2009 Legislative Session: First Session, 39th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

official report of

Debates of the Legislative Assembly

(hansard)

Wednesday, September 2, 2009

Afternoon Sitting

Volume 1, Number 10

CONTENTS

Page

Routine Business

Introductions by Members

Point of Privilege (Reservation of Right)

B. Ralston

Statements (Standing Order 25B)

Canyon Ranch

D. Barnett

100th anniversary of Sointula Co-operative

C. Trevena

Lawn bowling achievements of Vern Greenhill

D. McRae

Lacrosse and New Westminster Salmonbellies

D. Black

Burnaby athletes

R. Lee

Seniors outreach programs in Maple Ridge and Pitt Meadows

M. Sather

Oral Questions

Budget revenue projections

B. Ralston

Hon. C. Hansen

C. James

Hon. G. Campbell

S. Simpson

J. Horgan

D. Black

M. Farnworth

Tabling Documents

WorkSafe B.C., annual report, 2008

WorkSafe B.C., service plan, 2009-2011

Petitions

R. Lee

Budget Debate (continued)

B. Ralston

Hon. I. Black

L. Popham

Hon. B. Bennett

D. Donaldson

J. Les

J. Brar

Hon. R. Hawes

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WEDNESDAY, SEPTEMBER 2, 2009

The House met at 1:35 p.m.

[Mr. Speaker in the chair.]

Routine Business

Prayers.

Introductions by Members

J. Les: I am thrilled today to be able, for the first time, to introduce some of my grandchildren to the House. With us today are Brandon, Darren and Stefan Visscher. This is their first trip to the House while the House is in session. I guess that's one of the benefits of sitting during the summer months when school is not in session. They are accompanied today by their grandmother, who doubles as my wife Mattie. I would like all members of the House to please make them all very welcome.

Hon. C. Hansen: I would like the House to welcome a visitor who is here from Fort McMurray, Alberta. She is the mother of one of my very valuable and invaluable members of my staff. I hope the House will welcome Rosie Llewellyn-Thomas.

N. Letnick: I would like to welcome to the House Edna Aimsbury, a friend from Maple Ridge, who is accompanying my mother, Mary Claire Letnick. Please help me make them feel welcome as well.

D. Horne: I'd like to welcome, joining us in the gallery today, Bernie Hiller, who was the B.C. Liberal candidate in Port Coquitlam and is now my constituency assistant. I hope that everyone will make him feel welcome.

Point of Privilege

(Reservation of Right)

B. Ralston: I rise to reserve my right to raise a question of privilege with respect to remarks made by the Minister of Finance.

Statements

(Standing Order 25B)

CANYON RANCH

D. Barnett: We frequently speak about the importance of our agriculture sector as the food source and economic foundation for British Columbia. But I believe that too often we forget to recognize the work, care and pride that people in the agriculture industry have in the land.

Canyon Ranch in Alexis Creek has been awarded the 16th annual Environmental Stewardship Award from the British Columbia Cattlemen's Association and is a great example of leadership in agriculture. Al and Bev Madley have earned the award for the remarkable environmental management practices they use on their beef cattle ranch. Canyon Ranch has also won the Canadian Cattlemen's Association national Environmental Stewardship Award.

Canyon Ranch is located in my constituency in the Chilcotin River Valley, west of Alexis Creek. Bev and Al run the operation with their children Garrett and Brooke. One day Bev hopes to pass the ranch management title to her son Garrett.

Canyon Ranch won these awards for their outstanding commitment to water quality, habitat restoration, riparian management and range and nutrient management. Their management strategy has greatly improved the natural environment while maintaining a sustainable cattle ranch.

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The Madleys' Canyon Ranch also deserves to be recognized for being the first ranch in the Chilcotin to complete the environmental farm plan and the biodiversity plan.

These two awards clearly demonstrate how dedicated the Madleys are to sustainable, responsible ranching. Canyon Ranch deserves to be congratulated, and I am proud to stand here today and do so. The efforts of the people in the Cariboo-Chilcotin are very impressive.

100 th ANNIVERSARY OF

SOINTULA CO-OPERATIVE

C. Trevena: Small rural communities often rely on their store as a place for groceries and supplies, often for mail, for beer, for gossip. They are at the heart of our communities, and no more so than in Sointula, where the co-op this summer celebrated its 100th anniversary. That makes it the oldest serving consumer co-op in Western Canada.

Sointula did originally have a private store, but in 1904 people there decided that a co-op would better serve them. The community had come together to build communally and continued to work communally.

The co-op played a large

part in the development of the town, financing the library, initiating street lighting and a phone service. In the 1980s it took over the running of the gas station. Despite competition from stores down-Island in Campbell River, in Courtenay and even in Nanaimo, the co-op remains the centre of the town, providing power tools through to plumbing supplies, a butcher counter and island-fresh veggies. Its member-

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ship is still strong, and with a sale on memberships to mark the centenary, it's even healthier.

But it's a tough time for the co-op and the community. Sointula was once a healthy fishing village, but it's now a community with a strong spirit but little employment. Young families have been leaving to find work, and that hits the co-op. The second-floor dry-goods

section had to close, and the reality of more downsizing and cuts is one being faced by the board, membership and staff.

The 100th anniversary was marked in July in fine Sointula style with a pancake breakfast, a parade, a presentation of a plaque and, of course, a birthday cake. The 534 active members of the Sointula Co-op Association are hoping that the spirit of communal ownership and communal responsibility will work for their community for many more years.

LAWN BOWLING ACHIEVEMENTS OF

VERN GREENHILL

D. McRae: Imagine, if you will, a spacious, precisely level, flawlessly manicured lawn that is alive with social interaction and competition.

No, I'm not describing the lawn here at the Legislature, or even Butchart Gardens. I'm talking about the pristine beauty of a lawn bowling green.

Lawn bowling has long been a popular sport in the Comox Valley. The Courtenay Lawn Bowling Club, located at Bill Moore Park, is a popular venue for many of my constituents.

The dynamic membership has ensured that participants not only have a fantastic social organization, but that a very high level of competition also exists. One particularly skilled member and a constituent of mine — and, I might add, a distant relative — is Vern Greenhill.

In late June Vern entered the provincial men's single lawn bowling competition at the Juan de Fuca club here in Victoria. This is the first time he had entered this level of competition, facing off with 26 other members from across the province. Vern won seven of eight games and brought home a silver medal. He also won the opportunity to compete at the Canadian championships, also hosted by the Juan de Fuca club in mid-August.

Upon returning to Juan de Fuca in August, Vern again won eight of nine games in round-robin play. His only loss was to another B.C. player, Christie Graham. They faced each other again in the final game, with Vern Greenhill emerging victorious and winning the gold medal.

I am also proud to report that B.C. players won both gold and silver medals in the men's and women's events. Vern Greenhill now has the honour and opportunity to represent Canada at the lawn bowling world championships held later this year in Australia.

I would like the House to recognize the achievements of Mr. Vern Greenhill and his exceptional abilities and talent in the sport of lawn bowling.

LACROSSE AND

NEW WESTMINSTER SALMONBELLIES

D. Black: Lacrosse has played an important role in Canada's history. Lacrosse is a sport with a rich and fascinating heritage dating back centuries.

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It was derived from the first nations game of baggataway. When French colonists arrived in Canada during the 17th century, they saw the Mohawks playing baggataway and adopted the game. They thought the stick resembled a crozier carried by bishops, and they renamed the game lacrosse.

Lacrosse is the stuff of which legends are made. One of the most famous is Pontiac's rebellion of 1763, when the Ottawa Chief reportedly staged a game in order to distract British soldiers and gain entry to Fort Michilimackinac in what is now Michigan.

Starting September 4 Queen's Park arena in New Westminster is going to be the place to be for all sports fans. The famed New Westminster Salmonbellies will take on Ontario's Brampton Excelsiors for the 2009 Mann Cup, Canada's national lacrosse championship. The excitement of the fastest game on two feet played on the wooden floor of Queen's Park arena will thrill lacrosse fans from far and wide.

The Salmonbellies have made it to their 44th championship and 24 Mann Cup wins, a record unmatched by any other team. In fact, their closest competitor is Peterborough, with only nine Mann Cup championships. Tickets to the games are available on line from the Salmonbellies' website. For sports fans from other areas of B.C., the games will be webcast in real time.

Congratulations to head coach Bob Salt, team manager Dan Richardson and all the players for their skill and determination in taking the WLA title. I wish the Bellies players good luck as they start the national championship round on Friday night, and I'm looking forward to being in the stands in Queen's Park arena. I'll be there to cheer them on in the drive for 25 Mann Cup champions. Go, Bellies, go.

BURNABY ATHLETES

R. Lee: British Columbia produces a lot of outstanding athletes, and I am proud to say that many of them come from Burnaby — perhaps most famously, Burnaby Joe Sakic. Efforts flourish in my city, and today I would like to recognize some of our champions for their perseverance and dedication.

I would like to congratulate Michael Cai on the seven gold medals he won at the 2009 Canada Summer Games, making him the most successful athlete in the Games' history. I also want to applaud the accomplishments of Rebecca Alley for her gold medal in kayaking and Kelsey Haberl for her outstanding play, which led to a

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gold medal in softball at the Games. Selena Ye is to be congratulated for the four gold medals she won at the B.C. summer swimming championships.

Earlier this year young table tennis players from Burnaby also helped Team B.C. win the Canadian junior championships. Burnaby's Shirley Fu, Teddy Wu, Paula Hsien, Peggy Hsien and Leanne Lee made us proud as they won six gold medals and helped B.C. win 13 of 28 gold medals in the tournament.

Finally, I must also mention that Burnaby's Matthew Woo, Anthony Cusati, Ryan Matsuda and Matteo Vincelli all made significant contributions as their Hastings All Stars won the Canadian Little League championship and went on to represent Canada at the Little League World Series in Williamsport, Pennsylvania.

I ask the House to please join me in congratulating these fine young athletes for their outstanding accomplishments.

SENIORS OUTREACH PROGRAMS IN

MAPLE RIDGE AND PITT MEADOWS

M. Sather: For over 30 years Maple Ridge–Pitt Meadows Community Services has been helping seniors preserve their independence and well-being by way of the seniors outreach program, which provides indispensable services, enabling seniors to remain living in their own homes for as long as possible.

One of these services is the driver program, a sought-after alternative to taking expensive taxis. By paying an honorarium to a volunteer driver, seniors are whisked to appointments in Maple Ridge or all the way into Vancouver.

Of equal importance is the shopping program, which gives seniors the opportunity to shop for groceries with assistance. In the case of seniors who are unable to leave home, a volunteer will do the shopping for them. This is of particular importance in Maple Ridge, due to a strike closing Extra Foods, an affordable grocery store that is centrally located for seniors use.

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Through the handyman program, mechanically inclined seniors are able to give back to their peers by performing maintenance jobs for a very affordable fee. Again, this helps seniors maintain independence.

The visiting program and the Hello program are two other great services. In the visiting program volunteers make regular house calls to seniors who have similar interests. The Hello program provides weekly phone calls to check in and chat with seniors. These programs improve the emotional well-being of home-bound seniors and have proven vital as an emergency check-in.

It is quite evident that the seniors outreach program benefits the most vulnerable, isolated and at-risk seniors in my community. For some seniors, the volunteers may be the only contacts they have. Staff and volunteers are eager to continue providing these valuable services for seniors, but sadly, as of September 30, this program will be terminated in Maple Ridge and Pitt Meadows.

