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)

TUESDAY, JULY 27, 1993

Afternoon Sitting

Volume 12, Number 19

[ Page 9227 ]

The House met at 2:06 p.m.

V. Anderson: I would like the House to join me in welcoming Mr. Kang Tan, a businessman from the Vancouver-Langara area, to the House today.

Hon. D. Miller: It's my pleasure today to introduce a delegation in the members' gallery. It is led by the hon. Minister of Forests for Papua New Guinea, Mr. Tim Neville, who is accompanied by his wife, Fiona, and a number of people from the PNG Forest Authority: Mr. Stanley Pil, who is a Member of Parliament; Mr. Kanawi Pouru, Deputy Managing Director for the Forest Authority; Mrs. Cathy Munagen, the scientific officer for the Forest Authority; Ms. Joann Kaputin, executive assistant to the minister; and advisers Mr. Terry Warra and Mr. Conrad Smith. They are accompanied by Mr.

George Nagle of Victoria, a forestry consultant who has done a lot of work. The minister and his staff are seriously engaged in trying to bring modern forestry practices to their magnificent country, and we certainly wish them well in that endeavour.

L. Reid: I'd like the House to please welcome Steve Hussey, his daughter Kelleen and his son Kyle, who are visiting today. They are residents of Esquimalt. I ask the House to please make them welcome.

N. Lortie: It's my pleasure to introduce in the gallery today two very good friends, John and Peggy Mackie, from the community of North Delta, their daughter Laura and a visitor from Mexico, Se�or Jos� Porras. Would the House please give them a warm welcome.

G. Brewin: It gives me a great deal of pleasure to welcome to the Legislature today a group of people who are doing a lot of good work for British Columbia. They are the community and client relations subcommittee of the B.C. Ferries Corporation board of directors. Here today -- if they're not here yet, they're coming -- are Frank Collinson, a board member from Haida Gwaii; Arne Olsen, who represents and comes from Hornby and Vancouver; and Maxine Williams from Alert Bay. Also with them are B.C. Ferries staffpeople Rod Morrison, Nancy Addison, Ian Curtin and Marie Hickey. Would the House please make them welcome.

Hon. R. Blencoe: Hon. Speaker, I have the privilege to introduce a very special guest today who is visiting our province, the hon. Carol Carson, Minister of Municipal Government in Saskatchewan. Carol is also responsible for housing, sports and recreation and a number of other areas that keep her very busy. The hon. minister and I have had the privilege of representing our provinces at provincial ministers' meetings on housing, sports and recreation, and we look forward to working together in the future. Would the House please make the hon. minister welcome.

Hon. A. Charbonneau: I would ask the House to welcome Sharon Moore, who is a constituent from Kamloops on her first visit to the legislative buildings. I ask the House to make her welcome.

C. Evans: I have the pleasure to introduce today a friend of mine from Parksville, Barbara Barrett. I'd like members of all parties to make her especially welcome. I have it on good authority that she is one of only three people in the province who think we're interesting on TV.

Hon. L. Boone tabled the annual report for the Ministry of Government Services.

Oral Questions

B.C. RAIL LABOUR DISPUTE

G. Farrell-Collins: Hon. Speaker, my question is for the Minister of Transportation and Highways and the minister responsible for B.C. Rail. In the absence of the Minister of Labour, who I notice has departed on holidays, can the Minister of Transportation tell us who in cabinet has taken responsibility for the dispute at B.C. Rail to ensure that it's settled at the earliest opportunity?

Hon. A. Charbonneau: The normal procedures are being followed. The Minister of Labour plays a role, and I play a role as Minister of Transportation and Highways and the responsible minister for B.C. Rail.

G. Farrell-Collins: My supplementary question is to the Premier. Given that the B.C. Rail dispute is costing approximately $800,000 a day out of the British Columbia economy, can the Premier tell us, first of all, if he's been attending cabinet meetings? Secondly, how long will he let this dispute go before he'll take some action?

Hon. M. Harcourt: Yes, I do attend cabinet meetings -- and the sun does come up in the east and go down in the west. Quite frankly, the two ministers who are involved in this, the Minister of Labour and the Minister responsible for Transportation and for B.C. Rail, have spoken on this issue many times, and the member has heard their response.

G. Farrell-Collins: This reminds me of May when we bungled through the labour dispute as it related to teachers. We've let this thing drag on quite a while now. I think it is about time we started to get some direction from the government on how long this dispute is going to go on. With the House likely to rise within the next week or so, can the Premier tell us which Sunday in the month of August, or September, or October, the opposition should be booking off in order to return to this House to deal with the B.C. Rail strike?

EFFECT OF THE BUDGET ON THE AUTO INDUSTRY

L. Stephens: Last week the Minister of Finance was asked how much retail car sales were declining because of his tax policies, and the minister told this House that car sales were up. The truth is that the retail

[ Page 9228 ]

car sales are down by 26 percent on average. The minister was using figures on fleet sales, including government fleets, which are seasonal and which do not generate tax, and fleet sales are up. The minister later admitted his deception to the media. Will the minister acknowledge that he owes this House factual information? And will he admit that he used sales figures that had nothing to do with the sales tax revenues?

Hon. G. Clark: I'll let the facts speak for themselves. The Motor Vehicle Manufacturers' Association's own data -- their own data -- show that sales were up 13 percent in May over April, and up again by 4.6 percent in June over May. Vehicle sales are up in April, May and June, the months after the budget, and they were down January, February and March. I might say that sales were up after the budget in British Columbia and down in the rest of the country, so it is quite clear that vehicle sales are up.

Finally, just on the broader question of what is happening in the British Columbia economy, sales tax revenues in British Columbia are up 29 percent in April and May compared to the same period last year.

Interjections.

The Speaker: Order, please.

Hon. G. Clark: For the record, once again we have the highest increase in sales tax revenue and in vehicle sales in the country.

L. Stephens: The minister knows very well that the revenues are down from decreased car sales. These are the '93 figures here, and they're down from '92. Here they are.

Interjections.

L. Stephens: I will be pleased to; they're your own numbers. The minister was in a position to record and clear this record, but he chose not to. Will he admit that he misled the House, and resign?

[2:15]

Interjections.

The Speaker: Order, please.

Hon. G. Clark: I have said repeatedly that revenue is up both from vehicle sales and retail sales. The only thing that is down is the estimate of how much revenue we had received, because the historic data on trade-ins was not as significant as we estimated. In fact, this is good news for dealers. We estimated that 50 percent of cars sold on lots historically had trade-ins. It has now been proven to us that the pattern is that about 25 percent of car sales in British Columbia at dealerships have a trade-in value. That historic pattern is continuing, and we're continuing to monitor it.

The only reason the estimates were wrong has nothing to do with the tax; it has to do with that assumption we made based on historical data.

L. Stephens: I assume the Premier agrees that accuracy is a prerequisite for a Minister of Finance. Will he demand this minister's resignation?

B.C. RAIL LABOUR DISPUTE

J. Weisgerber: My question is to the minister responsible for B.C. Rail. Yesterday the minister said: "The union has requested, through the mediator, that negotiations resume." That statement, according to both the union and B.C. Rail, is a complete and utter fabrication. If the minister didn't deliberately mislead this House, will he tell us who misled him, and will he apologize to the House for being so badly informed?

Hon. A. Charbonneau: The information I had was that the union had contacted the mediator. I can add that the corporation has been in contact with the mediator to reestablish talks, and I would anticipate that the mediator will be doing so in the near future.

J. Weisgerber: This is the second time in less than a week that the minister has misled this House regarding the B.C. Rail strike. First it was the issue of the caboose. The minister claimed that that was the only issue holding up negotiations. Both the union and B.C. Rail said that that was ludicrous. How can British Columbians have any faith in anything this minister says? Is he so badly informed, or is he just careless with the truth?

Hon. A. Charbonneau: I would remind the member opposite that he was a member of a cabinet in 1990 when a B.C. Rail strike went on for 25 days. After much harm to the economy of the interior and the north of British Columbia, they finally saw fit to appoint an investigator under the Inquiry Act. At the present time we are about seven or eight days into labour action. It is not unusual for a strike to last this period of time. I have been keeping the House informed of developments to the best of my knowledge.

The Speaker: Final supplemental, hon. member.

J. Weisgerber: I take it from the minister's words that he believes 25 days is too long. Will he tell us how long he is prepared to allow this strike to go on? If 25 days is too long, is 20 days too long? Is 14 days too long? Is seven days too long? When will the minister take action and have B.C. Rail ordered back to work as an essential service?

Hon. A. Charbonneau: At this time it is too early for government to be involved in a labour dispute. It has been underway for seven or eight days. It normally takes time for the parties to come back to the table. Processes are underway, and I believe that the parties will be back to the negotiating table -- where this issues belongs -- shortly.

BUY B.C. PROGRAM

R. Chisholm: I have a question for the Minister of Agriculture. Yesterday in this House the Minister of Agriculture stated categorically that there was no agreement between his ministry and J. Walter Thompson Co. Ltd. on the Buy B.C. program. Now he is saying that his ministry intends to pay $78,000 to buy its way out of the non-agreement. My question to the

[ Page 9229 ]

minister is: if there is no deal, why is this minister shelling out $78,000 of taxpayers' money?

Hon. B. Barlee: We should all set it in the right perspective. First of all, this is a program that works well, and I will tell you why it works. The consumers are onside, and the producers and the businesses are onside. We talked to 150 of the businesses two weeks ago, in fact, and they are all at the table. They think it's a fine program, and it is a good program.

Interjections.

The Speaker: Order, please. If the minister would take his seat for a moment, I would ask the hon. members to come to order, and I would ask the minister to conclude his reply.

Hon. B. Barlee: There is a party that likes the money to go out of the country. They voted unanimously for the NAFTA. We like the jobs and the money to stay in British Columbia. Businesses are lined up for this program; they are participating and will continue to participate.

The Speaker: Supplemental, hon. member.

R. Chisholm: The program is a good program. It's too bad the ministry and the minister botched it up. The minister claims that there was no contract, yet he tells the media outside these doors that there was a verbal contract and that it was approved in error. Was there or was there not a contract? And did this minister approve it before it was signed or agreed to with J. Walter Thompson?

Hon. B. Barlee: There was a verbal contract, but not from me. And it's within my mandate.... We had 12 contracts, and all 12 were with British Columbia firms. I know you would like to see them go elsewhere, but we would like to keep them in British Columbia. This was one of the contracts, verbally agreed upon by one of my staff, who made a mistake. People do make mistakes. The key, however, is this: is the program working? Yes. Is the program working well for business? Yes. Is it working for the consumer? Yes. Are we utilizing that work done by J. Walter Thompson? Yes. They got paid reasonably for their services, and they did a good job. But they are not a British Columbia firm.

The Speaker: Final supplemental, hon. member.

R. Chisholm: Unfortunately the minister doesn't realize that as minister he's responsible for his bureaucrats. I doubt very much if a bureaucrat would give a $550,000 contract for advertising without the minister's knowledge. It is reprehensible that this minister refuses to take any responsibility for this expensive boondoggle. He's still blaming his staff.

The question to the minister is: can the minister explain why J. Walter Thompson received $78,000 for only ten days' work when the total value of the entire Buy B.C. advertising program is about $550,000 over five years?

The Speaker: The hon. minister, for a very brief reply.

Hon. B. Barlee: Certainly, hon. Speaker, I will accede to your request.

