1978 Legislative Session: 3rd Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

MONDAY, MAY 15, 1978

Afternoon Sitting

[ Page

1363 ]

CONTENTS

Routine proceedings

Oral questions

Use of Brannan Lake as drug treatment centre. Mr. Stupich –– 1363

YM-YWCA. swim team on B.C. ferry. Mr. Barber –– 1363

Heroin treatment programme. Mr. Gibson –– 1365

Visit to Prince Rupert by Alberta Premier. Mr. Lea –– 1365

Use of Brannan Lake as drug treatment centre. Mr. Cocke –– 1366

Revenue Surplus of 1976-77 Appropriation Act, 1978 (Bill 5) .

Second reading

Hon. Mr. Wolfe –– 1367

Mr. Stupich –– 1368

Mr. Gibson –– 1370

Mr. Lauk –– 1371

Hon. Mr. Phillips –– 1372

11r. Barber 1373

Mr. Smith –– 1374

Hon. Mr. Curtis –– 1374

Mr. Nicolson –– 1375

Hon. Mr. Wolfe –– 1376

Second reading –– 1376

Pari Mutuel Betting Tax Amendment Act, 1978 (Bill 6) .

Second reading

Hon. Mr. Wolfe –– 1376

Mrs. Wallace –– 1377

Mr. Stephens –– 1377

Hon. Mr. Fraser –– 1379

Mrs. Jordan –– 1379

Hon. Mr. Wolfe –– 1380

Second reading –– 1381

Corporation Capital Tax Amendment Act, 1978 (Bill 7) .

Second reading

Hon. Mr. Wolfe –– 1381

Mr. Stupich –– 1382

Mr. Veitch –– 1382

Mr. Stephens –– 1383

Mr. Cocke –– 1383

Hon. Mr. Wolfe –– 1383

Second reading –– 1383

Revenue Surplus of 1976-77 Appropriation Act, 1978 (Bill 5) Hon. Mr. Wolfe

Introduction of amendments –– 1383

Social Services Tax Amendment Act, 1978 (Bill 8) .

Second reading

Hon. Mr. Wolfe –– 1384

Mr. Stupich –– 1385

Mr. Cocke –– 1386

Hon. Mr. Wolfe –– 1386

Second reading –– 1387

Cigarette and Tobacco Tax Amendment Act, 1978 (Bill 9) .

Second reading

Hon. Mr. Wolfe –– 1387

Ms. Brown –– 1387

Mr. Lockstead –– 1388

Second reading o –– 1388

Municipalities Aid Amendment Act, 1978 (Bill 10) .

Second reading

Hon. Mr. Wolfe –– 1388

Mr. Barber –– 1389

Division on second reading –– 1389

Introduction of amendments –– 1389

Committee of Supply: Ministry of the Provincial Secretary and Travel Industry estimates.

On vote 194.

Hon. Mrs. McCarthy –– 1389

Mrs. Dailly –– 1390

Mr. Lauk –– 1393

Hon. Mrs. McCarthy –– 1394

Mr. Stupich –– 1397

Hon. Mrs. McCarthy –– 1398

The House met at 2 p.m.

Prayers.

MR. KERSTER : In the gallery today are 42 outstanding young adults from Port Coquitlam, students from the Mary Hill Junior Secondary School, along with their teachers, Kirk Templeton, Jim Gustafson and Dave Meronuk. I'd ask all members to make them welcome.

HON. MR. CURTIS : Mr. Speaker, in the gallery in a short while - but already in the precinct - are students from Cedar Hill Junior Secondary School in the constituency of Saanich and the Islands. They are hosting 36 students from Joseph Francois Perrault School in Quebec City. I know the House would like to know that they are present today.

HON.- MR. McCLELLAND : Mr. Speaker, in the gallery today directly above you are two very close friends of mine, one a former business associate, and they are visiting the gallery for the very first time - Mr. and Mrs. Bernie Grimstead. Welcome.

Oral questions.

USE OF BRANNAN LAKE AS

DRUG TREATMENT CENTRE

MR. STUPICH : Mr. Speaker, to the Minister of Public Works: can the minister comment on a report to the effect that BCBC is preparing Brannan Lake for use as an intensive drug treatment centre to be ready by January 1?

HON. MR. FRASER ; Mr. Speaker, that is certainly under active discussion.

MR. STUPICH : A supplementary, Mr. Speaker. The question is whether or not work has started.

HON. MR. FRASER : Mr. Speaker, I am not aware that work has started.

MR. STUPICH : Another question, Mr. Speaker. It's a week ago since I asked the hon. Minister of Recreation and Conservation whether or not he had received submissions from the people interested in the centre for other uses. I'm wondering whether or not he's ready to answer that question.

MR. SPEAKER : Hon. members, I've noticed in question period that

we are falling into a habit of asking questions again that have been taken on

notice. It seems to me that the prerogative of such an answer might better fall

to the minister of the Crown who has taken the question on notice. To be constantly

probing them is to do injury to Beauchesne's intent, which says: "Questions

previously asked shall not be asked again."

MR. STUPICH : Mr. Speaker, if I may, I'd like to ask the same question of the Provincial Secretary.

MR. SPEAKER : So ordered.

MR. STUPICH : The same correspondence was sent to the Provincial Secretary and to her ministry, urging upon that ministry that they consider the use of Brannan Lake Centre as a tourist promotion place, in that there are no facilities for overnight camping for tourists between Ivy Green Park at Ladysmith and Rathtrevor beach up near Parksville. I know representations were made, and I'm wondering whether or not the Provincial Secretary is aware personally of those representations, and whether or not her ministry made any representations to the cabinet committee that was going to make recommendations with regard to the use of that site.