Oral Questions

BUDGET REVENUE PROJECTIONS

B. Ralston: Yesterday, in one of his more recent versions of events, the Finance Minister admitted that he knew, and he knew in the middle of the election campaign, that government revenues were falling by hundreds of millions of dollars. He claims he did not tell the Premier, who was out on the campaign trail telling people that the deficit would be $495 million maximum. Can the Minister of Finance explain why he chose not to tell the Premier immediately this important information?

Hon. C. Hansen: When we built the budget that we tabled in February, we built in added prudence that would actually allow for a downturn in revenues. We knew at that time that there was certainly some volatility to the world economy and the impact that it might have on British Columbia. When the deputy minister advised me that there were indications that revenues might be off by $200 million to $300 million, I knew at that time that that could still be fully accommodated within the fiscal plan that we tabled in February.

Mr. Speaker: The member has a supplemental.

B. Ralston: The middle of the election campaign was April, only the first month of the fiscal plan. The budget year begins, of course, on April 1. Was the minister not concerned by the fact that within one month revenue had fallen off a projected $200 million to $300 million, and did that not lead him to ask his deputy minister some further questions, or did he simply choose the route of silence?

Hon. C. Hansen: With the comments that the deputy minister made to me, I took that to mean that that would be annual, over the entire calendar year or the entire fiscal year, and not a….

Interjections.

Mr. Speaker: Members.

Minister, just take your seat.

Interjections.

Mr. Speaker: Members.

Continue, Minister.

Hon. C. Hansen: As I have indicated, the deputy minister volunteered that information to me. I did not

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ask it of him. Quite frankly, given the protocols that exist, it would probably have been inappropriate if I had then subsequently asked the deputy minister for further advice in the middle of the election campaign.

So Mr. Speaker, I at no time before the election campaign or during the election campaign was advised by any of our officials that a $495 million deficit was not doable — at no time that the budget we had tabled would not stand up either on the revenue or the expenditure side.

Mr. Speaker: The member has a further supplemental.

B. Ralston: Well, the Finance Minister says that he took him to be referring to $200 million to $300 million on an annual basis. Did the minister not have the curiosity or the leadership ability to ask a further question: was that on a monthly basis? Because when we look at what the deficit is now, 12 times $300 million — $3.6 billion minus the HST signing bonus, it's pretty close to where we're at in this budget. Did the minister not think to ask that question? It's just not credible.

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Hon. C. Hansen: At the time of the February budget we actually built in the extra prudence of a 0.9 percent reduction in the gross domestic product that would actually allow for reductions in revenue numbers beyond what we had anticipated.

The other thing is that we also — and I indicated this at the time of the February budget — had instructed the public service to look at other discretionary grants. So in the February budget we had actually identified $1.9 billion worth of savings and discretionary grants that would come out of the future spending stream, and I signalled at that time that we were asking ministries to look even farther because we felt that there were more savings on the expenditure side that could be realized.

Even before the election started, I was aware of the fact that ministries were having some success in identifying at least the potential for savings on administrative grants. As a result of the information that the deputy minister provided me that day, I knew that that kind of a reduction in expected revenues was totally manageable within the fiscal plan that we tabled in February.

C. James: We learned yesterday that the Finance Minister said that he was informed midway through the election that revenues were tanking, but that wasn't the only thing we learned yesterday. We also learned yesterday that the Premier said that he was informed before the election: "I heard revenues were coming off, yes, a week before the election."

My question is to the Premier. Will he tell the House today who told him, when was he informed, and why did he keep it a secret from the voters in British Columbia?

Hon. G. Campbell: During the election I did have conversations with my deputy minister. They were largely with regard to H1N1. In one of those conversations she did raise the subject of the budget. That was in May. She told me that there were revenue pressures. She also informed me that the director of finance believed there were a number of measures that could be taken.

Mr. Speaker, I think this is important to note. At no time was I told that our February budget numbers were not going to be achievable. On the contrary…

Interjections.

Mr. Speaker: Members.

Premier, just….

Interjections.

Mr. Speaker: Members.

Continue, Premier.

Hon. G. Campbell: …I was told that our February budget was achievable. That's why I was clear with British Columbians that we would achieve our February budget. It would require difficult decisions, but we would achieve our February budget.

Now, since the election we have watched…

Interjections.

Mr. Speaker: Members.

Hon. G. Campbell: …a significant reduction in revenues that cost us $500 million in natural gas revenues, $500 million in natural resource revenues, over a billion dollars in corporate and personal income tax revenues. Obviously, we have faced challenges. We presented a budget that will protect health care, protect education and continue to build on British Columbia's record of success.

Interjections.

Mr. Speaker: Members.

The Leader of the Opposition has a supplemental.

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C. James: This is about public trust. This is about honesty. This is about making sure the public is informed. I question the Premier again. When the Premier was told that revenue was tanking, why did he not inform the public? Why was he not honest with the public in British Columbia?

Interjections.

Mr. Speaker: Members.

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Member, the last part of your statement — I want you to unconditionally withdraw that.

C. James: I unconditionally withdraw, Mr. Speaker.

Hon. G. Campbell: You know, I just outlined for the member opposite, for the Leader of the Opposition, what took place. Yes, I did have a conversation with my deputy. She did inform me that there were revenue pressures. She also informed me that the Deputy Minister of Finance had identified mitigative measures.

I think it's important for people to hear this. At no time during the election was I informed by any of our staff — by the Deputy Minister of Finance or anyone else…

Interjections.

Mr. Speaker: Members.

Hon. G. Campbell: …that we were not going to be able to achieve our February budget. In fact, I was informed, on the contrary, that we would achieve our February budget, and that's exactly what I said to the people of British Columbia.

Hon. Speaker, if I could just….

Interjections.

Mr. Speaker: Members.

Hon. G. Campbell: The reason our province is recognized for the way we manage our economy and manage the initiatives we have is because….

Interjections.

Mr. Speaker: Members.

Hon. G. Campbell: It's because — as we did in 2008-09 — we told the people of British Columbia we would balance the budget. We told them there would be a $50 million surplus. In fact, there was a surplus that was 50 percent higher than that, because we were willing to make difficult decisions, and we're going to continue to do that to build British Columbia's future.

S. Simpson: The one thing that's clear here is that the Finance Minister's story seems to change on a daily basis. He started out telling this House that it would be inappropriate for him to have discussions with his officials, and then, "Oh, I had one casual conversation," and then it was: "I've had a few discussions."

What we know is that this minister knew that there was a $200 million to $300 million tanking of this economy on a monthly basis, and he should have asked, and he kept it hidden from the people of British Columbia.

Frankly, while this minister may have felt comfortable to keep the facts hidden from the people of British Columbia, it's not believable that he kept them hidden from his boss. Did he tell the Premier? Did any of his officials tell the Premier about this, and when?

Hon. C. Hansen: What I was advised of by the deputy minister was that there were indications that revenues might be off by $200 million to $300 million. Now, to put that into context, that actually amounts to half of 1 percent of the projected revenues of the province. I also knew that on the expenditure side, we were fully able to cover that magnitude of a downside in revenue and still live within the fiscal plan that we had tabled in March.

But you know, just given the comment that the opposition Finance critic made yesterday, when he said….

Interjections.

Mr. Speaker: Members.

Hon. C. Hansen: He said this in this House: "Despite clear warnings from leading economists that their pre-election numbers didn't hold water…."

In April this Leader of the Opposition tabled a budget plan that they tried to get elected on, which adopted exactly the same numbers that were in our February plan. On top of that, they invented an additional $600 million of revenue out of thin air.

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I think it's a question that they need to answer to the voters of British Columbia. Why did they put forward a budget plan that they ran on if they thought that their numbers could magically invent new revenues?

Interjections.

Mr. Speaker: Members. Members.

I want to remind members to listen to the question and to listen to the answer, please.

The member has a supplemental.

S. Simpson: If this minister is telling us that he gets told by his deputy that it's $300 million and he doesn't have the wherewithal to ask "Is that a monthly or an annual figure?" maybe competency is the bigger question than honesty in this House.

In this province….

Interjections.

Mr. Speaker: Members. Members.

Just take your seat.

Members. Let's listen to the question. When the question comes, then we'll listen to the answer.

Continue, Member.

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S. Simpson: In this province we have a one-man government. It's unbelievable that the Finance Minister wouldn't have felt obliged to tell his boss about the collapsing revenues in this province. This minister's credibility is already in shambles with everybody in this province. It's time to tell the truth.

When did you tell the Premier or have your officials tell the Premier about this situation?

Hon. C. Hansen: I will put our track record as a government on financial matters up against the track record of that party any day.

Interjections.

Mr. Speaker: Members.

Interjections.

Mr. Speaker: Members. Members.

Hon. C. Hansen: Actually, unlike the track record of that government in the 1990s, where they deliberately overrode the advice of the officials in the Ministry of Finance — they deliberately changed numbers that were recommended to them by officials in the Ministry of Finance — we are a government that works with the fine staff that we have in the Ministry of Finance. We accept their advice, we accept their numbers, we accept their projections, and I'm proud of the record that we have established for fiscal management of the province's budget.

J. Horgan: The story changes quite a bit with these people. Last week the Finance Minister said that he did not meet with his officials, that it would be inappropriate to do so.

This week he says: "I had a casual conversation." I don't know what planet they live on, but 300 million bucks to the people of B.C. is not a casual issue.

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Interjections.

Mr. Speaker: Members.

J. Horgan: Today we learn…

Interjections.

Mr. Speaker: Members.

J. Horgan: …that the minister had several meetings with….

Interjections.

Mr. Speaker: Just take your seat.

Members. Members at the other end of the House.

Continue, Member.

J. Horgan: So let's recap. Last week it would be inappropriate for the Minister of Finance to talk to his officials. Now he admits that he's met with them at least three times to discuss falling revenues. The Premier just stood in this place and said he was briefed by his deputy minister — apparently not part of the protocol followed by the Minister of Finance.

Before the election was over, we were down $300 million. A week later we're down $1.1 billion. A month after that, you're still standing in this place saying: "$495 million — tops."

Will the Minister of Finance tell the people of British Columbia when he knew that his budget was a complete fabrication and he was deceiving the people of B.C.?

Hon. C. Hansen: First of all, I never met with the Deputy Minister of Finance even once during the election campaign. The Deputy Minister of Finance phoned me on a couple of occasions with regard to matters that pertain directly to my role as the Minister of Finance.

At no time did we get any indication that the budget with a $495 million deficit could not be achieved. In fact, in the discussions that I have subsequently had post-election with the officials in the Ministry of Finance, they also recognized that throughout that period of time they felt that a $495 million deficit was still achievable.

As I have indicated, the Ministry of Finance ran revenue projections which they completed on May 12 so that they would be in a position to brief, perhaps, a new government with a new Minister of Finance or perhaps a returning government with the latest information on detailed analysis of revenues and expenditures, as they do probably about four times a year. It is at that time that the ministry realized that revenues had tanked much more than they had originally anticipated.

Mr. Speaker: Member has a supplemental.

J. Horgan: The only sad part of that statement is that we don't have a new Minister of Finance.

We're weeks into the fiscal year. The Ministry of Finance advises the minister in a meeting that apparently didn't take place, although it's in his

schedule for April 15: "We're off by 200 million to 300 million bucks." Three weeks after that, we're off by $1.1 billion. A month later the minister is still maintaining that somehow, miraculously, we will only have a $495 million deficit.