This was money well spent. They did a good job; they're a good firm. They don't happen to be a British Columbia firm. The total price was $78,214.81. We watched it very well; this ministry watches every dollar. We always balance the budget. Frankly, the taxpayer can't ask for much more than that.

RECALL AND INITIATIVE LEGISLATION

D. Mitchell: I have a question for the Premier. The Chair of the Standing Committee on Parliamentary Reform has recently referred to the concept of recall as alien to the process of our parliament. I wonder if the Premier would agree that a reform endorsed by more than 80 percent of British Columbians has to be considered by this government as alien.

Hon. M. Harcourt: The hon. member for West Vancouver-Garibaldi is a student of history. I'm sure he'll acknowledge that in the Canadian experience since Confederation, recall, referendum and initiative legislation has taken place only occasionally and has had a very spotty history in our parliamentary system. It has been utilized in a foreign system -- the United States -- far more often. That is why we are very carefully carrying out the work that the previous government said it was going to do after the question was put to our people.

We asked questions on what "recall" means in a parliamentary system and what "initiative legislation" means. We wanted to know, in specific terms, what the wishes of the people of British Columbia were around those two items. The Chair of that parliamentary committee is bringing back the results of the consultation with the people of British Columbia so that legislation can be brought forward next spring.

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

Presenting Petitions

V. Anderson: I table a petition requesting that private adoptions be continued under regulations.

Orders of the Day

Hon. G. Clark: Report on Bill 45, hon. Speaker.

[2:30]

[ Page 9230 ]

HEALTH AUTHORITIES ACT, 1993

Bill 45 read a third time and passed on the following division:

YEAS -- 34

Petter

Boone

Edwards

Barlee

Charbonneau

Beattie

Schreck

Lortie

Hammell

Lali

Giesbrecht

Miller

Smallwood

Harcourt

Gabelmann

Clark

Blencoe

Barnes

Copping

Lovick

Ramsey

Pullinger

Farnworth

Evans

Dosanjh

O'Neill

Doyle

Hartley

Streifel

Lord

Garden

Kasper

Brewin

Janssen

NAYS -- 22

Chisholm

Cowie

Reid

Gingell

Dalton

Farrell-Collins

Wilson

Stephens

Hanson

Weisgerber

Dueck

Mitchell

De Jong

Neufeld

Fox

Symons

Tanner

Hurd

Warnke

Anderson

Jarvis

K. Jones

Hon. G. Clark: I call committee on Bill 79.

SUPPLY ACT, 1993-94

The House in committee on Bill 79; E. Barnes in the chair.

The Chair: We're on Bill 79, Supply Act, 1993-94. Just for the record, I'd like to say to hon. members that we are now in committee stage of this final supply bill. The bill is an administrative instrument, the purpose of which is to implement the appropriation of funds already fully canvassed in Committee of Supply. The amount contained in the act has been authorized by Committee of the Whole and is not subject, in the absence of a clerical discrepancy, to amendment.

Research indicates that the only occasion on which debate was permitted in committee stage of a final supply bill was when debate was permitted on certain ministries for which the House had not completed consideration of the relevant estimates.

In that we have a new House, I say this because I realize that there may be questions. It is customary practice to simply ask that the

section be passed.

Shall

section 1 pass?

Section 1 approved.

D. Mitchell: I have a question for the Minister of Finance on the Supply Act. I was listening, but I do have one question which is of a....

The Chair: Order, hon. member. Indeed, the member may have a question, but the purpose of the statement made by the Chair was to clarify for members who may desire to enter into debate that no debate is permitted on this particular act in the absence of the need to correct some clerical or technical error in the bill itself. Does the hon. member understand?

D. Mitchell: Yes. While I don't question the bill as printed, I did want to ask the Minister of Finance about the timing of Bill 79. We've had in this legislative session a number of interim supply bills, and this final supply bill is now being brought forward at this late date. I wonder if the Minister of Finance would care to share with the committee any observations as to the timing of the final supply bill and whether or not this is going to be considered ordinary practice for the government during a legislative session, or whether or not some consideration would be given to bringing in a supply act on a fixed

schedule so that it would come in earlier in the session so that the estimates process could be dealt with in a more orderly fashion....

The Chair: Order, hon. member. Would the hon. member please take his seat. I appreciate the hon. member's concern to get further information, but it does not qualify at this time in committee.

Section 1 approved.

Schedule approved.

Preamble approved.

Title approved.

Hon. G. Clark: Hon. Chair, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 79, Supply Act, 1993-94, reported complete without amendment, read a third time and passed on division.

Hon. G. Clark: I call committee on Bill 7.

SOCIAL SERVICE TAX AMENDMENT ACT, 1993

(continued)

The House in committee on Bill 7; E. Barnes in the chair.

section 2 (continued).

L. Fox: Prior to lunch we were talking about whether accessories would be considered part of the purchase price of a vehicle. The minister's answer to that gave me grave concern, and I want to canvass this further. In accepting that add-ons or accessories will be considered for the purposes of applying the so-called luxury vehicle tax, the minister would be creating a scenario I don't believe he wants to create, because

[ Page 9231 ]

there will be so many innovative ways of trying to get around that kind of logic.

You have to pay the 7 percent provincial tax on all these accessories, and the current practice is that if you buy a pickup and put a canopy on it, which is a removable product, you usually acquire it at the same time as you purchase the pickup. If you are purchasing the vehicle in the fall, in many parts of the country you would also purchase additional wheels and tires, because you may be buying some for winter as well as summer. There are so many things -- for instance, telephones added onto the vehicle at the time of purchase -- that are accessories.

You can list tool boxes and a whole host of different things that obviously are accessories to the vehicle and not part of the purchase price of a vehicle.

If you put that policy forward, all you would do is cause dealers to find innovative ways to circumvent the policy. If you bring forward that kind of non-commonsense policy, you're basically making people break the rules in order to apply common sense. I don't think that's what the minister really wants to do, so I would ask him to seriously think about that policy.

[M. Lord in the chair.]

Hon. G. Clark: I thank the member for his input. Obviously we will be monitoring the situation. Just so we're clear, the current rule -- this is not new to this bill or this year -- is that if you purchase a vehicle, then the accessories and repair accessories count as part of the purchase price if they are bought within two days of the original sale. That's the current policy, which has been in existence for some time. In other words, there's a two-day rule. Prior to this bill, if you bought a truck with a canopy, it would be counted in the full purchase price if you bought it at the time of the sale.

Similarly, if you bought a truck and had undercoating done within two days of the sale, then you had to pay the sales tax on the full purchase price, including the installation cost of the undercoating. So there is no difference here.

I appreciate that there may be some more importance to it now because of the differentiated tax question, and we'll monitor it. But the rule is that if you purchase accessories within two days of the original purchase, then it all gets added in as the total purchase price of the vehicle. The member is saying that there may be some attempts to deal with that by coming in three days later for a whole series of accessories and paying a lower sales tax on that. Then obviously we'll have to monitor that and see how that goes. But right now there is a two-day rule, and we have no intention of changing that.

L. Fox: The last thing I was implying was that you should make the rules even tighter so that you can capitalize on the clauses that allow you to increase the tax rate every $1,000 after $30,000.

The minister alluded to the reasons that the two-day rule will be a lot more prominent in this legislation than it has been in the past. My concern is that you have to add a $2,000 winch to many vehicles in order to make them functional and provide the protection of being able to get home on a muddy road through the woods. Now, because that's an add-on and may be traded to another unit later on.... It doesn't have to stay with that vehicle; it could be detached and moved to another vehicle.

Now, by virtue of the fact that they purchased that on the same day and applied it to that vehicle, they're going to be penalized. I don't believe that that makes a lot of sense or a lot of logic, nor do I believe that it can be policed. The minister suggests that they're going to monitor this. Well, hon. Chair, I would like to have some idea from the minister as to how he intends to do that. There are innovative ways to get around this piece of legislation in order to keep the purchaser at a realistic tax level.

There will not be visible records that the minister is going to be able to monitor, just a simple process of postdating an invoice for two weeks down the road, leaving it sitting on a hook, and not processing it for two weeks. The minister could never monitor or catch that. How does the minister expect to monitor that?

[2:45]

Hon. G. Clark: Obviously we can look at the records with respect to these sales, first of all. But if the member is suggesting that car dealers are going to conspire to circumvent the law, I don't believe that. I think that car dealers understand the laws, and will comply with them. My dealings with them have been that they understand that. They may not be happy about it, but they will follow the laws of the land. We will obviously have our usual auditing team to try to ensure that that is the case.

All I am suggesting is that I certainly understand and appreciate the argument the member is making. But the same argument can be made for air conditioning or other things -- air conditioning can be added after, and there's some nuance there. When the regulatory scheme is in place, we will have to be responsive to the environment within which it's trying to operate, and try to look at lists of exemptions and all of those things. That's what we do in the Ministry of Finance all the time. We will try to make it as workable as we can. If there are problems we will try to fix them over the next year.

The member said I was suggesting tightening it up and making it tougher, and that is an option. But the other option, which the member might suggest -- not including accessories and the like -- is just as valid. We will continue to try to strike a balance there, and see how it goes over the course of the next few months or a year.

L. Fox: This is not to belabour the point, but I want to straighten out the minister. I wasn't envisioning the dealers trying to circumvent any tax. Even though he fails to admit that the dealerships are hurting in terms of retail sales, the minister has to admit that there's horrendous competition out there between different dealers for that same customer.

If that customer can go to one dealer and propose that he would like his accessories added on at the time he picks the vehicle, but billed out at a later date -- and the purchaser puts that condition on the sale of that vehicle -- if that dealer does not respond, the customer only goes to another dealer. Sooner or later, when times are tough, a dealer

[ Page 9232 ]

will respond to him. It's straight economic sense. I think the minister is fooling himself if he believes that it will not happen. It will happen to a very large degree, because if the consumer is up into a 10 percent bracket for the full price of a $34,000 vehicle, but without $4,000 worth of accessories he can stay down at 7 percent tax versus the 10 percent, that is a tremendous savings to that consumer. There is no question in my mind that the consumer is going to find means of circumventing that particular aspect of this legislation. That is a fact of life.

I've seen many requests by consumers over the years that I couldn't comply with, and most dealers will not comply with. There is always somebody out there who wants to keep the doors open. They are fighting very hard, and bending the rules a little bit, especially when it makes good sense to argue that it shouldn't be that way. In a lot of people's minds, that is logic enough.

I thought this bill was so long coming forward because I really believed and hoped that the minister was meeting with the Motor Dealers' Association in a constructive way, and looking at alternative methods to this formula before us in order to increase the revenue of British Columbia. I want to ask the minister why he chose this formula and not the formula submitted by the Motor Dealers' Association of a $63 fee per transfer on all vehicle sales. As I understand it, that in fact would have netted the province as much revenue, if not more, than the $37 million it's now estimated they are going to receive under this formula.

Hon. G. Clark: That's a good question from the member. We had several meetings with the various dealers and organizations -- my staff and a technical group. I know that it may be sort of cold comfort, but I would pay tribute to the organizations that participated in the review. There was a detailed technical review, and their estimates were off significantly -- and our estimates were off, for a variety of reasons. At the end of the day, the dealers proposed -- you are quite correct -- a transfer tax of $63, from $18.

I appreciate the constructive nature of that, because it's difficult for any organization to come forward and say that they understand the fiscal situation in the province. They put forward a constructive alternative.

