I've stated

earlier, the province is expected to have a surplus of approximately

$145 million in the fiscal year just ended. Although this surplus is

relatively small in comparison with the overall budget, the government

is prepared to dedicate a portion of these funds to special projects to

assist our metropolitan areas.

Ten million dollars will be directed to the building of the proposed Vancouver

trade and convention centre. This contribution of the province is conditional

upon acceptable federal government and city of Vancouver contributions to

cover the $25 million estimated cost. This centre will be a focal point for

[ Page 253 ]

trade show and convention activity which will ensure British Columbia capitalizes

on its location to take advantage of the burgeoning trade opportunities with

the rapidly developing countries of the Pacific Rim.

Special provincial funding of $2.5 million will be allocated to the proposed

Victoria convention centre. This project will add a valuable new dimension

to Victoria's tourist facilities.

A provincial contribution of up to $25 million will also be available for

a sports centre or stadium in the lower mainland for the use of professional

and amateur sports activities and events. These funds are conditional upon

acceptable contributions from the federal and local governments.

A low-interest loan program for business in the metropolitan areas will

be started with a $5 million allocation. A similar program introduced in 1978

to provide financial assistance to small and medium-sized businesses engaged

in manufacturing or manufacturing related activities in the non-metropolitan

areas has had a positive effect on investment.

To provide additional money for industrial development in British Columbia

a further investment of $7.5 million will be made in British Columbia Development

Corporation through the purchase of shares.

Five million dollars will go into British Columbia Discovery Trust Fund

for the support of preliminary technological research to facilitate industrial

growth in British Columbia.

Twenty-five million dollars will be allocated for the stabilization of

health and hospital operating costs throughout the province. The provision

of these extra funds will enable British Columbia to maintain the high level

of health care provided in this province in the face of legitimate funding

needs. These projects will provide jobs in the construction industry and create

centres for recreational opportunities and economic benefits in the future.

I now turn to budget proposals of some of the ministries. I direct

your attention to the table which follows: Estimates of Expenditures,

Fiscal Years 1978-79 and 1979-80. Policies and programs are being

implemented in all industrial areas to strengthen and broaden the base

of our economy. Provincial expenditures in this area contribute to both

short-run economic stimulating and long-run development.

It is recognized by British Columbia that our forest industry is the

backbone of our economy, giving the people of this province a standard

of living among the highest in the world. Our forests are, for the most

part, owned by the people and managed for their benefit. In 1978 we

entered a new era in forest management with new legislation marking the

formal end of frontier-type developments. This new era will be

characterized by intensive management of the timber resources to ensure

sustained, long-run benefits for British Columbia. Accordingly, the

funding of the Ministry of Forests has been increased 5.3 percent to

$124.8 million to provide for implementation of the new Forest Act. In

addition, the 1977-78 surplus appropriation, which I described earlier,

includes a further $10 million for a special intensified forest

management program. This program will ensure that we bequeath to our

children and grandchildren a resource as rich as the one we inherited.

The province is also in the final stages of negotiating a

cost-shared intensive forest management program with the federal

government. This agreement represents only one component of a federal

provincial forest industry development program being formulated within

the province's economic strategy.

The recent government reorganization saw the creation of the

Ministry of Energy, Mines and Petroleum Resources, bringing together

all matters related to energy and minerals. The ministry has a mandate

to develop and implement an energy policy for British Columbia to

ensure British Columbians reap the greatest benefit from the production

and use of our energy resources.

The ministry is also charged with managing the province's mineral

resources to ensure they are developed in a responsible and efficient

manner to provide maximum benefit to the public.

Mining has been associated with British Columbia since the earliest

days of colonial development, with coal production on Vancouver Island

and the gold rush on the mainland. Appropriate incentives will maintain

this industry as a major contributor to our prosperity. The budget for

the ministry is increased to $13.2 million this year.

The tourist industry has been one of the fastest-growing industries

in British Columbia in recent years. The Ministry of Tourism and Small

Business Development will again be actively promoting tourism to help

the industry achieve its potential. The tourism branch will have $10.3

million for this purpose.

In addition, the federal-provincial Travel Industry Development

Subsidiary Agreement provides for a five-year $50 million program to

expand tourist facilities in British Columbia, particularly those which

will help extend the tourist season into the winter months. Most

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254 ]

notable in this category is the major development of skiing-related facilities

in the Whistler area.

A number of other projects which will increase the attractiveness of

British Columbia as a tourist destination are in planning or underway.

The Vancouver Trade and Convention Centre, the Victoria convention

centre and the sports stadium for the lower mainland, for which revenue

surplus appropriation funds from last year are to be made available,

will encourage events which will attract visitors from all over the

world. In Victoria, the Crystal Gardens project and the Inner Harbour

development will also produce benefits. All these provincially funded

activities will contribute to the growth of tourism, provide a large

number of jobs in British Columbia and contribute to the strategic

objective of diversifying our resource-based economy.

