1993 Legislative Session: 2nd Session, 35th Parliament HANSARD

The following electronic version is for informational purposes only. The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, MAY 27, 1993

Afternoon Sitting

Volume 10, Number 11

[ Page 6565 ]

The House met at 2:06 p.m.

Hon. M. Harcourt: It's with great pleasure that I ask the House to welcome some visitors from the People's Republic of China. Vice-Minister Liu, from the State Commission for Restructuring the Economy, is here with a group of senior administrators from the commission and from the Ministry of Public Health. They are here to study our health care system. They are spending two days in British Columbia, meeting with staff of our Ministry of Health, and making many site visits. I ask the members of the House to give them a very warm welcome -- niyo.

P. Ramsey: Joining us in the gallery today are my parents, Paul and Shirley Ramsey, who are visiting our province for a bit of a vacation, and also to watch their grandson -- my son -- graduate from the University of British Columbia yesterday. Would the House please join me in making them welcome.

B. Jones: One of the sacrifices of speakership is that you don't get to introduce constituents when they come to visit Victoria. On behalf of the Speaker, it's my privilege to introduce to the House today Joyce and Morris Knight and their granddaughter Jessica Knight. Would the House please make them welcome.

Hon. T. Perry: Although they are not from my constituency, I would also like to join in welcoming the parents of the hon. member for Prince George North and Paul Ramsey III, and congratulate him on the degree received at UBC yesterday.

C. Evans: Joining us in the gallery today is a longtime friend of mine, Bobbie Samet from New York. She says she has come all the way to B.C. to investigate whether or not there is truth to the rumour that we have fewer murders in Canada because we take all of our aggressions out in question period. I assured her that it's not true; that we love one another, and we're polite. Would you please make Bobbie and Marcia Braundy welcome.

Ministerial Statement

NAFTA AND U.S. DUTY ON SOFTWOOD LUMBER

Hon. M. Harcourt: I rise today to inform the House of an issue of great importance not only to British Columbia's forest industry and the workers in communities it supports but to our provincial economy and our trading relationship with the United States.

It has been my position as Premier, and the position of my government, that the treatment of our province's softwood lumber exports is a litmus test for the Canada-U.S. free trade agreement and the North American free trade agreement. Recent developments in Washington, D.C., on the softwood lumber countervail duty case give us great concern about the ability of the FTA to protect Canada from unfair United States trade practices and harassment. These developments strengthen my government's opposition to NAFTA, a treaty that the federal government is at this very moment pushing through the House of Commons with imprudent haste.

I would like to share with the House my letter to Prime Minister Mulroney:

"Dear Mr. Prime Minister:

"I am writing to request a delay in the North American free trade agreement vote scheduled....

An Hon. Member: Point of order.

The Speaker: Order, please. I hear a point of order. With the indulgence of the member, the Chair would choose to hear that point of order after the Premier has finished the ministerial statement and before the replies are given.

Hon. M. Harcourt: I'll repeat the opening of the letter:

"Dear Mr. Prime Minister:

"I am writing to request a delay in the North American free trade agreement vote scheduled for this evening, pending a meeting with you on the softwood lumber countervail dispute between Canada and the United States.

"B.C. Forests minister Dan Miller has just returned from Washington, D.C., and as a result of his consultations over the May 6 free trade agreement panel decision on the subsidy side of the countervail issue, it is now clear that B.C. log export controls, and indeed all Canadian provincial domestic processing requirements, have been left exposed to U.S. trade harassment. This situation will be further exacerbated by passage of the NAFTA by your government.

"On May 16, 1992, the U.S. Department of Commerce calculated a duty on imported Canadian lumber of 6.51 percent. More than half of this duty was based on B.C.'s log export controls. Canada appealed this U.S. decision to an FTA panel. Despite the fact that B.C. log export controls receive specific protection under

article 1203 of the FTA, the panel ruled on May 6, 1993, that log export restrictions and similar controls may be countervailed as a matter of U.S. law.

"The major objective of the FTA was to achieve secure and enhanced access to the U.S. market and to eliminate the harassment of Canadian exporters through the capricious use of U.S. trade remedy laws. To this end, the FTA called for further negotiations between Canada and the U.S. to settle the outstanding issue of the application of trade remedy laws. The task of negotiating fairer trade remedy laws was considered so important that a failure to agree to implement such changes is grounds for either party to terminate the agreement.

"In fact, many new anti-dumping and countervailing duty cases have been initiated against Canada since the signing of the agreement. No progress has been made to date on negotiating fair trade laws with the United States. As a result, the binational dispute panels under the FTA can only determine whether U.S. trade law, however unfair, has been properly applied. In the case of export restrictions on B.C. logs, this means that lumber from B.C. and other provinces is exposed to severely damaging countervail actions even while the

[ Page 6566 ]

U.S. maintains similar -- and from our point of view supportable -- restrictions in its own northwest states. Not only is this situation hypocritical, but the countervailing duty takes away a benefit that was specifically promised in

article 1203 of the

FTA.

"Now, with the NAFTA, Canada is taking a further step backward. Under NAFTA there is no longer a requirement to negotiate a 'substitute system of rules for dealing with unfair pricing and subsidization,' eliminating...."

Interjections.

The Speaker: Order, order. Is it a point of order that is being raised?

D. Mitchell: Hon. Speaker, I rise on a point of privilege.

[2:15]

The Speaker: The Chair has suggested, in recognizing a former point of order, that I would take the point of order at the end of the Premier's statement. I hope the hon. member will be cautious in the way he is raising the point of privilege, and I must take the point of privilege at this point.

D. Mitchell: I can't anticipate what the member for Abbotsford was going to raise with his point of order, but I can state that I believe the very political statement that the Premier is making today is a violation of the privileges of a legislative committee of this House, which has been appointed to look into....

Interjections.

[The Speaker rose.]

The Speaker: Order, please. I remind the hon. member that in raising a point of privilege, he must briefly state his point of privilege and make the motion that he proposes to move available to the Chair. I ask the member to adhere to those guidelines on raising a point of privilege.

[The Speaker resumed her seat.]

D. Mitchell: Today the Premier is making a statement which I believe is a very serious violation of the privileges of a standing committee of this House. A select standing committee of this Legislature has had a matter referred to it relating to the NAFTA....

The Speaker: Order, please. I cannot allow the member to continue unless he does adhere to the rules of raising a point of privilege, which is to briefly state it -- which he has done -- and to make available to the Chair a copy of the motion that he would move, if the Chair should so rule. And I must ask him to now do that, or I will have to ask the member to take his seat, and we will go back to the Premier's statement.

D. Mitchell: A point of privilege, I understand, has to be raised at the earliest opportunity. I do not have a motion prepared because I could not have prepared one in the time available. But the Premier raises today a very serious point of privilege, a violation of the rules of our House.

The Speaker: Order, please. I'm going to ask the member to take his seat, and I'm going to ask the Premier to continue with his statement. Then I will take the point of order at that time, and there will be opportunity for submissions on the point of order.

Interjections.

The Speaker: I would ask for the cooperation of the members. I have outlined the procedure that the Chair wishes to take, and I assure the members that I will hear the point of order and the submissions at the end of the statement. I would ask the Premier to please continue with his statement.

Hon. M. Harcourt: As I was saying:

"Now, with NAFTA, Canada is taking a further step backward. Under NAFTA there is no longer a requirement to negotiate a `substitute system of rules for dealing with unfair pricing and subsidization,' eliminating any hope for reduced exposure to tariffs on products from B.C. and other provinces where domestic processing restrictions are in place.

"Mr. Prime Minister, the situation outlined above is untenable to the people and producers of British Columbia. It requires your immediate attention.

"I would urge you to delay the vote scheduled for this evening, and for arrangements to be made for a meeting between us to discuss this matter further."

The recent decision of the FTA panel makes plain the fundamental flaw of the FTA's dispute resolution system. The binational panels can only determine if a country's trade law is applied fairly, not if the law itself is fair. It is our position that any U.S. law that could be used to undermine a provincial resource policy explicitly protected in an

article of the FTA is an unfair and intolerable law. It is also clear that NAFTA, in that it contains no requirements for parties to negotiate new fair trade remedy laws, ensures that the dispute resolution system remains largely ineffectual in protecting Canadian exporters against trade harassment.

The protection of provincial domestic processing requirements is not only an issue of importance to B.C.'s forest industry and to B.C. jobs, it is also an issue for the other Canadian provinces who were told that their policies in this area were protected in the FTA and in NAFTA -- as, for example, in the east coast fishery processing requirements. I have therefore shared my letter to the Prime Minister with my colleagues, the 11 other first ministers, and hope they will join British Columbia in calling on the Mulroney government not to move with undue haste on the implementation of the NAFTA. [Applause.]

The Speaker: Order, please.

I now recognize the point of order from the hon. member for Abbotsford.

[ Page 6567 ]

H. De Jong: The reason I raised the point of order is that this matter was referred to a select standing committee at last fall's session. The committee has not had the opportunity to report to the Legislature. The debate is currently going on, or perhaps has even concluded in Ottawa by this time. It has been known for at least the last three days that this debate would conclude today.

Interjections.

The Speaker: Order, please. The hon. member for Abbotsford does have the floor.

H. De Jong: The Premier bringing this statement before the House today is nothing other than political manoeuvring on the part of this government. Furthermore -- and this is far more serious -- it's a complete breach of normal parliamentary process, which this House deserves.

The Speaker: Submission on the point of order, hon. Government House Leader.

Hon. M. Sihota: I took the opportunity -- which I wish the hon. member would -- to review comments with regard to ministerial statements. These are found in Parliamentary Practice in British Columbia, which was written, of course, by Mr. MacMinn. On page 49, it says: "For many years, the government has been allowed by custom to make statements of new or altered policy at the opening of the daily proceedings." I pause at this point. That's exactly when the Premier rose to make the statement -- at the beginning of proceedings today. "These announcements usually relate to matters of general interest...." I don't think anyone in this House could argue that....

Interjections.

The Speaker: Order, please. I would ask the minister to give a submission on the point of order as briefly as he can.

Hon. M. Sihota: Announcements usually relate to matters of general interest. I don't think anybody can deny that NAFTA and its implications for the economy of this province, particularly as to log exports, is a matter of general policy and, if I may quote, "...and urgency...." Again, with the House of Commons voting on the issue today, I don't think anyone can argue that there's no urgency.

Interjections.

The Speaker: Order, please. The Chair is willing to hear submissions on this point of order, but we need to have the courtesy to listen to the member who has the floor at this time. I would remind the hon. minister that this is a submission on the point of order and that he is not to debate the subject matter.

Hon. M. Sihota: Thank you, hon. Speaker. I'm just pointing out on the point of order, if I may continue, that "...the practice is accepted today as a useful vehicle by which government policy may be made known to the House...."

We're dealing here with a May 6 ruling that has not been dealt with by the NAFTA committee. Therefore the Premier, in his capacity as Premier of the province, I'm sure is entitled -- in fact, it is incumbent upon him -- to deal with this issue now, in light of the fact that the ruling is one that occurred May 6. The only basis upon which the opposition would seek to take issue with the Premier's right -- indeed, his duty and prerogative -- to stand up in this House and make this statement is the fact that they themselves have a different position on NAFTA than the government does.

The Speaker: Are there further submissions on the point of order?

G. Farrell-Collins: I too would like to quote from the guide book that the minister so often quotes from as it relates to ministerial statements. However, I intend to do so a little less selectively.