HON. MRS. McCARTHY : In the last 10 days I have had correspondence from the group to which the hon. member for Nanaimo makes reference. At that time I referred it to my ministry for their estimation of the proposal, and I haven't had a report back as yet.

MR. STUPICH : A final supplementary from me, Mr. Speaker. I just wonder if the Minister would also take as notice the question as to whether or not her ministry made representations to the cabinet committee.

YM-YWCA SWIM TEAM ON B.C. FERRY

MR. BARBER : My question is to the Minister of Recreation and Conservation in his capacity as minister responsible for the B.C. Ferry Corporation. An unfortunate incident occurred last night on the B.C. ferry system. At approximately 5:45 p.m. the Victoria YM-YWCA swim team, called the Flying Ys - some 24 children aged 7 to 14, and eight adult chaperones with them - arrived in two vans at Tsawwassen terminal. They had by prearrangement some 10 days earlier obtained the group rate. Their two vans went aboard the Alberni which was scheduled to sail at 6 p.m. The kids were required to walk through the gate, pay

[ Page 1364 ]

their fare and on to the pier. Unfortunately, when they got to the pier, they were turned back at the last moment; they were told there was an overload They asked if they could unload the vans from the Alberni and they were told they could not.

At 6 o'clock the Alberni sailed with the two vans and the kids were left at the Tsawwassen end. Needless to say, the kids were very angry and their chaperones very upset. I gave the minister notice of the question this morning; he already has them and, hopefully, we might get the answer now:

Is it indeed a Ferry Corporation regulation that citizens using their group rate are required to leave their vans or buses and walk through the gates to the ferry? If so, why?

That's my first question, I'll give them in order, or do you wish them all at once, Mr. Minister?

MR. SPEAKER : One question at the time, please, hon. member.

MR. BARBER : Well, that's the first question. Is it in fact a regulation that citizens are required to leave their vehicles of transport and walk through the gate, and then join the vehicle aboard the ship? Is that in fact a regulation of the Ferry Corporation?

HON. MR. BAWLF : Yes, Mr. Speaker, the only vehicles with passengers which can reserve space up to a limit are buses. In the case of a group rate, such as would apply to these people, it is necessary to have the people disembark from the vehicles, for the purpose of a head-count. That is the the policy of the corporation.

MR. BARBER : On a supplementary question, is there any regulation that in fact makes it impossible for a van or a bus in a case like this, when there is a passenger overload and the van gets on but the passengers do not, to be taken off if the passengers wish it? Is there any regulation that would have forbidden that?

HON. MR. BAWLF : Well, Mr. Speaker, obviously in the case of a vessel which is loaded with vehicles, it would be necessary to unload a portion of those vehicles in order to get a selected one off the ferry. In those circumstances it's practically not feasible.

I would just like to say, however, what the circumstances are surrounding this matter. The group was booked for the 5 p.m. sailing and space was allocated for the vehicles and the passengers. They then telephoned to change the booking to 7 p.m.

The two vans containing the party arrived at the terminal, the vans went through the toll booth and the passengers went through the foot passenger booth. It then became apparent that the vans could get on the 6 o'clock sailing of the Queen of Alberni. At that point, the foot passengers, who were sitting in the terminal coffee shop, realized that the vans were leaving. They went to the vessel, which had already been loaded, and the master concluded that it was at its capacity in terms of licence limit for passengers.

The group then insisted that the van be discharged, but for the reason I've just cited it was not feasible to do so. One of the group then stood on the ramp and said he was not going to let the vessel depart, and at that point it was necessary to phone the police. Before they were able to attend to the matter he was dissuaded of that approach. Those are the circumstances which surround the matter.

MR. BARBER : My final supplementary question: as the minister has indicated, the Victoria YM-YWCA were very upset last night that the vans went aboard and that they themselves couldn't.

HON. MR. BAWLF : They shouldn't have gone. They should have gone on the 7 o'clock sailing.

MR. BARBER : Would the minister give consideration to changing the regulation that requires people to leave their vehicles? Indeed, as you know with buses, the Ferry Corporation takes the word of the bus driver as to how many passengers there are aboard, and the sheet is filled out. Surely someone could do a head count when the people are in the vehicles, and these extremely embarrassing and humiliating situations would not occur again.

MR. CHAIRMAN : I think the minister has the question. The question is not really in order in that it inquires into the policy, but the minister may answer if he wishes.

HON. MR. BAWLF : Well, I just want to reiterate one point. If the party - the people and their vehicles - had stuck to their reserved space for the 7 p.m. sailing, none of this problem would have occurred.

MR. BARBER : They were held up in Blaine at the border, Sam.

HON. MR. BAWLF : Mr. Speaker, they were there

[ Page 1365 ]

in good time to make the 7 o'clock sailing, but someone in the party made the decision to try to rush onto the 6 o'clock sailing with the vans, so in the process they got stuck there and separated from their passengers. The Ferry Corporation was all prepared to accommodate them as per their request, which had been changed once already, on the 7 p.m. sailing.

MS. BROWN : If people stay in the van, they don't get left.

HEROIN TREATMENT PROGRAMME

MR. GIBSON : Mr. Speaker, I have a question for the Minister of Health. On April 17 of this year I asked the minister if staff members of the Alcohol and Drug Commission had been asked or required to sign a statement saying they agreed with the minister's compulsory heroin treatment programme. On April 18 the minister answered no.