The expansion of secondary industry and the removal of impediments

to small business are major priorities of this government. The Ministry

of Economic Development has responsibility for programs to promote

industrial activity, including the Duke Point project in Nanaimo, and

the federal-provincial Industrial Development Subsidiary Agreement.

In addition, the Ministry of Tourism and Small Business Development

will be cooperating with the Ministry of Economic Development and the

British Columbia Development Corporation to assist small business

through such programs as low interest loan assistance and Assistance to

Small Enterprise Program. As I announced earlier, appropriation from

the 1978-1979 revenue surplus will establish a small- and medium-sized

business low-interest loan program in the metropolitan areas.

The Ministry of Economic Development budget is increased 24.9

percent to $36 million, and a further $1.5 million is provided for the

small business development branch of the Ministry of Tourism and Small

Business Development.

Fisheries has been a key resource in British Columbia. Two major

developments have a significant bearing on the future of the fishing

industry. The first is the Salmonid Enhancement Program, which, under a

recently signed federal-provincial agreement, will see $150 million

spent over five years to double the number of salmon in the waters of

the province.

The second is the Canada-U.S. west coast fishing agreement. British

Columbia is monitoring federal progress in these negotiations to ensure

provincial interests are protected. The Ministry of Environment, which

recently assumed responsibility for marine resources, will also be

working in the coming year to enrich our harvest from the sea by

encouraging the development of industries based on other fish species

and on marine plants.

The rapid increase in food prices over the past two years, which

concerns us all as consumers, presents an opportunity and challenge to

British Columbia farmers. The fact that the increase has been caused

mainly by external factors, including the decline in the value of the

Canadian dollar, means our farmers have a chance to provide substitutes

for high-cost imports, with benefits accruing to consumers as well as

to the farmers themselves.

This government stands ready to assist farmers in this effort.

Financial assistance programs, including farm income assurance and

agriculture credit, are designed to reduce risks and costs for farmers.

The five-year $60 million federal-provincial agriculture and rural

development subsidiary agreement provides funding for projects to

improve farm productivity.

In addition, the Ministry of Agriculture is conducting a promotional

campaign to encourage consumers to choose homegrown products, and to

increase local processing of our agricultural products. The budget

provides $55.2 million to the ministry to assist and promote the

development of agriculture in British Columbia.

Transportation has long been a key element in the development of

British Columbia, and it continues to have a high priority with this

government. This was recognized in the creation of the new Ministry of

Transportation, Communications and Highways. This ministry will be

formulating and implementing a new transportation policy to ensure

government activities in this field are consistent with other

provincial policies and thus make maximum contribution to economic

development of all parts of British Columbia.

Substantial funding will be provided for transportation this fiscal

year from the province and its Crown corporations. Highway construction

will receive a regular appropriation of $160.3 million, and an

appropriation from the 1977-1978 surplus of $25.4 million. The surplus

appropriation also includes $14 million for reconstruction work on

British Columbia Railway's Fort Nelson extension.

There is $2.1 million in the budget for the Local Airport Assistance

Program. While not part of the provincial budget, the British Columbia

Ferry Corporation has begun a capital program of approximately $70

million to expand and modernize the fleet.

All these projects will create jobs and improve the essential transportation links which bind this province together.

[ Page 255 ]

[Mr. Speaker in the chair.]

An important facet of British Columbia's economic strategy, which I

discussed earlier, is research and development. The Ministry of

Education, Science and Technology, through the Science Council of

British Columbia, will be actively promoting research activity in the

province. This budget provides $500,000 in direct research grants, and

$5 million is available through the proposed British Columbia Discovery

Trust Fund for this purpose. In addition, the ministry will ensure the

educational system provides our young people with the opportunity to

develop the skills necessary for the high-technology future which

awaits them. Our objective is to coordinate and focus these many

economic and resource development programs to maximize the current and

future benefits realized from this use of taxpayer dollars.

Now, Mr. Speaker, to turn to program expenditures for people,

although the increase in this budget has been restrained to 5 percent,

the government still has been able to expand its large commitment to

people. The emphasis on business growth should not be seen to be in

conflict with the expansion of social programs, but rather as a

prerequisite for such expansion.

Increasing tax revenues from a growing economy provide government

with the resources necessary to finance new programs. This government

has a continuing commitment to provide a rising level of social

services as long as they can be afforded.

British Columbia has the best health-care program in Canada, Mr.

Speaker. The improvement of health care services continues to be a

major priority, as evidenced by the allocation of $1.2 billion to the

Ministry of Health, which is more than one-quarter of the budget. In

addition, there is $25 million from last year's revenue surplus for the

stabilization of health and hospital costs in the province, for a total

health care expenditure of $1,238 million.

Mr. Speaker, Hospital Programs and the Medical Services Commission

continue to receive the largest share of funding at $649.2 million and

$245.3 million respectively.