The reason I haven't agreed with that alternative is twofold. One is that we would need special legislation to impose a new transfer tax. Right now we charge a transfer fee of $18, which is cost-recovered -- we recover the cost of service. If we went from $18 to $63, as you can appreciate, that would be a 250 percent increase in that fee. It could no longer be legally sustained as a fee; it would become a new tax. First of all, to do what the motor dealers suggested would require legislation in this House now, in July, to impose a brand-new transfer tax.

Secondly, that tax would be somewhat regressive, because it's $63 on all car transfers -- whether it's a $200 car or a $50,000 car -- as opposed to what we have currently, which is quite a bit more progressive, because you pay a little more if the car is worth more. So currently it's progressive; their proposal was very regressive. Again, it was a constructive and legitimate suggestion -- and I take it as being made very much in good faith -- which I very actively considered. The problem was, firstly, it required new tax legislation to impose a tax burden on a broad range of people; and secondly, it was regressive. So we chose not to do that at this time. Those are the main reasons.

The third reason is that the dealers also had an interesting idea about trying to have a consumer protection package associated with that tax. In other words, you would be essentially putting a big new tax on every transfer, but they suggested that the quid pro quo, to make it not just palatable but also worthwhile, would be to have with that tax the cost of a consumer protection service so that there would be a history of the car. Again, I think that was another constructive suggestion.

There are two problems with that. One is that we would require significant work with ICBC to try to implement something like that. I still think that has validity, and we're looking at it. But again, the lead times would have been months and months to try to do it, technically. Secondly -- and this is of course the biggest flaw, which we haven't overcome yet -- if you are going into your ICBC agent, which is where you'd pay this $63 tax, you would have already bought the car, and then you would receive the history of the car.

Obviously, if it's really a consumer protection package, you would want that to be available before you make the purchase. The dealers' proposal was essentially to give you the accident history of the car after you had purchased it. So that's another problem.

It was a legitimate suggestion by the dealers -- although with that fairly large caveat -- which we will continue to review. That's essentially the reason why we chose not to abolish this tax and instead impose a new tax on different people.

L. Fox: I find it quite amazing that the minister suggests that because it would be a 250 percent hike in the fee, the government would need legislation, when we've seen fee increases by this government in many sectors of up to 400 or 500 percent. We certainly didn't require legislative change for those.

I understand that the charging of the $63 may not be known by all purchasers prior to buying the vehicle. The other part of the issue, though, is whether they would know the previous history of the vehicle. This could be done very simply when you transact the deal, because you give a copy of the previous registration at the transaction. All it needs is a very small square on the registration indicating that this vehicle has had damage over $2,000. You would have a good discussion point right there when the history of the vehicle is brought forward at the time of the transaction.

If the dealers know that the vehicle has had damage exceeding $2,000, they must make that known to the purchaser at the time of sale -- that is already in law. So I do not understand the minister's hesitancy about accepting that part of the argument.

While it may take some time, and I recognize there is a need to upgrade the computer system to handle it and perhaps work out some software that would carry out that command, I think it is achievable. I hope that the minister will continue to look at that in the future,

[ Page 9233 ]

because it would be a tool for the dealer when he purchases a vehicle -- he used to get them on trade-ins, but he doesn't any longer, thanks to this legislation. But it would help him to identify those vehicles that have had excessive damage.

There's one other item with respect to this, and the minister has alluded to part of it already. The initial projection by this minister was that they were going to receive $56 million in revenue from this luxury tax over the course of this year, but now they are only going to receive $37 million. Earlier today in question period the minister alluded to the fact that sales are up in British Columbia, and he quoted from the manufacturers' list.

That list covers all sales, irrespective of whether they are made to governments, fleets or whatever, and 300 of the car sales reported in May were to the province of British Columbia. That may have been by design, because it helped the minister to suggest that sales were up by a certain percentage. With 300 of the sales in British Columbia in one month going to the province -- and obviously they pay no tax....

As well, the dealer probably gets only $100 for predelivering that vehicle, because the government has such huge buying power that the dealer doesn't get an opportunity to participate much in what the province pays for those vehicles -- the minister is well aware of that, I'm sure.

[3:00]

What we're seeing, in fact, is a drop in sales because of this legislation. In retail sales, the amount varies from 20 percent to 40 percent in different locations in the province, and the average is around 26 percent. Beyond that -- and I would like to make the minister aware of this -- about 25 percent of the car sales business is usually from used cars that they used to receive on trades. Probably another 5 percent of that dealership's business went into the repairing of those used cars, because dealers have to make them roadworthy and safe, and meet the standards required by the inspections.

It's a prerequisite that a dealer must do that in order to comply with his licence. So they not only lose that revenue, they lose a good share of the used-car revenue. The stats that the minister reported are only from new vehicles; they are not used-car stats. When you add all that together, it destroys the numbers that the minister has brought forward on a consistent basis; he's only looking at one part of the automotive retail business, not at the total picture.

I'm concerned because, having had some experience in this business, I know how difficult it has been over the last four or five years in any small business to maintain a black bottom line -- and we've been very fortunate. It's extremely difficult. Many people, including this government, believe that there's just mounds of money in each car deal. I would suggest that if you looked at all the audited statements of dealers you would probably find that the gross profit in their deals is between 5 percent and 6 percent. If you take away 25 percent of their sales, on which they only make a small percentage, it is a huge hardship on that particular industry.

I'm really concerned that this government doesn't understand what that's going to mean in layoffs. We already see a lot of pressure on car salesmen. We see nervous breakdowns. In one sales department in Prince George recently there were two suicides. I'm not blaming that on this tax. I don't intend to bring that forward and blame it on a tax, but I'm trying to point out to the minister that there's a lot of stress in sales and a lot of pressure on these people to maintain their numbers. This legislation certainly isn't helping that.

The Chair: Before the minister answers, I would like to remind committee members again that we are not in second reading debate. We are not discussing the philosophy of this bill; we are discussing it clause by clause.

Hon. G. Clark: Very briefly, I understand the member's concerns. I'll just make a couple of comments. First of all, the member is correct: we only have new-car data; we don't have used-car data. No one does, so that's a bit of a problem in terms of access to information that might give us a better handle on it. In terms of the new-car data, it's incontrovertible. Yes, there are fleet sales, but there were fleet sales last year and sales were up this year over last year. Fleet sales are in every part of the country, so we're not doing anything different from anywhere else.

So fleet sales are a part of it, but they were a part of it last year and they're a part of it in every other province as well.

Secondly, and maybe more importantly, we have a free market in sales; things are happening in the marketplace that you can't necessarily attribute to the tax. In fact, I would argue that you can't. Imports are down; sales of imports are down significantly in Canada and in British Columbia. I suspect it's partly consumer preference and marketing; it's partly the value of the yen versus the dollar and the cost increase in imported Japanese cars. GM car sales are down across the country.

Chrysler and Ford car sales are up in British Columbia, and if you count light trucks -- vans, minivans and that whole market -- they're up dramatically. Sales are up dramatically in the light-truck end of the market because of consumer preference, by and large, and because of style and other choices. So when the dealers say that car sales are down 20 percent, I tell you categorically that we find no evidence of that, unless you take a subset of retail sales of GM cars.

If you forget about trucks, light trucks, vans, pickups and everything else and take that subset, they might be down in one sector, and across the country they're down as well. If you add sales of light trucks, minivans and that whole new marketplace into the data, we're doing better than virtually anywhere else in the country. That's a fact. With fleet sales and everything included, we're doing better than anywhere else in the country.

I'm not suggesting that all car dealers are doing extremely well. We did not go through a big recession like the rest of North America, but we had a slowdown in 1990, which was very tough, I'm sure, for all people in the private sector -- obviously it was tough on government finances as well -- and people are looking forward to a strong recovery. We haven't got a booming recovery. We in this province are doing better than anywhere else in North America, but it's not as healthy as one might like. It's a fact that car sales were down in

[ Page 9234 ]

January, February and March and up in April, May and June, and the dealers agree with that. However, many of them have suggested to me that in March it was really starting to take off, and it would be booming now if we hadn't had the impact of the budget. The numbers are clear that car sales are up, and they're reduced to arguing that their expectations were much higher than what has in fact taken place, which may be the case.

I'm not trying to pick an argument except to say that the facts are really quite clear in this situation. Yes, some dealerships are suffering, as they are across the country. Some sales are down, some are up. In the numbers that we have for fleets and new-car sales as well as light trucks -- apples-and-apples comparisons -- we are doing better than anywhere else in the country. I'm not saying that it's gravy time for dealers. I'm quite sure that they, like all small business men in Canada, are working harder, trying to make a living, and we're not trying to penalize them, but they clearly are doing better than most places in the country.

L. Fox: The reason I point out all these issues is because ultimately it's the consumer who is hit. Ultimately, the loss of the tax credit on trade-ins, for instance, is in real terms an action by this government to reach into the pocket of every individual in B.C. who owns a vehicle and extract 7 percent of the value of that vehicle.

To put that into perspective, whether you own a vehicle valued at $5,000 or $10,000, the minute the budget was passed and this particular initiative was put into place, in effect, the government reached into the pocket of the B.C. consumer and took away 7 percent of the value of that vehicle. With the loss of the tax credit, a vehicle that used to be worth $10,700 is now worth only $10,000. The minister has to understand that what he has done is depreciate every personal vehicle in the province by 7 percent.

Hon. G. Clark: I acknowledge that this is a consumer tax -- that the bill is a tax on consumers. Where I disagree, however, is that the majority of British Columbians sell their cars privately and do not trade in the value -- the estimates range from 50 percent to 75 percent -- and those individuals never received a benefit. The only benefit of the tax advantage was to those individuals who traded their car in. It's not true that every British Columbian had some advantage that we've taken away; in fact, it was a minority.

Again, there are not clear statistics on this, and the dealers have been arguing historically. The truth seems to be that 75 percent of the people who sold their cars did not trade them in to a dealer but sold them privately.

Yes, the 25 percent who trade their car in will pay more. They'll pay the same as the 75 percent who do not. To that extent, it is a consumer tax, and I certainly acknowledge that. Speaking personally, I always prefer to trade in a car because I think the service is better, and there are some advantages to dealing with a dealership. Many of us obviously don't have the time or inclination to try to market our own sales privately, but I do acknowledge it.

Again, the reason that our revenue estimates are down is that we assumed that in something like 50 percent of car sales, people would trade their car into a dealer. We didn't have any accurate information on that; that was our estimate. In talking with the dealers, they have made a very good case that that was not the case prior to the budget. More people sold their cars privately, which is why our estimate number came down.

Is it the case that after the budget, even less people are trading in cars? We don't know the answer to that yet. We are monitoring it, but I can tell you that we haven't seen the evidence that that is the case. I know that the dealers are making that case. We will continue to monitor it, but we haven't got statistical evidence in that respect.

L. Fox: Did the minister research what the percentage was prior to the implementation of the GST? I think that if the minister had researched the impact of that on personal sales, he would have found that the percentage was a lot lower prior to the GST. Just to explain that, if I were to buy a vehicle from the minister I don't have to pay the GST. But if I trade the vehicle in or buy a used vehicle from a dealer, I have to pay the GST, and I get no credit for it when I trade it in. So I think there are a lot of factors in this whole business that deserve some deliberation.

I also believe that if the minister monitored the variance month-to-month.... I recognize that it's difficult on a month-to-month basis, because the trend changes, and in that business you do business with a different segment of the public at different times of the year. So the trade-in aspect obviously changes on a month-to-month basis. My experience is that new-car dealers have fewer vehicles traded in, and therefore have fewer used vehicles for resale.