I would now like to rephrase that question. At the end of September, 1977, 20 employees of the Alcohol and Drug Commission were sent a letter from chairman H.F. Hoskin, outlining the proposed programme. Is it not true that those 20 employees were expected to reply in writing expressing their acceptance or rejection of the programme?

HON. MR. McCLELLAND : I will take that question as notice, Mr. Speaker, and I would love to see the letter.

MR. GIBSON : In response to the minister's question, would he also take this under advisement? In view of the fact that the letter states, "Confirmation that you accept changes in treatment will help us in planning treatment staff requirements, " and in view of the fact that a follow-up memo was sent in January, 1978, to any employee who had not replied in writing, why did the minister tell this House on April 20 that the letter had nothing to do with the questions that had been raised and why did he decline to table the letter at that time?

VISIT TO PRINCE RUPERT

BY ALBERTA PREMIER

MR. LEA : Has the Premier been notified by the Alberta government that Premier Lougheed and the hon. Minister of Transport, Hugh Horner, will be in Prince Rupert on this coming Friday?

HON. MR. BENNETT : Yes, Mr. Speaker.

MR. LEA : Is our Premier going to be in Prince Rupert on Friday to meet with Premier Lougheed?

HON. MR. BENNETT : No, Mr. Speaker. The discussions surrounding this event have already taken place. This has to do with the Premier of Alberta's own investigation of some discussion with the wheat pools concerning the elevators that has been going on and discussions that have been participated in by B.C. Development Corporation.

MR. LEA : Well, it seems that Premier Lougheed of Alberta is very interested in economic development in the northwestern part of our province, especially in grain elevators. It seems to me that our Premier should be interested enough to travel to Prince Rupert. I would like to ask the Premier why it is that he doesn't feel that he could travel to Prince Rupert to meet with Premier Lougheed, on the spot, because there are people in Prince Rupert who have some ideas too. I think it would be beneficial to the Premier to be there.

HON. MR. BENNETT : Mr. Speaker, as I've said, the discussions with

the Premier of Alberta have already taken place with his government, and the

initiatives for the development in this area the port development and the rail

connection were taken by the B.C. government and are being carried out by the

B.C. Development Corporation and the Ministry of Economic Development. What

we have is an attempt where part of the discussions for financing of grain elevators,

federal, provincial, B.C. Development Corporation.... Now Alberta is concerned

for their wheat farmers, and are concerned in, perhaps, money from their sources

to help in the financing of projects already planned, already underway, initiated

by this govern-ment. The discussions have taken place and the matter was discussed

as to whether it would require further political meetings between the Premier

and myself. We had concluded that the discussions we've had up until now

were sufficient for this time as they were dealing only in one

part in regard

to grain facilities, and indeed they were following up in part on the work already

undertaken by the government.

MR. LEA : On a supplemental, could the Premier tell the House what it is exactly that the province of British Columbia has told Alberta that they will do to assist Alberta in promoting economic development in northern British Columbia in terms of grain terminals?

[ Page 1366 ]

What has British Columbia told Alberta that British Columbia will do to assist?

MR. SPEAKER : Order, please. We cannot ask questions into cabinet confidentiality. However, as the Chair has no knowledge....

HON. MR. BENNETT : Mr. Speaker, later in this House, because I can't answer it in a single question period, I'll be pleased to make another speech on port and rail development in this province in regard to that area. Part of those facilities and our plans for that area were announced not just recently, but some time ago in the province.

MR. GIBSON : On a supplementary. Mr. Speaker, in view of the visit of the Premier of Alberta to Prince Rupert, I would ask if the Premier of British Columbia has any plans to visit Lethbridge to ensure continued supply of sugar beets for our province.

HON. MR. BENNETT : Mr. Speaker, it just happens I am planning on visiting Alberta and I'm glad the member gave me a chance to state that I will be visiting Alberta this year.

MR. GIBSON : Will you get PWA back?

USE OF BRANNAN LAKE

AS DRUG TREATMENT CENTRE

MR. COCKE : Mr. Speaker, I'd like to direct a question to the Minister of Health. In view of the fact that a very definitive announcement was made over the weekend by an assistant of the Minister of Health, Bert Hoskin, and in view of rather conflicting evidence that has come just now from the Minister of Public Works around whether or not Brannan Lake is going to be used for the drug addiction centre, I would ask the Minister of Health what's going on. There was a definitive statement made about 123 employees, et cetera and the Minister of Public Works says that it's just at the discussion stage. I would ask whether or not it was just a PR stunt.

HON. MR. McCLELLAND : I guess the easy answer to that question would be no, Mr. Speaker, but I could go on a little further while I'm on my feet and tell you....

MR. SPEAKER : I'm not sure that the minister had retained the floor. It appears to me he had already taken his seat.

HON. MR. McCLELLAND : Well, I didn't sit down, Mr. Speaker. I would like to say that....

MR. SPEAKER : Order, please.

HON. MR. McCLELLAND : Oh. Am I through? (Laughter.)

MR. SPEAKER : I think that we must respect the bell unless the minister wishes to ask leave.

HON. MR. McCLELLAND : Well, Mr. Speaker, I was in the middle of answering a question when the bell rang.

MR. SPEAKER : I think we can settle the matter. It was the observation of the Chair and certainly of the individual ringing the bell that the minister had already taken his seat. Perhaps if the minister wished to ask leave....

HON. MR. McCLELLAND : If you don't want to hear the answer to the question, that's okay.

AN HON. MEMBER : We'll give leave. Ask leave.

MR. COCKE : If I can get a reply then that will be fine.