The long-term care program, in its second year of development,

receives $117.3 million for the fiscal year 1979-80. This program is

expected to relieve some of the pressure on acute-care hospitals and

reduce the overall cost of the health system. Sick people in British

Columbia no longer have to fear the high cost of necessary long-term

care. Our government's program has brought a tremendous sense of

security to thousands of people, particularly those in their senior

years.

During the coming year the Minister of Health will be developing a

new comprehensive dental care program which will provide those British

Columbians who are not part of an existing dental plan with a measure

of protection from the high costs associated with basic dental care.

Legislation will be introduced during this session of the Legislature.

The ministry will also devote increased attention this year to

encouraging healthier lifestyles among our citizens. The burden of

health care costs would be lightened and the quality of life increased

if we could reduce the incidence of degenerative diseases caused by

insufficient physical activity, improper diet and excessive use of

alcohol and drugs.

Mr. Speaker, nearly a quarter of the budget is allocated to the

Ministry of Education, Science and Technology, which receives $1.1

billion this coming year. Colleges and provincial institutes will

receive $200.7 million, an increase of $40.8 million, or 25.5 percent

more than last year.

Taxpayers in most parts of the province will be pleased to know they

will no longer have to pay property taxes to support their regional

college. We are providing $23 million in grants to remove all costs for

the operation of colleges from the local school districts. This, Mr.

Speaker, will affect practically every property taxpayer in British

Columbia.

This applies, of course, to Camosun, Capilano, Cariboo, New

Caledonia, Douglas, East Kootenay, Fraser Valley, Malaspina, North

Island, Northern Lights, Northwest, Okanagan, Selkirk and Vancouver

Community Colleges, as well as provincial institutes such as the

British Columbia Institute of Technology, the Open Learning Institute,

the Pacific Vocational Institute, and the Emily Carr School of Art.

Mr. Speaker, universities will receive $232.8 million, an increase of $24.2 million, or 11.6 percent over last year.

The public school system receives $22.8 million more, or $614.8

million — over one half of the education budget. Of the increase, $21.4

million constitutes direct payment to school districts which will

restrict the increase in the basic mill rate to 1.25 mills.

Mr. Speaker, this substantial $44.4 million increase in grants for

the support of public school and college education should greatly

reduce the amount of school costs required to be raised through the

property tax and bring further tax relief to the homeowner. This is in

addition to the $100 increase in the annual homeowner grant, which is

first deducted from

[ Page

256 ]

school taxes, and which will cost an estimated $55 million.

Now to the subject of the Human Resources ministry. The

third-largest share of the budget goes to the Ministry of Human

Resources at $648 million. Savings from increased efficiency in the

administration and delivery of income assistance benefits over the past

three years can now be passed along to the recipients of social

assistance. Therefore the income assistance budget is increased $72.7

million, to $249.5 million. This is to cover the increased rates

implemented effective April 1, as well as increased costs resulting

from federal cutbacks in unemployment insurance.

This government has a strong commitment to make home ownership

available and affordable to as many British Columbians as possible. The

new Ministry of Lands, Parks and Housing will be making Crown land

available to individuals for the purpose of building new homes. By

increasing the supply of land for housing we can stop the upward spiral

in housing prices which has put home ownership beyond the reach of many

of our people.

The Home Purchase Assistance and Family First Home Grant programs,

which assist British Columbians buying their first homes, are to be

expanded and simplified.

The government is determined to reduce homeowner property taxes by

attacking the problem on a number of fronts. The most direct benefit

for the homeowner comes from the freezing of municipal mill rates,

which I announced a few months ago, in combination with the effect of

the special $100 increase in the annual homeowner grant which is being

financed from the 1977-78 surplus appropriation.

A total $29.9 million is provided in the budget for housing programs.

Local governments have been the beneficiaries of substantial

increases in assistance from this government in the past three years.

The new revenue-sharing program was introduced last year to give

municipalities and regional districts a share in the more dynamic

provincial revenues. Under this program they received $138.3 million

last year, an increase of more than $20 million over the allocation

under previous programs. In the coming year, this will rise to $141.7

million. In addition, the provincial government is now paying full

municipal property taxes on its properties. Local school districts have

also received substantial increases in provincial support.

Despite these generous increases in financial assistance, the

majority of municipal mill rates did not fall. Instead municipal

budgets increased at a faster rate than the provincial budget. The

people of this province, Mr. Speaker, are demanding restraint from

their governments and no level is exempt from this demand. The

provincial government has responded by restraining its own budget. As a

consequence, we cannot continue to underwrite the excessive increases

in local government spending where they occur.

Accordingly I announced in January that, except in extraordinary

cases, no increases will be permitted in general municipal mill rates

this year and municipal budgets will not be permitted to increase by

more than 5 percent. As I have stated, provincial expenditures are also

being held to a 5 percent increase.