The important

part is that it's not so much the dealer I am concerned about; I am concerned that every time we raise taxes, we put more impact on the consumer, to a degree. Earlier this year the Minister of Consumer Services passed some legislation which gives the consumer more protection, in terms of transactions on vehicle sales.

I'm getting boring, I guess, because one member dropped off. I suppose that could be put down to the many hours that we spend in the Legislature. We in opposition have more opportunity to stand up and keep ourselves awake by talking, but backbenchers have a difficult time doing that.

What I am saying in a nutshell is that the more you take away from doing a legitimate business in car sales, the less consumer protection you give the consumers. If I buy a vehicle from you personally, I get no protection whatsoever. It's buyer beware or civil litigation, and that's a fact of life. But when the transaction happens through a recognized, bonded.... Under this new program the consumer has the protection of this new fund, when they do business with a dealer. By these actions I am concerned that one of the effects will be less consumer protection, and you will have more problems in the transaction of private sales.

F. Gingell: Hon. Chair, as you well know, I have concerns about fairness in subsequent assessments. One could have a set of circumstances where a vehicle that would qualify for a higher rate of tax is taken to a business place other than the dealer from which it was

[ Page 9235 ]

purchased to have a winch put on or whatever. The person installing the winch on the vehicle would have no knowledge of the original cost of the vehicle. Am I correct in assuming that the amount of provincial tax that should be paid on that winch, as an example, would depend upon the value of the vehicle and not on the value of the winch? How would the winch dealer be in a position to know those facts? I have concerns that the department could subsequently make reassessments, which I would then categorize as unfair.

[3:15]

Hon. G. Clark: If it's the same person selling the package, it would be the full purchase price. If it had gone to somebody else to have a winch put on, there would be a 7 percent sales tax.

F. Gingell: What if it is not a different company but an associated corporation? What would happen there?

Hon. G. Clark: It would be the dealer or an associate of the dealer. This is not unique to cars; this is generally consistent with tax legislation. In other words, anything -- forget about cars, trade-ins or luxury car taxes -- can be brought up and skirted around the tax. For example, some things are exempt from the tax and some aren't. Any attempt to break up a contract to defy the spirit of the legislation is captured through this kind of mechanism.

R. Neufeld: I have a couple of quick questions. In the budget manual, under the heading "Sales tax trade-in allowance on purchase of passenger vehicles removed," there is a sentence that says: "The trade-in allowance on the purchase of other tangible personal property is not affected." Could the minister explain to me what other tangible personal property is not affected? You specifically say passenger vehicles. Are you saying that motorcycles, skidoos and those types of things are exempt? Is that what is meant by other tangible personal property?

Hon. G. Clark: This covers only automobiles. If you brought in furniture or something else, you wouldn't be eligible for a sales tax credit, largely because there is no revenue to be gained by trying to apply this kind of rule in other circumstances. There isn't a very large trade-in trade. Rather than bog down the administrative practices enormously and try to police it where there is no revenue gain, we chose not to do that. If you had a deal where you took your sofa in and bought a new sofa, you would pay....

Interjection.

Hon. G. Clark: A skidoo? I'm sorry, we'll have to get back to you on that. I'm not sure that's a motor vehicle; I don't believe it is.

R. Neufeld: I asked about motorcycles, which are licensed as motor vehicles; skidoos are also. There are quite a number of things, such as all-terrain vehicles. If those types of vehicles are all exempt, that's fine.

I have one more question. In the budget manual where you estimate that revenue of $56 million will accrue to the province through the sales tax of up to 10 percent on luxury passenger vehicles, and the removal of the trade-in value on passenger vehicles.... Can the minister tell me if he has figures that break out that $56 million? What part of the $56 million is attributable to the 10 percent, and what

part is attributable to the passenger vehicle tax removal?

Hon. G. Clark: The luxury car tax is about $10 million, and now there is $27 million in the trade-in. The luxury car tax numbers have more or less stayed constant. It's the trade-in value that has come down because, as I said earlier, we overestimated the historic number of trade-ins.

R. Neufeld: Do I understand that you are going to get back to us as soon as you can about what the exemptions are going to be under that heading?

Hon. G. Clark: I don't think that is required. My advice is that skidoos are not passenger vehicles, so the trade-in allowance will still apply to them.

J. Weisgerber: Along that line, the trade in recreational vehicles and motor homes, for example, is not affected. If you trade in a motor home on a new motor home, do you pay a sales tax on the difference as you did under the old system? A lot of dealers will operate a recreation franchise along with a motor vehicle franchise. If a recreational vehicle is traded in on a passenger car, how does that work?

Hon. G. Clark: It depends on what you are buying. If you are buying a passenger vehicle but you are changing from a recreational vehicle, there is no trade-in allowance credit. If you're trading in a passenger vehicle to buy a recreational vehicle, then you would only pay on the difference.

F. Gingell: I want to say one last word. For the amount of money that's involved, you are making our lives terribly difficult and involved. You know what is true: that when you have these difficult and complex tax arrangements, people don't obey the law by mistake -- then your assessors come along afterward and make assessments covering long periods of time. It really isn't the way to run a country.

L. Fox: I want to follow up on a couple of points. I had some real problems with the answer just given to our leader. If a passenger vehicle is traded in on another passenger vehicle, it is not suitable for a tax credit in terms of the trade-in, and yet if I want to trade it in on a boat or a recreational unit, I can then get a tax credit. All of a sudden it is worthy of a trade credit for the purposes of taxation. What's the logic in having those two different policies?

Hon. G. Clark: I may have misled the House. Just so that I'm clear -- and my staff can kick me if I'm wrong -- it is what you are buying that counts. If you're buying a passenger vehicle and you trade in a recreational vehicle, you pay the tax on the full price of the passenger vehicle. If you're buying a recreational vehicle and you trade in a passenger vehicle, then you can get the credit, because it is what you are purchasing

[ Page 9236 ]

that we're taxing. The removal of the sales tax credit for the trade-in portion applies only to the purchase of passenger vehicles.

L. Fox: I'm glad the minister spoke about the reverse situation, because that was going to be my next question. I am still trying to find out what the logic is. A passenger vehicle, in many aspects, is something that is not a pleasure vehicle. In many aspects, it is something that one needs to get around on a day-to-day basis. Yet a recreational vehicle -- and one would assume that if you can afford to buy a recreational vehicle, you have more ability to pay than if you're just buying a passenger vehicle -- is exempt. You pay the tax penalty when you're buying a vehicle that could be deemed a necessity.

I have some difficulty understanding the logic in this policy. Has the government all of a sudden gone totally conservative, ultra right-wing or something? It seems we don't respect the rights of someone buying the average vehicle as a necessity; now we're respecting those buying luxury recreational units. I'm not going to argue that you shouldn't be doing that, but I have problems with the logic. That's one issue.

The other issue I want to clarify.... When the member for Peace River North stood up and asked the question on skidoos, all-terrain vehicles and perhaps motorcycles that are not licensed, the minister said they were exempt. By saying they were exempt, does that mean you also can get a tax credit for trade-in when you trade in your skidoo, motorbike or all-terrain vehicle, providing it's not licensed?

Hon. G. Clark: It has nothing to do with whether they're licensed or not; it has to do with the definition of a passenger vehicle. Motorcycles with engine capacities over 250 cc are classified as passenger vehicles. I went through that earlier, in terms of our

schedule and the definition section.

What we are taxing and dealing with in this tax statute is passenger vehicles. That's why recreational vehicles don't count; that's why yachts.... It doesn't matter whether they're all-terrain vehicles or not. If they classify it as a passenger vehicle -- as I've described them at length here today -- then they're captured. It doesn't matter whether they're licensed or not.

L. Fox: If I understand the minister correctly, anything over a certain size in the recreational vehicle -- whether licensed or not -- is.... Is that what you said?

Hon. G. Clark: Sorry. I hate to go through this again, but the members of the opposition.... Passenger vehicle includes trucks and vans up to and including three-quarter-ton trucks and vans, station wagons and motorcycles as defined under the Motor Vehicle Act, and motorcycles with engine capacities of over 250 cc. It does not include trucks or vans larger than three-quarter-ton, camperized vans for the purposes of recreation -- and we've discussed that, motor homes and buses as defined, ambulances and hearses. It's a fairly clear definition. If it's an all-terrain vehicle that is not in the

schedule as a passenger vehicle, then this doesn't apply. It has nothing to do with whether they're licensed or how big they are. It has to do with how we've defined it in the act.

J. Weisgerber: The more we hear, the more questions we have. It seems to me now that if vehicles were brought in under the one-ton designation -- pickup trucks, vans, crew cabs, etc. -- then the dealer and customer would not only avoid the penalty of going from 7, 8, 9 or 10 percent, they also would be able to obtain a trade-in credit when they purchase the vehicle. Once the vehicle moves out of that passenger vehicle category, it seems to me that would happen. There would appear to be -- probably unintentionally -- a considerable advantage for people now to stock somewhat larger vehicles to avoid tax.

I don't want to have a long discussion. It's also clear that the commercial trade-in process applies to the range of commercial trucks. Is the difference with transport trucks and that kind of thing, as well as all the recreational vehicles, etc., still taxable?

Hon. G. Clark: Yes, that's correct.

L. Fox: Just one final question. On the increase from 6 percent to 7 percent in

section 2(a). Earlier today in question period, the minister suggested that there was a 29 percent increase in retail sales in British Columbia. Will that correspond? The projections were originally $305 million. Will we now look at something like $395 million? Will the percentages be the same in terms of tax collected?

[3:30]

Hon. G. Clark: It's premature to say that. Sales tax revenues were up 29 percent in April and May. That's all sales tax revenues, including the sales tax from cars, trade-ins and everything else. But as you can appreciate, going from 6 percent to 7 percent is a 16 percent increase, so this is 29 percent. So clearly yes, at the current rate there is more revenue than is in the budget. But I want to caution members. Having been in the job 20 months, I see these numbers every month, and they bounce around a fair amount.

This is very good news, but sales tax revenue, I must say, is so heavily dependent upon the Christmas season that it is absolutely surprising to those of us who haven't had the experience in that. It's too early to say that this means we're going to have millions of dollars more in revenue.

Also, I'd just say that even if we were to maintain this pace, it's not hundreds of millions of dollars more than budgeted but more like $10 million to $30 million above the budget, because we projected an economic recovery, which is taking place. But it's still very good news and way better than anywhere else in the country, as has been the pattern for the last year or so.

Section 2 approved on division.

section 3.

J. Weisgerber: I have a concern about this whole notion of the 7.... Is the effect of this essentially to implement those items we discussed in

section 2?

[ Page 9237 ]

Hon. G. Clark: I want to just make sure we're clear here. This is precisely what we canvassed at great length in the previous

section dealing with the dealers: amendments to tangible property by the same dealer, in this case, as opposed to elsewhere.

F. Gingell: You said before that if it has gone to a different dealer, the second dealer is not responsible. Does this only apply when it is done in-house?

Hon. G. Clark: So to speak. Or an associated company.

Section 3 approved.

section 4.

F. Gingell: I can't speak as knowledgably and as interestingly as my colleagues and friends did before on the subject of buying cars, but I can talk about parking them. I do park them occasionally.

Section 4,

section 2.03(4) says: "Where the commissioner considers it appropriate to do so, the commissioner may make a valuation of a parking right that passes at a sale, and the sale price of the parking right for the purposes of taxation under this Act shall be as determined by the commissioner." In the circumstance where somebody is renting office space.... In highrise buildings, you normally rent the parking spaces separately, but you may not. There may be five spaces included in the cost of your lease, and you have to pay for any additional spaces over and above that.