It says: "For many years the government has been allowed by custom to make statements of new or altered policy at the opening of the daily proceedings." Clearly there is absolutely not one thing new or altered in the comments by the Premier. It's the same NDP rhetoric we've been hearing from Ottawa for the last five years. It goes on to say: "These announcements usually relate to matters of general interest and urgency and the practice is accepted today as a useful vehicle by which government policy may be made known to the House when no other proceeding offers a suitable opportunity."

The reality, as the Premier well knows, is that the House has already referred this issue to a standing committee of the Legislature, which in the past few days and in the future will be touring the province soliciting input from British Columbians, not from MPs in Ottawa. We want to hear what the people of British Columbia have to say about NAFTA. That committee will then report to the House, and then we can have a comment from the Premier.

Clearly the Premier's ministerial statement does not fall within the guidelines. It is not new or altered. There is plenty of opportunity for the Premier to put out his political propaganda in a more convenient way than to take up the time of this House. The Premier is clearly out of order in his ministerial statement, and it does not fall within the guidelines of Mr. MacMinn that we all try to follow.

Interjections.

The Speaker: I would call the House to order. I have heard the submissions on the point of order that was raised. From time to time we have had ministerial statements in this House. As all members well know, ministerial statements, while not part of the official standing orders, are certainly a part of the practice of this House, and the guidelines that both members, from

[ Page 6568 ]

both sides of the House, have referred to are not definitive.

The Chair has listened carefully to the points of order, particularly the concern regarding the referral of the matter to the select standing committee. But in this instance the Chair does feel that there are no specific limits on ministerial statements relating to matters that may be in the hands of select standing committees.

In addition, in ruling on these points of order, the Chair is also very much aware that with a ministerial statement, there is a built-in opportunity for response from both opposition parties. So in this instance the Chair does not feel that the ministerial statement went beyond the limits of that which has been allowed in this House as a matter of practice.

I appreciate that the member raising the point of order may feel aggrieved, but I would invite the two opposition parties to make their comments in response to the ministerial statement that was made. I would invite the members to now do so.

[2:30]

F. Gingell: Of course all members on all sides of this House are interested and concerned with the fairness of the trade rules between us and our largest trading partner. Eighty-seven percent of British Columbia's trade is with the United States.

Some Hon. Members: Forty.

F. Gingell: Forty percent. It's 87 percent of Canada's.

It is our most important single trading partner, and the Premier wants us to turn around and tear up a valid contract. It's time the Premier realized that acting like King Canute doesn't work. All you will do is get wet feet, and we will all catch cold and suffer the consequences of your actions. You can't go around trying to close the door after the horse has bolted.

An Hon. Member: Another one.

F. Gingell: A third one.

They should listen to their own Minister of Forests, who encourages everybody in this House not to be naysayers and nitpickers. Let this government get on with the job of ensuring that British Columbians take advantage of the opportunities that are there for us in these trade agreements. The Premier travels the world encouraging trade, and then he comes back and wants to tear this up and throw it in the face of our most important trading partner. It's blatant hypocrisy, and I sincerely believe his statement today -- standing up and making this speech -- was shallow political rhetoric for the purposes of their federal party's election campaign.

H. De Jong: If we go back a little ways, to last summer, it's my understanding that the Premier had an invitation from the federal government to deal with the fine points of the free trade agreement. The Premier declined that invitation. He declined it on behalf of all British Columbians. Then, at the fall session, the select committee was established with a mandate to tour the province and find out what the people of B.C. were thinking about the NAFTA. There were many presentations made, some for and others against. But the fact is, hon. Speaker, that there were many good presentations made -- from both sides.

Certainly this ministerial statement today is premature. In fact, it's an embarrassment to all those people who made presentations to the committee. They made those presentations in all honesty and sincerity to the committee, and yet this Premier, this government, does not allow that committee to report before he stands up here and makes his ministerial statement. I think it's a shame. It's an abuse of the House; and it's an abuse of the privilege of the Premier, in terms of establishing a select committee.... I have served on the committee....

Interjections.

The Speaker: Order, please. I would ask the member to take his seat while I call the House to order so that the hon. member for Abbotsford can complete his statement.

H. De Jong: I have enjoyed serving on the committee.

Interjections.

H. De Jong: The fact of the matter is that since the House went into session I have not attended a committee meeting, and I have specifically...

The Speaker: Your comments through the Chair, please, hon. member.

H. De Jong: ...made known to the Chairman of the committee that because of our duties in the House I could not attend those committee meetings. However, that's beside the point. The point is that the Premier has not allowed this committee to report to the Legislature before making the statement here today. Because of the abuse the Premier has caused to this select committee, which was duly established by this Legislature, I take the opportunity at this point to officially resign from the NAFTA committee.

The Speaker: The hon. member for Okanagan West on a point of order.

C. Serwa: No, I'm going to also take the opportunity to respond to the ministerial statement.

The Speaker: I regret, hon. member, that the practice in the House is to allow one response per party to a ministerial statement. Therefore I cannot allow the hon. member to respond.

The hon. member for West Vancouver-Garibaldi on a point of order.

D. Mitchell: I rise to move the point of privilege I attempted to raise earlier.

[ Page 6569 ]

The Speaker: Briefly state your point of privilege and then forward the motion to the Chair.

D. Mitchell: The issue today goes beyond the order and proceedings of this House. It strikes at the privileges of this Legislature and its legislative committees. I believe that the statement made by the Premier today really does constitute a gross contempt for this parliament. If the Speaker would agree with this -- and I would await her ruling -- I would be prepared to move a motion that would read....

The Speaker: No, hon. member. You can only forward the motion to the Chair; you cannot read it.

D. Mitchell: I will forward it to the Chair. The substance of the motion...

Interjections.

D. Mitchell: ...is dealt with by the Speaker. But I....

Interjections.

The Speaker: Order, please.

Interjections.

The Speaker: I call the House to order.

D. Mitchell: Hon. Speaker, the case I would make for this -- which I would ask the Speaker to consider when she is considering whether a point of privilege does exist here -- is whether the Premier's statement made today prejudges the work and the referral on NAFTA that was made to a select standing committee of this House. I believe that it does. I believe it's a very serious matter, and I would hope that the Speaker would be able to rule on this in short order. Thank you, hon. Speaker.

The Speaker: A submission on the point of privilege raised, Government House Leader.

Hon. M. Sihota: The hon. member argues that somehow it is in contempt of parliament for the Premier to stand in this House and make a statement with regard to NAFTA. The countervailing duty costs British Columbia about $300 million a year -- about 1,500 jobs. The Premier has an obligation to stand up in this House and take a position. Surely it cannot be in contempt of this parliament for the Premier to stand up and protect jobs and stand up for an industry in this province. It seems to me.... Hon. Speaker, it may be that the opposition....

The Speaker: A point of order has been raised by the Leader of the Official Opposition.

F. Gingell: Hon. Speaker, the Government House Leader is obviously out of order because he should be speaking to the motion of privilege, not to the subject.

The Speaker: Thank you for your point of order, hon. member. I'm sure the Government House Leader will keep your comments in mind and make a submission on the point of privilege only.

Hon. M. Sihota: Hon. Speaker, it may be that the opposition may wish to take refuge in points of order, but it is a duty of the Premier to stand up for British Columbia and protect the jobs and the paycheques....

Interjections.

The Speaker: Is this a submission on the point of privilege?

G. Farrell-Collins: Yes, it is, hon. Speaker.

The Speaker: I will hear the hon. member.

G. Farrell-Collins: Quite clearly, this House debated some time ago the referral of this issue to a select standing committee of the Legislature. It is the duty and privilege of members of this House to sit on that committee, to take submissions from the public and to report them to this House. For the Premier, particularly as the head of government with responsibility for trade, to stand up in this House and make the type of statement that he did usurps the privilege of every member to sit on that committee and to bring the recommendations of that committee before this Legislature for discussion.

If the Premier had intended to continue to make this type of statement and prejudge the work of that committee, then he shouldn't have referred it to the committee in the first place. The privilege and the duty of every single member of this House who sits on a legislative committee has been damaged by the political opportunism of the Premier.

The Speaker: The Chair has heard the submissions on the point of privilege. The Chair will take the matter under advisement and come back to the House later with a ruling.

The hon. member for Surrey-Cloverdale on a point of order?

K. Jones: No, hon. Speaker. I rise to speak on this issue as it impacts on the concerns of my constituency. It is very appropriate for each member whose constituency is affected by this issue to make a statement in this regard.

The Speaker: Unfortunately, hon. member, the Chair cannot allow that. There is no ability to do that.

Interjections.

The Speaker: I ask the member to take his seat.

On a point of order, the Minister of Finance.

Hon. G. Clark: If it would help the Chair or members of the House, the member could ask for leave to respond to the statement, and we would see if

[ Page 6570 ]

members of the House would be prepared to give him leave.

Interjections.

The Speaker: Order, please. I'm sure the House will agree that wasn't exactly a point of order; it was more of a suggestion.

The hon. member for Fort Langley-Aldergrove on a point of order.

[2:45]

G. Farrell-Collins: Yes, hon. Speaker, it is a point of order. I believe that you may have already been advised by the Clerk of the provision under the guidelines for ministerial statements, which you referred to in your ruling to the member. The last item under "Limits on Content of Statements and Reply" states: "A member whose riding is particularly affected by a ministerial statement has been permitted a brief comment with the general concurrence of the House."

Hon. Speaker, with due respect, quite clearly the member for Surrey-Cloverdale, living as he does in a riding that borders on the United States and that has a great deal of cross-border trade, has a particular interest in this issue.

Interjections.

The Speaker: Order, please. The member who has raised the point of order.... The Chair does have that sentence in front of me at this time. Quite clearly, although it has not been the normal practice of this House, if the House wishes to give general concurrence to a member's request, that request can be asked for.

K. Jones: The NAFTA has been having a serious impact on my riding....

Interjections.

The Speaker: Order, please. I would ask for the cooperation of hon. members, so that we can get through this with some semblance of order. If the hon. member is rising and wishes to make a statement that clearly demonstrates his riding is particularly affected by the ministerial statement, the Chair has said that he must first have leave of the House to do so. That has been the Chair's statement, and I am now in the hands of the House as to where we go from here.

K. Jones: I would request the concurrence of the House to proceed with the debate.

Leave granted.

The Speaker: Please proceed with your brief statement. I ask the member to beware of the very narrow limits in terms of your own riding being particularly affected.

The hon. member for Okanagan West on a point of order.

C. Serwa: My point of order is simply that the House can only function with some consistency. A few minutes ago I rose and requested permission to speak. At that time permission was denied by the Chair. Now the Chair has reconsidered the decision and made another decision which appears to be dramatically inconsistent with the first, hon. Speaker. How can this Legislature function?

The Speaker: In light of the confusion this afternoon -- although that's not exactly a point of order, hon. member -- I can appreciate the point that's been made. The Chair would respond by saying that when the hon. member rose, he did not seek leave of the House to make that statement. In the eyes of the Chair, he rose simply to respond to the ministerial statement.

So with that explanation, I would now ask the hon. member for Surrey-Cloverdale to continue with his statement.

K. Jones: In my riding I have several forestry manufacturing plants that are going to be directly affected. This whole issue is also going to impact the transportation side of things, as there is a continual flow of trucking that carries industry from my plants into the United States as part of the trade process. With 300,000 trucks crossing the U.S. border at the Pacific crossing at the southern end of my riding, this has a very major impact upon the people in my riding. We are definitely concerned about the impact upon the plants along the Fraser in the north end of my riding, the various sawmills.