To assist municipalities in achieving this target the province will

be contributing, for this year only, an extra $7.5 million to reduce

the local share of social assistance costs. The province will collect

only $1.06 per capita per month from municipalities, rather than $1.40

which would normally be collected as the 10 percent share paid by

municipalities with populations over 2,500. Thus welfare costs to

municipalities will rise only 5 percent this year.

As a matter of interest to hon. members, I want to say that while

provincial public service staff establishment levels and salaries for

those levels are provided in the budget, there are normally vacancies

in every ministry as the result of staff turnover and delays in hiring.

In the past these recruitment savings have been used as a "cushion" by

ministries. We are now removing this cushion, a saving which amounts to

about $60 million. This places a greater financial responsibility and

accountability upon program managers to ensure their spending remains

within the limits authorized by this Legislative Assembly.

Also, as in all other provinces, and with the federal government,

the expenditure estimates no longer list staff positions and

classifications.

I've touched upon only a few highlights in the spending budget. But

it does indicate a broad range of new initiatives to improve the

quality of government in this province.

Turning to the financing of capital programs of our Crown

corporations, almost $700 million in long-term funds was made available

last year. Provincial trusteed funds, which are primarily public

pension and sinking funds administered by the province, provided $425

million of this amount. Canada Pension Plan funds provided the balance

of $260.5 million. There were no market borrowings during the year.

[ Page 257 ]

As in previous years, Canada Pension Plan funds were allocated

primarily to Crown corporations other than British Columbia Hydro and

Power Authority. Provincial trusteed funds were allocated entirely to

British Columbia Hydro.

I would refer members to a

schedule of borrowings by Crown

corporations from provincial trusteed funds and the Canada Pension Plan

investment fund.

British Columbia Hydro and Power Authority's requirements were met

by $425 million from provincial trustee funds, and $51.8 million from

Canada Pension Plan funds.

British Columbia School Districts Capital Financing Authority made

$91.3 million available to school districts for school construction.

British Columbia Educational Institutions Capital Financing

Authority borrowed $25.3 million for university and community college

construction.

British Columbia Regional Hospital Districts Financing Authority

made $57 million available to regional hospital districts for possible

construction.

British Columbia Buildings Corporation borrowed $35.1 million for the construction of government buildings.

British Columbia Railway Company borrowed no long-term funds during

the year, but $20 million in short-term notes was provided to allow the

railway to meet its financial commitments, including debt-service

requirements.

For this fiscal year, the Crown corporations have estimated their

requirements as follows: $671 million for British Columbia Hydro; $91

million for hospital construction; $91 million for public school

construction; $83 million for university and community college

construction; $75 million for British Columbia Railway; $60 million for

British Columbia Buildings Corporation.

The government expects to meet these financing requirements from the

Canada Pension Plan and from pension and sinking funds administered by

the province.

The fact that we can dig into our own pockets and come up with these

large sums of money to finance our own capital development shows the

strength of our British Columbia economy. We don't always have to

borrow from foreign lenders.

At March 31,1979, British Columbia Hydro had approximately $350

million towards this year's requirements. Legislation will be

introduced to allow B.C. Hydro to increase its borrowing limit from

$4.9 billion to $5.65 billion. The increase is required to allow the

Authority to borrow funds up to this point to meet its requirements for

funds for capital construction.

It had been planned to transfer transit operations from British

Columbia Hydro on April 1, 1979, but a last-minute delay in reaching

agreement with the Greater Vancouver Regional District has made it

necessary to defer temporarily the proposed changes for greater

Vancouver and greater Victoria. Agreements have been reached for

cost-sharing arrangements for all other transit operations in the

province.

I would like to review our unique new plan which enables every

eligible British Columbian to participate directly in the development

of our natural resource wealth.

Our government believes in personal economic freedom. It has

constantly dedicated itself to providing greater investment and

ownership opportunities for the individual in British Columbia. Our

commitment is to individual ownership, not big-government ownership.

For this reason the provincial government is undertaking the

distribution of the shares it owns in the British Columbia Resources

Investment Corporation. These shares were received as payment for the

provincial assets sold to the corporation.

Consequently, after British Columbia Day, August 6,1979, the

government of the province of British Columbia will transfer five free

British Columbia Resources Investment Corporation shares to every

eligible man, woman and child in British Columbia who makes application

by June 15. This will afford each of them direct ownership in the

province's resource industries. The free shares are expected to

represent up to 80 percent of the government's current holdings in the

B.C. Resources Investment Corporation.

It is estimated that some 2.4 million British Columbians are

eligible to receive free shares. If the offer is widely accepted, the

British Columbia Resources Investment Corporation will be the most

broadly based public company in Canada.