Is that because the minister was already counting the beans from Ottawa, the blood money to introduce a $2 billion tax shift to the people of British Columbia? Is that

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why you weren't concerned — because you'd already cut a deal with the federal government?

Hon. C. Hansen: The answer is no.

D. Black: Today the Minister of Finance admitted that he was aware two days after the election that revenues had fallen by more than a billion dollars, and yet on June 10, when the cabinet was sworn in, he still insisted that the deficit would be $495 million.

My question to the minister is this. Why did he say the deficit would still be $495 million when he had been told differently — when he had been told that that was not the case? And will he admit today in this House that he was just covering up for the Premier?

Hon. C. Hansen: While we were advised in the third week of May that revenues had declined greater than anticipated, revenues are only one side of a budget equation. Also, in terms of our ability to reach a target of a $495 million deficit, we had options. We had options around revenues. We had options around expenditures.

But towards the….

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Interjections.

Mr. Speaker: Members. Members.

Continue, Minister.

Hon. C. Hansen: In late May, as we began discussions with the federal government with regard to the possibility of us changing our position on the harmonized sales tax, it became apparent to us that the federal government was putting $1.6 billion on the table. So at the time of the June 10 swearing-in, I was already at that point convinced in my own mind that a shift to HST would be important for British Columbia and that I would be recommending that going forward.

At the time, I was also of the impression that we would have to take the total $1.6 billion in one fiscal year. We have since actually negotiated with the federal government to allow us to spread that over a greater period of time.

Mr. Speaker: Member has a supplemental.

D. Black: There's not one single person in British Columbia who believes that bafflegab.

B.C.'s deficit.…

Interjections.

Mr. Speaker: Members.

Take your seat, Member. Take your seat.

Members. Let's listen to the question, and then let's listen to the answer.

Continue, Member.

D. Black: B.C.'s deficit had grown by a billion dollars by election day. The minister knew that on May 14, but it was so important for him to cover up his government's budget deception that he refused to come clean with the voters of B.C. or the people of B.C. He knew the deficit was much higher than $495 million, but he deliberately avoided telling the truth.

Mr. Speaker: Member. Member.

D. Black: I withdraw.

Will he stand up in this House today and apologize to the voters of British Columbia for his government's budget deception? Will he for once, just once, show some respect to the voters of British Columbia?

Interjections.

Mr. Speaker: Members. Members.

Minister, continue.

Hon. C. Hansen: It's a little bit hard to take — for a New Democrat in this chamber to be talking about budget deception, given what happened in 1996.

I'm not going to apologize for the fact that we have outperformed in eight consecutive budgets. I'm not going to apologize for the fact that we produced five surplus budgets and drove down the debt. I'm not going to apologize for the fact that after a series of credit-rating downgrades experienced by the NDP government we actually had bond-rating agencies giving us seven consecutive upgrades.

At the end of the last fiscal year, when everybody was predicting that the last fiscal year was going to be in a deficit, including members of the opposition…. I'm not going to apologize for the fact that we ended that last fiscal year with a surplus that was 50 percent higher than had been forecast.

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Interjections.

Mr. Speaker: Members.

M. Farnworth: Actually, it's funny you should ask. They're doing really well, because people are watching your budget stories change all the time right across this province and are enjoying every minute of seeing your guys' deception.

What we've seen today is a Finance Minister stand up and admit to this House and the people of British Columbia that he knew during the election that the revenues were tanking and that he failed to ask the deputy minister how bad it was. It's okay — 200. Maybe it's 300.

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Maybe that's annual. But no, he didn't ask any questions. He failed to ask a question on how bad things were.

What we also know is that the Premier told this House that his deputy told him that revenues were tanking. And yet the Premier failed to ask the most basic question: "How bad is it? How serious is it? How much is it?"

Now, was it because of incompetence, neglect or the fact that if they were told the truth, they'd know they'd have to come clean with the people of British Columbia, and they just didn't think that would be convenient?

Hon. C. Hansen: This, coming from a member who sat in a caucus where the Premier deliberately fudged the budget numbers, who deliberately overruled the advice of Finance officials.

Mr. Speaker: Minister, will you withdraw the last part of that statement.

Hon. C. Hansen: I withdraw.

Mr. Speaker: Continue.

Hon. C. Hansen: The budget that we tabled yesterday actually has the results of protecting core social programs in British Columbia, protecting a health care budget, protecting an education budget. It's a budget that actually builds a foundation for the economic recovery that we are going to be seeing in the near future.

Interjection.

Mr. Speaker: Members.

Continue, Minister.

Hon. C. Hansen: One big difference between this government and that government in the 1990s is that we recognize that in the Ministry of Finance, we have some of the finest experts, some of the finest economists and some of the finest forecasters. When they provide us with that advice around a budget and budget projections, we accept that advice.

[End of question period.]

Tabling Documents

Hon. M. Coell: I'd like to table the 2008 annual report and 2009-2011 service plan for WorkSafe B.C.

Petitions

R. Lee: I would like to present a petition on behalf of 88 people from the film industry urging the government to match tax incentives to other provinces.

Orders of the Day

Hon. M. de Jong: I call continued debate on the budget.

Mr. Speaker: Member for Surrey-Whalley.

Member, if you want to just take a few minutes while members tend to other duties.

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Budget Debate

(continued)

B. Ralston: I rise to continue debate on the budget. I want to begin my remarks, in examining this budget, and look at the circumstances that led to the tabling of the budget in February. That budget was tabled but not passed.

It's a peculiarity now of the fixed-election-date budget year that there is a tabling of a budget document in February and a subsequent budget in the fall. The contrast between the two budgets is a very dramatic one and something that we've just addressed in question period to some degree.

It was very clear in the economic run-up to the budget in February, beginning back in August and September of the previous year, that dramatic changes were taking place in the world economy, beginning most notably with the collapse of the major, longstanding, historic investment bank Lehman Brothers in the United States, the subsequent plunging of the stock market in the United States and the attendant consequences to be heard around the economies of the world.

[L. Reid in the chair.]

That began a series of economic reverberations which, of course, had their impact here in British Columbia. The tabling of the quarterly report in September and the subsequent discussion last year began a process of readjustment to the changing economic circumstances that the government took into account, and they had some measures that they proposed for British Columbians.

Probably the next step in the chronology was the brief session that was called in October, where the government tabled a ten-point plan. I think one of those ten points was recalling the Legislature. It was hardly a particularly weighty plan, but nonetheless, that's what they did.

At no time in this particular look at the economic circumstances of the province and the range of remedies that the government had at its disposal to tackle those problems was the harmonized sales tax ever mentioned. There's absolutely no mention of that whatsoever — certainly an opportunity to deal with it then.

What the Premier has said since the election, of course, is that the harmonized sales tax is the single most

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important measure that the government could take to assist the economy of British Columbia. Yet when the economy was showing signs of difficulty, when the government went to look for policy solutions, there surely was a perfect policy option for the government. Given the superlatives that the Premier has heaped upon this measure since the election, it's surprising — is it not? — that this was not mentioned at all. It wasn't brought forward. It wasn't discussed. It wasn't even mentioned.

The ten-point plan notably included a measure to assist retailers in their handling of the provincial sales tax. At that time and up until now, although it will be abolished with the introduction of the harmonized sales tax, retailers and those who collect provincial sales tax on behalf of the government receive what's called a commission. In other words, they receive a small fee for basically acting as the government agent in collecting the tax and remitting it to the provincial revenue ministry.

[1430]

One of the points in the plan that was thought so essential, so important to economic recovery, was that the ten-point plan doubled the commission. So potentially a retailer could earn up to $195 a month, depending on the volume of sales on which the PST was collected, and could earn double that amount.

Not only was the HST not mentioned; the PST and its importance in the economic life of small business was reinforced and enhanced because the commission was increased by 100 percent. That was an opportunity to talk about the HST that was missed, and rather, this most important economic measure that the province could undertake had no place in that. In fact, the contrary took place. The PST was reinforced in the economic life of small business.

We then move towards the budget in February and the ordinary prebudget consultation takes place. There has been mention made by the minister, and I think by some members of the Finance Committee…. The Finance Committee made a number of recommendations. The Finance Committee did make a recommendation agreeing — and this is an all-party committee — to a study of the HST.

Now, for some reason, members opposite chose to interpret the very simple words of that — to study the HST — as implying an endorsement of the HST by opposition members of the Finance Committee, indeed by government members of the Finance Committee. I'm not sure, knowing some of the political predilections of government members of the Finance Committee, that it could be construed as an endorsement of the HST by some of them, knowing what their views might have been at the time on the HST.

Of course it's a different story now. It's the most important economic measure that could be taken by government ever. Back then, the government members of the Finance Committee were considerably less keen on it, but we agreed to engage in a study. The wording of the recommendation is "a cost-benefit analysis."

I was confident, given what I knew about HST, that the cost-benefit analysis would show that it was a major hit on consumers and would be very politically unpopular and that any reputable study would come back and show that.

But that measure, that recommendation of the Finance Committee, never produced a study. Certainly, nothing was ever made public. I suppose, if we were to engage in the freedom-of-information process, we could see if it was ever followed up, but we wouldn't have an answer, given the way the government ordinarily responds to those requests, for another nine months to a year.

That study, I'm convinced, never took place. The recommendation was stillborn. For the government to rely upon it as some indication that members on this side were supporting the HST is simply preposterous and shows just how far they're grasping at straws in order to construct arguments that might be construed by the credulous as being arguments that are in support of the HST.

The government then moved to its budget and the preparation of the budget. The forecast council was convened. They last met prior to the budget on January 9 and issued their predictions. The Premier has made much of those predictions in his defence of the budget, and that even continues until now. "We relied on these experts. We took the average of their forecasts, and we knocked it down a bit. This is what we did, and that's why the process was very credible."

[1435]

What is omitted from that partial explanation is the fact that the forecast council, in the very unusual economic circumstances of the beginning of this year…. In the first quarter of this year, in 2009, the U.S. Department of Commerce was predicting a 4 percent drop in GDP, and the American economy obviously impacts here.

Looking backwards now, as we are in September, at the first quarter — January, February and March of this year — that was perhaps the time of the steepest decline in GDP in both the American economy and Canadian economy, and globally, although there are some regional variations, obviously.

The forecast council, consisting largely of bank economists who are in tune with the international movement of money and economic trends generally, asked the minister if they could come back and offer new forecasts prior to the tabling of the budget. That request was refused.

When the Premier says, "Well, we relied on these experts; their input was taken into account in the budget; that's the basis on which we constructed the budget; those are the forecasts on which we constructed the budget," it's really not the whole story if those very experts wanted to come back and change their predic-

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tions, their forecasts. These are the very same people that the Premier claims to applaud.

It is significant that a number of the bank economists revised their growth projection downwards. Mr. Pastrick — perhaps the most pessimistic — revised his downwards substantially. Economists in the Bank of Montreal, the Bank of Nova Scotia and other economists revised their predictions downwards.

The very basic element of the budget, of the forecast…. Of course, when it's translated and run through the econometric models of the government, it generates a revenue number. That number was substantially different, according to those members of the forecast council, than it should have been, because economic circumstances — even between January 9 and the tabling of the budget in mid-February — had changed, and they continued to change.