But it certainly will be the case in small mall offices or where there are offices with some parking in front that is designated to the lessor. Is it the intent of the ministry to have a major investigation audit to ensure that the taxes on those units are being paid, or do you not believe that that situation will be caught under this section?

Hon. G. Clark: The advice is that this is pretty straightforward, and we don't anticipate a great deal of problems with it. This is one of these sections, as all these tax sections are, which give us certain powers to try to deem value if someone is screwing around, as we speak. That's, of course, similar to other tax statutes. Again -- I'm wandering a little bit, but just so people will know -- there is an appeal to the Minister of Finance and then further appeal to the courts on all of these tax statutes. This is no different.

F. Gingell: It doesn't do you any good.

Hon. G. Clark: Well, that's not correct. About once a month the Minister of Finance overturns a ruling. Obviously, we are trying to be consistent in its application. In any event, we don't anticipate this being a huge regulatory burden on anybody, including the Ministry of Finance's staff.

F. Gingell: But is it your intent that in circumstances where office space leased in large downtown Victoria or Vancouver buildings carry with them the exclusive right to a certain number of parking stalls, that they will be valued and subject to a 7 percent sales tax?

Hon. G. Clark: Currently, if you are charged separately for the parking space, we are taxing it. We're not taxing it if it's part of an overall rental of a site -- if it's one charge. I think it's likely that down the road it may be required to break out the parking component -- that's certainly not what we are doing right now -- in terms of trying to ensure that parking is paid.

On this general topic, interestingly enough, there was a report done today by 2021 and the GVRD, which Mayor Campbell has been involved in. I have a lot of concerns about that report generally, but I will say that they supported a parking tax as a method for funding transit. Again, in case anybody wanted to ask this question, as members know, 100 percent will be flowing to the Transit Commission for the purpose of dealing with the SkyTrain debt associated with the extension. So the $10 million a year revenue will flow to the Transit Commission for that purpose.

However, I want to tell members also that while I might be inclined to offer this tax as part of the areas that the Transit Commission can tax -- right now they have certain rights to recommend taxes to the government -- they have not asked for this right, nor did they get it. So the revenue from the sales tax on parking -- to forestall some questions if they were coming -- goes into general revenue, and I have made a commitment to flow back to the Transit Commission $10 million from provincial taxes toward the debt servicing associated with SkyTrain and also to deal with their funding deficit.

So that's a bit of a technical point. This is dedicated to transit, although it does go into general revenue and then the government flows it out -- at the current time anyway.

F. Gingell: Will any parts of the province be paying a tax on parking that will, in effect, not be pushed through to transit? It seems unfair to put a tax on everybody when this portion of it has been dedicated to transit in the Greater Vancouver Regional District.

Hon. G. Clark: I'm sorry if I unintentionally misled anybody. These will be prescribed by regulation, and the only area where this tax will apply is in the Vancouver Regional Transit Commission area. There won't be a sales tax on parking in Victoria. If the transit commission in Victoria, or other people in Victoria, suggested that they wanted to pursue rapid transit in this area at some point in the future, the government may at that time decide to extend the sales tax on parking to this region -- but that's not been contemplated or requested, nor will it happen at this time.

So while this is a general tax statute that deals with parking, we will only be applying the regulations to the Vancouver Regional Transit Commission area. It doesn't apply anywhere else even if there is pay parking. Of course, in most cities there is limited pay parking outside of the major Vancouver and Victoria regions.

F. Gingell: I'd just like to go back to the previous subject that we discussed regarding how subsection 4 could pull in the assessment of tax on a purchase of parking rights that go together with a lease. You stated

[ Page 9238 ]

that you do not presently anticipate doing anything about that. Would you consider that subsection 4 gives you sufficient authority to make that policy change in the future -- or publishing regulations or doing something that clearly tells the public what is happening -- without coming back for new legislation?

Hon. G. Clark: No, this is all that's required. I'll just read the note for the record. "This subsection permits the commissioner to make a valuation of a parking right where it is considered that the reported sale price does not reflect the fair market value. This amendment is necessary to deter tax avoidance where the taxable value of a parking right is deliberately understated. A valuation by the commissioner may be appealed to the minister and to the courts under sections 13 and 14 of the act."

J. Weisgerber: I'm trying to get a sense of the kinds of parking that will be taxed. It seems to me that there is parking that is provided to staff by the employer and owner of a building. There are commercial parking lots where you can rent a monthly or weekly parking spot, and obviously those are intended to be taxed. There are other places where parking is sold by the hour. I'm not sure whether or not that's taxed as well. Then there's the metered parking where you put in coins. Out of that menu from employee parking through to metered parking, could the minister indicate which are taxable?

Hon. G. Clark: Everything is taxed with the exception of metered parking. On-street metered parking is exempt from this sales tax in part because I didn't want to.... Essentially all of that is municipal revenue, so this would be a tax on another level of government, which was attractive in some ways, but we chose not to do that. A future government may wish to do that, I suppose. So on-street metered parking is exempt; residential parking is exempt; and parking that lasts longer than 28 days is defined as storage, and it's exempt. Other than that, the other categories the member mentioned are taxed.

J. Weisgerber: One of the first questions that arises from that is with regard to

section 2.03(5), which says: "The tax imposed by this Act shall be calculated separately on every purchase of a parking right...." That would suggest to me that every time someone passes through one of those turnstiles and pays $2, the operator of that has to record the transaction separately, rather than providing a bulk statement at the end of the day. If that's the case -- and the signals I'm getting are that it is -- it doesn't seem to make much sense. It would seem a lot more logical for the operator to report sales at the end of each working day, each week or each month.

Hon. G. Clark: The member is correct: that is in fact what happens. It's the aggregate amount of the sale, and then they remit 7 percent on top of that. Just for the member's information -- and for those who aren't from Vancouver or haven't been there lately -- it has been in effect since June 1.

J. Weisgerber: Is the minister suggesting that the tax is calculated so that on a $2 parking fee, you would pay $2.14, and your receipt would show that you are paying 14 cents in tax? It's obvious that I don't get to use those kinds of parking lots.

Interjection.

J. Weisgerber: But it's recorded on each transaction and calculated to the nearest cent?

Hon. G. Clark: Yes. This is a consumer tax. In this case, of course, the GST applies as well. When you drive through a lot in downtown Vancouver, as I've done recently, there's a sign that essentially says that PST and GST are added to your bill.

[3:45]

L. Fox: I have one follow-up question along the same lines. In many of the parking lots I've gone to in the Vancouver region, you put your money into a coin-operated slot. You will find that the price varies from $1.50 per two hours to as much as $2 per two hours. It seems to me that what will happen is that because the 7 percent will now make the amount for that parking stall $2.14, that amount will be rounded up to $2.25. Has the minister looked at how this tax might increase the cost beyond 7 percent for people who want to utilize those coin-operated parking lots?

Hon. G. Clark: I guess if one assumes that there is no price elasticity, they'll add on. Private operators who manage the sites at the moment are absorbing the 14 percent, because there is the GST as well as the sales tax on the final purchase. If you pay $1 an hour at a meter operation, they are still paying $1 an hour. If you are asking me whether the owners of those parking lots will raise it to $1.25, I guess that's up to them. It's a free market, and they will deal with the consequences of that, I suppose.

R. Neufeld: The minister said that he will be giving $10 million to the Vancouver Regional Transit Commission. According to the budget manual, the revenue raised in 1993-94 will be $10 million, and in a full year, you would expect $12 million. Would I be correct in assuming that next year the Vancouver transit commission is going to receive the full $12 million, because they are receiving the full $10 million this year?

Can the minister tell me how much it costs the Ministry of Finance, or the government as a whole, to collect this tax, process it and give it back to the Vancouver Regional Transit Commission, because as the Leader of the Opposition said earlier, we're taking from the general public to collect the tax if it's more than $10 million. If it costs you $1 million to collect the $10 million, then the rest of the people in British Columbia are subsidizing that. Would that be correct?

Hon. G. Clark: That's a good question. But I am not sure if the revenue numbers in the budget are net or not. I think they are net revenue after the costs of collection. The government provides a couple of hundred million dollars in subsidies for the Vancouver Regional Transit Commission. We've added $10 million

[ Page 9239 ]

as per the parking tax, and the member is correct that we anticipate about $12 million in annual revenue. So there are a couple of million dollars there which the transit commission may request, and we may provide, although it's a bit of apples and apples, because they are obviously subject to other budget deliberations. But our purpose is to flow the money to the commission. At the moment we are giving $10 million, and we anticipate that next year, in the first full year of operation, it will raise around $12 million. There's a little room there.

R. Neufeld: Maybe the minister can clarify that for me. Did I understand him to say that in the budget manual the numbers quoted here for all the income tax, corporation capital tax, social services tax, tobacco tax and the homeowner grant are all net revenue? Have the expenses of collecting it already been taken off that?

Hon. G. Clark: Yes. I'll get back to the member on that question, but it's very minor, believe me. There is a very modest cost associated with extending the sales tax base, because the burden is on the individual to comply with the law. The cost is really a very marginal increase to administer it, and also for more auditors to audit the situation. Even for the capital tax, which was a much more major undertaking, there were some start-up costs of probably about half a million dollars or something initially, and then much more modest costs of monitoring that over time. This one is significantly less because it's an existing tax statute and we have experience in this area.

Section 4 approved.

section 5.

J. Weisgerber: For my first question, I have to refer the minister back to the

definitions under

section 1(d)(a)(i). The reference there with regard to services includes interest, finance, service, customs charges, etc. It seems to me that it's an extension into a tax area that I've never seen before. I've never been aware, for example, of sales tax applying to the finance charges that might flow from the purchase of the vehicle. I'm curious to know why this act would anticipate a tax on finance charges associated with services.

Hon. G. Clark: What the member refers to has nothing to do with tangible services. Those words have existed, I believe, since 1948 in the initial sales tax legislation. Just to go back to the

definitions section. What we're trying to do here on the purchase price is make sure that they can't carve out an area to exempt themselves from the tax. We're adding a definition on the existing definition to try to ensure that there isn't either double-taxing or the ability to carve it out. I want to assure the member that all of his references to customs, excise, etc., are in the existing statute and have nothing to do with the taxing of specified services in this

section we're dealing with.

J. Weisgerber: I would just like to confirm that this refers to the built-in costs of the supplier of the service or goods; that you can't break out your costs and say that some of those are....

Interjection.

J. Weisgerber: Fair enough.

The other area on which I would like to get some clarification is with regard to the provision of services to residents outside of British Columbia. Particularly in the area that I represent, a fair amount of retail and service trade is done with people who live on the Alberta side of the border. They come and have automobile and commercial repairs done. Where the costs of those repairs are of any significance, there is an opportunity for them to apply for a refund of tax.

When a trucker from Alberta brings his truck into Dawson Creek for mechanical repairs and then takes the truck back, there is now a provision for a refund on the tax paid on parts. I am wondering if the minister could confirm that the labour tax will be treated in the same way as the tax on parts is currently treated.

Hon. G. Clark: The answer is that they would pay it. As I understand it, there is no refund provision of the sales tax on the goods portion. There is a prorated sales tax if they operate in more than one province, and they pay only that portion which applies in British Columbia. On services, there is no such pro rata agreement between the provinces, so they would pay the sales tax in British Columbia.

J. Weisgerber: I understood that from the minister's answer to the questions by my colleague from Peace River North. I am dealing with a slightly different situation. I think the application there is on interprovincial trucks that travel across the country, and agreements are worked out between the provinces. We are dealing with a different situation.