At a time when the control of industries is falling into fewer and

fewer hands, this is truly a positive step. It is our hope all British

Columbians will avail themselves of this unique opportunity. At the

same time, the corporation is making available for sale additional

common shares. These shares, with a limit of up to 5,000 per person,

will be sold to those who have qualified and applied for free shares

and wish to add to their holdings. They are being sold at a price of $6

per share, well below their appraised book value.

These extra-purchase shares are not the shares once owned by the government, but are

[ Page

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being sold by the Corporation to raise new money to invest in the development

of the province. The people purchasing these additional shares are buying more

shares in their own company.

Too many of our citizens are content to put their money into savings

accounts instead of investing directly in the province's growth. We

hope that giving these shares to the people will provide them with a

tangible sense of ownership and participation in British Columbia's

economic future and encourage further investment on their part.

The assets of the British Columbia Resources Investment Corporation

represent an important part of the province's basic resource wealth.

Included in these assets are: oil and gas exploration rights to some

2.3 million acres of Crown land in northeastern British Columbia; 81

percent of the common shares of Canadian Cellulose Company Ltd., a

large-scale forest product firm with pulp mills at Prince Rupert and

Castlegar and three sawmills; 100 percent of the common shares of

Kootenay Forest Products Ltd., a medium-sized lumber and plywood

manufacturer at Nelson; 100 percent of the common shares of Plateau

Mills Ltd., a midsized lumber producer near Vanderhoof; and about 10

percent of the shares of Westcoast Transmission Company Ltd., which

operates a major pipeline in British Columbia and is a partner in the

Alaska Highway gas pipeline project.

We have recognized there would be a cost to the distribution of

these shares but we firmly believe this money to be well spent to get

people to participate in their own company.

Interjections.

HON. MR. WOLFE: The members opposite didn't think of this first, so they just don't like it.

Let us consider some of the major benefits of this share

distribution. For the majority of people eligible for the free shares

this will be an introduction to equity ownership. Provincial residents

are being given the first opportunity to purchase additional shares in

the corporation. This could mean active participation in the

determination of the direction of the corporation's future activities.

New investment money is being raised for the corporation to extend the

investment base. And this offer of ownership in some of the province's

resource wealth may encourage increased participation by our citizens

in other business investment opportunities, thereby establishing

greater control within the province over our destiny.

The share distribution involves all financial institutions — credit

unions, banks, trust companies, and investment dealers — in promoting

local resource ownership. Companies and non-residents are not allowed

to participate in this initial share offer.

An amount of $9 million is allocated in the budget for payment of

services provided by the financial institutions. These services

comprise a major part of the total activity in the distribution and

include: providing facilities and training staff; bringing in

additional staff; providing information; brochures and the prospectus

to applicants and subscribers; inspecting identification of applicants

and subscribers; completing application forms; batching applications

for submission to the Ministry of Finance; calculating remittance

payments and transferring documents; remitting and balancing share

purchase payments; handling stop-delivery orders; correcting errors;

and completing requisition forms for share certificates. For this part

of the procedure the financial institutions receive $2.50 per

application.

A further $2.50 per application will be paid for the following:

handling NSF cheques, cancelled subscriptions and stop delivery orders;

sorting applications and subscriptions in name sequence; verifying and

balancing receipt of share certificates; matching share certificates

against customer's copy of application; delivering share certificates;

accounting for all share certificates received; and returning the

financial institution's copy of all application forms.

Also in the budget is a figure of $3 million for data processing

costs. A further $3 million special authorization was provided last

year for printing, distribution and other initial costs related to the

share distribution, for a total estimated cost of $15 million.

The B.C. Resources Investment Corporation represents only one of our

government's many efforts to encourage individual British Columbians to

participate actively in the determination of their own economic future.

This unique new plan, coupled with the other incentives which have

been proposed in this budget, adds to the foundations of British

Columbia's future economic growth and prosperity.

I turn to the revenue measures for the 1979-1980 fiscal year. As I

mentioned previously, the increase in the spending estimates this year

is only 5 percent more than the revised spending level for last year.

Because the province's revenues can usually be expected to increase at

a rate in step with the gross

[ Page 259 ]

provincial product — or by about 11 percent this

year — the restraint and spending growth could normally be thought of

as providing considerable scope for granting tax relief.

Revenue this year is forecast at $4,567.5 million to balance with

total spending — an increase of only 1.6 percent over the revised

revenue forecast for last year.

There are two main reasons for this lower than usual increase.

First, and most important, are the tax cuts proposed in this budget.

Second, the full effect of the tax cuts made last year will be felt

this year. The social services tax revenue for last year, for example,

included collections for one and one-third months at the higher rate of

7 percent, providing $24 million extra. Also, personal income tax

revenues last year included $117.4 million received from the federal

government under the sales tax reduction program. Those revenues are

not available to us in the coming year.

The effect of these and other minor changes reduces this year's

revenues by almost $200 million. Nevertheless, our program of spending

restraint does allow for some tax reductions, and the revenue measures

I am about to propose are those which will provide the most effective

stimulus to the British Columbia economy. They will also remove some

inequities in the tax system.