They continued to change. That's what's so particularly preposterous about the assertion of the Premier on April 23, after the radio debate, that the deficit for British Columbia in the new fiscal year would be $495 million maximum. There was no intellectual support for that from the forecast council. The claim is that the forecast council was supporting that, but in fact, that's simply not accurate. The forecast council prediction at that point was out of date, and the minister refused to meet with them and revise the forecast to a more realistic level.

So that's the basis on which the budget was constructed in February. At the time, just to recapitulate history briefly, the members of the opposition in question period, for example, raised questions about some of the key assumptions — the key assumption, for example, of retail sales. Given what was clearly known about the economy, given what was clearly going on in the economy, the prediction of an increase in retail sales was deemed by many analysts to be unrealistic, yet the government persisted in that.

Everything was done to stretch revenue to the limits of plausibility, and everything was done to suppress spending to the limits of plausibility. Probably the best example on the spending side is the fire budget. The fire budget this year, regrettably and unfortunately for the citizens of British Columbia, has gone way, way past what was predicted, and it's been one of the worst fire seasons ever.

We're not disputing that fires need to be fought and that money needs to be expended to fight them, but the fire budget…. In an effort to keep the deficit down and in an effort to suppress expenditure, the number that was put in the budget was below the ten-year average of the money expended over the previous ten years.

[1440]

Granted, there are spikes, as there were in 2003 in the Okanagan and again this year, but to enter the fire budget below the ten-year average was certainly, at the time, unrealistic and, in hindsight, appears to have been blindly optimistic as to what might happen in that area.

There were a number of measures taken in constructing the budget that really led the budget to…. I think it's clear that in the view of experts, particularly, and informed commentators, as time wore on, the budget was not realistic. It was based on false hope, and the $495 million deficit would not be achieved and could not be achieved.

Yet the government persisted with that and carried that budget into the election campaign. The Premier claims today here in this House that he didn't know otherwise, yet people not in the political process — informed business people, economic commentators, many people — were firmly of the view that the $495 million deficit was not attainable, regardless of how much government expenditure was cut, given the revenue projections that were going on.

It's clear that there were other indications during that period of time, other economic indicators, that suggested that the budget wouldn't be held up, and there are specific indications in some of the ordinary economic indicators that that would not be the case.

For example, between February 2008 and February 2009 insolvencies and bankruptcies skyrocketed 45.8 percent. The job loss numbers continued to mount in the first quarter, and those are released — and they're objective measures — by the government agency Statistics Canada. Real job loss numbers continued to mount so that at this point British Columbia had one of the highest job loss numbers of full-time jobs for the size of the economy in the country.

On April 27 Stats Canada said that B.C.'s real GDP fell 0.3 percent in 2008, the first contraction since 1982. There was a Canada-wide GDP increase of 0.5 percent. British Columbia, at that point, was out of step with the rest of Canada in a fall in real GDP, which is a surprising turn of events.

In March, I referred to job loss numbers. B.C. lost 23,000 full-time jobs. That was the worst job loss record in the country. Since the beginning of 2009, B.C. has lost nearly 80,000 full-time jobs. British Columbia's unemployment rate has become the worst in western Canada, and since October of last year B.C. has one of the fastest-growing rates of unemployment in Canada. These were, in the economic environment, a number of separate and discreet indicators, yet we have the Premier….

[1445]

All of these have an impact, some of it not direct, but all of these have an impact on government revenue. Yet the Premier and the Finance Minister blithely continued on with and maintained the increasingly hard-to-believe fact that the deficit would only be $495 million maximum.

On April 28 Statistics Canada reported that the number of employment insurance claimants reached

[ Page 215 ]

63,700. That was an 11.6 percent increase in February alone, the second-largest increase of any province. Since October 2008, EI claims in British Columbia have increased by 40 percent. In a number of towns and constituencies across the province, EI claims have, for example, almost tripled in Williams Lake and doubled in Quesnel, Kelowna, Cranbrook, Chilliwack, Powell River and Penticton. These are, again, provided by Statistics Canada.

There were those indications, independent of the reporting of the government and of the Finance Ministry, by independent agencies — credible, reliable, independent agencies — that the economic picture was worsening. For example, the projection on revenue from income tax was, in the February budget, unrealistic, to say the least, given the fact that as unemployment increases, obviously, people don't have full-time jobs, and the amount of income tax they pay declines accordingly. That was not taken into account, and the $495 million persisted.

The Premier mentioned, and he likes to argue along with his suggestion, that the forecast council was what he relied on, omitting the fact that the forecast council asked to come back after January 9 and wasn't invited back. He also likes to talk about the decline in natural resource revenue — in particular, natural gas. Now, predicting the price of natural gas can be perilous. I think of a trader in Calgary, Amaranth investments, that I think lost $600 million or $700 million by betting on natural gas futures.

I don't totally disagree that it's difficult to predict, but it was clear in the spring of this year that the trend was a downward one in terms of the price. This is from Natural Resources Canada: in February 2009 the price per gigajoule was $4.74; in March, $4.57; in April, $3.95; in May, $3.33 per gigajoule; back up slightly in June; and down to $3.21 in July of 2009.

For the most part, that's a pretty consistent trend, a downward trend. Prudence, again, and caution would have suggested that a budget based on a higher price of natural gas was in trouble and that the government wouldn't be able to attain its revenue target for that particular area of revenue.

Again, these are sometimes difficult to predict, but the combination of all of those trends spoke to a substantial decline in government revenue, making the assertion that the deficit — notwithstanding whatever measures were taken to cut government expenditure — would be $495 million, essentially an unachievable fiction.

That's why the forecast council and its members began to change, as the months went on, their predictions for growth downwards, and they….

I am the designated speaker, Madam Speaker.

Interjection.

B. Ralston: Well, I thank the Minister of Aboriginal Affairs for his support for this speech. It's not often I get plaudits from him, but they're graciously received and, I'm sure, graciously extended.

[1450]

Interjection.

B. Ralston: Yes, and convincing, I'm sure, Member.

I'm glad the member is listening so attentively because perhaps he can take that message back to his cabinet colleagues.

Interjections.

B. Ralston: Oh, thanks very much. That's very kind. But I'll ignore the distractions that the members opposite are posing, although they are pleasant ones compared to what I usually receive from them.

What the forecast council began to do was to revise their revenue estimates downwards. So when the Premier said in April and when the Finance Minister continued to support the position that the $495 million was achievable, no credible economist believed that.

Shortly after the election there were newspaper reports. Mr. Finlayson, for example, predicted that the budget deficit would be $2 billion to $3 billion, and in fact, he turned out to be pretty accurate. Mr. Pastrick similarly predicted, shortly after the election, that the budget deficit would be $495 million no more and that it would be substantially greater. There was not quite an expert consensus, because there was a range of opinion, but everyone agreed that the $495 million couldn't be attained, regardless of what expenditure control measures the government took and given just the drastic decline in revenue.

It's simply, I would argue, not credible for the Minister of Finance to assert on June 10 that he could still attain a $495 million deficit — that the budget was something that he was able to attain. I think I have his exact wording here somewhere in my notes. It's a rolling track of quotes, and they're all very different.

On June 10 the Minister of Finance said: "If I were in a position to table the budget today, it would be a deficit of $495 million or less. I am still confident that come September 1, we will be able to deliver on that." Yet this is after being briefed, after the election, of a decline in revenue, at that point, of a billion dollars. And that was a month previous to his statement there.

He now claims that, well, he had the HST in mind and that he was planning to use that. The agreement on the HST…. It's only an agreement to agree. It's not really a contract. It's merely a memorandum of agreement more or less setting out the mutual intentions of both parties.

It was only signed on July 22. So in advance of the signing of the agreement in July yet only about two

[ Page 216 ]

weeks after initiating discussions with the Minister of Finance federally, Mr. Flaherty, the Minister of Finance provincially…. His version of events is that he had a conversation with the federal Minister of Finance around May 25. They ran into each other at the coffee machine at a federal-provincial conference, and he initiated discussions. So within a scant two weeks, he was already booking $1.6 billion on the federal books.

That's a rather astonishing revelation for those who doubt that government can move with great haste and great speed. There, within two weeks of initiating a casual conversation with the Minister of Finance, the provincial minister was already able to rely on $1.6 billion. Who would have dreamed that the government could move so quickly? There are those who are skeptics.

[1455]

I know that Christy Clark, much beloved by members opposite as a former colleague, said on her radio show, in her new incarnation, that there's just no way it could have happened that fast. She did serve with many of the members opposite in the cabinet. She served with this Premier. So I tend to think that she might know what she's talking about. Certainly, she has experience of government. She was a former Deputy Premier, held in very high esteem by members opposite. I'm sure they wouldn't say anything to the contrary even now.

She said that she simply didn't accept that things would move that fast and that the government would have to have known prior to the provincial election that they were embarking on this HST proposal and this measure. Yet the Minister of Finance — I suppose the Speedy Gonzales of Finance ministers — between May 25 and June 10 was already booking $1.6 billion in revenue on the provincial books. Good negotiations, I suppose — very speedy. I'm not sure anyone accepts that that was the chain of events, but perhaps, as the weeks go by, there'll be more detail revealed about just how that came about.

What the minister did say, though, on July 9 — and the ground began to shift once again — at the tabling of the public accounts was that for the first time he wasn't optimistic that a $495 million number was anywhere possible. He claimed that as recently as the third week of June…. So he said in July that even past June 10, so into the third week of June: "I'm still optimistic we will be able to bring in a budget that would reflect a deficit in the range of $495 million. The news we got from the federal Department of Finance June 24, as briefed on the morning of June 25, means I can no longer say that I am that optimistic."

Lo and behold, the minister received advice from the federal Ministry of Finance that corporate income tax revenue had declined. Well now, that was a shocker. That was a shocker. Couldn't have seen that coming. When corporate profits were dropping dramatically along with the stock market, when the recession was beginning to bite deeply, is it any surprise that corporate revenue began to tumble? Is it any surprise whatsoever that as a consequence of corporate revenue falling, corporate tax returns fell as well?

The minister claimed that this came as a revelation to him. He had to be briefed by his officials, and up till then, the third week of June, he hadn't seen that one coming. It was just out of the blue, and that began to change his view that the $495 million was not attainable.

Once again, I'm not sure that there are many informed observers who would say that the fact that corporate revenue declined over the previous three quarters was a big surprise to anyone, but apparently, this was the triggering event for the Minister of Finance. He began to rethink his position that the $495 million was attainable.

Let me quote him exactly: "That one sort of took my breath away — what was happening on corporate income tax revenues for 2008-2009." So it's perhaps a bit of a surprising reaction — hardly a worldly, sophisticated reaction, I would have thought, given what was going on in the broader economy.

The financial newspapers and the financial reports — Bloomberg, the Financial Times , the Wall Street Journal , any of the traditional financial newspapers or information services that are out there — are reporting crashing corporate profits and, the follow-on from that, declining corporate income tax. It's hardly a surprise, but for this minister, it took his breath away. We have to accept that at face value — but a bit of a surprising reaction, I would say.

[1500]

He then began to revise his budget and began to construct the budget — so he claims — that we now see before us here in September, tabled just this week. The centrepiece of that budget is the harmonized sales tax. This minister has said a number of things about the harmonized sales tax and made it a very important part of his budget. It's clear that he has a similar story of sudden, post-election revelation, very much reminiscent of his explanation of the change in the $495 million deficit figure. It only became clear to him in late June, early July that that was changing after, essentially, the whole economic world had turned. He managed to catch up then.