This statement is going to have an impact on how they do business. It is a major monetary item that has to be addressed. It's going to affect the economy of Surrey and the general area around Surrey. This is indeed an area of great importance. The issue is so great that I think it should have been referred to the select standing committee that is reviewing the NAFTA. This was very improper and immature, and without proper procedural presentation. I think it put the select standing committee and its process into question.

The Speaker: Before I recognize members in oral question period I will make a statement, and while the Chair may have second thoughts about choosing this time to do so, I hope that I will have the cooperation and attention of members.

A couple of days ago the Chair had occasion to urge the cooperation of members in adhering to standing order 47A in both asking and answering questions. In reviewing subsequent question periods, I'm reluctant to say that the Chair has not noticed a great deal of change. In fact, the Chair has noticed that several questions continue to be particularly argumentative and enter into debate, and that several answers have quite clearly been inordinately and inappropriately long.

I want to urge members from both sides of the House to address their comments to the Chair, and also advise members that the Chair will be particularly vigilant today in encouraging both sides of the House to adhere to the guidelines of standing order 47A.

With that, I will now recognize question period.

[ Page 6571 ]

Oral Questions

EDUCATION AS ESSENTIAL SERVICE

W. Hurd: I have a question for the Premier. Yesterday in this assembly, the Minister of Education made one of the most outrageous statements about education ever heard in this assembly. Given the fact that his Minister of Education has clearly sided with the BCTF in this strike affecting 130,000 students in this province, will the Premier be guided by the ruling of the Labour Relations Board, and order an end to the lunacy in our school system by demanding that education be made an essential service?

Hon. M. Sihota: Let me say, first of all, that we have received the advice from the Labour Relations Board.

G. Farrell-Collins: Do something with it.

Hon. M. Sihota: If the opposition wants to just chatter away, I'll give them time to do that, hon. Speaker.

Secondly, as a result,

section 72(2) requires the minister to make determinations as to whether or not the next step should be taken. That includes options that range from doing nothing to ordering designation. At the appropriate time the government will advise all members of the House of our intentions with regard to the ruling of the Labour Relations Board.

W. Hurd: My supplemental question is to the Minister of Labour. Hon. Speaker, this minister has failed the students and parents of British Columbia. He failed them during debate on Bill 84, he failed them by passing the buck to the LRB, and he's now failed them by asking the school boards to bite the bullet. When is this minister going to bite the bullet himself, summon up some courage and backbone and designate education as an essential service in this province? When is he going to replace rhetoric with some backbone, hon. Speaker?

The Speaker: Order, please. I'm sure the hon. member can appreciate that in this fairly highly charged atmosphere in the House, language that is not moderate and temperate is only provocative. I would ask the hon. member to take back the words that are personally attacking another member of the House and to just restate his question in its simplest form.

W. Hurd: Hon. Speaker, I have to stand by the comment that this minister has no backbone. But if it's the desire of the Chair that I should withdraw for making those remarks, which I believe to be fair comment about this minister's performance, I'll accept the direction of the Chair.

The Speaker: The Chair has asked an hon. member to withdraw comments that the Chair considers are a personal attack on another member of the House. I think all members recognize that....

An Hon. Member: But he's running for the leadership.

The Speaker: I would ask the House to come to order, please.

I think all members recognize how important it is to adhere to the principles of parliamentary language in order to encourage productive debate in the House. While I know members feel very strongly about these matters, as the Chair who has made the determination that that language is not appropriate, I'm going to ask the member a second time to please reconsider, withdraw the personal comments, and ask his question as the Chair has suggested.

W. Hurd: Hon. Speaker, perhaps you could advise me exactly which phrases, in the opinion of the Chair, impugned the integrity of the minister.

The Speaker: The hon. member well knows that it's not the Chair's responsibility to do that. The Chair has made a request of an hon. member to withdraw words, and I am now asking a third time for the member to reconsider his words, and in the interests of proceeding in an orderly fashion, to please withdraw the words. Otherwise, unfortunately, the Chair will have to ask the member to withdraw. But I'm sure that the member would like to now reconsider, withdraw the words, and we can proceed with question period.

W. Hurd: Thank you, hon. Speaker. On a matter of principle, I will withdraw from the chamber for the reminder of the day.

The Speaker: Order, please. The Chair has acknowledged that the member has refused to withdraw the words. Regrettably, the Chair confirms that the member must withdraw from the chamber for the reminder of the day.

CONSIDERATION FOR GRADE 12 STUDENTS AFFECTED BY LABOUR DISRUPTIONS

C. Serwa: My question is to the Premier. The comments made by the Minister of Education yesterday were an embarrassment to this government and a disgrace to her office. If the minister doesn't even believe in our public school system and the value of education, what is she doing in her job? Why was she appointed, and how can the public have any confidence in that minister?

Hon. M. Harcourt: I think the minister, like every member of this House on occasion, wishes that words that have left her mouth could be taken back. I think all members realize that, and that the minister has apologized and explained herself. I think that if members now want to continue to pursue this, it will be a comment on them and not on the minister.

[3:00]

The Speaker: Before I recognize a supplemental, I'll advise members that question period will be

[ Page 6572 ]

extended by the four minutes that were taken up by non-question-period matters. Supplemental, please.

C. Serwa: The supplementary is to the Minister of Education. The public must be wondering if the minister is disinterested in the plight of students, or simply proving inept and incompetent with respect to her refusal to grant special consideration to students writing provincial exams in strikebound districts. Yesterday she defended an apparently shallow policy as a matter of fairness because the students affected supposedly enjoy an advantage by their lack of class time. What cloud is this minister living on? Why won't she reconsider that ridiculous policy?

Hon. A. Hagen: Hon. Speaker, first of all I want to take this opportunity in the House to express regret for the comment that I made yesterday. Secondly, I want to make very clear that the policy that I spoke about yesterday, around a fair exam system, has long been a policy of this government. It's a policy that was in place with the previous government. In fact, the only time that policy was altered was in the year of an election. It was altered for a strike that was taking place just prior to that election. Our exam system needs to be fair to all students.

Right now we have a labour dispute that is making life very difficult for those students. With respect to those students, we are ensuring that their marks for the school year will be in place and that they will be able to write their exams. We are working with the post-secondary institutions, who are aware of the unusual circumstances that exist for these students.

Interjections.

The Speaker: Order, please.

Final supplemental, hon. member.

EDUCATION AS ESSENTIAL SERVICE

C. Serwa: The minister didn't stand up for students when education was removed as an essential service from the Labour Code. She was asked six times yesterday whether she personally believes education should be declared an essential service. Is the minister now willing to confirm, without any bafflegab, that education must be considered an essential service?

Hon. A. Hagen: The ruling of the Labour Relations Board provides a very solid basis for looking at the importance of education in the context of a collective bargaining system and strikes. The Minister of Labour has indicated that he will be dealing with the matter of designation of essential services. This is a part of the labour code and the Labour Relations Board has made a ruling in respect to schools.

LABOUR DISRUPTIONS IN SCHOOLS

C. Tanner: I have a question for the Minister of Education. In light of the minister's statement yesterday that students might do better on final exams because of the teachers' strike, has the minister considered reducing costs and improving education by having textbooks issued in September and sending the students home until their final exams in June? This would be a closer-to-home education system.

A. Cowie: My question is for the Premier. The parents of schoolchildren in my riding, Vancouver-Quilchena -- and the Premier's riding of choice -- are outraged by the fact that there's no action on improving the strike situation and getting the children back to school. The Minister of Labour is unwilling to get off his bandwagon for the BCTF; and the Minister of Education clearly showed yesterday that she was out of touch, but fortunately has apologized today. My question is: isn't it about time that the Premier took leadership, put an end to this bickering and got the students back to school?

Some Hon. Members: Hear, hear!

A. Cowie: Clearly more inaction by the Premier.

The Premier and the NDP in their election promise No. 41...

The Speaker: Your question, hon. member.

A. Cowie: ...promised they would get the best education for children. In fact, they promised that the school boards would have their mandates restored. My question to the Premier is: are you finally going to get these children back to school, or are we going to continue just to have the rhetoric and no action -- similar to the Canucks in the playoffs this year?

NORTHERN SPOTTED OWL ISSUE

D. Mitchell: I have a question for the Minister of Forests about the northern spotted owl. The Minister of Forests has indicated that the spotted owl issue is likely to be as difficult for us here in British Columbia as it has been in the northwest states of our American neighbours. Many thousands of jobs were lost in the forest industries of Washington and Oregon as a result of this issue.

Is the minister saying that this government is helpless, that there isn't anything we can do, that we're going to see our resource-based communities devastated because we can't manage this issue in a way that balances the need to protect an endangered species with the need to preserve forestry jobs which now seem to be in peril?

Hon. D. Miller: No.

D. Mitchell: I have a supplemental question for the Minister of Environment. The interim management guidelines for the northern spotted owl in British Columbia -- which were issued by his ministry, and which he has told us are now in a draft form -- have already had a very negative impact on resource-based communities in our province. Will the minister agree to set aside those guidelines until a much more detailed and complete study of both the environmental and the socioeconomic impact of this issue can be assessed,

[ Page 6573 ]

which involves all of the key stakeholders, including the forest industry, local governments and the general public?

Hon. J. Cashore: I will commit to continue to work closely with the Minister of Forests. The two ministries will continue to work together to resolve this issue in the most appropriate way possible.

D. Mitchell: I have a final supplemental to the Premier. Clearly the Minister of Forests and the Minister of Environment are unwilling or unable to show any leadership on this very important issue. After thousands of jobs were lost in the American northwest, President Clinton called a timber summit to deal with that devastated industry.

Will the Premier show some leadership and agree to hold a British Columbia timber summit before thousands of jobs are lost in our province, and involve in that summit representatives of industry, unions, communities and others who are determined not to see the job losses in our province that we've seen in our American neighbours' forest sector? Will the Premier agree to hold a B.C. summit?

Hon. M. Harcourt: This is an important issue, and as you've heard from the two ministers, they are working very closely with each other on it. The question of an industrial strategy that adds jobs in British Columbia instead of shipping logs to the United States is important. The minister has been meeting for a number of months with leaders in the industry, with workers and with others to bring about the creation of more jobs in British Columbia, instead of shipping logs across the border or off the continent.

The Speaker: The bell signals the end of question period.

Interjections.

The Speaker: The bell was in error.

K. Jones: It's nice to know that that bell has so many capabilities.

TOLLS ON BRIDGES IN GREATER VANCOUVER AREA

K. Jones: My question is to the Premier. Your Minister of Transportation and Highways, in a speech a few weeks ago in Kamloops, suggested a 65-cent-per-car toll on each bridge leading into greater Vancouver. Can the Premier confirm that he is actually considering creating a fortressed Vancouver, a city surrounded by toll gates?

Hon. M. Harcourt: The issue of improving the transportation system, which has been neglected for many years, is an important one. It is a matter of future policy. I will take it on notice for the minister.

Interjections.

The Speaker: Order, please. Unfortunately, hon. Premier, a minister can only comment or take it on notice; he cannot do both.

K. Jones: To the Premier once again. This one is directly to you; you don't have to pass it on to the minister. The Minister of Transportation and Highways made his comments upcountry, away from the region of impact. Do you, as a member from the targeted area and the leader of the NDP, endorse this "toll them all, toll them all -- the rich, the poor and the small"?