The first change proposed to this House is designed to reduce the

inequitable burden of property taxes upon farm and agricultural reserve

lands. We wish to offer every encouragement to reserve these lands for

agricultural production. To relieve farmers of part of the burden of

property taxes, and to recognize the restrictions on lands in the

agricultural land reserve, the government proposes to reduce, by 50

percent, the assessed value of land that is reserved for agricultural

use. This applies to land classified as a farm under the Assessment Act

or established as an agricultural land reserve under the Agricultural

Land Commission Act.

This change will come into effect on December 31,1979, and apply for

purposes of the 1980 and succeeding years' assessments for general and

school tax purposes. Legislation will be introduced to make the

necessary amendments.

Next we propose to increase the exemption limit under the

corporation capital tax from $500,000 to $1 million and along with this

provide a graduated tax for companies with capital between $1 million

and $1.25 million, effective April 1,1979. This proposal to increase

the exemption limit for the consecutive year will remove the tax

completely from an estimated additional 3,000 firms and provide further

tax relief to small business. In two years we have completely removed

the tax from 16,000 smaller firms, leaving only the larger corporations

to pay the tax. It should be noted that this tax was introduced on

small business by the former government. The cost of this change is

estimated at $4 million in a full year. Thirdly, the following items

will be exempt from the social services tax effective midnight tonight:

vitamins and dietary supplements; and diabetic and ostomy supplies.

These items are necessities for a significant number of our citizens

with health problems and I am satisfied there is no justification for

continuing to levy the tax on these items. The cost of this change is

estimated at $2.25 million.

The government proposes to make a number of changes in the personal

income tax, the first of which has to do with the renters' tax credit.

The present tax credit is for $100, reduced by 1 percent of taxable

income. This tax credit has the effect of reducing rental accommodation

costs for persons with taxable incomes below $10,000. The government is

proposing to this House to increase the annual renters' tax credit by

$50 to provide a maximum grant of $150 beginning in 1979. The grant

reduction factor will be increased to 1.5 percent which maintains the

grant for renters with taxable income below $10,000.

The largest benefit from the increase will be to persons with no

taxable income as indicated by the proposed renters' tax credit

benefits following table. The attached table shows various taxable

income figures, the present tax credit of $100 and the new tax credit

of $150.

The renters' tax credit program is administered for the province by

the federal government through the personal income tax. Renters will

receive the first benefit from the increased grant when they file their

1979 income tax return. The cost of the renters' tax credit increase is

estimated at $7 million. Through this increase in the renters' tax

credit and the previously announced increase in the homeowner grant,

every homeowner and most tenants should see their housing costs reduced.

The second change to the personal income tax is an innovative one

designed to encourage equity investment by British Columbians, to

retain the head offices and senior managements of corporations in

British Columbia and to make it easier for British Columbia companies

to issue equity capital.

A special dividend tax credit of 5 percent is proposed for British Columbia residents re-

[ Page 260 ]

ceiving dividends from public corporations, as

defined under the Income Tax Act of Canada, that have their head office

and central management located in British Columbia. The new dividend

tax credit will be restricted to dividends from public corporations

with their head office and central management in British Columbia and

will be in addition to the existing dividend tax credit which can be

claimed on the taxable income of the dividends from all eligible

Canadian corporations.

This proposal will allow a British Columbia taxpayer to deduct 5

percent of the taxable income of such dividends from his or her British

Columbia income tax. The effect of this credit is to increase the B.C.

dividend tax credit rate from 11 to 16 percent on qualifying dividends.

To qualify, certain conditions must be met. The taxpayer must be a

British Columbia resident for income tax purposes. The dividend-paying

corporation must meet the conditions for eligibility for the existing

dividend tax credit and, in addition, must maintain its head office and

central management in British Columbia. Finally, it must be a public

corporation as defined under the Federal Income Tax Act.

It is important to encourage local control of corporate decisions

which affect the British Columbia economy. When decisions affecting the

province's economy are taken by managements remote from the province,

we are not satisfied that the people making those decisions are as

knowledgeable about provincial conditions as they would be if they were

located in British Columbia.

Economic policy does not favour all parts of Canada evenly. We have

in this tax measure an opportunity to generate corporate interest in

maintaining head offices and senior management in British Columbia. We

do not intend to allow British Columbia to become a branch-plant

economy.

Most important, this government believes in individual ownership.

Through tax measures that benefit the individual, such as the dividend

tax credit, ownership of our industry by our citizens will be

encouraged which will create further opportunities for the individual.

This dividend tax credit is intended to benefit the average person who

purchases shares.

Legislation will be introduced to initiate this tax reduction measure. However,

hopeful arrangements can be concluded allowing for federal administration of

the British Columbia dividend tax credit under our tax collection agreement

with Ottawa. This legislative amendment will be subject to proclamation after

of this measure is estimated to be $3 million in the first year.