The story of the HST that the government is advancing, particularly the Minister of Finance and the Premier, is a sudden, post-election revelation — that nothing was contemplated. The language that is used — and it's used repeatedly and successively — is: "The HST wasn't on our radar." That's a little bit of a trite metaphor, but nonetheless, it does seem to get repeated by the Minister of Finance and the Premier.

What does "not on our radar" mean? It would be hard to imagine a more ambiguous figure than "not on our radar." Does it mean that it wasn't discussed in cabinet? Does it mean that it wasn't considered at the senior financial level of the Ministry of Finance? That it wasn't considered at Treasury Board? That it wasn't discussed

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between federal Finance officials and provincial Finance officials at the direction of their respective ministers?

I return to Ms. Christy Clark, who said that negotiations of this complexity couldn't have taken place in those two weeks between May 24 and the booking of $1.6 billion on June 10. At least the minister certainly mentally booked that $1.6 billion.

The phrase is "not on the radar," and I would submit that that's a deliberately chosen, ambiguous phrase that really has no meaning. It's simply a bridge to get from one part of an interview to another, or one part of a speech to another, but it doesn't really mean anything.

There are a number of questions that do arise. They'll be addressed, I'm sure, by freedom-of-information requests by journalists, by members of the opposition, and we may get to the bottom of this. But certainly, no one accepts that this sudden, dramatic reversal wasn't something that was contemplated before the election.

Again, it's striking to look at the language of the Premier post-election, "We decided this was the best thing we could do for the economy" — the best thing. Was it included in the economic recovery points in October? No. Was it included in the budget in February? No, absolutely not. Was it included in the Liberal platform in the election? No.

In fact, the members of the Liberal Party and their apparatus, in response to written questions — not casual conversation, as the Finance Minister sometimes has with his deputy, but in written responses to questions from the food and restaurant association — said that…. They were asked directly — the Liberal party: would they implement an HST? And they said no.

They went on not only to say no, but they gave reasons why it wouldn't be a good idea. They said that it would limit provincial autonomy and flexibility in creating tax policy. It would do away with a number of valuable PST exemptions for the public that had been fashioned by governments here. It would do away with those.

[1505]

They also made another commitment in this same response to what the restaurant association asked — that they wouldn't do this without any further consultation. Understandably, given the reaction of the restaurant association when they were utterly and completely betrayed by this government…. They were livid.

Mr. Tostenson made no bones about saying on a radio show the day after the HST was announced on that summer day deep in July that he was a supporter of the government, that he had worked and campaigned for the government, and he felt just sickened and betrayed by the treachery of this government to introduce this measure without consulting him.

The consequences for his industry, of which I'll talk about a little bit more shortly, were things that he was very, very troubled by, yet there are no apologies offered. The minister says that he'll undertake some mitigation measures, but what mitigation measures those might be has not been revealed.

The discussion is ongoing. There's no possibility of any further exemptions, because in the agreement that the provincial government signed with the federal government, the number of exemptions is limited to 5 percent of the total GST tax base, and those exemptions have already been assigned and designated. There are a few of them, but most of it is for motive fuel, for gasoline. There are a few others — books, child car seats, female sanitary products and a few others — but very, very few compared to the long list of exemptions that exist in the present legislation.

There's no possibility for a further exemption for restaurant meals, for example. It's just not possible in the fiscal straitjacket that the government has agreed to by entering into this agreement. The number of exemptions is very, very narrow. They're all taken, and it's done.

For the government to hold out and the Finance Minister to issue the soothing noises that he sometimes does that he'll consult and take these concerns into consideration, there's no way. There's just no possibility of creating any new exemptions in the agreement — just not possible — certainly not any substantial ones, because there's a strict limit to 5 percent of the GST tax base.

The calculation that's been provided, at least provisionally…. The Ministry of Finance hasn't been forthcoming with a lot of these figures. It's already taken out. The maximum allocation to exemptions has already been filled. So that's what the government undertook as part of the centrepiece of this budget.

But I think we have to look a little bit at the history of the public discussion in the rest of the country about HST in order to evaluate this claim that the HST "wasn't on the radar," to use the ambiguous term of the Premier and the Minister of Finance.

The Ontario Premier, Mr. McGuinty, on January 23, 2009, publicly confirmed he was considering moving to the HST. On January 27 the federal Finance Minister brought in a budget and made some mention of HST and the opportunity for ongoing negotiations. He did not mention any province specifically.

On March 10, 2009, the Ontario government signed a memorandum of understanding with the federal government outlining the terms of implementing the HST. On March 26, 2009, the Ontario budget was released, and Premier McGuinty officially announced his intention to bring in the HST.

On March 30 the federal Minister of Finance, Mr. Flaherty, confirms that other provinces have approached him about the HST. Those provinces without HST are Saskatchewan, Manitoba, P.E.I. and British Columbia. It became publicly known that Saskatchewan, Manitoba and P.E.I. said they were not interested, leaving, of course, of that list of four, only British Columbia.

[1510]

[ Page 218 ]

Certainly, there's an indication there. Perhaps this will be revealed, because we have, as the government opposite likes to claim, the most open and transparent government, I think it is, in the history of the galaxy. Maybe it's just in the history of the planet. So these negotiations and their content will be revealed through a freedom-of-information process, and we may get that result sometime next year.

There was an indication of discussion. An approach was made to the federal minister, and then the discussion took place. We have Christy Clark's view that this had to have taken place. The discussion had to have begun before the election. And then we have the election coming along, where the B.C. Liberals said formally: "No way. We're not doing it. It's a bad idea. Here are the reasons why. If we ever have to implement it, of course we'll consult."

There's been more consultation on the issue of cell phones while driving than there has been on bringing in what the Premier likes to call the most important economic measure that we could undertake for the province of British Columbia. There's been more consultation on cell phone use than there has been on this, certainly prior to it being initiated.

The government then decides that they will, out of the blue, drop it, although not until July 23. The agreement is signed on July 22. Mind you, as I've said, the Finance Minister has already mentally booked that $1.6 billion onto the budget, so he doesn't feel the obligation to talk about the deficit.

What is the argument that the government makes about HST to support HST? Because the reasons, contrary to what they said to the restaurant association, are relatively badly supported by the government.

The argument is weakly made. It's as if, despite the height of the rhetoric that the Premier uses, the hard work of convincing other members of the cabinet — or even members of his caucus or members of the public and members of the restaurant association — was never done. That's because it's very, very difficult to make a good argument in favour of the HST, other than its benefits for a couple of the bigger businesses in the province.

When the government came into power in 2002, they did immediately make changes to the PST and eliminated the PST tax on production machinery. I'm just going to turn to the back of the budget here. In 2001, under the social service tax, the government introduced a tax exemption for production machinery and equipment.

What is spoken about as a benefit of this tax is the ability to give an input credit for production inputs, particularly for mining, forestry and construction. Those are the three examples that the Premier has used in his discussion of this issue. Yet back in 2001 production machinery and equipment were exempted from the PST. Presumably, if you're buying mining equipment, you would not be required to pay the PST.

In Budget 2002 that same exemption, the machinery and equipment tax exemption, was expanded to include repair parts. Obviously, it's operating machinery in heavy construction, in forestry — expanded.

[1515]

The estimate of the cost of this measure was about $110 million a year. It's not a trivial amount directed to production machinery and equipment, presumably to provide an economic incentive to invest in production machinery and equipment and to experience some economic benefit from that. Although in the tables in the budget there's a calculation about the total dollar value of the tax foregone — for example, on basic food — there's no calculation of the revenue foregone by this measure from 2001 forward. It can only be estimated to be substantial.

Again, that's part of the flexibility that the government spoke of in responding to the survey of the restaurant association in 2006. Under the social services tax, services were exempted to maintain and modify software. They clarified and expanded eligibility for the machinery and equipment exemption. Again, there's no cost put on that.

The PST had that flexibility. There was tax revenue foregone, but there's no analysis that I've been able to find about its impact on capital formation, on investment in those items on the list that had the tax removed from them. Obviously, there's clearly a choice being made here.

I raise this because we hear from the government: "Well, what's going to happen is that the PST will be wrung out of the cost of products. As a result of that, there will be increased investment in the province, and that will all be to the good, of course."

But given that there's this very expensive measure…. It was undertaken in 2001. One of the very central attributes of the production process, production equipment and machinery — a huge cost in terms of foregone tax. What was the benefit? Where's the analysis? Never heard anything.

One can scour the Ministry of Finance website, the comptroller general website. Nothing shows any of the benefits of that particular foregoing of provincial sales tax revenue, despite that it's specifically targeted at that production machinery and equipment with, obviously, an economic agenda in mind.

I raise that just to say that one has to view the claims of the Premier and the Minister of Finance about the effects of the HST in terms of inducing new investment with skepticism, given that some of these measures, where there's a very direct reduction of tax and no analysis of what took place as a result — whether there will be the claimed benefits or not….

Certainly, when one looks at the justification that's provided for this measure…. The government, in its note in the budget, likes to refer to a study written on

[ Page 219 ]

behalf of the C.D. Howe Institute. I'm looking at page 79 of the budget, in the note on the HST. They refer to a Michael Smart, Lessons in Harmony: What Experience in the Atlantic Provinces Shows About the Benefits of a Harmonized Sales Tax .

This is cited with approval. It's really the only intellectual justification that the minister has trotted out, and it's repeated again here in the budget. But when you actually look at the document, it doesn't say what's claimed by either the minister or in the budget document.

The two claims that are made — and they claim support in this particular study — are (1) that prices will go down. That's because the economic theory is that, well, big business will get these benefits. The HST input credits will reduce their costs, and they will pass those cost reductions on in the form of reduced prices. That is considered to be — and I'm sure most would agree — a good thing.

[1520]

What this study reveals is just the opposite. What is said in the study is that the change in prices post-1997 in the maritime provinces as a result of the bringing in of HST was statistically insignificant — in other words, no change in prices.

The only slight decline was completely consistent with the reduction in tax. Newfoundland went in and…. When they joined, combined, the two sales taxes, Newfoundland reduced its provincial sales tax by 5 percent, Nova Scotia reduced its tax by 4 percent, and so did New Brunswick. So there is a real reduction in the provincial component of the tax to put the HST together, and that is the only claim that's made by Mr. Smart — that that appears to coincide with that reduction in tax.

One of the central arguments made by the Minister of Finance, by the Premier, is that it's going to reduce prices. Here's the study. The C.D. Howe Institute is hardly a socialist organization. It's a pro-business organization. Mr. Smart, an economist, prepared this for them in an effort to provide intellectual support for the HST, but what this study reveals is that the change in prices is statistically insignificant. In other words, prices didn't go down in the way that the theory called for.

There's no reason to assume that the same thing wouldn't happen here — absolutely no reason. That's, understandably, why citizens are skeptical about the claim that is made by proponents of the HST, including the government — that it's the best thing the government could do for the economy, that prices will go down and that those will be passed on to consumers. Just no basis for it.

[H. Bloy in the chair.]

Then the other claim that's made is that there's an increase in investment. Once again, this study of the Maritimes doesn't support that conclusion. What the study says is that….

I forgot one point that I wanted to make about the price issue. It's that, indeed, not only did prices not go down, but in the case of clothing and housing, prices went up. So what the conclusion of Mr. Smart in the study is, is that it's what he calls slightly regressive. In other words, it's unfair to those who earn less.