MR. GIBSON : Mr. Speaker, in response to the request of the Minister of Health, I would ask leave to table documents relating to the Alcohol and Drug Commission.

Leave granted.

MR. SPEAKER : The hon. Minister of Consumer Services and Corporate Affairs.

MR. GIBSON : You're getting closer, Mr. Speaker, but not really very close.

HON. MR. MAIR : With leave, Mr. Speaker, I would like to introduce to the House a person in the gallery whom I did not have the opportunity to notice before.

Leave granted.

HON. MR. MAIR : In the gallery today is a gentleman who, but for the temporary insanity of myself and a majority at a nominating convention of March, 1975, might be here as a member for Kamloops. I'd like the House to recognize and to welcome Mr. Pat Desmond.

HON. MR. FRASER : Mr. Speaker, I'd like to clarify an answer I gave to a question that was asked me today regarding Brannan Lake.

[ Page 1367 ]

Leave granted.

HON. MR. FRASER : A decision has been made to allocate that to the drug and alcohol division of the Ministry of Health, but on another part of the question, I'm not aware that any money has been spent on it to date.

MR. BARNES : Mr. Speaker, there is a resolution standing in my name on the order paper that asks that this House join the City of Vancouver Safety Council in promoting safety cycling between May 20 and 27. 1 would ask leave.

MR. SPEAKER : Order, please. Hon. member, this is not the appropriate time.

Leave not granted.

Orders of the day.

HON. MR. WILLIAMS : Second reading of Bill 5, Mr. Speaker.

REVENUE SURPLUS OF 1976-77

APPROPRIATION ACT, 1978

HON. MR. WOLFE : Before proceeding with introduction of second reading of this bill, I'd like to distribute considerable background material covering expenditures and information related to the intentions covered in this bill. Could I ask one of the attendants to take these around?

MR. SPEAKER : Yes. Would it require a little bit of time and would it be to the advantage of the House to have a short recess for the distribution?

Is it agreed that we have a short recess?

The House took recess at 2:32 p.m.

The House resumed at 2:34 p.m.

MR. SPEAKER : Hon. members, the distribution appears to be complete. Is it agreed that we proceed?

HON. MR. WOLFE : Bill 5 is the Revenue Surplus of 1976-77 Appropriation

Act, 1978. 1 think it is reasonable to say that it is one of the more significant

bills of the current session. It symbolizes the dedication of the surplus generated

through the first fiscal year of this government towards a very necessary job

creation and other projects associated with much-needed programmes which face

us in British Columbia today.

One of our major concerns in British Columbia is unemployment. It is a national concern and, notwithstanding that we have had trends in British Columbia which were going against the national trend, it is the belief of this government that we should proceed positively in every area to try to counteract unemployment.

The latest labour force data - that is, as of April, 1978 - reveal that British Columbia's seasonally adjusted unemployment rate has fallen to 7.7 per cent, the lowest level in almost a year and a half. This represents a 1.1 per cent reduction from April, 1977, when the province's seasonally adjusted jobless rate stood at 8.8 per cent. The improvement in the provincial employment situation has taken place while national unemployment has continued to worsen. From April, 1977, to April, 1978, the Canadian unemployment rate increased from 8.2 to 8.6 per cent on a seasonally adjusted basis.

Despite this favourable trend the British Columbia jobless rate remains too high, so the government is taking strong and immediate action to improve British Columbia's employment situation. The attack on unemployment has been mounted on two major fronts. First, as outlined in the budget, substantial new incentives have been provided to encourage small business to expand production and thereby create new job opportunities. Small-business development provides an important source of economic innovation and permanent long-term employment creation.

The second part of the government's job stimulation effort involves direct and immediate employment creation through expanded and accelerated public-sector programmes.

Because we managed to bring spending under control in our first budget year, we have ended up with a surplus that gives us the leverage to now do something positive about the unemployment problem. We are consequently able to recommend that the surplus from the 1976-1977 fiscal year be used on a wide variety of projects to create new jobs. This $76.1 million 1976-1977 revenue surplus will be used to expand programmes which will provide immediate job opportunities and enhance the province's future employment prospects. By avoiding simple make-work projects, the longer-term employment benefits of this program will exceed the 10,000 jobs that this year's programme is expected to create.

This accelerated works programme is broken down basically into 11 sections, which are as follows:

$10 million will go towards the purchase of 100,000 shares of the British

Columbia

[ Page

1368 ]

Development Corporation. This additional capital will allow the corporation

to make loans to and assist industries in the province to expand and create

employment.

$27,629, 730 will go to upgrade and extend highways in the province. This

amount will be utilized by carrying out a large number of day labour projects

throughout the province.

$5 million will go to provide airport facilities for smaller centres in

the province.

MR. SPEAKER : Order, please. Would it perhaps be wiser to discuss

the ramifications of the subsections during committee? The principle of the

bill, presumably, is to provide a lump sum figure. I'm willing to abide

by the wishes of the minister, however. It's just a suggestion.

HON. MR. WOLFE : With your indulgence, Mr. Speaker, I'm going

to make the very briefest of reference to the basic intentions of these 11

programmes. The members can ask, I think appropriately, questions later under

committee where we can provide more details.

$10 million to improve the forests of the province and particularly to

create permanent employment in the province's forest industry. The main

thrust in this will be for reforestation.

$5 million will go to provide an accelerated summer works programme for

immediate action on behalf of our employed. These funds will supplement the

present working government programme.

$5 million will go to provide an accelerated mining development programme.

This will include assistance for the discovery and development of new mineral

deposits.

$5.5 million will go to construct extra public recreation facilities throughout

the province.