The Speaker: Order, please. The Chair fails to see how that comes within the jurisdiction of the Premier. I will now recognize the next questioner.

B.C. GAS AND B.C. HEALTH SERVICES LTD.

L. Reid: My question refers to an issue of both health and petroleum resources and talks about B.C. Health Services Ltd. Inland Natural Gas Marketing complained to the commission about fixed charges contained in the interruptible and transportation rate schedules of B.C. Gas and asked for a waiver of certain basic charges that the utility was recovering from customers. I am addressing my comment to the Premier because the Minister of Energy, Mines and Petroleum Resources has just left. The question looks at Health Services Ltd., which is a private sector company trying to do business in this province.

Indeed, what is their proprietary interest in opposing an application for a rate change? I would ask the Premier to respond.

Hon. M. Harcourt: I tried very hard, hon. Speaker, to catch that. It was almost like the Kraft commercial: "I've got six seconds to sing." It was that fast. I will take on notice what I think I heard.

Orders of the Day

Hon. M. Sihota: Hon. Speaker, I call second reading of Bill 8 in this chamber.

I also advise members that Committee of Supply A is called for the Douglas Fir Room to deal with the estimates of the Ministry of Environment.

SOCIAL SERVICE TAX AMENDMENT ACT (No. 2), 1993

(continued)

The Speaker: The Leader of the Official Opposition adjourned debate.

F. Gingell: Bill 8 is the admission of defeat of Bill 9. First of all, part one of this bill retroactively reintroduces a tax that was struck down by the British Columbia Supreme Court. This government calls itself the New Democratic Party; it knows that one of the basic principles of a democracy is that there not be retroactivity in taxation. You can't pass laws and create taxes and make them retroactive. It simply isn't right and it simply isn't fair. The Minister of Finance, hon. Speaker, should recognize that when you lose, you don't have the right to change the score. You can't go back and say: "We've decided that instead of losing this one, we have won."

[3:15]

I appreciate and understand that it is perfectly acceptable to change the rules for the future and to start

[ Page 6574 ]

a new game, but it is simply unacceptable to turn around and create a retroactive tax when it has been defeated in the courts. On this particular issue, the minister is not living by the rules of a democratic society. I think that is most regrettable. Why did the previous social services tax amendment that applied to the legal profession get struck down? It got struck down because basically the act wasn't clear. It was too vague, and anybody could be subject to penalties for not following the rules and regulations that the act had set down.

[H. Giesbrecht in the chair.]

The defence of the Attorney General, who was representing the government, was that they could only put people in prison under this act for two years, so therefore that should not be considered a valid reason. But the fact is that the British Columbia Supreme Court dealt only with one issue. They were able to find that

section 7 of the Constitution Act of 1867 came into play because the wording of the act was too vague. I accept and understand that under Bill 8 the minister and his advisers have enlarged the description of what legal services are and widened and made more definitive the description of what purchases are. But there were other issues involved in that challenge that the court didn't rule on.

The first question is whether or not the province has created a tax that only applies within the province, or whether it applies outside. That matter hasn't been dealt with. There was also a challenge based on the question of whether this is a direct tax or an indirect tax. The province has the right, under the constitution, to levy direct taxes. They do not have the right to levy indirect taxes.

That particular subject, and the defence that the plaintiffs are bringing, comes back to an issue that we tried to convince the minister of during debate on Bill 9, which was the time-lag between the delivery of the services, the billing, the requirement of the lawyer to pay the amount and the time at which he might collect those fees and taxes. We tried to explain to the minister at that time that those particular sections were really unfair.

To make the assumption that the first penny collected is the tax and the last penny collected is the fee and to require the amount of the tax to be remitted immediately it has been billed, or within 15 days of the month following -- when the lawyer has not necessarily been paid -- seemed to us to be a gross miscarriage. And the minister was expecting the lawyers to finance this themselves. Only something less than 25 percent of legal fees are paid promptly from the lawyer's trust account at the time the billing is made.

We didn't appreciate that there was also a constitutional question on that issue, but it is something that we really do suggest the minister should revisit.

Another issue is the question of whether this tax is discriminatory. We dealt with this at great length during Bill 9, and it's just as discriminatory now as it was then. Why on earth would this government decide to levy a tax on the cost of the services of a lawyer and not on the cost of the services of an engineer, architect, accountant or any other profession? Why have they selected -- in a discriminatory manner -- lawyers? We all recognize and accept that governments will create discriminatory taxes on things like luxuries, so we have luxury taxes.

A fur coat -- if you can find one these days -- might carry a different rate of tax than a cloth coat. We have seen this government bring in an additional provincial sales tax on what they call luxury automobiles.

Legal services are never a luxury. You don't go to a lawyer -- I can assure you -- unless you really have to. You go to a lawyer to get a court order to protect you because you have an abusive spouse. Is that a luxury? You go to a lawyer because you're in financial difficulties; you need to go through bankruptcy proceedings. Is that a luxury? You go to a lawyer when you're in marital difficulties and you need to get a maintenance order to provide for your children. Is that a luxury? More people are first-time homeowners than any other classification. Buying your first home is not a luxury, but you need a lawyer.

When you have your will made up, that's certainly not a luxury; you are contemplating a death and all that entails. They don't charge a provincial sales tax for a person to go to a tanning studio to get an attractive tan. They don't charge a tax on the cost of going to a diet centre to get an attractive figure. But they charge a tax on the cost of going to a lawyer to get an order to protect you from an abusive husband, or to get maintenance payments for your children -- certainly not a luxury. Governments as a matter of public policy bring in discriminatory taxes that are called sin taxes.

They're taxes on tobacco, taxes on liquor, taxes on things that we don't think are particularly good for you. They not only raise revenues but also discourage the use of such things. Do we want to put a tax on lawyers to discourage their use? You don't go to a lawyer unless it's absolutely necessary.

Interjection.

F. Gingell: At this point I'll just cede the floor for a second.

Deputy Speaker: The Chair recognizes that the member has taken a short break.

C. Evans: I'd like to thank the Leader of the Opposition for allowing me to make an introduction.

Leave granted.

C. Evans: Many years ago I used to log with a fellow. Both of us have now grown up and gotten more honourable professions; he's slightly more honourable than myself perhaps. Barry Gray is here as a school-teacher with a group of students from the Nelson Waldorf School. They've come very far. I wish everybody to make them welcome.

F. Gingell: I was speaking with respect to whether or not this tax is discriminatory, working on the thesis that you have luxury taxes that are discriminatory, and clearly a tax on legal fees is not a luxury. You can have what we call sin taxes, which are discriminatory and accepted as public policy. People normally only go to lawyers when they're in trouble or need help or are in

[ Page 6575 ]

the throes of bankruptcy. You don't go to lawyers for the fun of it, and that's one thing that's true. So is this a discriminatory tax? Clearly it is. In fact, it actually works in reverse. There's a positive discrimination in the act. There is no provision in the act for a lawyer to pay tax on the value of the services that he renders on his own account. If a lawyer is purchasing a piece of property and registers the property himself, that work has a value. There's no requirement in this act to have that tax paid. Everybody else has to pay the tax, but if you're a lawyer you don't have to pay.

That seems to me to be inappropriate. If you are in the business of manufacturing or selling tangible goods, and you take them for your own use, you pay the tax. It's obvious this is clearly discrimination in reverse.

I saw that the two new tax experts that the government has hired Professors Gunton and Maloney, agree that this tax is regressive. I think all members of this House would agree that a tax on legal services, on the value of services rendered to someone, has no relationship to the ability to pay. But the Minister of Finance, on April 30, 1992, said that this tax was a progressive one and he was proud to introduce it. So that he understands the difference between progressive taxes and regressive taxes, I want to make the point to him clearly that progressive taxes are based on the ability to pay.

They are normally taxes on income; they are not taxes on spending. Spending taxes or consumer taxes are considered to be regressive. As the Minister of Finance, it's very important for him to understand that. There's clearly no relationship between needing the services of a lawyer and the ability to pay for them. There may in fact be an association, but it may be negative rather than positive. Lawyers tend to deal with single mothers, bankrupts, the elderly and first-time homebuyers.

They deal with people who need their services, and to suggest that this class of people has the ability to pay this additional tax is simply poppycock. In fact, the reverse is true.

[3:30]

When it comes to corporations, one would expect large corporations with their own house counsel to do their legal work to have a greater ability to pay a tax on legal fees than would a small business. A small business has no choice but to go outside and hire a lawyer. The tax does not apply to the value of legal work done by house counsel for the company that employs them. That simply doesn't make sense to me, particularly when the minister thinks it's a progressive tax. The burden is going to fall far more on the small business.

It's also going to fall more on the individual than on a corporation, because the corporation is able to deduct the 7 percent tax from their taxable income. If they're in the 50 percent tax bracket, they'll only pay 3.5 percent; the people of Canada will jointly pay the other 3.5 percent. It is very unusual -- it normally never occurs -- that an individual would be able to deduct fees and taxes to determine their taxable income. So as an individual, you won't get any deduction; as a corporation, you will. That doesn't seem fair.

Earlier I mentioned briefly the question of delay of payment. The provisions of this act have been written in such a manner that the government has determined that the first penny paid is a penny of tax. All of the first collections, up to the amount of the tax, are taxed, and it is not until that is paid that the payment of the fee begins. This clearly is unfair and needs to be changed. We all understand and appreciate that there are such things as bad debts, particularly for lawyers who are dealing with bankrupts and single parents and people who are in difficult financial positions.

Clearly there should be a simple calculation whereby the amount of money that is collected is divided at the ratio of 7 to tax and 107 to fees.

It's an unusual set of circumstances when we once again have the opportunity to debate the same bill and the same issues that we debated last year because the minister or the Attorney General got it wrong. I'd be interested to know if the Attorney General ministry, which does legal work for all of the ministries and, I presume, some of the Crown corporations, has started billing them tax on the services they render. But we said it all last year. The minister is going to hear it all again this year. This tax really is unfair; it is discriminatory.

It should not be applied to lawyers if you're not going to apply the tax to architects and engineers and accountants. They -- let's face it -- are normally dealing with clients who are building something, or at least are reasonably wealthy. I'm certainly not trying to encourage you to widen the net. You should be closing it and not taxing any of these services, because it is a regressive tax.

To pick out lawyers, who normally are dealing with trials and tribulations and situations where there is family breakup and a lack of money, I think shows an absolute lack of understanding and sympathy by this government for the people who are forced to take their problems to the court system.

To suggest that the purpose of putting in this tax is to fund legal aid, which is what the minister said when this tax was proposed at this time last year, is also nonsensical. We don't have taxes that are normally created to fund specific actions. I don't think that's good policy. I know the Minister of Finance doesn't believe that's good policy, because in Bill 4 -- which I was prepared to speak about -- you were taking it away for what I believe were good and valid reasons. I don't see the logic of suggesting that people who can afford to pay their legal bills should pay an additional tax to fund those who can't.

With that, I would make one last plea to the minister to reconsider this. I am sure that the Law Society is going to challenge this once more, because all of the issues that were dealt with didn't have to be dealt with by the courts. They looked at the first one and said: "That's enough. It's unconstitutional; throw it out. We don't have to look at reasons 3, 4, 5 and 6." So they'll be back next year.