A gravel truck, farm truck, fuel truck -- a truck that is used primarily in Alberta, is licensed only in Alberta but is used in the proximity of the B.C. border -- is brought regularly into British Columbia for repairs simply because Dawson Creek happens to be a major truck repair centre. It is more convenient for some people to bring their vehicles in and they are able, as I understand, to apply for a full refund of the tax on the parts that they have purchased.

Rather than getting into a debate as to whether they get a refund on the parts -- because I am advised by retailers that they do -- I would think that at the very least the labour component should be treated in the same way as the parts. In other words, if there is going to be a refund on sales tax that applies to parts, it should apply to the service as well.

Hon. G. Clark: The answer is no, because we don't have this proportional agreement that we have with respect to parts. If we only charge the proportion based on the services in British Columbia, then they would pay more -- unless I am missing the member's point. Right now, if you get your car repaired in Washington State, you pay a sales tax on labour in Washington State. If you go to Manitoba, Ontario or

[ Page 9240 ]

Quebec with your car or truck, and you get your vehicle repaired there, you pay sales tax on the labour for repairs, which is much higher than British Columbia's, and this is the same.

J. Weisgerber: Let me then give an example that I am completely familiar with, so that I know that I'm talking about an area that I have knowledge of.

Interjection.

J. Weisgerber: As opposed to some of the other times when I do not have a personal knowledge of particular circumstances.

A farmer brings a truck from Alberta to Dawson Creek for the express purpose of buying a grain box. He buys a grain box, and then has it installed along with a hoist and all the controls. There is an opportunity for that farmer to go back to Alberta and send a copy of the invoice, along with an affidavit, and claim the sales tax on the grain box, the hoist and the other components that were put in. My question is: when the person now makes an application for a full refund of the tax paid on, say, a grain box and hoist, will that person be able to include in the claim the tax paid for the installation of that item?

Hon. G. Clark: I don't want to deal with this specific question, because it gets a bit complicated, but the short answer is yes. If you are eligible for the sales tax exemption now and for the refund, as you are in that case, then you would also be eligible to apply at the same time for the refund of the sales tax you would pay on the labour services.

[4:00]

Hon. G. Clark: That's the list we've just been canvassing. There is a huge list of exemptions from sales tax on goods right now, and every year we add to it, and the Minister of Agriculture aggressively lobbies a big long list of exemptions -- from greenhouses to new technology, and usually the Finance minister complies. In my case, I always comply with whatever the Minister of Agriculture requests. In the case of services, we want to ensure that those exemptions on goods also apply to the repair of those goods.

R. Neufeld: Just a few things on the 7 percent sales tax introduced on specified labour services, which will bring in a sizeable amount of approximately $160 million a year, according to the budget manual. One day in question period the Minister of Transportation and Highways confirmed that the cost of this tax change for ICBC would amount to $4.5 million. That's substantial, because that's just passed through to the consumer from a Crown corporation, and this applies to all Crown corporations.

I'd like to know if you have a breakdown on what it is going to cost B.C. Ferry Corporation, B.C. Railway Company, B.C. Transit Corporation, B.C. Buildings Corporation and all the Crown corporations that we have. What is it going to cost the hospital districts? What is it going to cost the school districts? The list goes on and on and on. It's much like the corporate capital tax or the water tax, if you like. It's hidden, and people don't really know about it, but it's a large generator. I would like to know whether the minister has those numbers.

Hon. G. Clark: I do have a breakdown. Not counting ICBC, which the member did refer to, the total cost to the government of British Columbia -- because we pay sales tax on repair labour ourselves for government fleets, etc. -- is estimated to be $6.3 million. Of that $160 million in annual revenue, $6.3 million was paid by the provincial government and its Crowns, with $1.7 million by municipal governments, if the member is interested in that. It just gives you a sense of the magnitude of it.

R. Neufeld: I certainly don't want to dispute your arithmetic, because you obviously can add pretty well when it comes to taxation. You can figure out how to squeeze a dollar out of a rock. It just seems strange to me that with a corporation as large as B.C. Hydro, which is huge, or B.C. Rail, that our Crown corporations are only in the magnitude of $6.7 million. It doesn't seem to compute right.

Interjection.

R. Neufeld: The member just qualified my statement about $4.5 million for ICBC -- that was for six months. There seem to be some discrepancies here that I don't understand.

Hon. G. Clark: It is not surprisingly high. A huge chunk of practically every automobile repair in the province is ICBC. But just to give you a sense, remember this base: real property is exempt. Repairs on real property -- your own home, for example -- are exempt from this. Almost all of B.C. Hydro's repair work is on its own property, whether it's a dam or something else. That is why it wouldn't be as onerous as you might think, given that it is a huge corporation. A lot of the repair work and labour service work would be on its own real property.

R. Neufeld: I would just like to pursue a little further....

Hon. G. Clark: Ships over 500 tonnes are exempt.

R. Neufeld: Ships are exempt. Okay.

I would like to pursue a little further on the prorated trucking companies, and the ones that are not prorated. The minister confirmed again that the 7 percent tax on labour is not prorated, but that the 7 percent sales tax is. I find it amazing that we are doing that, because that

[ Page 9241 ]

will drive businesses that are right close to the border, in the constituency where I come from, into Alberta.

When you take a large truck in for major work on an engine, or on a transmission or the rear end -- any kind of work like that -- the labour part of that is sizable. I had a small trucking company, and my labour bill for a year was $50,000. Large trucking companies are certainly going to have an awful lot of labour costs that they are going to have to pay the 7 percent on, and it would just encourage them to move into Alberta, into Grande Prairie a little ways away, and run their operations out of there.

I don't think that does anything for the province of British Columbia. Nothing at all. I have spoken quite often about the need for jobs in British Columbia, and the minister confirms that: we need jobs for people in British Columbia. But if we continue to drive businesses across the line into Alberta to operate from there into B.C. because of punitive tax measures, it certainly doesn't do anything for the job market in British Columbia or for confidence in the economy. I'm sure that we cannot take it lightly, because $160 million a year is an awful lot of money.

Obviously most of that, by the amounts that are going to come out of the government, is pretty insignificant. What is going to come out of it is all those small businesses, which provide 90 percent of the jobs in British Columbia.

Did the minister do any calculations in the ministry as to what effect this would have on those types of businesses?

Hon. G. Clark: This is the same situation that exists in eight provinces out of ten, so it's not something that's pioneering or dramatic. It's a broadening of the sales tax base. Even after this, we will continue to have the narrowest sales tax base in the country -- outside of Alberta, obviously, which has no sales tax. I'm prepared to say to the member that not this year, but if it became a problem, we could look at taxing labour services on a prorated basis as well unless they paid the tax in another jurisdiction, which is something that would require legislative amendments.

In other words, if they paid the 9 percent sales tax on labour services in Ontario, then we wouldn't want to tax them here as well. We wouldn't want a prorated situation right now. If we were the only province to prorate labour services, it would essentially increase the costs for everybody across the country because they would pay there as well as here.

If Alberta continued not to have a sales tax, then I think you could prorate it where they didn't pay the sales tax in their home jurisdiction. I would be prepared to monitor that situation to see whether that's possible and whether it would in fact be desirable. It would reduce the tax significantly below 7 percent if most of their business was in Alberta and they did some repair work here. The pro rata would reduce the tax payable; certainly it would be below 7 percent. We could look at that if it became a significant problem with respect to that corner of the province, and I guess the southeast corner as well.

But again, it is exactly the same as virtually every province in Canada. There's a whole series of these kinds of questions across the country. Quebec truckers pay even more than Ontario, so there's some of that problem there. It's the same problem as in Washington State, where, as you know, the combined state and county sales taxes are higher than the provincial tax in B.C. So there's some advantage.

Anyway, that's my only suggestion. There is no pro rata system for labour services in any province, and pretty well all of them have a tax. We could look at it, it seems to me, only in the cases where they didn't pay it in the other jurisdiction, because otherwise we would have an even worse situation.

R. Neufeld: I appreciate it when the minister talks about Washington and Quebec and probably Ontario, but I'm talking about a corner of the province that borders on Alberta, which does not have a sales tax at all. I'm talking about the Yukon, which does not, and about the Northwest Territories, which does not. My constituency actually borders on all of those jurisdictions. For the minister's information, we do tend to penalize those companies that do their business in B.C. and generate jobs in B.C. That's not the fault of the present Minister of Finance, but it does happen. It's carried on through time.

You don't have to prorate for a truck to be able to go into Alberta and the Yukon and B.C. Under those circumstances you can have a company centred in British Columbia -- let's say Fort St. John -- that's not prorated, and at the end of the year you can prorate the sales tax that's paid on parts if you do part of your business in Alberta, if you just happen to buy a plate in Alberta and a plate in the Yukon. On top of that, what we're doing now is saying to that individual: "We're going to tack another 7 percent on the labour that you pay to keep your company going.

Because you're such a nice person to stay in British Columbia, we're going to tack another 7 percent on you." Not all companies can do it, but those are the kinds of straws that will make a company move out of B.C. The companies I'm afraid about are those that are close to the border in Fort St. John and Dawson Creek. They're the ones that could easily do that. They don't have to be prorated; they can just be licensed in B.C.

The Chair: The Chair recognizes the hon. member for Prince George-Omineca, and again reminds members that this is committee stage on this bill. The philosophies and principles of this bill have been debated and passed by this House.

L. Fox: I thought the members were ever so mindful of that exact point.

I have a question about the new initiatives in this section. I speak primarily of dress alterations, shoe repairs -- all these very small businesses, many of them home-based or part-time. Can the minister tell me how many new vendor numbers are needed and what process he's going to have to go through to initiate and upgrade the computer files, to accommodate the virtually thousands of new contributors that this particular

section will provide the opportunity for the government to partnership with?

[ Page 9242 ]

Hon. G. Clark: As a matter of fact, we don't anticipate very many new filing numbers at all. The principle here is that if it's taxable when you buy it, then it's taxable when you fix it. So most of those, whether it's shoe repair or otherwise, would have a taxable number if they're selling any products which are taxable. Most of them do have -- not all of them, the member's correct. If you're in a shoe repair facility, they sell shoelaces or shoe polish or the sole on the shoe. They charge sales tax on those things now. And they're extending it to the labour service they're providing.

If someone is providing purely the labour service and no sale of any property covered by the current sales tax, then yes, they would have to file. We expect that will be a very modest number indeed, because almost all these businesses currently have a sales number and do provide some sales, and they're just extending the sale to the service.

L. Fox: I don't intend to go into a long debate on this issue. But the fact of the matter is that many of these home-based businesses do sell shoelaces -- you're correct -- but they pay the 7 percent at the time they purchase them, because they don't have a tax number. The same thing applies with dress alterations and watchmaking: they pay the 7 percent at the time they purchase the supplies.

Hon. G. Clark: It's against the law.

L. Fox: It may very well be against the law, but in fact it's been the practice forever. Because there's very little opportunity to find out who's doing all this out there, I'm wondering how the minister is going to be sure that all these home-based businesses.... In the rural parts of the province, the shoemakers do not sell shoes. Very few shoe repairmen ever sell shoes. The history is that they do shoe repairs in some back room in somebody's home. I can point out many communities where that's a fact, and I'm sure the minister knows it is. What process is the minister going to use to seek out these individuals, to make sure they're all complying with this new legislation?