$2 million to provide for the construction of additional housing facilities

for our elderly citizens. With this contribution, it is estimated some 252

new senior citizens' housing units will be produced.

$2 million will go to conduct research and field work in problem areas

relating to the farm communities and to update and improve facilities for

agricultural fairs.

$2 million will go to provide for expansion of our fishing industry, particularly

in the expansion of the shellfish industry.

$2 million will go to provide improved water facilities in the non-municipal

areas of the province.

The responsibility for administering these programmes rests with each of the ministers concerned with such programmes. Hon. members will appreciate that since these programmes are being paid for from surplus revenue of 1976-77, they are over and above the spending proposed for the 1978-79 regular government operations as outlined in the estimates of expenditure.

In addition, Mr. Speaker, to providing direct employment for an estimated 10,000 people in the year, the programmes covered by this Act will assist resource development, transportation, social capital and general industrial development projects. The effort, consequently, affords an important contribution to the creation of long-term and permanent job opportunities in British Columbia.

As I have said earlier, I have circulated more detailed background information of the individual expenditures proposed and I think these will supply members with the information they wish to have, perhaps to ask questions in committee. Further, I might say at this time that there is a minor amendment to be proposed after second reading which merely changes about two words in the Act. It changes the word "mining" to "mineral" and proposes to delete "treatment" and substitute the word "improvement" under the water development proposal. These amendments will be introduced after second reading.

I might say in conclusion that this particular bill has some urgency in obtaining passage because none of these very worthwhile expenditures can be initiated before passage of the bill. It is necessary to have all of this money expended and authorized within the current fiscal year, or it cannot be put forward to these projects. So I urge the co-operation of all members towards initiating this project so it can be proceeded with.

I move second reading.

MR. STUPICH : Mr. Speaker, one can only wonder why, if it is so urgent that this legislation be passed quickly and efficiently, it wasn't dealt with much earlier by the Legislature. For that matter, why couldn't the House have met earlier? But even then, we did start this session in March. We are now well into May; today is May 15.

HON. MR. WOLFE : Is that why you spent 10 days on the Premier's estimates?

MR. STUPICH : Mr. Speaker, the Minister of Finance asks: "Is that why you spent 10 days an the Premier's estimates." May I suggest, Mr. Speaker, that every member on the government side of the House spoke on the amendment to the Premier's salary? There were other speakers as well, so it was not us who spent

[ Page 1369 ]

the 10 days on the Premier's estimates.

MR. SPEAKER : Order, please, hon. members. We must go to the principle of Bill 5.

MR. STUPICH : Mr. Speaker, I just feel that I have some obligation and some opportunity to reply to the minister, and included in the minister's remarks was the reference to the Premier's estimates.

MR. SPEAKER : Hon. member, it's not appropriate to reply to members who have not spoken while they had control of the floor. Let's move to the principle of Bill 5, please.

MR. STUPICH : Mr. Speaker, to proceed with the principle of the bill then, the minister did say in concluding his remarks that he wanted this bill to be put through the House very quickly. I suggest that we would have been very co-operative had he tried to do it earlier in the month or even last month, and we wonder at the urgency for getting it through very quickly.

However we're certainly quite prepared to co-operate, because if this is the only way this particular government can find to finance job-creating opportunities in the province we want to do everything we can to help them.

I noted in the minister's remarks his comment that this surplus was generated in the first fiscal year of this government. Well, Mr. Speaker, you and I know better. I think the minister knows better; I think perhaps he must be reading something that was handed to him. Perhaps he doesn't know better. Perhaps he read it in all good faith thinking that it really was generated in the first fiscal year of this government. I'm not sure, Mr. Speaker, but you and I both know that the surplus was generated by previous governments.

It was generated by a previous Social Credit government in part, and in part by the previous NDP government when they set up various special funds which were set aside for special purposes. It was a way of putting the money away in times when finances were good, and allocating it to special purposes.

Then this government, in its wisdom, introduced legislation - and the Legislature supported it - to wipe out those special funds which created something like $30 million, which was brought into surplus this, year. But those funds that were created over a period of years by two previous administrations. It was sound management of the two previous administrations, not sound management of this particular administration.

I see the Premier smiling about this. Surely he knows those special funds were created by previous Legislatures, and surely he knows as well that the $48 million was obtained in a scheme of collusion to avoid corporate income tax. It was a scheme that has been stopped by the federal government. You will recall, Mr. Speaker, when the proposal to sell the ferries was announced in the Legislature we were told that it was urgent that we deal with this very quickly because, and I'll paraphrase the minister of the day's remarks, the federal income tax department realized that this was a tax loophole.

It was against the interest of the Canadian people, and it was closing that loophole. If this government did not act very quickly to sell these ferries, then the opportunity to avoid paying corporate income tax would be lost for all time. So it was important that we hurry if we were going to act in collusion with those finance companies to enable them to avoid paying corporate income tax.

Mr. Speaker, it was argued at the time that we were really borrowing money. at an attractive rate. No recognition was taken of one of the clauses in the contract to the effect that in the event the federal government ever changed that legislation which would in any way impair the ability of those finance companies to make a profit out of this deal, then this province would save them harmless, would make sure that they made up any losses that future federal tax legislation might inflict upon them.

AN HON. MEMBER : Some deal!

MR. STUPICH : It's a great deal, Mr. Speaker. One of the items that was never taken account of in dealing with that proposal was that B.C. is losing its share of the corporate tax that's been lost by this tax-avoidance scheme. And when they were calculating the interest rate, that was never mentioned. Nevertheless, if this is the only way that this particular government can find to create job opportunities in a time we desperately need them, then certainly we support it.