This time I hope that when the minister loses -- as I'm sure he will lose -- that he won't try and change the rules after and that he'll accept the verdict of the courts and allow the money to be returned to the people who were improperly taxed and make any changes that he believes are in the interests of British Columbians to apply only to the future. He really should learn to be a good sport. You don't change the rules retroactively.

[ Page 6576 ]

H. De Jong: I to rise to speak against Bill 8, and I guess that it's not unusual for a member from the opposition to speak against it. This bill is not simply a bill concerning lawyers' fees, hon. Speaker. Lawyers are being used as collection agents to gather these taxes on behalf of the government from clients who need the services of lawyers. So it's not a tax on lawyers as the bill would have it.

This bill indicates that the tax will be applied retroactively. I'm not sure of the date last year when the courts ruled that because of some technical aspect it was indeed illegal to charge this tax, but surely since that time lawyers have not collected this tax because it was unconstitutional or illegal -- whatever term may have been used. So lawyers have had clients who would normally have paid but didn't pay because there was no need to pay an unconstitutional tax. Is the minister, with his retroactive statement in the bill, suggesting that these lawyers go back to their clients of the last year to collect these taxes? Surely he wouldn't do that.

An Hon. Member: Knowing him, he might.

H. De Jong: I guess nothing is impossible with this government.

Interjection.

H. De Jong: Yes, but it's not a lawyers' tax; it's a tax on the people who use lawyers for whatever purposes.

Now put that over against the other segment of society that uses legal services through the Ministry of Social Services. Had it gone through, this tax would have been an additional cost to the Ministry of Social Services as well. But the courts decided that it was not an appropriate tax to charge. Has the Minister of Social Services continued to allowed this 6 or 7 percent tax to be paid on the charges that were put in by the legal services lawyers, or are the people using the services of legal aid exempt from this tax? I'm sure they're not because it is still a legal service provided by lawyers. Why should one lawyer pay but not the other, or one lawyer charge but not the other?

At the same time, a question comes to mind: would the Minister of Social Services allow this tax to be paid even after the courts have said it's not right, that it's illegal? Surely there must be control on the minister. Whether that is true is a question that's often asked. If indeed the courts have said that this tax is not to be charged by lawyers and not to be paid to this government, then how would the minister allow this tax to be paid? I'm sure that the minister would not allow this tax to be paid since that decision was made.

Put that over against the average person who used a lawyer's services last year, how can this government expect the people who used the services last year to pay for that particular legal service this year? They missed out on the taxes last year because of a decision by the courts. Surely we don't have a double standard in this province. If this minister wishes to push through this bill in its present form, however, we will have a double standard.

It's not unusual for this government to do that, particularly when it comes to raising taxes. They've tried it on a number of things this year -- one they finally withdrew from. This tax is not against lawyers but against a certain segment of society that needs a specific service, which we may all need from time to time. As the Leader of the Opposition stated, the large corporations which have an in-house service don't have to pay this tax because it is simply salary paid like any other within the corporation.

[3:45]

Again, this tax is aimed at middle-class people. It is another onslaught on small businesses, which often have to use these services, and on the average family, which requires legal help from time to time in purchasing a home or other things.

I'm opposed to this bill. For one thing, I cannot see the logic of it. I think it's unfair to a specific segment of society. Mostly, it's unfair to have a retroactive clause to demand that lawyers collect the taxes they should have collected last year after the courts have ruled that they were illegal. I'm opposed to this bill; we will certainly oppose it at second and third reading.

L. Stephens: It is a pleasure for me to rise today to speak in opposition to Bill 8. As the Leader of the Opposition has so clearly stated, it is a discriminatory tax. This tax, along with the labour tax, selects services and taxes them. Luxury services are not taxed. Does the government then view legal advice as a service and not as a need? Does an individual need to draw up a will? Does an individual need a lawyer during the purchase of a house? Does an abused partner need a lawyer in order to file for separation?

These are the types of services and advice that will be taxed by the government's social services tax. Why does a law-abiding individual have to pay a tax to establish a will, to settle the purchase of a house or to seek an injunction against an abusive partner?

As a number of members have said in this House, this is a tax not on lawyers but on people. It's going to be on elderly couples seeking to prepare wills; on single, working and non-working mothers striving to maintain or to enforce child care maintenance agreements or court orders; on young, first-time homebuyers whose resources are already strained by the purchase of their homes; and on small business people whose cash flow is tenuous in this economy, but who still need consultation on their business problems. This is a tax on clients -- on people -- not on lawyers. The consumers of legal services will bear the burden of this tax; that's all of us.

This is a regressive tax that will impact most severely on those low- and middle-income people. It may discourage people from seeking legal help. Legal services are essential services, not luxuries. People need lawyers' advice and assistance to protect their rights and seek their remedies.

This tax will hurt small business especially. Many large firms have the benefit of in-house counsel. Small business people do not have this option. Many business people will have to pay more for legal services. This will

[ Page 6577 ]

make it harder for them to survive in an already very difficult time.

The bill stipulates that the tax will be applicable to and payable on legal work performed by non-British Columbian out-of-province lawyers if the subject of the legal work being done is situated in British Columbia or if it is contemplated that the subject of the legal work might be done at some future date. How will this collection be enforced? This stipulation will have an impact on offshore real estate and business investors. The stipulation was not in the bill last year that introduced legal fees; this is a new addition.

The legal firms will become Revenue B.C. The tax will be a burden on small firms in particular, who will have to collect the tax and pay it. The government requires that the tax be paid whether or not the firm has collected the full payment. Small firms are going to have a difficult time with this stipulation.

B.C. is the only province in Canada to impose a tax on legal services -- another first for this province.

An Hon. Member: Nothing to be proud of.

L. Stephens: And that's nothing to be proud of. No U.S. state imposes a selective tax on legal services.

This tax will discourage people from seeking legal counsel, particularly low- and middle-income people, including seniors, single mothers and people on fixed incomes. For those reasons, and others that we will be speaking about in committee, I urge all members of the House to vote against this bill.

A. Cowie: I wish to speak very briefly on a couple of points that haven't been covered by the Leader of the Opposition and my fellow members. Clearly I'll be speaking against it. It's a very unfair bill, in my opinion, to....

Interjection.

A. Cowie: Absolutely. The minister says there are more lawyers per capita in the Vancouver-Quilchena riding, and that's absolutely so. I can assure you that many of the lawyers have called me on this.

Interjection.

A. Cowie: Actually, the member for Delta North suggested that I live in Tsawwassen. I do, but I wish to announce that I am now moving to Vancouver. We have finally sold our house, and I am moving to Vancouver-Quilchena.

An Hon. Member: Move before the bill is enacted.

A. Cowie: Thank goodness I don't have any legal costs.

It purely is discriminatory, and that's what many of the lawyers who have called me.... I hope that the next step isn't that architects, landscape architects, engineers and planners.... My goodness, planners don't make enough money to even survive anyway. Surely there wouldn't be much money coming in on a tax for planners. The Social Credit government already ruined planning in this province; surely the NDP government wouldn't want to make it any worse.

However, I wish to make one point that perhaps the minister hasn't thought of. Many of the municipalities -- particularly the small municipalities -- contract their legal services out to private companies, so this is simply going to be a double tax. The lawyers will have to tax the municipalities and the regional districts. That's just going to add to the local tax burden, because there's no way of getting around it. So it's just government taxing government.

Having worked in municipal life, I can assure you that those taxes will be considerable. Legal costs on rezonings, and the way municipalities have to get legal advice these days to protect themselves, are horrendous. The member for Delta North will know that in Delta alone -- when he was an alderman a few years ago -- legal costs were probably in the range of $250,000 a year and are now in the range of $750,000. So you can imagine the taxes the municipality will have to pay -- through the lawyers, of course.

The main and final point that I want to make -- because I did say my comments would be brief -- is that this is a ridiculous tax, singling out one profession. It's most unfair -- grossly unfair -- and I hope the minister will reconsider it.

L. Fox: I rise to speak on the principles and philosophy of Bill 8. Obviously those principles and that philosophy are more in line with this NDP government than they are with my party, and I therefore am opposing Bill 8.

First of all, I wonder how effective the province will be in policing this particular tax. When I look at the retroactivity of it, how will this government go back with some accuracy....

Interjection.

L. Fox: Hon. Chair, I'm competing with the member from the Liberal Party who said he didn't want to speak to this bill.

I will complete my statement about retroactivity. We read here that if an outside legal firm does business for anybody that falls within the province's domain, tax is supposed to be collected and remitted to British Columbia. First, I wonder whether the government has the autonomy to go after a firm that may have its offices in Alberta or Washington yet has been called to the bar in British Columbia. I know there are several firms like that that have done business over this course of time.

In fact, I would suspect that this government would not have the autonomy to use force upon those legal firms outside the jurisdiction of this legislation in order to collect this tax. I would suspect that the courts, as they did with the earlier legislation last year, would view that as not being within the constitutional jurisdiction of this Legislature. So that's one area that I think has not been well thought out.

When we look at who uses legal services the most, obviously business and industry play a big part. Several members spoke about the fact that the larger industries

[ Page 6578 ]

have on staff at least a portion of the legal expertise they use. Beyond that, they do contract out for expertise on specific issues, and obviously they would then be obliged to pay the tax. But the bulk of the people that this will hurt will be the small entrepreneurs trying to start up or develop new companies, who are already hurting. Quite often we find that when smaller businesses are starting up, a large percentage of them fail because they're undercapitalized. Going through the legal process is a substantial cost in starting a new business, and this tax will increase that by 7 percent.

True, those businesses will have the opportunity to write off that expense. The problem is that if you don't have any profit to write it off against, all the write-offs in the world are really of no value to you. So there is a direct expense.

The other part of life and the segment of the population that I believe contributes most and will be impacted most by this taxation is the average working British Columbian. The individual who is not fortunate enough to be working has the opportunity to apply for legal aid; and his costs will be paid, as the previous member for Abbotsford pointed out, by the Ministry of Attorney General or by social assistance through our legal aid program. It will be the average working person who wants to protect his family, to develop a will....

N. Lortie: He wants fair wages.

L. Fox: Well, now we want fair wages, and this 7 percent tax is going to create fair wages? That's a new twist. That's a real new twist on it. That shows the integrity and the understanding of the back bench.

It's this kind of tax that will necessitate higher wages by increasing the cost of legal protection and the cost of seeking justice to the average British Columbian. That will encourage those individuals to once again seek higher wages, either through the bargaining process if in fact they're organized, or through their employers if they're not organized, because their relative buying power is going down with every new tax that this government brings forward.

[4:00]

One of the main issues in legal fees is in the area of conveyancing. I think it was the Leader of the Official Opposition who pointed out that for first-home buyers this is not a luxury. Right now, on most homes in my region, legal fees are between $1,000 and $1,400 just to handle the average conveyancing. This 7 percent tax puts another cost of $70 to $90 directly onto the purchaser. Yet it's possible, hon. Speaker, to have your conveyancing handled by a notary public. If you choose to go that route, there's no taxation on it. Yet, if you choose to use a lawyer, you're going to be taxed for it.

I don't want to suggest that a notary public cannot convey your title as well as a member of the legal profession. The act is favouring notaries public over the legal profession. It's promoting that individuals use a notary public in order to handle the land transactions that they're entering into. That, I believe, is another unfair part of this bill.