That's in the study. That's what it says. So why would anyone want to support an HST based on a claim that prices will go down when the very document that the Minister of Finance has cited in the budget and trots out in support doesn't support that conclusion?

If I could turn, then, to the issue of investment. Well, you hear the rhetoric. This is the theory. You bring in an HST, and it's going to increase investment.

What this study shows in the Maritimes is that there was a short-run increase in investment, but — and this is an important but — it couldn't be attributed to bringing in the HST. There's offshore oil and gas exploration. There are a number of other things going on in the economy.

A short-run phenomenon. It's basically a one-time thing, to some extent. What he says is: "It is important to emphasize that the increase in investment caused by the HST reform is a short-run phenomenon as firms have acted to adjust to the new higher capital stock that is desired when taxes are lower."

What happens is that when the regime changes, people delay the investment decision, understandably. I'm sure there are investment decisions being delayed now in anticipation that the public won't react in outrage and that the government won't come to its senses and withdraw this legislation. But in the unlikely event that the government is so foolish as to proceed on this perilous course, there are firms that are probably making that calculation. They're not going to invest now. They're going to wait.

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In the middle of a recession the government has provided an incentive to delay investment rather than to encourage it. They'll wait until the tax regime comes into place. They'll make their investments, and that will be the one-time increase, short-run phenomenon that Mr. Smart refers to. They'll make the transition because they'll get a tax benefit by doing it.

Those are the two main arguments that are advanced by the government to bring in this measure. Prices will be lower, and consumers will benefit. No support for that in this study. There will be increased investment, in what Mr. Smart says is a short-run phenomenon, just because people make the investment in order to benefit from the new tax regime, and then it's over.

This is the best economic measure. It's no wonder that the government didn't talk about it in its election platform. It's no wonder that they didn't talk about it in

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their February budget. It's no wonder that they didn't talk about it in their economic points back in October of last year.

It's no wonder because the intellectual justification for it is just not there. We're embarking upon a tax shift from big business to consumers and small business without any demonstration that there will be benefits. The very document, the very institution, C.D. Howe Institute…. Mr. Smart doesn't support that.

One wonders why the government is embarking on it, and I think the answer is in the Minister of Finance's mental calculations made back on June 10. That $1.6 billion is dangling out there. It looks pretty good, it's pretty juicy, and it will assist with the short-term financial difficulties that the government has created for itself, in part, over the last while. That's the main motivation for bringing in this HST.

It's clear that other provinces have reacted in a different way. Mr. McGuinty in Ontario. There's opposition both by the Progressive Conservative Party in Ontario and by the Ontario New Democrats, so it's opposition across the political spectrum, and it's fairly fierce opposition there.

They, as part of the transition, have used the money as transition money, as I think the term implies, and are going to give a thousand-dollar rebate, a transitional rebate, to each family. That's clearly not the case here. The minister has already ruled that out, and it's going to be plowed into the budget in the way that the minister has described.

One wonders why that decision was made, why the minister claims that it was made so rapidly and why he had mentally booked it on the budget against the deficit on June 10. I think the answer is very clear. That seems to be the major incentive for entering into this regime — to turn our tax system upside down for that benefit.

In addition, what happens when the HST regime comes into effect is that a number of provincial sales tax exemptions that were formerly in place disappear. One looks back to the so-called green budget. There was much ballyhoo and many bugle calls about the green budget.

I'm looking through Budget 2008 about the social services tax measures. They were important. They were an integral part of the plan. They were lauded by the minister. They were extolled by the Minister of Environment. These were measures that were really important. "This is part of fighting climate change. All these things are really important." That's why they had to be done, and that's why they were brought in, in the budget in 2008.

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For example, on February 20, 2008, exemptions were brought in. Let's just go through a list of them.

Provide time-limited point-of-sale tax reduction for conventional fuel-efficient vehicles. Exempt Energy Star–qualified residential refrigerators, clothes washers and freezers to March 31, 2010. Exempt energy-efficient residential gas-fired water heaters to December 31, 2009. Exempt production machinery and equipment for local governments for production of power and cogeneration. Expand the exemption for bicycles to include electric power–assisted two- and three-wheel cycles and non-motorized tricycles. Exempt electric motorcycles to March 31, 2011. Reduce tax payable on hydrogen fuel cell buses.

Exempt biodiesel fuel or portion of biodiesel for heating. Impose tax on coal and coke except for residential use.

These are measures fashioned here to pursue public policy. Government claimed sincerity about pursuing these important exemptions to incent the purchase of these items to fight climate change — all part of their strategy. Guess what happened to all those exemptions when this agreement was signed and when it comes into effect. They're all gone. They're all gone — just like that.

The minister said in an interview on CHNL: "Well, it's nice to have exemptions, but we won't have them anymore. Now they're gone." The important exemptions, all the high-flying rhetoric — all just wiped away. "Well, too bad. We had those exemptions; now they're gone."

That's the extent of the commitment to these green objectives. They're just gone. Under the HST regime, they can't be brought back. Unless they were negotiated at the outset — which they weren't; none of them were — they're gone. Those important tax exemptions…. On some of these, these are substantial tax incentives.

The basic economic theory is that if you reduce the price, you're going to incent people to purchase them or certainly consider the option. Electric motorcycles, production machinery and equipment for local governments for power production and cogeneration, residential refrigerators — these are Energy Star–qualified residential refrigerators — clothes washers, freezers…. Those are all 600, 700 or 800 bucks. So 7 percent on those is nothing to be sneezed at. All of that — gone. All of that — gone.

That is, I suppose — when one considers it, in looking back on the ballyhooed green budget — really the extent of the hypocrisy of the government at the time about their commitment to green objectives, because these were central.

I remember the minister standing there and talking about them in the most glowing terms. All gone. Nice to have; now we don't have them. They're gone.

They're gone — even the exemption on bicycles, brought in a long time ago by the Social Credit government, in a rather forward-looking move, way back in the '80s. I was there with the Leader of the Opposition at a bicycle store where the owner, not too long ago, was expressing real concern about the impact that taking the PST exemption away from bicycles was going to have on sales not only of bicycles but of the subsidiary paraphernalia that cyclists need and like to use as part of their equipping themselves to ride a bicycle.

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Some of these bicycles — the newer ones — are expensive, to my way of thinking. Some of them can be as costly as a couple of thousand dollars. Again, an exemption from PST on those items…. It's a substantial increase in the cost.

One wonders: where were the studies? Where was the analysis? Where was the thought? Where was the discussion? Where was the consultation with any of this, with environmental groups — indeed with the climate change secretariat? You know, we had heard about that for a few years, until the Premier's attention got diverted elsewhere.

Where was the analysis that went into the impact of this measure on all those measures that were so important and brought into legislation just in 2008 — a scant 16 or 17 months ago? Where's the analysis? Have we seen it? Is it forthcoming? No, of course not. Nothing has been done. Just a snap of the fingers. As the minister says, there were exemptions. "They were nice to have; now we don't have them." That's it.

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Is this the best way to make public policy? Of course not. Is this a reason why the HST is so unpopular with this particular segment of the public? Of course it is; of course it is. I have yet to hear a justification beyond that back-of-the-hand dismissal from the minister. "Nice to have exemptions; now we don't — too bad." No one on that side of the House has stood up to justify that change.

Will it create more jobs at bicycle stores? Will it increase cycle usage and purchase? Well, I doubt it. I doubt it. But apparently the government…. That was then, and this is now, and now it's the best economic measure in the history of the province — the best thing we can do at this time. "We've got to jam it through. People may not like it, but that's tough. It's just hard medicine. It's like taking cough medicine; it's good for you. You just don't understand." That seems to be the attitude.

There are a number of other impacts of the HST that don't appear to have been contemplated. The minister said in question period a couple of days ago: "Just wait until the budget. We'll have tables. We'll have tables there. We'll explain the impact of this measure on ordinary families."

Well, you can flip through the budget. You can flip through the supporting documents. There's nothing there. The ministry and the minister…. Certainly, the minister has talked about the benefits to construction. I believe $880 million is the number that's being used. He's talked about the benefits to forestry. There's a number attached to that. He's talked about the benefit to mining. There's a number attached to that.

But the impact on the rest of us — the ordinary citizens of British Columbia — promised by the minister…. That's what he said here: "Look for it; there'll be tables in the budget. Don't worry about it; just look."

They're not there. In fact, today in The Vancouver Sun on the front page of the paper, Craig McInnes has an

article just about that very fact. So it has not gone unremarked. It's not something that was managed to be slid by. It has been noticed and commented upon, and it's really quite shocking.

It's indicative of the attitude of this government. "Well, we lined up some of the big business supporters; they came out on day one and said they supported it. But you, the public — we'll get around to telling you maybe in the budget, but not yet. Maybe sometime in — I don't know; later on — October, November. Maybe we will never tell you."

But that hasn't stopped other people from making a calculation of the impact of the HST on the average family, and they're circulating by e-mail, on Facebook, through the Internet, in newspapers, flowing into constituency offices. People are looking and examining their budgets and calculating the impact on their budgets. How much are they going to have to pay? Estimates seem to be in the range of $1,500 to $2,000 a year for the average family.

But let's hear from the government. The minister promised tables but didn't deliver them — really a rather shocking attitude on behalf of the public that he's supposed to serve. I mean, understandably, business wants to make the calculation, because they're going to get some HST input tax credits. They're going to get those on their bottom line. But what about the rest of us?

That really shows the priority, and it shows what motivated this change. Those calculations were made. What it means for the rest of us — less of a problem. We should just understand that it's good for us, and we should be quiet and just take our lumps. I think that seems to be the attitude. We're not entitled to know.

The minister isn't going to provide the information through his officials. He speaks very highly of his officials, and I share his estimation of Ministry of Finance officials. I'm sure they're quite capable of producing those tables. Clearly, they haven't been directed to do that and to release them.

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So people will make their own calculation, understandably. And when it's going to pile thousands of dollars onto family budgets, when it's going to impact industries like the tourism industry…. We've heard suggestions from them about the impact on their industry.

We've heard from, for example, homebuilders. Peter Simpson, CEO of the Greater Vancouver Home Builders' Association, said: "The last thing we need right now is another impediment to home buyers." So the home-building industry is very troubled by this — no consultation and its impact upon their industry.

The Canadian Restaurant and Foodservices Association. I have a copy of a slide presentation, and they set it out here. "The problem with harmonization.

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The significant tax increase caused by harmonizing the PST and the GST in British Columbia will hurt restaurant operators, their customers and their employees. Harmonizing the GST and PST will increase the tax on restaurant meals from 5 percent to 12 percent. It will result in an annual loss of sales of $750 million, or nearly $50,000 a year for the average restaurant."

They point out that the employment numbers they provide are substantial. It's a $10 billion industry — 5 percent of British Columbia's GDP; 173,200 jobs, one of the largest employers in B.C. — mostly small independent businesses; 69 independents, 31 percent chain. They have reason to make this calculation because they were hurt by the impact of the GST in 1991, and sales declined in 1991 — 9.5 percent with the impact of the GST.

So they are expecting a decline in their revenue. They're worried. They're just coming out of recession. They're worried about job loss. They're worried about the impact on their business. The minister has issued some cooing noises but done nothing for them and really can't. There's a legislative straitjacket. The agreement is signed. It's over.