The third change, affecting both personal and corporate taxes, is an

innovative one designed to stimulate investment in more risk oriented

business. Our government is proposing incentives for the establishment

of a new type of financial corporation in British Columbia — a

small-business, venture-capital corporation. The purpose of these

corporations is to provide venture or equity capital to small business

in British Columbia.

To encourage establishment of venture capital corporations, and to

encourage both individual and corporate taxpayers to put their savings

into such corporations, special tax deductions from British Columbia

income taxes will be provided to investors who place their funds in a

venture-capital corporation.

Individuals and corporations in British Columbia will benefit from

reduced provincial taxes by placing their savings into venture capital

corporations. In turn, these corporations will make these savings

available in the form of equity and equity-related financing for

innovative or high-risk, small business investments in British

Columbia. By making such funds available at a reasonable cost to small

business in the province, the corporations will aid the small business

sector in realizing its growth potential and in contributing further to

the overall strength of the British Columbia economy.

It is our intention to introduce enabling tax legislation and

legislation for the establishment and registration of small-business,

venture-capital corporations during this session of the Legislature.

The cooperation of the federal government will be sought to accommodate

the administration of this tax program through the income tax under the

tax collection agreement. Satisfactory implementation of the program

will require participation of the federal government.

The fourth change in the Income Tax Act is to propose to the

accelerated write-off or tax credit against income tax of the cost of

adapting buildings to the needs of the handicapped. This is in keeping

with proposed changes to the provincial building code to provide access

to buildings for handicapped people. The province is prepared to allow

the accelerated write-off or tax credit against its income taxes, and

will ask the federal government to do the same and administer the tax

change under the tax collection

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agreement. It is the clear intent of this

government to assure equal opportunity for our handicapped citizens in

the workplace and for everyday needs and enjoyment. It is also

estimated that this new incentive will soon provide several hundred

additional construction jobs.

The fifth change will provide a sharp tax reduction for low income

individuals now paying British Columbia income tax. Hon. members will

recall this government enacted a change to the provincial Income Tax

Act in 1977. That change provided that low-income taxpayers who paid no

federal income tax would likewise not pay British Columbia income tax.

More than 100,000 British Columbians benefited from that change. In

1978 we raised the exemption limit, and it will be raised again for

1979 to reflect the indexing of exemptions and tax brackets.

However, British Columbia residents with taxable incomes slightly

above the tax exemption limit are required to pay more British Columbia

income tax than federal income tax because of the manner in which the

federal tax credit is deducted. To correct this situation, I am

proposing a change to the British Columbia Income Tax Act, so that no

low income taxpayer will pay more British Columbia income tax than

federal income tax.

In 1979 the range of taxable incomes affected by this measure will

be between $1,770 and $2,730 of taxable income. In future years this

range will be adjusted upward to reflect indexing of exemptions and tax

brackets. An estimated 65,000 taxpayers will benefit from tax

reductions ranging up to a maximum of $89.

The sixth change the government is proposing in the personal income

tax will provide benefits for every individual taxpayer in the

province. The provincial personal income tax rate is to be reduced two

percentage points, from 46 to 44 percent of federal income tax payable,

effective July 1,1979. At 44 percent, British Columbia will have the

second lowest personal income tax rate in all Canada. In comparison,

Saskatchewan has a personal income tax rate of 53 percent, Manitoba is

at 54 percent and Newfoundland is 58 percent. The effect of these last

two measures is to provide a tax reduction for all British Columbia

residents who pay personal income tax.

For taxpayers in the lower taxable income ranges the tax reduction

is up to 98 percent. For taxpayers of average and high income the

provincial tax reduction in a full year is 4.3 percent. In the case of

a couple over 65, it is possible to have gross income of $10,500

without incurring any provincial income tax liability. For a family of

four with a family income at the British Columbia average of $23,000,

the tax reduction is $65, or 4.3 percent.

The cost of these two measures in the first full year is estimated to be $53 million.

And now, just as an aside, I would like to notify the hon. members

of this House that in the income tax bill I will present today there is

also a proposed amendment that will allow the deduction from British

Columbia income tax of a portion of political contributions made by

individuals and corporations to British Columbia political parties and

candidates at elections to this Legislative Assembly. It is this

government's firm belief that just as it is important to encourage

individual support and business enterprise in this province, so it is

to encourage individual support of political parties so basic to our

democratic society. The Ontario commission on legislation in 1974

endorsed this principle of allowing a partial deduction of political

contributions.

The proposal to be introduced provides a tax credit against B.C.

Income tax payable of 75 percent of the first $100 contribution, 50

percent on the next $450 of contributions and one-third on the amount

of contributions in excess of $550 in any one year, up to a maximum

credit of $500 in that year. This proposal is the same as the tax

credit allowed by the federal and Alberta governments.