Look at some of other taxation policies that this minister has brought in, particularly the taxation on labour that he brought in with his budget. Look at the impact of that on ICBC. By the minister's own admission -- after it took him a month to answer a question taken on notice -- it was going to have a $4 million impact on ICBC over a six-month period. That's an $8 million impact on ICBC over the course of one year from a 7 percent tax on labour. I ask the minister: how many dollars does ICBC spend in legal fees in order to settle claims? It's going to be a dramatic amount of money.

Where is that going to come back? Once again, it's going to come back on the average working British Columbian when he goes to buy his auto insurance. Once again, there's a compounded effect by this kind of taxation.

I'm also extremely concerned about another very expensive part of justice that involves the probating of wills. If you look at the process that must be gone through here, through the courts and through the legal profession....

I must be giving a really exciting speech, because virtually the whole House has left me.

Anyway, the probating of wills is an extremely expensive process with horrendous legal fees attached to it. This particular legislation is nothing more than a tax grab on those individuals, even though they are buried and gone. We knew that this government was considering legislation which would see those estates taxed, but we didn't realize that they were also going to tax the legal fees charged to probate those estates. That's obviously what this bill allows to happen.

There are many aspects about this, and there's no question in my mind that it's going to be challenged by the legal profession, even though the legal profession knows that they are only an agent for the government in this process. They realize that this tax is not on them as individuals or on their corporations. They won't have to pay it. The average British Columbians are going to see their costs of and opportunities for justice increase by 7 percent due to this bill.

For those reasons, I join other members of the opposition who have spoken against this bill, and I'll be joining them in voting against it.

K. Jones: I also wish to speak against the Social Service Tax Amendment Act. It sounds like it's got something to do with social services, but we have to look at who the tax is intended to attack, or who it's intended for. It is primarily going against legal fees. As such, it's not helping social services; it's creating more of a problem. It's going to place more people into difficult situations.

There might even be a few more people added to the social services rolls as a result of this extra cost they are facing as they become quite marginal, particularly the small business people who depend upon this type of legal advice. They can't have a person on staff, like a larger corporation can, which this government says that they would more appropriately tax.

In this case they are going against their own intentions. Their intentions would be to tax the very wealthy and give tax relief to the poor. In this case they're taxing the poor and releasing the wealthy. It seems to be a total contradiction to the entire

[ Page 6579 ]

philosophy of the NDP. I can't understand why the Minister of Finance would even consider bringing forward such a bill. Surely the minister must have been sleeping at the time the bill was being processed, and he still hasn't had a chance to read it. Otherwise he would have thought better of it and stuck to the basic philosophies; or maybe they have changed. Maybe they are just another Social Credit Party from the past, and now that they are in government they're doing all the things that the Social Credit Party wants to do. Maybe that's the reason this bill has been brought forward.

They've lost track of their basic philosophical roots, and the minister is now in charge of the big corporation that taxes all the people of British Columbia. He wants to make sure he gets every penny squeezed out of every little change purse the poor people of British Columbia have.

Believe me, this taxation has got to be the most retrogressive, the most cowardly, form of taxation hitting the poorest people who need legal services. They're certainly going to need legal aid, even if they're in the middle-income bracket, because by the time this type of extra taxation comes on it, the legal bills will be so high that most people won't be able to afford it. Maybe the intention of the minister is to do away with the legal profession. I know he has a great abhorrence for the legal profession and certainly would like to stick it to them every chance he can.

Maybe this is his way, through this method. The only trouble is that he has missed the mark. He has missed the target, and the arrow is going right past the lawyer, and he's getting the backside of the consumer. The consumer is the one who will be paying and saying ouch, not the lawyers.

I will step down for a moment to allow the hon. member for North Vancouver-Lonsdale to make an introduction.

D. Schreck: I ask leave of the House to make an introduction.

Leave granted.

D. Schreck: I would particularly like to thank the hon. member for interrupting his presentation to allow me this opportunity.

In the gallery are approximately 34 grade 5 and 6 students from Lonsdale Elementary School, accompanied by one of their instructors -- and I know I'm going to mispronounce this name, but I will try -- Mr. Stuible. I know that the students will forevermore ridicule their teacher over my mispronunciation of his name. I bid the House make them welcome. Thank you for coming to Victoria.

K. Jones: The wisdom that comes from the mouths of our children is sometimes very incisive. It's a pleasure to have them here.

I hope that through this debate you will have an opportunity to see some of the problems that a government, which seems to be slightly misguided as to its purposes.... In the light of our presentation, it will be shown that this is not the type of bill this province needs. We in the official opposition, and other members of the opposition, are speaking against this bill. We are saying that it is an improper bill to be brought forward and that the Minister of Finance should seriously consider withdrawing it.

I would ask the minister to consider putting this bill to the test. After the previous bill was passed into legislation, it was tested in the courts, at great expense. I would like the minister to consider withdrawing it at this time and putting it through the test it's ultimately going to receive anyway, and that is the legal test the Law Society will definitely give it. Many other bills the minister has brought forward would probably fail that test if they were put under the same type of scrutiny as the previous bill, which this one is replacing.

The previous bill certainly does discriminate against people, according to the decisions of the Supreme Court. I think this bill also discriminates against people. It means that certain people will have to pay this tax, and other people will not. Those who, through incorporation -- whether it be privately or as a company -- can afford to have a solicitor on staff can get free of this taxation; yet those who have to hire the services of a solicitor on an hour-to-hour or day-to-day basis have to pay the tax. That's discriminatory. The minister has to realize that this is wrong; it's a contradiction of the basic philosophy of fairness in taxation.

We really wonder how much revenue will ultimately come out of it. What it will amount to is that fewer people will be able to use the services of the legal profession, and those services are only used when they are really needed. The people who are going to be hit by this are going to be those in our society who need special advice -- the person who is appealing a case with regard to their land title or some problem with the neighbour. It's the ordinary, common person who's going to be really impacted by this.

We're already hit with taxes to the bottom of our pockets today, and certainly this minister is digging right through the holes in our pockets down into the bottom of our boots. There's nothing left there, hon. minister, for you to go after.

I urge you to recognize that this type of taxation is not appropriate. It is a tax that has to be withdrawn. Recognizing that you're going to go through a long legal process again and probably will not collect any money through this budget year, as you didn't collect anything through the last budget year, who are you trying to collect this money for? By the time you get finished, it will not have any value, because of the inflation process -- especially with the provincial debt increasing at such a great rate. It will basically bring no return to the province. It certainly won't be of help to the budget year that you're planning this for.

I ask and urge the government and this minister to withdraw this bill today. If he needs to do this, he should make sure that it is done in a more appropriate manner -- a fair and equitable taxation, not this continual attack upon poor people.

[4:15]

[ Page 6580 ]

Hon. G. Clark: I rise to close debate. It's always nice to follow the semi-incomprehensible remarks of the member for Surrey-Cloverdale.

I simply want to make a couple of points. First of all, no one likes to raise or impose any tax, least of all anybody in politics, but we have some choices. If you're going to raise taxes, who is going to pay them? We had a problem in British Columbia -- we still have it, although it's getting under control -- of a 100 percent increase in the cost of legal aid. Actually, it was more than that. It's absolutely dramatic. We now spend $100 million on legal aid as a result of the previous government doubling the fees paid for lawyers on legal aid. We have since cut those fees by 15 percent, and the costs are more or less under control, but it is in the area of $100 million.

It's a lot of money, hon. Speaker, and when we chose to look at revenue sources to pay for it, we thought that a tax on legal services was a fair and appropriate way to do it. I want all members to know that this is not a regressive tax; this is a progressive tax, and it is statistically proven. This is not a subjective opinion; this is an objective fact. The majority of this tax will be paid for by business, and of those individuals who pay taxes.... The more money you make, the more likely you are to spend money on lawyers. That is a statistically proven fact. This means that the more money you earn, the more tax you pay on this type of service.

As a result, it is very clear that it is a progressive form of taxation. It's not one which I enjoy, not one which I like. I prefer not to do this, but if we're looking at $40 million in revenue, the alternative sources of raising that kind of revenue are, in almost every case, more regressive than this one. While I don't enjoy imposing this kind of tax on any professional group, we do think it is progressive. It does raise $40 million, and it helps to defray the costs of legal aid, which are rising dramatically in British Columbia and in other provinces.

With that, hon. Speaker, I ask members to support second reading of Bill 8, Social Service Tax Amendment Act (No. 2), 1993.

Motion approved on the following division:

YEAS -- 38

Petter

Perry

Marzari

Boone

Priddy

Edwards

Cashore

Jackson

Pement

Beattie

Schreck

Lortie

Lali

Miller

Smallwood

Hagen

Harcourt

Sihota

Clark

Cull

Blencoe

Barnes

MacPhail

Copping

Lovick

Ramsey

Pullinger

Farnworth

Evans

O'Neill

Doyle

Hartley

Streifel

Lord

Randall

Kasper

Brewin

Janssen

NAYS -- 14

Chisholm

Cowie

Gingell

Dalton

Farrell-Collins

Wilson

Stephens

Hanson

Serwa

Fox

Tanner

Jarvis

K. Jones

Tyabji

Bill 8, Social Service Tax Amendment Act (No. 2), 1993, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: Hon. Speaker, I call second reading of Bill 4.

BUDGET MEASURES IMPLEMENTATION ACT, 1993

Hon. G. Clark: This bill amends three acts to implement various revenue measures which support the government's commitment to control the deficit. The bill also includes amendments which reinforce the polluter-pay principle and improve the accountability of the sustainable environment fund. In this bill we have succeeded in reducing the deficit without jeopardizing essential services. Meeting our fiscal objective of working towards eliminating the deficit will ensure that future generations are not left a legacy of debt. To do this, we have had to make difficult decisions to increase some taxes.

The bill includes the following changes. Effective April 1, 1993, the tax rate on natural gas used in pipeline compressors is increased to 1.9 cents per 810.32 litres. This is of historical significance. It also applies to natural gas used in internal combustion engines to run pumping stations of oil pipelines and is expected to raise an additional $7 million annually.

This bill also includes an increase to the tax rate on cigarettes. Members might remember that last year we didn't raise the tax on cigarettes, and this year I was reluctant to do so because we were concerned about smuggling. But we do have the best record in the country on the problems associated with smuggling of cigarettes, and we're very confident that as a result of some new tax-marking schemes we will be very much on top of that problem. The rate of tobacco tax is increased to $22 from $21 per carton of 200 cigarettes.

The increase is consistent with calls from the medical profession for higher taxes to discourage smoking -- especially among young people -- and is also consistent with the legislative committee which is reviewing a similar kind of provision and demand to increase taxes on cigarettes. In addition, cigarette smoking is a particular problem that drives up the cost of medical services. So in a sense, this is a form of user pay.

[4:30]

The amendments to the Sustainable Environment Fund Act restrict the fund to only those revenues and expenditures related to environmental degradation. Because of the narrowed focus, corporate management of the fund by the cabinet committee on sustainable environment has been removed and the Minister of

[ Page 6581 ]

Environment, Lands and Parks will have sole authority over fund activities. I think this is important not only for accountability purposes, but also because when we have an environmental tax, as we do on rubber tires, we want to make sure that the revenue generated goes into dealing with environmental problems, particularly the environmental problem associated with rubber tires. I think that increases accountability, and I hope that it increases the acceptability of the tax.