It's "dislike it and lump it," I guess. It's the minister's approach. "Just tough it out. It will be character-building for you. You'll get through it. It won't be as bad as you think." That's basically his attitude towards one of the largest employers in British Columbia — 5 percent of the GDP. That's the attitude.

Understandably, that's caused real consternation in homebuilding, in the restaurant industry. I don't think I should leave this area without again responding to the Minister of Finance where he says…. Well, in order to enjoy what he calls fine dining, you have to have a job.

He somehow wants to associate restaurant meals with a white tablecloth, violin music and candlelight, but for most people, dining at restaurants — and that's a part of the restaurant industry…. Eating food out of the house at Tim Hortons or a fast food location is an essential part of their daily routine — whether it's working lunches in food courts or fast food restaurants, whether it's snacks after school, whether it's taking the kids out to one of the chain restaurants as a treat. All of those are impacted.

That's not really what I would call fine dining. I would call that an integrated part of people's daily routine. All of those purchases of meals will be impacted by the HST, and they'll suffer the same consequences. So for the minister to kind of dismiss it and use the term "fine dining" as though it were some kind of luxury for the top end of the economic stratum, I don't think really does justice to the wide service that the restaurant and food service industry does for most British Columbians.

The trend has been clearly, for people over the last several decades, to eat fewer meals at home, fewer meals prepared by themselves and their families, and to eat meals elsewhere. So this will impact very widely. That's why this is such an important sector of the economy, and that's why it is such a big employer.

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Again, there's no question that this is going to have a huge impact on this industry. The minister has nothing to offer — no studies done in advance. The restaurant industry is bracing itself for a real hit. That's regrettable, but it doesn't seem to be something that the government is going to be able or willing to do anything about.

These are just some of the reactions from associations, families, community groups across the province — whether it's the practitioners of traditional Chinese medicine or the Chinese chefs association. I've attended some meetings with those people.

Massage therapists, hairdressers, barbers — anyone who provides a service is going to be impacted by this and hasn't been consulted, doesn't like the way in which it was introduced — sprung on them in July — and doesn't accept the government's argument that prices will be lower and investment will go up. There's not even support in the documents cited by the government to back that up. So why should they believe it? And in fact, they don't.

This is a hugely unpopular measure. I hope that the members of the government and the private members, as well, reflect upon this and raise this in their caucus. I'm sure there are some vigorous discussions, I hope, in the government caucus about this measure — the wisdom of doing it, the way it's been introduced and the political consequences that it's going to have.

I fear that some of those members opposite in their private moments are thinking that they're going to reap the whirlwind when the voters get a chance to express their opinion on this matter. There are mechanisms in our constitutional apparatus — whether it's initiative or whether it's recall — and we'll see what comes of it. Certainly, public opposition continues to grow across the province, and we'll see what takes place.

The government — for example, in the case of the Coquihalla Highway — decided it was going to sell it off back in 2003. Public opposition mounted to a fever pitch, particularly in the Kamloops constituencies where opposition rose to the levels of the public opposition that's indicated for this measure. The government, right up until the day they did it, said they wouldn't do it, and then they withdrew.

There's a chance to rethink this. There's a chance to do something different. Although the money is put notionally into the budget, the Auditor General has said that until the contingent event, which is required — the passing of legislation — it can't be formally on the books of the government. So there's an opportunity to revisit the deal, not to take the money and to think of other, more sensible policies than this one.

It seems that for overthrowing the system of the PST exemptions that have been developed for public policy

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reasons here, for the impact on small business, for the impact on consumers, for the impact on school boards and health institutions, the strata associations — all of whom will have to pay increased costs as a result of the HST — there's a chance to rethink this and to come back with a different measure.

I'm sure there are members opposite that are new members who are surprised by the actions of the government. They weren't party to what was going on before the election, likely, nor after. It was sprung upon them probably, I understand, with a couple of hours' notice in July. So some of them have reason to be resentful, and I encourage them to speak up.

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If they can't see their way to speaking up here in the Legislature or publicly, speak up inside their caucus and indicate to and tell the Premier, tell the Minister of Finance what people in their riding are saying. I know what they're telling me, those people who are in the ridings of members opposite, and they don't support the government on this. Most people don't support the government.

The numbers of opposition are very, very high indeed. There are a few of the traditional political supporters of the government — the Business Council of British Columbia — and others who are representing the economic interests of their members, understandably. But for the most part, people in the ridings of the members opposite don't support this measure.

So I urge them to listen to their constituents, to speak up internally if they don't feel they can risk the wrath of the Premier here in the Legislature or the internal discipline that may follow if they speak out publicly. But there is a chance to do this, to change this.

You only have to look out publicly at the opposition that's growing, whether it's on what's considered the traditional Left or more considered to be the traditional Right. Opposition is growing. It's widespread. It's politically diverse. It's geographically diverse, and it continues to grow.

That's the centrepiece of this budget, and that policy is not only likely to be not the best economic measure for the province but likely to be a very, very dismal policy failure which will place additional cost burdens on ordinary families for nothing in return. That's what I think the calculation is by most British Columbians at this point and will continue to be, because the government isn't able to support it.

I want to turn, in closing, to a few other measures in the budget that I want to comment on.

The numbers in the Ministry of Children and Families. One of the ways in which the budget allocation for the Ministry of Children and Families has been calculated is based on a reduction of the number of children in care.

The child and youth advocate, who is an independent officer of the Legislature, has expressed her independent belief — and she's an officer of the Legislature, entitled to and expected to speak out on these matters — that the budget that's allocated there, the artificial — what she regards as the artificial — suppressing of the numbers in care…. In order to calculate the budget, the ministry has reduced the anticipated number of children in care.

She disagrees with that, and certainly at a time of economic stress, it's her view that it's unlikely that numbers will go down. In fact, numbers are likely to go up. So the recommendation and the budget number for that particular ministry is inadequate and likely to cause real problems to the child and youth system in the province, of which she has intimate knowledge and deep concern for.

I recommend to the minister who's responsible for that particular budget and to the government to consider reviewing. I know there's been a recent change in one measure that the government took in terms of the three-year grants. Some money was just found, I think, as recently as today. I urge the government to reconsider that particular measure.

The other thing that the children and youth advocate has focused upon — and, again, this is in pursuit of her mandate as the child and youth officer — is the introduction of the all-day kindergarten. While it's something that is a good policy, what she's expressed a concern about and school boards have expressed a concern about — and I expect that some of my colleagues here in the Legislature will also speak about this matter — is that the budget for implementation of this measure isn't adequate, and the budget to actually bring it in across the province is totally inadequate as well.

When the Minister of Finance has difficulty predicting the deficit between June 10 and September 1, and he's out by a magnitude of 5.5 times, it's probably not surprising that there is skepticism about the ability of the government to fulfil that commitment that is set out in the budget.

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Certainly, knowledgable people are concerned about what's taking place there. In order for that to come about, there'll have to be a re-evaluation of the budget that's allocated for that.

If I might begin to conclude, an objective and careful review of this budget shows that it's a measure of the degree to which this government is fiscally incompetent and has set out purposefully to mislead the public as to the real financial state of the province. That's what the budget before us represents. The commitment made in the election campaign of a deficit of $495 million was a totally hollow and false one, and this budget proves that.

The commitment to protect health care and education services is not something that is being followed through on either. There's not a single increase between February and this budget in allocations to the health authorities.

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There will be surgeries that will be cancelled, and health authorities will be forced to bring in nominally balanced budgets.

But everyone recognizes that the reality will be that they'll continue to run deficits because they can't meet their public commitments to the kind of care that people deserve in this province within the budgets that are being offered by the government in this budget.

I want to conclude by urging my colleagues to vote against this budget. It's the wrong budget for British Columbia at a time when we're in a recession and beginning to emerge from it. For a government to come forward with a new, regressive tax and an increase to MSP premiums…. That's the best the government has to offer. I'm sure that the citizens of British Columbia will join us in decisively and emphatically rejecting this budget and the government that brings it before this Legislature.

Hon. I. Black: It is an honour for me to stand before the House today and offer my unequivocal support for Budget 2009-2010.

Let me start on a few personal notes. First, this session marks the beginning of yet another

chapter in this occupation of being an MLA and, by my good fortune, a minister of the government. It is an honour to have this role. I would not be able to do this without the support of my family, and to them I offer extraordinary thanks.

It was when I was dating my university sweetheart, who against most better judgment later became my wife, that I explained to her that someday I may wish to go into politics. For both of us it was a bit of a surprise that it happened five years ago — that particular conversation in terms of: "Honey, I have an idea." Indeed, I thought I would be probably about 15 years older than I am now, and I certainly didn't think I'd have three children under the age of five at the time. But I did. Those were our circumstances.

Nonetheless, the work of this role, the work of this House, irrespective of the party that you belong to, is crucial work. I believe it's crucial for our respective communities. It's crucial for the work of the people of B.C. Despite the punishing lifestyle of this job and the time away from home, for reasons that still confound me I have the undying support of my children Thomas, Jordan and Danielle, and I am grateful that they have afforded me the honour of continuing to do this job.

The election most recent was a tough one for me. I had an interesting — exciting but interesting — decision to make about which riding I should defend. The former riding of Port Moody–Westwood was the third largest in the province. I represented over 72,000 people. Our laws say it should be between 50,000 and 55,000. It was the fastest-growing riding in this great province. So it was no surprise to me that the electoral boundaries commissioner decided that my riding should, for all intents and purposes, be cut in half.

I made the decision to compete for the honour of serving the people of Port Moody–Coquitlam, and I'm so pleased that they decided to allow me to return to this House. But I could not have done that without the help of some extraordinary people — some of whom were left behind, as I put it, in the other riding, the new riding that was created, of Coquitlam–Burke Mountain.

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I am going to rattle very quickly through a long list of names. They have been extraordinarily supportive of me through the years, and I will forever be in their debt — people like Wendy Cooper, Guenter Stahl, and Eileen and

Gerry Shinkewski.

Then, on my new team, a team that grew into

such an extraordinary force of support during the election, are people

like Chris Barry and Dave Bassett, whose counsel and friendship I

depend on, on a daily basis; Ann Kitching; Peggy Littlejohn; John and Gaye Northey; Ken

Juvik; and Lee Vishloff, who wore out a pair of shoes with me in Anmore and Belcarra.

I think of Don and Margaret Logie and the laughs we shared on the doorstep and of Sen. Yonah Martin, who gave up incredible time to spend some time introducing me to many of her constituents and friends in her area. I think of Dr. Jim Moore; Jim and Connie Fish; Allan Lamb; Al Ordge; my extraordinary youth team and the under-35 crowd — Ross and Lynne Murray, Patricia and Terry Pepin, Lorraine Davidson; and of course, my E-day chair, Kareem Allam; and my incredible campaign manager, Joan Dick. We also had a volunteer who came out pretty much every day named Louise Pitre, and I would be remiss if I did not take this opportunity to mention her as well.

They could not have banged on more doors, waved at more cars, handed out more brochures. We outperformed expectations, and I thank them from the bottom of my heart.

I would also, like every member of this House, be lost if I did not have two incredibly capable individuals making me look good in the community, and in both the opposition and government ranks there would be agreement that that's probably not an easy job. I have two amazing constituency assistants, Linda Kingsbury and Vicky Collins. Their service and loyalty to our community is extraordinary, and I've come to value their friendship in a great, great way.