We do not anticipate any difficulty in obtaining federal government

agreement to administer this additional British Columbia income tax

credit under the tax collection agreement.

Mr. Speaker, the parimutuel betting tax will be reduced one full

point to 7 percent, effective immediately, which will be 5.5 percent

net to the province. This is the second consecutive year the tax has

been reduced, making British Columbia's parimutuel rate the second

lowest in Canada. The measure will stimulate the racing and

horse-breeding industries. I would also point out to the hon. members

that British Columbia does not tax the admission fee charged by the

track operators as is the case in some other provinces including

Ontario and Quebec.

The final tax change which is proposed today is one which will

provide benefits for all British Columbians. Effective midnight

tonight, the social services tax is reduced by one percentage point to

4 percent on all taxable purchases except sales through liquor

distribution branch retail stores, agencies and winery outlets. The

revenue cost of this measure is estimated at $131 million in a full

year. This will provide a tax reduction of approximately $70 a year for

every British

[ Page 262 ]

Columbia family, thereby assisting and reducing the

increase in the cost of living. The business sector will benefit both

from increased consumer demand and the effect of the tax reduction on

their own costs.

The new sales tax rate of 4 percent is lower than the rate in effect

at any time in the last 25 years. British Columbia is the only province

that has ever lowered the general sales tax rate permanently and now

has the lowest sales tax rate of any province in Canada that charges

the tax.

It should be noted that Newfoundland imposes a sales tax of 11

percent; Prince Edward Island, New Brunswick and Quebec each charge 8

percent; Ontario has a 7 percent sales tax; while Manitoba and

Saskatchewan levy a sales tax of 5 percent. The overall reduction in

provincial revenues as a result of these tax changes is estimated to be

$155 million this year and $205 million in a full year.

For the benefit of the hon. members, let me summarize the revenue measures proposed by the government:

a reduction in school and general property taxes on all farm and agricultural

reserve land in the province.

an increase in the corporation capital tax exemption level to $1 million.

a sales tax exemption for vitamins, dietary supplements, diabetic and ostomy

supplies.

a $50 increase in the annual renters' tax credit.

introduction of an additional 5 percent dividend tax credit on dividends

paid by British Columbia-based public companies.

introduction of a venture capital corporation investment tax credit.

an accelerated write-off for income tax credit for the cost of adapting

buildings to the needs of the handicapped.

a reduction in the personal income tax for persons with low income.

a reduction in the personal income tax rate, from 46 to 44 percent, of

federal income tax payable, effective July 1, 1979.

a reduction in the parimutuel betting tax rate to 5.5 percent net to the

province effective immediately.

a general reduction of I percent in the sales tax rate, from 5 to 4 percent,

except on liquor sales, effective immediately.

And, while not a revenue item, $55 million is provided for a $100 increase in the annual homeowner grant.

I would refer hon. members to the table of comparative provincial

tax rates in my budget statement. I made earlier reference to the

higher personal income and sales tax rates in certain other provinces,

and now would draw your attention to the motor fuel tax rates.

British Columbia has the lowest gasoline tax rate, at 17 cents per

gallon, of any province charging a gasoline tax. By comparison,

Newfoundland levies a 27 cent rate, Nova Scotia and Prince Edward

Island levy a 21 cent rate, New Brunswick collects 20 cents,

Saskatchewan, Ontario and Quebec each impose a tax of 19 cents, and

Manitoba is at 18 cents. B.C. has the lowest gasoline tax rate of 17

cents.

The variances are even greater with diesel fuel taxes — from 19

cents in British Columbia to 26.6 cents in Saskatchewan, 27 cents in

Newfoundland and Nova Scotia, and 25 cents in Prince Edward Island,

Quebec and Ontario.

It is obvious from this tax table that the burden of taxation upon

the individual taxpayer in British Columbia is the second lowest in

Canada. And, Mr. Speaker, I draw to the members' attention a

schedule

showing the estimates of revenues for the past year and for the coming

years.

In conclusion, these tax reductions and those made by this

government in 1978 restore British Columbia to the position of having

among the lowest rates of any province. We have been able to do this —

to cut taxes — while at the same time maintain, improve, and add an

impressive range of services to those in need. This budget provides

more money than ever before for social and economic programs, while at

the same time cutting taxes significantly for all the province's

taxpayers.

Our budgets over the last three years have restored integrity to the

province's finances and careful spending has provided small surpluses

that we are able to put to work to help in the tax reduction and to

develop incentives for individual investment in new business in British

Columbia. This will ensure that in this year, and in the future, our

people will find employment as the result of new opportunities that are

being created by our economic strategy.

Mr. Speaker, we want the individual to have room to move and to grow

in our society. We want the individual to seek out opportunity — to be

able to seek out opportunity — and not have to depend on growing

bureaucracy or big government to look out for h