People have a problem when a tax is raised ostensibly for environmental purposes, and then the Minister of Finance or the government of the day uses the revenue for something else. This improves the accountability, so that revenue generated from environmental taxes goes into dealing with environmental cleanup or the problems associated with that, and the Minister of the Environment is the minister responsible for spending money out of that fund for those environmental purposes.

The amendment reinforces the polluter-pay principle and improves accountability by strengthening the link between revenues and associated expenditures. I now move second reading.

F. Gingell: There isn't a great deal to this bill, but there are two or three issues that I would like to deal with. I'm clearly not worried about the problems of taking out references to leaded gasoline. I'll be interested to learn during committee debate exactly what the historical reference is to 810.32 litres. I was trying to work it out and thought that it might be one tonne. But I don't think it is a tonne; it's a little less than a tonne.

The issues that I think need to be addressed are that the minister, in his remarks just now, has spoken about the allocation of revenues from specific sources to accomplish specific goals. He was speaking about the revenues that come from a deposit on tires. But the minister is in the process of removing from the sustainable environment fund the automatic allocation of certain revenues to the fund -- I was under the impression -- not in this bill, but in Bill 5, I think it is. So those are two different messages.

[M. Lord in the chair.]

I have problems understanding if he is intent on removing specific funding exercises. The problem we have with special funds and statutory allocations of revenue streams to special funds is that the spending of the amounts raised does not come in front of this Legislature for debate. A little over $16 million will be coming into the sustainable environment fund in the year 1993-94 as a transfer and appropriation from vote 33. In addition, there is an amount of $24,700,000 coming in.

This is the total amount of certain revenues that the government receives which, under the Sustainable Environment Fund Act, are deemed to be incoming revenues of that fund. So in the process of legislative debate, there is $16 million that we can discuss and $24 million that we can't or shouldn't. It seems to be an inconsistent and unsatisfactory way of arranging government finances when certain governments -- a government in this case in 1990 -- made a decision on spending initiatives that would carry on forever.

It seems to me that it's the position of the Minister of Finance that he and the Lieutenant-Governor-in-Council -- the cabinet -- have the determination to decide what the budget is. Therefore I encouraged him in the past to collapse many of these special funds and to have the revenues that accrue to the special funds accrue to the government without any charge or hypothecation of them.

I don't know how I should comment on the fact that the Minister of Finance, in his wisdom, has decided to increase taxes on cigarettes. I understand what he's doing. I wish he would make the commitment that the additional funds raised would be spent on education and on programs to discourage young people in our schools from what my wife tells me is the filthy and disgusting habit of smoking. I see that he has increased the tax on pipe tobacco. I want to assure this House that we do not have any private arrangement that caused him to allow cigars on this one occasion to go through without an increase in tax. But I note it.

This bill is flawed. I know the minister has a great reluctance to changing sections of the bill, but it is flawed. The way it is written at the moment simply won't fly. During committee stage debate we will be proposing an amendment to

section 7, because the "and" should come at the end of paragraph (

f) and not at the end of paragraph (g). I'm surprised that the minister is so incompetent that he hasn't got that. At least, I hope that is the case; I am fairly certain that it should be after paragraph (f). With that major change that we will be seeking the support of the government on in committee stage, I thank you for the opportunity, hon. Speaker, to speak on this bill.

L. Fox: I rise to speak on the philosophy and principles of Bill 4. This legislation has several effects that are of concern, particularly the increased tax on an "internal combustion engine at a compressor station of a gas pipeline or a pumping station." I'm suggesting that the increased tax on the supply of natural gas is going to have a major effect on the residents of northern British Columbia.

Interjection.

L. Fox: The minister asks why. I'm absolutely surprised that he should have to ask that. He puts forward a tax that is going to cost one company alone -- Westcoast Energy, which supplies most of the gas to northern British Columbia -- $4 million. To whom is that going to be charged? I would submit that immediately they will be going before the Utilities Commission and applying for an increase in gas rates to offset the impact of this government's taxation. Winters in my community are longer and colder than in the south. In the winter months natural gas alone in my home costs about $225 a month.

The impact, once again, is going to be felt by the northerners and those people who rely on this type of heat. It will have a far more severe impact on them than on the people in the south.

Let me go on to suggest that we should be encouraging the delivery of natural gas, not discouraging it

[ Page 6582 ]

through taxation, because it's environmentally friendly. If we continue to hike the prices, we will see people go back to other forms of heat -- perhaps not as the primary source but as a supplementary source so as not to pay increased gas bills. Many communities, particularly in northern B.C., are looking to do away with wood smoke and the other forms of delivery of heat because of the environmental impact on those communities. Now we see this government taxing something that was helping in those particular areas. I believe that's the wrong direction. The minister should have found other means rather than taxing something that encourages a more environmentally friendly form of heat.

Let's talk a little around the amendments to the sustainable environment fund. The previous speaker spoke about the dollars that are coming into that fund. I hope this particular initiative is finally going to see some movement. The Finance minister mentioned the issue of tires. Presently the sellers of tires have to look after the disposal of old tires when they're exchanged for new ones, but there's no process for disposing of them. We have piles of tires at tire shops and service stations around the province, with no way to get rid of them.

I hope this will encourage the Minister of Environment to find a way of recycling them, because they're becoming horrendous in many rural areas of B.C., although not so much in the southern sectors. There's a means of recycling them when there isn't a large transportation cost attached, but to transport used tires 500 or 600 miles down to this process, which really doesn't have the capacity to utilize all the tires anyway, doesn't make a lot of sense.

As for the rest of it, being a cigar smoker myself on occasion, I appreciate that the minister didn't attack the smoking tax part of it.

Hon. G. Clark: Amend it in committee.

L. Fox: I thought that was where the leader of the Liberal Party was heading.

My key concern in this bill is that we are impacting a process and the delivery of a gas, which will have a strong negative effect on northerners versus southerners because of the climatic and living conditions. I really would have appreciated the minister looking elsewhere or looking at suspending versus putting more tax on northerners. I will be voting against this bill because I believe it's an unfair tax on some parts of the province.

Hon. G. Clark: To close debate, I appreciate the remarks of both opposition parties on this bill. I think we can give some comfort in committee stage to their concerns. I'll pass on the previous speaker's comments with respect to the Ministry of Environment and the question of surplus tires. That's a legitimate concern. As you know, there are horrendous problems in the eastern provinces with respect to the disposal of tires. Some progress has been made. If there are particular problems in the north, I'm sure this gives a revenue source which we can at least look at fixing.

[4:45]

With respect to the concerns on natural gas, I just want to remind members opposite that other provinces have forms of taxes that we don't, which were options we could have pursued. In Saskatchewan a 9 percent sales tax is applied to natural gas at the compressor site. Manitoba applies a 7 percent sales tax at the compressor site. We have 1.1 cents per 810 litres. It does raise some revenue. I want to assure the member that while some of this will be passed on to the producer, which I appreciate is a concern, we're still very competitive in that area, and we want to make sure that continues to be the case.

Secondly, some of that will be potentially passed on through the rate base, spread out through all of the rate base with respect to Westcoast Energy. The cost will be very modest indeed, if any, to the residential consumer. So while I do appreciate and take seriously members' concerns about the disproportionate costs associated with heating a home in the north, I think you'll find it's very modest with respect to this bill.

This is essentially not a principle bill where there's a large debate. This is one that we can better do in committee. I move second reading.

Motion approved on division.

Bill 4, Budget Measures Implementation Act, 1993, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: Hon. Speaker, I call second reading of Bill 18.

MOTOR FUEL TAX AMENDMENT ACT, 1993

Hon. G. Clark: I don't want to move in a hasty way for the members opposite. I'm not attempting to do that. I was just saying to the Leader of the Opposition, who wasn't here, that I'm not attempting to move in a hasty fashion here. This is second reading debate on the Motor Fuel Tax Amendment Act, and I hope that doesn't give too much discomfort. It's a rather small bill and provides a number of amendments to the Motor Fuel Tax Act and the British Columbia Transit Act.

Bill 18 proposes a transit tax of 1 1/2 cents per litre on gasoline and diesel fuel purchased in the Victoria regional transit service area. I want to emphasize that the tax is introduced at the request of the Victoria Regional Transit Commission. The revenue from the tax will contribute to the local share of transit funding and will allow transit facilities and services in the region to be upgraded.

I will say a couple of things about that for members. When we took office, the government had a deficit in both the Vancouver regional transit area and the Victoria regional transit area. Victoria is not as serious a problem as Vancouver, because Victoria had a surplus in its account. It essentially had a stabilization account which they had to draw down. Nevertheless, the annual deficit would have accumulated. In addition, as members know, there is a lot of growth in this region and a lot of demand for improved bus service in

[ Page 6583 ]

particular as well as other transit services. So we had to fix that deficit question. The transit commission -- the local people -- had to make recommendations to the government on how to fix it.

A variety of things were proposed. One was that they suggested taking off the hydro levy and putting a very modest charge on property taxes. That, I think, is a very positive initiative which saves the taxpayers of Victoria $330,000 in GST payments alone and is very modest indeed on the property tax bill.

Secondly, they proposed a tax on gasoline, as we -- meaning as a Vancouver MLA or Vancouver resident -- have in the lower mainland. In Vancouver the current transit fuel tax is 3 cents a litre; this is 1 1/2 cents a litre here in Victoria.

I want to emphasize to members that from the provincial taxpayers' point of view, this is a very good agreement generally, although no one wants to see any tax increases. In terms of funding transit, I think a gas tax clearly has some linkage and some merit. The tax is half the rate of Vancouver and allows for -- I want to emphasize this -- a 25 percent improvement in bus service over the next five years, and as a percentage of the cost of transit the province's share declines very modestly.

So what this does, even though it's a bit of a phony distinction because of the system we inherited from the previous government.... It's phony in this respect: the 1 1/2 cents a litre that we are asked to vote on today in this House is classified as a local share of funding. So this is the transit commission, local mayors and council members appointed by the government, albeit in this region, asking us to pass what is effectively a provincial tax and give it to them for their local share of costs. As reluctant as I am, as Minister of Finance, to do that, there is a real logic to gas-funding transit.

They've asked for it. It allows for dramatic improvement in the service in this region, which is desperately needed, particularly in some of the congested areas -- the Colwood area and the like. Our share of the subsidy for transit, which is the largest of any province in Canada, does not grow with this dramatic increase in service. This sort of provincial tax share does not grow; it's largely supplied by this local share. In this case, the predominant amount is this 1 1/2 cents a litre.

I've talked a bit to give more comfort to members opposite. It's very positive. I must say there's been a lot of public debate in this region about this issue. This is not new; it's not a surprise to anybody. It's been debated extensively in the local community. It is not universally loved, and I acknowledge that very clearly. However, I would say that a majority of citizens in this region -- certainly their elected representatives -- see that we have to pay this deficit. This is probably the best way of doing so.

Bill 18 also proposes amendments to the Motor Fuel Tax Act to provide an explicit legislative basis for suspending or cancelling a person's authorization to colour fuel where that person contravenes the provisions of the act and regulations which govern the colouring of fuel. This is again taking the opportunity for housekeeping amendments to ensure that we have a legislative basis for doing what we are in fact doing and have been doing for some time, as the Ministry of Finance.

In addition, Bill 18 proposes amendments to the act to establish that a person who uses lower-tax coloured fuels for a purpose that is not authorized by the act may be assessed for the difference between the coloured-fuel tax rate and the clear-fuel tax rate. The proposed amendments respecting authorizations to colour fuel and assessments for unauthorized uses of coloured fuel are required to protect provincial revenue from losses that occur when the lower-taxed coloured fuel is used for unauthorized purposes.