Perhaps we might even wish, Mr. Speaker, that it were possible to sell more ferries or to sell some of the assets or cancel more of the special funds that were accumulated by previous administrations. That would enable this government, with its paucity of ideas for improving economic conditions in the province, to cash in on previous governments' good business to finance employment opportunities now.

There is nothing in this bill that guarantees the money will be used for those

purposes. It does enable the government to do it,

[ Page 1370 ]

but we recall in the past year several announcements to the effect that some of these very programmes were going to be cut back because the government wanted to finish the year with a surplus. Reforestation, unfortunately, was one of the programmes that suffered.

With respect to the individual items, I'll comment on them briefly, as the minister did. Regarding the $10 million share purchase that is going to increase the lending base, Mr. Speaker, I wish that this share purchase in BCDC was really going to do something important to create jobs in our province. You will recall that BCDC was established by the previous NDP administration and you will recall that that administration provided $25 million in funds for a new corporation that is now some two and a half years older since this administration came to office.

So little has been accomplished in that period that it hasn't been necessary to put any more money into BCDC. Now, at this late date, it's a relatively small amount when you consider that it is now two and a half years older and that we have a minister who is supposed to be devoting full time and all of his ability to it. Perhaps that's the problem, Mr. Speaker; his ability isn't sufficient to do the job that has to be done.

Certainly if we're going to depend upon that particular minister after all this time to make use of another $10 million to create increased credit - that's what the statement says: to increase the lending base - a $10 million increased lending base for all of the small businesses in B.C. is going to do very little to any of them. That amount could easily be used in any one of 50 communities in British Columbia and still leave much to be done.

Mr. Speaker, we are not opposed to this happening. We're just saying that if a government is going to depend upon this action to create much in the way of jobs when we need them so badly, then I'm afraid little will be accomplished.

The second proposal is an amount of $27,629, 730 for highway programme s. You'll recall from previous remarks in this House that the estimates in the Ministry of Highways for highway construction have been reduced by $22.6 million. So we are making up that reduction, and another $5 million besides. But you'll also recall, Mr. Speaker, that Hydro is contributing almost $12 million for highway construction. So in effect the government is putting less into highway construction in this period, even with this $27 million contribution, than it did last year.

Now is that supposed to create jobs, to do less than we did last year in highways? Surely the Minister of Highways and Public Works (Hon. Mr. Fraser) can't be satisfied with this. The odd figures would indicate that he simply got what %us left over and will have to keep trying during the year to get a bit more out of this programme.

Mr. Speaker, I intend to comment on one other programme only - reforestation - to express my disappointment that the government isn't doing more about reforestation. I've always been concerned about this as a person and so has my party. We've always spoken in favour of the government doing more about reforestation. We're concerned now that they aren't doing more at this time.

Mr. Speaker, you are aware that in the last year under the previous Social Credit administration the total spent on reforestation was $4.7 million. In the short space of four years, we did get that up to $14.3 million. You can't do it all at once; you have to have seeds and you have to plant the seed and have seedlings. It's a continuing program-me and an expanding programme. Under the NDP in that period it did expand from $4.7 million in 1972 to $14.3 million in 1976.

In the estimates last year we voted some $22 million for reforestation. It was one of the programmes cut back. This year we will be voting in estimates $1 million less for reforestation than we did last year. We're reducing the amount in the regular estimates. We are saying out of this programme that $10 million is for reforestation. It's more than last year, but there's no guarantee that they'll spend it.

The estimates are cut back, so one can only wonder about the sincerity of the government in saying that it is going to use the money that it obtained from selling ferries commissioned by the previous NDP administration and closing out special funds saved by the previous Social Credit and the previous NDP administrations. One can only wonder at their sincerity in saying that they are using these funds to provide jobs in light of the programmes that have been announced and in light of this government's record in actually spending money on job-creating projects, money that was approved by the Legislature.

Mr. Speaker, we will agree to deal expeditiously with this legislation. We regret that it wasn't dealt with sooner. We regret that it isn't going to do more by way of creating jobs than we fear it will accomplish.

MR. GIBSON : Mr. Speaker, I spoke on this programme in the budget debate and supported

[ Page 1371 ]

it. I just have two more things to say briefly now.

First of all, call this what you like, call it a separate bill, but it is really a budgetary-type expenditure, and it should be included in the budget for the purposes of calculating the impact of the government on the economy. As a matter of fact, this is made very clear in the explanatory note where it mentions: "This money will be in addition to any other money provided out of the current revenue in the estimates for the same purpose." It's really budgetary-type expenditure.

This, if properly counted as a part of the budget, would raise the impact of the provincial expenditure as a percentage of the gross provincial product by about 0.3 of I per cent, so it's a substantial amount not to have included.

My second point is that here we are given a sum of money and a number of jobs. There are always great promises of this kind before the fact. I urge the minister to do everything in his power to make certain that in fact this money being voted by the Legislature is expended for those purposes. But I'd like him to go beyond that. I'd like a commitment from him, when he closes debate on second reading, that this House will have a report at or before the next budget next year as to how many jobs -and not just jobs but how many man-years -were actually created by this programme as compared to the targets.

Only by an after-the fact comparison with the before-the-fact flimflam can this House know whether the programme that it is approving of are actually met by the government during the year. So I'd ask the minister to give the commitment that we will have a post mortem on this programme to see how successful it has been.