[4:15]

Hon. G. Clark: The short answer is that it's no different than it is today. The member is suggesting that people are breaking the law, if you will, in home-based businesses. That's been the case for some time; again you're quite correct. It's been a modest problem. We have inspectors all around the province -- which certainly predates our government -- who review these questions and try to police the tax statutes so that it's fair for everybody. That simply will continue to try to ensure that the tax statutes are applied consistently across the province.

Sections 5 to 19 inclusive approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete without amendment.

Motion approved on division.

The House resumed; the Speaker in the chair.

Bill 7, Social Service Tax Amendment Act, 1993, reported complete without amendment, read a third time and passed on the following division:

YEAS -- 33

Petter

Boone

Edwards

Barlee

Charbonneau

Beattie

Schreck

Lortie

Hammell

Lali

Giesbrecht

Miller

Smallwood

Harcourt

Gabelmann

Clark

Zirnhelt

Blencoe

Barnes

Copping

Lovick

Ramsey

Pullinger

Farnworth

Dosanjh

O'Neill

Doyle

Hartley

Streifel

Lord

Garden

Kasper

Brewin

NAYS -- 21

Dueck

Serwa

Weisgerber

Hanson

Stephens

Farrell-Collins

Dalton

Gingell

Reid

Cowie

Chisholm

K. Jones

Jarvis

Anderson

Warnke

Hurd

Tanner

Symons

Fox

Neufeld

De Jong

The House resumed; the Speaker in the chair.

Hon. G. Clark: I call committee on Bill 66.

PUBLIC SERVICE ACT

The House in committee on Bill 66; D. Streifel in the chair.

[4:30]

section 1.

F. Gingell: The term "auxiliary employee" is used quite often throughout this act. It is going to be defined in the regulations. It is very difficult to understand the full meaning of the act without a definition from the minister now.

Hon. G. Clark: Why is the definition of an auxiliary employee not in the act and left to be resolved through the regulations? The answer is that the definition of an auxiliary employee impacts the collective agreements of three public service bargaining units. To impose a definition in legislation which is not consistent with the collective agreements would not be appropriate, particularly given the spirit of the legislation.

We will, through the consultative process...

[ Page 9243 ]

The Chair: The member for Vancouver-Langara.

V. Anderson: We're not used to having so many members of the government in the House. There's so much noise we can't hear. Is there a way that we could hear what's happening?

The Chair: Thank you, hon. member. The committee will come to order, and keep the side chatter down slightly.

Hon. G. Clark: Again, the answer is that right now there are three different collective agreements that we're dealing with in the Public Service Act. The definition of an auxiliary employee may be different for each of those three collective agreements, so putting one definition in the act would be a problem. We're going to work with the three public sector units to find a common definition which we'll put in the regulations.

F. Gingell: Does the term primarily deal with people who are hired on a temporary basis or on a part-time basis?

Hon. G. Clark: Primarily on a temporarily basis.

If I could, I'd just like to introduce Wayne Scale. I think it was yesterday that I had with me Ron McEachern, who is the director of negotiations services. Wayne is the director of corporate personnel services in the government personnel services division.

Section 1 approved.

section 2.

J. Weisgerber: I would move the amendment to

section 2(

b) standing in my name on the order paper.

[SECTION 2, is hereby amended by deletion in

section 2, paragraph (b), of the phrase "representative of the diversity of the people of British Columbia", and by substituting therefor the following: "open to all British Columbians equally, on the basis of individual merit".]

On the amendment.

J. Weisgerber: The amendment obviously changes the wording, deleting the part that suggests that the public service be reflective of the diversity of the people of B.C., and instead suggests that it be open to all British Columbians equally on the basis of individual merit. I think it goes to the heart of the arguments that we have had with the bill. Clearly, the criteria for employment should and must be on the basis of merit, and should be open to all British Columbians. That seems rather straightforward and not to require saying.

I think it more clearly reflects what most British Columbians want of their civil service, and more clearly reflects the things that potential applicants to the civil service hope will be looked for.

With that, I hope the minister will consider and accept the amendment.

V. Anderson: I would like to speak in favour of the amendment. I think the wording "open to all British Columbians equally, on the basis of individual merit" is a very logical representation. Other acts, including the Multiculturalism Act, represent the equality of everyone in British Columbia. When we say "all people equally," we mean that whatever their background, all people should have the opportunity to be considered and hired. When we use the term "representative of the diversity," I know that the intention is to recognize that everybody is equal.

But the very fact that you have to say it in this way implies that everyone is not equal, so I think it's counterproductive and gives out the wrong message. It certainly gives out the message to people of all backgrounds, not of any one particular background, that it is possible for this to be weighted by the bias of those who are doing it, and to deal with people unequally.

I think it is very important that the amendment be passed, because it says: "...all British Columbians equally, on the basis of individual merit." Individual merit includes all of a person's characteristics. It includes their cultural and racial background and their age; it includes all the characteristics that they have. To indicate in this act that it doesn't is counterproductive and gives out the wrong message. Therefore we must very strongly oppose the present wording and go with the amendment.

Amendment negatived on the following division:

YEAS -- 20

Mitchell

Serwa

Weisgerber

Hanson

Stephens

Farrell-Collins

Dalton

Gingell

Reid

Cowie

Chisholm

K. Jones

Jarvis

Anderson

Warnke

Hurd

Tanner

Symons

Neufeld

De Jong

NAYS -- 33

Petter

Boone

Edwards

Barlee

Charbonneau

Beattie

Schreck

Lortie

Hammell

Lali

Giesbrecht

Miller

Smallwood

Gabelmann

Clark

Zirnhelt

Blencoe

Barnes

Copping

Lovick

Ramsey

Pullinger

Farnworth

Evans

Dosanjh

O'Neill

Doyle

Hartley

Lord

Randall

Garden

Kasper

Brewin

F. Gingell:

Section 2(

b) talks about trying to replicate the diversity of the people of British Columbia in the public service. The number one responsibility of the public service is to serve the people of the province. We have to recognize them -- and we do recognize

[ Page 9244 ]

them -- because it is a fact of life that there is considerable diversity within the people of British Columbia. I would therefore move that in

section 2(

b) we strike out the words "representative of," and substitute the words "responsive to," so it would then read: "...recruit and develop a well qualified and efficient public service that is responsive to the diversity of the people of British Columbia."

[4:45]

The Chair: The amendment is quite similar in intent to the one that was just negatived. As such, the Chair rules it out of order.

F. Gingell: May I debate that?

The Chair: No. To clarify: it wouldn't be debatable, hon. member.

F. Gingell: Maybe the words need to be changed slightly. The intention was not to suggest that, heaven forbid, the public service should be open to all British Columbians on an equal, fair basis, or that they be only hired on the basis of merit. Heaven forbid that any government of the people of British Columbia would believe in that. The intention is that this amendment would....

Interjection.

F. Gingell: Does the Minister of Government Services have some standing as Chairman?

The Chair: Order, hon. member. The amendment has been ruled out of order, so we will carry on the debate on

section 2.

F. Gingell: Recognizing that the most important thing for the public service of British Columbia is to render and deliver the services that British Columbians pay a lot of money for, and recognizing the need to do that effectively, I would like to suggest to the minister that there's something missing here.

Section 2(

b) talks about painting the civil service in the same hues and tans as the people, but doesn't recognize that the hues and tans of the people of British Columbia require them to get the service from the public servants in a manner that recognizes those differences and that diversity. Surely the most important thing is to ensure that our bureaucracy is competent and capable, and able to serve all the people of British Columbia, recognizing that many of them need those services in slightly different ways, whether because of cultural or language needs. That surely is the intent, and that seems to be missing here. I'd be interested in the minister's thoughts on that.

Hon. G. Clark: It's not missing at all.

Section 2(

a) says: "...facilitate the provision of service to the public in a manner that is responsive to changing public requirements." This clearly captures the points the member is raising. We want the public service to be responsive to the changing diversity of British Columbia, and I think it is all-encompassing. Remember that this is the broad purposes

section of the bill. It says the public service should be "responsive to changing public requirements." It says that we should "develop a well qualified and efficient public service that is representative of the diversity of the people" it serves, "encourage the training and development of employees to foster career development and advancement, encourage creativity and initiative among employees, and promote harmonious labour relations" between the government and its employees. It seems to be a broad, all-encompassing purpose that is in keeping with a modern public service act. The concerns that the member raised are clearly captured by the broad purposes described in this section.

J. Weisgerber: In

section 2(

b) the key word seems to be "representative." Is it the intent of this legislation to see various ethnic groups reflected in the civil service in relation to the population of the province? Is the intent of the legislation to mirror the cultural makeup of the province? Or is it merely to be representative by ensuring that at least some members of various cultural groups are represented in the civil service?

Hon. G. Clark: I'm not sure that there's much of a distinction in the member's remarks. This is a purpose; these are the goals. Is it not a desirable goal to have the public service be broadly representative of the people it serves? Yesterday one of the members of the Liberal Party suggested it was unacceptable that we hire an Indo-Canadian in the employment standards branch, even though there are thousands of Indo-Canadian workers and no Indo-Canadians currently employed as employment standards officers.

Is it not desirable that we have people in the public service who understand the language and culture of particular ethnic groups? The answer is clearly yes. It astonishes me -- in fact, I might even say it disgusts me -- that members opposite would suggest otherwise, that it's not a desirable goal for the public service to broadly represent the makeup of the population at large in British Columbia. That's all this

section does. It doesn't impose quotas; it doesn't say the government is taking affirmative action or anything else. It just says that it is a goal of the public service to be broadly representative of the public it serves; it should be "representative of the diversity of the people of British Columbia."

J. Weisgerber: Those are warm words that sound very good. The practical application, though, is different. If the goal is to achieve a representative cross-section of the diversity, then one group is going to be overrepresented if another is underrepresented. There are a couple of ways of approaching it. One is to say that between 3 and 5 percent of British Columbians are of aboriginal ancestry; therefore the goal of government is to have between 3 and 5 percent of its staff members of aboriginal ancestry. If that's the goal, then it's important to understand that.

If the goal is only to ensure that there is aboriginal representation in the civil service, that could mean something quite different. It could mean less than 1 percent or more than 10

[ Page 9245 ]

percent or 20 percent. Is the government seeking to identify representative groups that roughly parallel their representation in the rest of the province? If so, then we'll understand the purpose of the act, and we will pursue the debate on that understanding.

While the minister speaks with some passion, he avoids the issue; he avoids the question. In order for us to debate this bill logically, we need to know what the purpose is. Is the purpose to have quotas or to identify specific numbers for specific ministries? Is the goal simply to have representation in the civil service? Is geography a factor? As has been stated in second reading debate, there is an overrepresentation of women in the civil service. The argument is that there isn't enough representation in the management areas. So while this is a laudable goal, it lacks so much specificity that no one can understand what it means.

Hon. G. Clark: If the member thinks this is a laudable goal, then he should support this section. How the government chooses to go about doing it is a question for either a later

section or for a debate, and the member can attack the government if he chooses to do so. But if the member agrees with this goal, then he should support the section. I don't know why we're debating it or why he's trying to amend it as he suggested. You can't have it both ways.

I'll say this: no quotas are being contemplated. There is no attempt to rigidly say that if 5 percent of the population at large is aboriginal people, there must be 5 percent in the public service. Broadly speaking, we want to try to deal with geographic questions and service questions. If you're doing a new native program on child abuse or on alcohol abuse, then it may be desirable to have aboriginal people in the service delivery capacity. That makes sense.