A. Cowie: I wish to thank the Minister of Finance for giving us a few minutes to prepare for a brief reply. The Liberal caucus supports this bill in principle. In fact, the 1 1/2 cents per litre has been requested by the local authority, as the minister said. It's a bottom-up decision and a request to provincial government, shall I say. We believe in the community making those kinds of decisions. There certainly is a need for improvements to the bus service. As the minister says, it's projected that this will give a 25 percent increase in the quality of service to the local residents of greater Victoria.

It is my hope that these improvements to the bus service will be combined in the long run with improvements to rail transit, Mr. Minister. It's also very important. I've heard from the mayors and councils of greater Victoria. They would like to see transit improvements made over the next few years tied with land use decisions. So any transit money that....

Interjection.

A. Cowie: I'll just pause for a second, because I think this is a very important part of this bill.

Any money that comes in for improvements to transit should not be spent willy-nilly. I'm not suggesting the transit authority would do this. We recognize that the first moneys have to be spent on bus improvements. However, in the long run there will be a rail transit system in greater Victoria, and it's very important that major land use decisions about where future housing, commercial and industrial use will go are tied to that decision. It's a great opportunity if this money is spent in looking at long-range planning and in tying transit with land use.

With that provision, the Liberal caucus can certainly support this bill. We are, with a little caution, concerned about increasing taxes generally, but provided the money is well spent in long-range planning and improvements that will be made in the next short while, we can support it. With that, I will turn it over to any other members who wish to speak.

For the minister's observation, I am not going to comment on the coloured fuel aspects or any other housekeeping aspects of this bill, just the long-range planning and the fact that funds which are collected will be spent for that.

F. Gingell: Nobody likes additional taxes, and I'm sure the people of Victoria -- much as the minister protests that this is requested -- really don't want the

[ Page 6584 ]

additional taxes. It's important for all levels of government to recognize their responsibility to deliver the services required by our citizens at the lowest possible cost.

Late last year there was a report done for B.C. Transit which talked about the kind of savings that could be achieved. I haven't seen all of that report, but I believe it referred primarily to the Vancouver side. I'm sure that similar concerns, savings and improvements can be made on the Victoria side. Rather than always looking for more money from our taxpayers, we must be looking for more effective and efficient ways of delivering the services they need. I plead with the minister to pass that message on to the individuals who are responsible for the Victoria regional transit area, because simply increasing taxes is not acceptable.

If I may, I would also like to deal briefly with the coloured gas tax issue. There have been very substantial problems in the coloured gas area. The ones of which I have some knowledge dealt primarily with fuels being moved out of Alberta into Regina and Saskatoon, where there are so many farmers it is possible to get coloured fuels without a great deal of question -- not quite the same situation as in British Columbia. If we have laws, government and taxes -- and I guess we're going to have all of those things for some years to come -- we have to have fairness and equity, and it's important that everybody be treated the same way.

[5:00]

If these provisions allow the Minister of Finance and the people within his ministry to administer this act in a fair manner, to ensure that the taxes that are required to be paid are being paid.... If they are not being paid when they should be, then that is a burden that is placed on the law-abiding citizens of this province. Perhaps when the minister closes debate he might let us have a few words on the issue of enforcement and the need for it in British Columbia. As my hon. friend the member for Vancouver-Quilchena said, our party will be supporting this bill.

L. Fox: I don't find a whole lot within this bill to speak on, but an observation comes to mind every time the Finance minister stands up and talks about minimal impacts in terms of taxation. We've heard that statement so many times. Eventually, so many minimal impacts become a massive impact and there is, in fact, a tax overload. That's what we are presently seeing in this province, and that's why so many people are discouraged to the point of.... Well, I hate to say that they're taking

part in any tax revolts, because those seem to have come and gone. But certainly the concern of people in B.C. is at what point this government is going to start looking at minimal cuts in spending rather than minimal taxation increases. I think that question is on the minds of virtually all British Columbians.

I don't profess to understand all of the concerns about the Victoria transit system. While I understand the process that has been gone through, I hope that the minister in drafting this is projecting it the way it was, and that he is respecting the wishes of the transit authority. That being the case, I certainly support it.

[E. Barnes in the chair.]

There is an issue with respect to the authority to colour fuel. While the Liberal leader touched on it, there is, besides the colouring of the fuel, the whole issue of who should have the authority to burn coloured fuel. This particular legislation, while it provides the authority to colour fuel and a penalty for not doing it correctly, doesn't give any definition as to who has the authority to burn coloured fuel. That's really the crux of the whole matter. That's where the individual gets into problems.

There is such a grey area out there in terms of defining, for instance, what a bona fide farmer is or what particular road construction can or cannot use coloured fuel. On its own this will not really improve the aspect of who can or cannot burn fuel. It provides some authority for penalizing and for colouring it, but the major question still has to be addressed. With that, hon. Speaker, I will take my place.

R. Neufeld: I want to talk just briefly on this bill. My colleague brought up the fact, and so did the Leader of the Opposition, that it's another new tax by the NDP. As I've said many times, British Columbians have told me, and they have probably told the government, that they are tired of taxes. They are tired of increases in taxes. There is a multitude of small taxes that, in the end, take a large share from people who are trying to make a living. There may not be other ways to finance transit in Victoria. I know a good part of it's done this way in Vancouver.

Like my colleague from Prince George-Omineca, I'm not familiar with the whole transit system on the lower mainland, but I realize that the transit system has to be put in place. In fact, there should be more public transit in the lower mainland to get away from the use of automobiles as much as possible. I don't think we'll ever get away from the use of automobiles in Canada or North America -- not for many years, anyway, because it's a love that North Americans have.

I would like to touch briefly on the coloured fuel amendments to the act. I am fairly familiar with it because I was authorized to colour fuel for 13 years as a bulk-plant agent for Petro-Canada. At that time, there were many representations made to government to....

Hon. G. Clark: Wasn't that a state-owned oil company?

R. Neufeld: It was a state-owned oil company that I joined when it was Pacific Petroleums; it was a private company.

H. Lali: Shame on you for working for a state-owned company.

R. Neufeld: I'm still working for a state-owned company. Anyhow, getting back to the coloured tax....

An Hon. Member: Coloured gas tax.

R. Neufeld: Coloured gas tax. Hon. Speaker, I guess it's been quite a day, hasn't it?

[ Page 6585 ]

Deputy Speaker: Yes. Now back to Bill 18.

R. Neufeld: Authority is given to the agent for the company to colour gasoline and diesel fuel, and that agent alone can colour fuel. It makes it very difficult at times, if you live to the letter of the law -- especially in the north where I come from, where things happen seven days a week around the clock -- for the agent to be there at all times to colour gasoline. It also becomes a hard call at some points to say who can really buy coloured gasoline.

I know many representations were made to government to withdraw the colouring of gasoline and diesel fuel altogether and to put the onus on the person buying it to reclaim the tax. I would rather see something like that, than repealing parts of the bill and substituting new parts to make it a little more difficult for everyone out in the field. After all, we do want to simplify government as much as we can, not make it more difficult. I would rather see that we did that, but I see the Finance minister does not want to do that. He wants to put in his own rules, or the government's rules -- just change some that were there before.

As we go through committee, maybe we can deal with each point more easily than trying to do it in second reading. With that, I don't believe I have any real opposition to the bill, other than to the addition of more regulation and the

interpretation of that.

Deputy Speaker: The hon. minister closes debate.

Hon. G. Clark: I appreciate that today there was slightly less partisanship with the four speakers in the opposition. Maybe it's because they're all supporting the bill for a change. But let me try and deal with some of the concerns raised.

First, the Leader of the Opposition made an excellent point about looking first to the expenditure savings before we move on the tax side. Through the Crown corporations secretariat we commissioned a report on transit. I'm very pleased to inform members of the House, if they're not aware, that in the middle of last year we actually cut $20 million from the transit budget as a result of that review. I think that Mr. Denhoff, and B.C. Transit generally, deserve some congratulations for that, and now we have a CEO from the private sector.

As a result of that fairly dramatic cut, it has meant significant savings both to the province and to the local share. So the deficit in Vancouver has come down significantly, and a little bit in Victoria as well, as a result of those cuts. Can more be done? Yes, absolutely. I have discussed this with the new CEO. I've been very frank -- as I usually am -- that there aren't a lot of new resources there, so we're looking for increased efficiencies in order to improve public transit without additional tax resources. Having said that, we do still have a problem in Vancouver which we'll deal with, I'm sure, at some other time.

I want to pay tribute as well to the Victoria transit staff, because all of the reviews we've done with transit show -- and I don't mean this as a criticism of Vancouver -- that the Victoria transit operation is uniformly more efficient than the other major system in Vancouver. Just to give you one statistic, there is an average of 20 sick days per bus driver in Vancouver; 12 sick days in Victoria. Now, 12 is too high -- I don't have any hesitation in saying that -- but it's a lot better than 20. The morale, efficiency and cost in Victoria are quite a bit better than in Vancouver.

There are arguments that say the reasons for that are that it's a smaller system, it's not quite as polarized and it's not as unwieldy. I don't diminish that, but I would just say that Victoria does a much better job. If we could obtain those levels in Vancouver it would mean millions of dollars in savings. We're obviously striving to do that and to do an even better job in Victoria.

I think the transit commission has done a good job here. I think the staff -- Mr. Lingwood in particular, who manages this operation here -- are doing generally a very good job. We are looking, however, for more efficiencies. I want to make that very clear. We have achieved significant efficiencies in transit. But more are needed, no question about it. Unfortunately, we need to improve service as well, with this growing population, so it requires this tax increase.

On the coloured fuel question, I appreciate the comments from members opposite who know more about this and certainly have more experience in this than I do. The Ministry of Finance sees a lot of various interest groups and the like. Often they're not happy or they want something. But farmers organizations as well as car dealers have made very constructive comments in this vein to the government in recognizing our fiscal circumstances.

Farmers have suggested, for example -- the member opposite mentioned this -- that they issue a bona fide farmer's card, which they claim would save millions of dollars because of the leakage in the system and which would deal with who's a bona fide farmer. They would have to be approved. That's a bit of a private sector response, so that the government is not saying who is a farmer; the farmers' association is. I want to tell all members of the House that we're reviewing that suggestion very carefully. I think there are some pilot projects taking place, but I'm not positive of this.

We're looking at that with farmers' organizations because there is a problem. We want to give a tax break to farmers with respect to fuel and to others who qualify. We do not want this to be broadly applied, because then it defeats the purpose and the money can't go to farmers who need it. Clearly this is increasingly so in Canada and British Columbia.

We are looking at all those options. The members point out quite correctly that this bill does not rectify all the problems. This bill helps to codify and deal with problems we have in enforcing the situation we find ourselves in today and in ensuring that it stands up to any legal challenges. The fundamental question of who is a bona fide farmer and who should be eligible is a more vexing and serious problem. This bill doesn't do that, but I want to assure members of the House that when I have the opportunity we will be actively looking at working with the industry -- if you will -- in trying to find better ways of making sure this is policed.

With that, I move second reading.

Motion approved.

[ Page 6586 ]

Bill 18, Motor Fuel Tax Amendment Act, 1993, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: I call second reading of Bill 5.

INCOME TAX AMENDMENT ACT, 1993

Hon. G. Clark: I move the bill be now read a second time. I w