MR. LAUK : Mr. Speaker, looking over this bill, I'm wondering two things. First of all, I'm aware that the Minister of Finance is a well-meaning individual who, I fear, is being used on a straight PR job with respect to Bill 5. It does belong in estimates; it doesn't belong in a separate bill. Secondly, when I look at the bill, I'm wondering why on earth they bother. I certainly want to re-emphasize the minuscule nature of this contribution toward job creation within the province of British Columbia at a time of recession, when there should be maximum effort by government.

I'll give you one example. Just looking at the last quarter of 1977, in British Columbia there were 81 bankruptcies in small businesses.

Interjections.

MR. LAUK : For the benefit of the Minister of Finance and the Minister of Economic Development (Hon. Mr. Phillips) , I'll deal with other quarters currently. That's $12 million in one three-month period. Then they bring in Bill 5 contributing $10 million to the British Columbia Development Corporation. Even dealing with only one quarter of last year they are $2 million behind.

I wish to associate myself with the remarks of the member for Nanaimo (Mr. Stupich) and the member for North Vancouver-Capilano (Mr. Gibson) . First of all, the member for Nanaimo emphasized - and it certainly is true - that this is a permissive statute. The government will be perfectly within its rights not to expend this money for the purposes stated in the bill.

Secondly, I couldn't more strongly support the Liberal leader's suggestion that a full report be given with respect to the job creation actually effected by the moneys appropriated under this statute. That report should be through the auditor-general's department. There is provision within the Auditor General Act whereby Mrs.

Morrison and her staff should be charged with the responsibility of saying: "All right, if this is what you proposed to the Legislature and the Legislature has accepted your word...." The auditor-general should look at where those funds go throughout the year and give a report to this Legislature and to the public accounts committee as to how many jobs were indeed created by this effort.

When the British Columbia Development Corporation was first established, it was considered a very great hope for the small businessmen in this province. It was a Crown corporation mechanism that had been promised for many, many years by W.A.C. Bennett, and it was established by the NDP administration. In its first year it had much more in the way of financing to, get established than this $10 million set out in Bill 5.

After almost four years of the corporation's existence, I can't help but think that, if I were the minister in charge and saw this great hope of the small businessman turn into a bucket shop - and this $10 million is certainly a drop in that bucket - I couldn't avoid feeling responsible enough to resign my position, having failed to convince my cabinet colleagues of the very serious importance of helping the small businessman in this province.

I stated the other day that as soon as this administration took office, the Development Corporation pulled back from many worthwhile programmes which were in support of small businesses. One example is the hotel and motel programme for tourist accommodation in this

[ Page 1372 ]

province, where loans would be granted by the Development Corporation. This was cancelled by a stroke of the pen of the minister.

Faced with an average of 75 to 80 bankruptcies per quarter, involving much more than $10 million or $12 million per quarter, the government now - at this late date - makes this grand gesture of $10 million in the bucket.

Mr. Speaker, I can't help but think that the Ministry of Economic Development would be better off in someone else's hands - even in this government. We need a much stronger voice in the cabinet on behalf of small businessmen in this province. For the first year of the minister's term he had difficulty determining what his job was; in the second year he was appearing before commissions, and in the third year we see that his great effort - the mountain giving birth to the molehill - is $10 million. It's a very great disappointment indeed.

MR. SPEAKER : Perhaps we could get back to the bill, hon. member.

MR. LAUK : I'm speaking of the bill that's the molehill mentioned in paragraph A which I will deal with in greater detail in committee. This is just an example of how this bill is a PR job, is highly overrated and could have been brought in much earlier.

We had been waiting with great anticipation. We had been poised for the great action of this dynamic government. We were waiting for the Legislature to sit. We sat in late March, and all that we have to show for it is this drop-in-the-bucket legislation. I'm sure that I'm speaking for most of the small business community in this province when I say that this government, in terms of its support for small business, has been the greatest disappointment in current memory.

HON. R. PHILLIPS : I certainly rise this afternoon to support this bill with as much effort as I can put forward because I know that the bill is possible.

MR. NICOLSON : On a point of order, no member is allowed to speak twice to the same reading of a bill. I believe that the minister has already expressed his feelings on this during the speech of the previous speaker.

MR. SPEAKER : Order, please, hon. members. It's not a proper point of order. Will the minister please continue?

HON. MR. PHILLIPS : No, Mr. Speaker, it's not a proper point of order, but it's typical of how they have tried to delay the business of this Legislature and not allowed us to get on with creating the jobs. They have continually stood in the way since this Legislature opened. I'm going to have to go out there in the community and tell how those obstructionists over there wouldn't allow us to get money voted. to go out and create jobs in this province.

Mr. Speaker, as I started to say before I was so rudely and frivolously interrupted, I 'm very honoured to stand in my place in this Legislature and support this great move forward in this great bill, because this bill is only possible because of the good fiscal management of this government and the good policies of that great Minister of Finance.

It's very interesting to me, Mr. Speaker, to hear the opposition stand up and say: "Too little, too late." I have to return you to a few years ago when under their management the province was indeed going broke and they had to stop all government spending. Now we, under good fiscal management, have been able to bring in a bill such as this at a time when it's needed to create jobs in the sector on things that are needed, Mr. Speaker. They're not make-work jobs, and I certainly agree with this.

Now, Mr. Speaker, I'm not going to get into a debate on the great British Columbia Development Corporation here this afternoon under this bill because I don't want to delay passage. There will be ample opportunity during my estimates and also during legislation which we have to bring in to revise the British Columbia Development Corporation Act, to get into some good lively debate on that Development Corporation. However, Mr.