When it comes to reflecting the workforce better, as opposed to the population, aboriginal people make up only 2 percent of the workforce but 5 percent of the population. It would be the workforce characteristics that you'd want to represent in the public service.

Secondly, I think the character of the service you're providing would have an impact on the government's desire to accommodate that. And thirdly, the geography of the region would also have an impact. In the Nass Valley it may be desirable to promote local hiring of aboriginal people in that community. So the answer is a broad one rather than one that deals with specificity -- I think that's the word -- which would certainly not be in this section. This is a broad goal for government.

J. Weisgerber: When you look at the question of women employed in government, statistics are regularly brought out. We're reminded that women make up 52 percent of the workforce, but that only 43 percent of middle management in government are women. That seems to argue that in fact government is looking for quotas. Otherwise, you would argue that 43 percent is representative, if that's the argument the minister wants to make.

[5:00]

While we can't have it both ways, neither can the minister. You can't argue that you're looking only for representative diversity and then make the arguments, specifically to women, about percentages of women in the workforce -- not even across government, because the argument doesn't work there. This government, this party, takes the argument further and breaks it down into various groups within government. Clearly, "representative" means something different in that circumstance than what the minister would have had us believe in his last comment.

Hon. G. Clark: It's not a question of measuring the percentage of women or aboriginal people in a particular category for the purposes of having a quota system or affirmative action program. But how else would one measure how we're doing? The percentage question is a measurement tool for government. How are we doing in terms of representing the public? Well, only 2 percent or 3 percent of the senior management in the government are women. Oh, gee, that's a surprise, because 52 percent of the people who work for the government in general are women. Why is it that very few senior managers are women?

How else would the member have the government try to measure how we're doing in terms of representing the broad workforce in the public sector, other than to take a look at those percentages?

It does not mean that we're going to say that we're only at 48 percent, therefore we must have a quota to achieve that extra 2 percent and this is how we're going to do it with rigid guidelines. We haven't said that at all. This is essentially the goals and purposes of the act. It's a broad definition of our commitment to try to see that the public service is representative. All of us should support the goal of a public service that is representative of the diversity of British Columbia. Obviously, percentages are an important way to measure how we're doing. It doesn't mean anything more than that.

Just before I wrap up, hon. Chair, I want to introduce Brian Dagdick, who is the director of employment equity in the Ministry of Women's Equality. He is an expert in the question which seems to be the topic of much discussion from members opposite.

J. Weisgerber: First of all, I expect that representation at the most senior level in government has fallen off in the last 18 months. In fact, there were more women deputy ministers in government when you were elected than there are today. I hear the percentages argument being used as a rationale for bringing in the legislation. I hear the percentages being used to say that we're not doing a good enough job. Therefore it would seem to me that there must be percentage goals that are different from the ones that exist today.

If there isn't a goal that is different from what exists today, then the argument about the need for the legislation would seem to fail. If the minister says that there are goals higher than what exist today, then we'll move on.

Hon. G. Clark: I don't quite know what the member is talking about, but let me be clear. It is not required to have this in the legislation for the government to pursue employment equity. There is an employment equity policy, read into the House, in

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many cases under the administration that that member was a member of the executive council in. Trying to deal with this question of employment equity has been going on for some time in British Columbia. We don't require it anywhere in the legislation. It's in there because we have a policy that was pursued prior to our coming to office. We're pursuing it. We think there is a legitimate concern about representation in the public service among the various groups that we talked to and that are contemplated in the act.

We included as a goal -- and in some other sections -- what might be called enabling legislation, broadly speaking. This act does nothing to advance the cause of employment equity, except to recognize that it's a legitimate policy goal of government, and to say that employment equity within the public service will be carried out within the public service commission which is set up under this legislation.

That is an important distinction which the members opposite seem to conveniently miss. I think it would be dishonest for them to say that they support the policy, but want it taken out of the legislation. We're being honest and upfront about it. It is the policy, we support the policy, we're putting it in this

section here as a framework, and enabling that policy. But the debate the members want to have, it appears to me, is better had in canvassing the policy question than the implementation of the policy question, which has nothing to do with this legislation. It is much broader, and in fact, gives employment equity policy in the public service a home within government.

G. Farrell-Collins: I want to address a couple of comments the minister made earlier, as they relate to

section 2. First of all, I don't think there are many people, certainly in my caucus, who would have a problem with the intent of what's in

section 2. I think our second reading speeches....

Interjection.

G. Farrell-Collins: Well, we probably will. Our second reading speeches were indicative of that, and I'm sure that if the minister listened carefully he would have understood that our problem isn't with the intent or the goals. They are laudable goals and laudable intents.

In my speech yesterday -- and I think the minister referred to it a bit -- I referred to comments by the Minister of Women's Equality, and the example she used of advertisements that were put out or job descriptions that were made for various positions. In her words, those positions should focus on the skills and abilities of the individual, not on certain arbitrary qualifications such as educational standing or access to a driver's licence or their race.

When the minister responded to the comment that a member of the Liberal opposition made -- that a Punjabi person should not be hired by the Labour Relations Board -- I think he was being a little facetious. What was said was that those types of job applications should be done in much the same way the Minister of Women's Equality stated: they should outline the qualifications, skills and abilities of the person. If it so happens that that person is Punjabi -- and very likely the person would have to be Punjabi in order to meet those qualifications -- then that's wonderful, that's fine.

For the minister to make the type of statement he was making was stepping a little beyond fair comment.

The reality is that one can agree with the intent and the goals, and approach it in a different way. In fact, I am agreeing with the Minister of Women's Equality. If he is saying something different, then he should get together with the Minister of Women's Equality and decide what it is they are really trying to do, because I am hearing different things from the Minister of Finance than I heard from the Minister of Women's Equality in her presentation. I just want the minister to perhaps be a little more cautious in the types of tags he puts on members of the opposition. He should be careful, because Hansard will speak for itself.

D. Mitchell: The member for Fort Langley-Aldergrove makes some good points here. I think the real reason the member might discern some differences between the two members of the executive council is that Bill 66 takes away significant authority from the Ministry of Women's Equality, and enshrines it in the new agency that Bill 66 puts into effect. I suppose that's fine as long as the minister is upfront about that.

We're dealing with

section 2, which addresses the purposes of the act.

Section 2 says: "...representative of the diversity of the people of British Columbia...." The Korbin commission report refers specifically, on page 25, to "women, visible minorities, physically challenged and aboriginal people." Would this

section of the act be based upon that definition when we talk about being "representative of the diversity of the people of British Columbia"? Would it be that part of the Korbin commission report?

Hon. G. Clark: It's broader than just four target groups. If that is what the member is referring to, this is broadly representative of the diversity of the people of British Columbia; it's not just visible minorities or disabled people.

D. Mitchell: I was trying to get a bit more specific than that, although I suppose I understand what "broadly representative" means. I was referring to the Korbin commission report simply because in that report, when commissioner Korbin talks about diversity, she frames it in the context of women, visible minorities, physically challenged and aboriginal people. When the minister now says "broadly" -- that it goes beyond that -- would he include people of different educational levels, or people of different linguistic or ethnic backgrounds, in addition to those Commissioner Korbin referred to?

Hon. G. Clark: It is fair to say that the four target groups Ms. Korbin talked about would be the dominant areas, because they canvass a broad area, but it is broader than that. What we are trying to do is remove access barriers to public service jobs for the broad range of the public, whether it's in the Human Rights Act, the

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Multiculturalism Act or in this act. There may be groups who aren't represented in those four broad categories, and we are not trying to be exclusive with respect to that.

D. Mitchell: In response to questions from the Leader of the Third Party, the minister said that quotas weren't being considered. How will the government determine the success of the policy enunciated under

section 2, concerning the purposes of Bill 66? When you are trying to achieve a public service that is representative of the diversity of British Columbia's people, how will the government measure whether or not it has achieved that? Will you be setting targets of one kind or another?

Hon. G. Clark: The advice that I am receiving from staff is that in the four areas, it will be more easily dealt with. The percentage question we talked about earlier is an accurate measurement you can use to tell how you are doing with respect to target groups. But in the other areas, broadly speaking, it is more anecdotal. We will be talking to people and listening to them.

Believe me, there's a lot of interest in this policy from people who feel aggrieved about not having access to government jobs, whether they are physically challenged people or others who are really excited by the prospect of being able to compete for government jobs for the first time and not be discriminated against on the basis of their handicap. When we choose to try to promote this kind of initiative -- and it's very unfortunate that members would oppose this issue -- we get a lot of feedback from that area, as you can see. We are not doing this in isolation with some rigid quotas and numbers.

As we attempt to remove barriers, to make the public service jobs accessible to, say, physically challenged people, we will be talking to those groups and to groups they represent, discussing with them how they think we are doing as a government.

Every government in Canada, of course, has a policy like this. After 20-odd years with the Social Credit government, we are, unfortunately, a long way behind, so we are trying to catch up. Over the course of the excitement that this bill and the government's approach is causing in all those groups who have felt disadvantaged, we are trying to work with them to see where we can assist in removing those barriers.

I am, of course, pleased to be informing them of this debate and of the disgusting comments from members of the Liberal Party, and others, with respect to their opposition to this kind of approach. I will be fully informing them because when we are trying to deal with barriers which exist, the members opposite not recognizing those barriers is a big surprise and disappointment to me and to them as well.

In the course of our discussions today, as we go through it, I say that we will be able to measure our success not only by the percentages but also in terms of the feedback we receive from those groups that have not been heard from by government in years past. The kind of dialogue we're having is one which will help us see and measure how we're doing in terms of achieving some of those objectives.

D. Mitchell: The minister says no to quotas, in response to questions from the Leader of the Third Party. But he did indicate that one of the ways the government will be measuring the success -- or lack of success -- of this policy will be some kind of measurement. There has to be some. I refer one final time to the four categories listed in the Korbin commission report on page 25: women, visible minorities, physically challenged and aboriginal people.

Could the minister tell us today where each of those four categories, referred to in the Korbin commission report, stands as a percentage or in straight numbers in the public service of British Columbia? Would the minister have that measurement, so that in the future we could measure the success or lack of success of this policy?

Hon. G. Clark: An excellent question. We don't have those numbers, because, of course, no work has been done in this area for years and years. We don't know how many....

D. Mitchell: How will we know if you're successful?

[5:15]

Hon. G. Clark: Once we pass this legislation, giving employment equity a home in the new commission, I'm sure the first thing we will do is canvass the areas. We have a lot of anecdotal evidence from the groups themselves, and from those of us MLAs who can look around and see a sea of white, elderly, male people who occupy practically every position of power in the government. So there's sort of obvious anecdotal evidence.

An orderly review of the makeup of the public service will happen, so we can get baseline information -- other than on the gender question, which we do have information on. I hope, although I guess it won't happen.... Normally you'd expect the opposition to hold the government to account in estimates and ask the minister responsible for the Public Service Commission how we're doing. If the members opposite aren't interested in that, then maybe that won't happen. But hopefully, the minister will volunteer a report on how we're doing with respect to reducing barriers to those who have not had access to the public service.

V. Anderson: I'm just utterly amazed at the simplistic approach of the minister, and that the minister has not heard that the opposition has never opposed representation of all people equally in the government or any other facet of the economy. I'm also amazed that whenever we raise a question for the minister, to clarify and probably understand what he's about, he is trying to tell us that we're in opposition -- when we're trying to clarify, not only for ourselves but for the public at large, what the minister is saying. If the minister believes that anybody who is trying to clarify is in opposition, and he is going to go out and tell the public that because we're trying to clarify we're in

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opposition, then