This is an extraordinary budget in extraordinary times. It is important to put this budget in the context of the steps we have taken in the past, the global economy of today, and our hopes and plans for the future. These past steps are allowing us today to protect the vital services that British Columbians value so highly.

The world is a very, very different place today than where it was a short year ago, and our province has been buffeted by the same storm that has blown through every economy in every country around the planet. The

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world economy has shrunk. The global recession has been nasty, and it has been deep. It has been the worst since the 1930s.

The U.S. economy is smaller by nearly 4 percent, Europe's economy is smaller by almost 5 percent, and Japan's economy is smaller by almost 6 percent. These are not just our friends; they're our customers.

The cold statistics translate into struggling businesses around the globe and, most certainly, here in British Columbia — lost jobs and hardships for families, unfortunately, including families right here in B.C. For every government around the globe it has meant a struggle to preserve public services at a time of dropping revenues.

Now, in British Columbia we are not immune to this. A slowing economy means less revenue for governments. We are facing a loss of $2 billion in revenues this year, and that is when you take into account the fact that the independent economists to whom we turn for independent and objective advice through the years have given us predictable numbers to which we had applied even more conservative estimates. We actually lowered them, in some cases, by up to 20 percent.

I would use as an example the oil and gas revenue dependency that British Columbia has. For those watching at home, oil and gas have traded on the open markets. When gas is bought and sold, the government of British Columbia gets a royalty to deliver services to its citizens. It's priced in what they call gigajoules, or the unit of measurement, rather, is dollars per gigajoule. We have seen the price of natural gas go from $9.33 in June of '08 to $5.87 in February of '09 to $2.05 most recently.

The reason this matters to all of us in this room and all of the people we serve is that for every dollar of change in the price of natural gas, we get or forgo $300 million in government revenues. So from natural gas alone, in a short number of months we have seen our revenues drop by almost $500 million.

We've seen our personal and corporate taxes drop by almost a billion, other natural resources revenues drop by $560 million and other taxes that we were expecting disappear to the tune of $268 million.

Now, to put B.C.'s financial challenge in perspective, let us turn to our cousins to the south, the United States. They are facing a budget deficit of $1.6 trillion. I don't really understand the "t" word all that well, I must admit. That is $1,600 billion. It's a staggering number.

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Our federal government alone is forecasting a deficit of $50 billion. Ontario, in their provincial budget, separate from the federal, is forecasting a deficit of $18.5 billion. Our once mighty — and the envy of the country for this — debt-free Alberta is now grappling with a 2009-2010 deficit of nearly $7 billion. Here at home, despite a more diversified economy and the competitive advantages that we've built in the last eight years and that are the envy of others, our province, too, is caught in that downfall.

On the horizon we've got some good news. Our B.C. economy is expected to grow by nearly 2 percent next year. That will lead the nation and, frankly, most western economies, but this year it is still expected to shrink by 2.9 percent.

So we're faced with a deficit. Why? There are three reasons. The first is what I just mentioned. We are down $2 billion in expected government revenues from just a year ago. Second, the commodity prices — oil, gas, forestry — upon which we depend so fiercely, are down, and there's no sign of them coming back to a meaningful level any time soon. Third, the vital public services that we depend on as British Columbians have got increased demand placed upon them and increased funding put towards them by government, despite the facts that our revenues are down and commodity prices are not likely to help us in the near future.

That is the reality of today. But we are far better able to deal with this reality, thanks to the prudent choices that we made in budgets of days gone by. If it wasn't for our achievements in restoring sound fiscal management to the province, our prospects today would be much, much worse.

Imagine, just for a moment, if we had carried on with the tax-and-spend fiscal policies that we inherited when we took government in 2001, that drove this province to the brink during the last decade. During the largest expansion of human wealth in history, our unemployment levels were higher during that period than they are right now, going through the biggest disruption or devastation since the Great Depression of the 1930s.

The disposable income of the citizens of this province. When around the rest of the globe it was growing, our disposable income in British Columbia shrank by over $1,700. We gave more than $1,700 in tax relief to the average British Columbian by the fifth year of our mandate.

Imagine if we had not made the tough decisions and brought in five surplus budgets in a row. Imagine if we had not made the largest annual debt repayment in British Columbia's history and if we had not achieved our top-notch credit rating. Where would we be today if we had not cut taxes to leave more money in people's pockets to save or to spend and if we'd not made British Columbia a better place to do business and instead, as had been happening, drove businesses away?

What if we had listened to all of those who said: "Forget the debt; spend it all"? What if we had not spent eight years filling in the hole of credit card debt dug by the NDP in the previous decade? If we had listened to those who forgot our responsibility to today's taxpayers or to tomorrow's generations, where would we be today, Mr. Speaker? Well, I'll tell you.

We would not be in the position to produce a budget as strong as the one that my colleague the Minister of

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Finance delivered yesterday. Let there be no doubt. There is no Finance Minister in the country of Canada who would not pine for the opportunity to have the economic situation that British Columbia has in these difficult times.

Whether his provincial counterparts are of an NDP persuasion, Liberal or Conservative, there is no Finance Minister in this great country of ours who wouldn't pine for the opportunity to deliver to this House the budget that was brought down just the other day — a budget that protects the vital public services, strengthens the economy and helps prepare us for the economic upturn that is coming our way. We are glad for the good fortune of having our economic situation relative to any other in North America, we are glad for this budget, and we are very glad for our Finance Minister.

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This budget readies us for a new decade of growth and prosperity. In short, this budget carries on our tradition of prudent fiscal management, a tradition that we established in 2001 and have maintained all along, a tradition which today is giving us the strength and the foundation and the vision to see us through these challenging times.

It gives us clarity and purpose so that we can stand and say, after more than 120 tax reduction measures, that we will not raise taxes; so that we can stand and say we will not cut the firefighting budget, especially in this historically busy year on the fire lines, where the $60 million budget is likely to require the fully allocated $409 million budget that is in this particular document.

We can say that we will not reduce access to unemployment and assistance programs. In fact, we're spending more, reflecting the increased demands in these crucial areas that occur during a difficult economic period.

After eight consecutive increases under this government, we can stand and say that we will not reduce K-to-12 funding. In fact, from the $3.7 billion budget which existed in 2001 it will rise to over $4.6 billion by 2009-2010. It is seeing a year-over-year increase of $84 million in operating grants alone. With 53,000 fewer students to educate in our system, there's over $873 million more to spend than there was when we formed government.

After eight years of consecutive increases under this government, we will not be reducing funding for the Ministry of Health Services. From a budget of around $8 billion in 2001 we are now focusing on a budget that will approach $15.7 billion by the end of 2011 and 2012. That is a three-year lift of over $4.7 billion.

Now, the opposition is welcome to continue to call $8 billion to $16 billion a cut. They're welcome to call an increase of $8 billion, doubling it effectively, a cut. However, I have a six-year-old, an eight-year-old and a ten-year-old who would suggest — politely, I would hope — that there's a flaw in that arithmetic.

We will continue to invest in the infrastructure — the roads, the schools, health care facilities and other projects — that will create up to 88,000 jobs in British Columbia, jobs in communities throughout B.C. And we will continue to support small business, the engine that drives the B.C. economy. I am very, very proud to be the minister responsible for small business.

We're going to be doing this by increasing the small business tax threshold from $400,000 to half a million. That's going to save small business a total of $20 million a year, and it's the highest threshold in the country. We'll continue to eliminate the small business income tax, and by April 2012 it will be gone.

Now, why would we do these things? Well, for one, we know that this provides the incentive to the men and the women and the families in British Columbia that take the risks, that start the businesses or invest in their businesses and purchase goods and create jobs.

We do these things because we're committed to a stronger and a more competitive economy. We do these things because we know that with this investment and with a competitive and streamlined business environment, we will create jobs.

Therein lies the key to balancing our books once again. Therein lies the key to continuing to provide the public services that British Columbia depends on.

Now, after listening to a couple of the members opposite last week, I have to tell you that I am astonished. I am flabbergasted, actually. I find it incredible that the opposition is suddenly scrambling to try to speak for business in British Columbia.

Where have they been for eight years? Last I checked, the opposition was in favour of raising their taxes, taking their payroll up $450 million a year, and applying a chokehold to small business under the suffocating grip of re-regulation.

Now, last Thursday in this House, I listened to the new member — and welcome him to the House — for Cowichan Valley…

Deputy Speaker: Through the Chair, please, speaker.

Hon. I. Black: Through the Chair.

…rail against business. "We can't have the corporatization of B.C.," or something, he said. In the next breath he said: "However, I like corporations, and we've got to have them." Then he lamented — and to his point, I would give him credit on this — very appropriately about the challenges that are faced by forestry communities and, indeed, the forestry industry itself.

But herein lies the first of many disconnects. When we announced the single biggest improvement we could make for business in British Columbia, an improvement that will save the forestry industry $140 million, that will help the industry create jobs in these communities, what happens? The member and his colleagues object.

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Now, the coastal mills are currently at 50 percent capacity, and the logging operations are at about 25 percent. It seems to me that $140 million is going to mean more shifts at those mills that are opened and that closed mills have a better chance of reopening.

They object to helping British Columbia businesses compete not only here in Canada relative to provinces like Ontario but also in the rest of the world. They seem to object to all the things that give us the best shot at securing the better paid, long-term, stable jobs that will keep our economy and our communities vibrant and will keep them strong.

Now, they've made it clear that they object to the benefits related to the HST, but let's put aside for just a moment the benefits of it. Let's put aside the fact that the harmonized sales tax for British Columbia is going to be the lowest in the country, put aside the rebates for the charities and the municipalities and the new houses, put aside the $1.6 billion of transitional assistance that comes along with this program, put aside the need to be competitive both within our country and around the world and put aside the positioning that this gives us for the recovery ahead.

The shortcoming of the debate to date, with respect, both within the media and within this House, is the challenge associated with the misinformation and, in many cases, misunderstanding around what happens when you change tax regimes. To be fair to everyone concerned, it can be confusing when you make a change in a tax regime. But there's also an enormous logical disconnect as well.

I happened to be speaking with a lot of my constituents on this. I've had a steady stream of conversations with constituents — with business owners, seniors and parents — where they've asked me: "Is the HST on medical and dental services?" No, it's not. "Is it on child care services?" No, it's not. "Is it on basic groceries and prescription drugs and medical and assistive devices?" No, it's not. "Long-term residential care?" No, it's not.

There's also, because of the process of creating the HST that's right for B.C., an opportunity, frankly, that did not exist before. We have the opportunity for exemptions. In Ontario, the HST — the 8 percent, not the 7 percent component that British Columbia has — will actually apply to gasoline and to all motor fuels. Not in British Columbia. It's exempt from that. It's exempt from books and children's-sized clothing and footwear, diapers and feminine hygiene products, and something that's very near and dear to my heart because of my history on the topic — children's car seats and booster seats.

There's also related relief on the HST file for low-income tax credits, as well as the fact that we're moving the basic personal income tax credit to $11,000. Perhaps most pointedly, especially for our communities up north, provincial rebates will be provided for residential energy.

The opposition has opposed almost everything we've accomplished on behalf of business, big and small. They've opposed our measures to keep British Columbians working and making their lives better, and they will no doubt object to the budget — a budget that increases the Ministry of Health Services funding by $4.6 billion.

Let me talk about this logical disconnect, for a moment, in this whole HST debate. Who is it that put in place over 120 tax reduction measures in British Columbia? We did. Who opposed it? The oppo