Speaker, I do just want to say that in the year ending March 31,1977, the corporation estimates that a total of 561 jobs were created or preserved through the Development Corporation lending activities, which provided a total of $7.6 million to 72 firms. This translates into less than $14,000 per job and compares most favourably with the $35,000 to one ratio estimated by the federal government for their job development programme.

I just want to say in passing that comparable figures, Mr. Speaker, for 1977 for the corporation indicate an even ratio at less than $11,000 per job for a lending total of $4.9 million and a job total of 451. 1 haven't got the '78 estimates yet, but certainly that same trend will continue, which really points out - and I just say it in passing - that the Development Corporation is doing an excellent job. I notice the ex-Minister of Economic

[ Page 1373 ]

Development (Mr. Lauk) is really over there eating his heart out and dying with envy because he knows we're doing such a tremendous job over here. It's very difficult for that member to stand up and criticize us, so he gets up and he goes through a little act because his leader said: "Now you get up and criticize."

MR. SPEAKER : Order, please.

HON. MR. PHILLIPS : Yes, Mr. Speaker - back to the bill.

I just want to say one other word, Mr. Speaker. There's been an awful lot of talk about bankruptcies and certainly there's been some bankruptcies. It's the policy of this government that we're not going to go in and rescue every badly managed and aver-extended company in this province. That's the system. They have the right to make a prof it and I want to tell you, Mr. Speaker, they have a right' to go broke under this system. It's not our policy over here to take over every bankrupt company in the province and shore it up with taxpayers' money.

We had one there - Swan Valley - at $11 million and we've got some other indicators. That is not the policy of this government. They have a right to make a profit; they have a right to go broke. I'll have more details about how many companies have been formed and what's going on when we get to my estimates, Mr. Speaker, but I just want to assure you that, indeed, it is a great honour and a great pleasure for me to stand in my place this afternoon and give full support to this great bill.

MR. BARBER : This bill is necessary for one reason only: under Social Credit the people have been overcharged and overtaxed, and now there is a surplus. if they had not been overcharged, if they had not been overtaxed, there would have been no surplus and the budget would have balanced. The bill is necessary because the Minister of Finance bungled his forecasts of revenues and expenditures. The people were overtaxed and overcharged, and the forecasts were utterly and discreditably bungled by the minister. But the bill is offensive to me personally....

Interjection.

MR. BARBER : We'll talk about your $215 million overruns another time - the worst overruns this government ever saw.

In one particular regard, however, this bill is particularly offensive, and it offends me as critic for housing on this side.

HON. MR. PHILLIPS : We overrun right into a surplus every year.

[Mr. Rogers in the chair.]

MR. BARBER : This bill is offensive because it reeks of hypocrisy in one particular regard, and that's in the field of capital housing grants for seniors. According to the nonsense the minister gave us this morning, under

section N we are informed that the Ministry of Municipal Affairs and Housing is to receive $2 million towards an elderly citizens' housing construction programme augmenting the $4 million in the main estimates. These projects are funded jointly with the federal government. The provincial contribution consists of one-third of the total capital costs of the project. So we're told this year that we should be grateful that the budget for seniors' housing has been increased by 50 per cent under the provisions of this bill.

The hypocrisy that reeks is that the government does not tell us that two budgets ago, the money allocated for seniors' housing was $10 million. One budget ago it was cut to $4 million.

This year it goes back up to $6 million and they tell us it's progress. Only under Social Credit would you view that as progress. Two budgets ago, $10 million was allocated for seniors' housing construction in this province. The next year they cut it to $4 million, and this year they expect us to be grateful that it's going up to $6 million. They expect the public not to remember that it used to be $10 million.

That $10 million itself was grossly inadequate for seniors' housing. The $6 million offered this year is an insult. It's an insult to every senior who believed the promises of that coalition that things would get better for them. In fact, it's gotten worse. The budget has been cut.

The minister of Labour (Hon. Mr. Williams) and the Minister of Consumer and Corporate Affairs (Hon. Mr. Mair) may find this an amusing fact of life. They may even be embarrassed by the hypocrisy of trying to get away with a statement like this, leading us to believe that things are better for seniors. The fact is, under your government it's worse than it's every been. It used to be $10 million, last year it was $4 million, and now you tell us it's going to $6 million and you tell us to be grateful.

We're not grateful, we're angry. We're angry that you would do this to the seniors, we're angry that you would deceive people in so deliberate and hypocritical a fashion. We're

[ Page 1374 ]

angry that you think you can get away with it, and we promise you you won't.

MR. SMITH : It's a pleasure to take my place in the debate on this bill, particularly following the words of so-called wisdom from the second member for Victoria.

It's interesting to listen to his dissertations in this House about all of the so-called injustices that the existing government is perpetrating on senior citizens, little children, young adults, and everyone else he seems to have great empathy for, except for the fact that he did not sit in this House during a time when all of us saw what actually happened in years gone by under a previous administration and found out just what kinds of programmes were involved and what weren't, and what promises were made and how few were ever kept.

But I do not want to dwell on that particular negative thought at the moment, I want to dwell on something that's very positive, and that is the provisions within the bill that is before us this afternoon, the Revenue Surplus of 1976-77 Appropriation Act, 1978, pointing out and providing in a very, very worthwhile manner those things that are most required at a time when we wish to stimulate employment opportunities in the province of British Columbia and get the economy rolling again.

It provides for additional money for specified types of programmes, and it would seem to me that those specified programmes will inject into the economy not only $75 million in the current fiscal year but also create Job opportunities for thousands of presently unemployed people, or those who are concerned about their future employment in this province. That's the type of programme we need at this particular time. It would be futile, in my opinion, to set up programmes which continued or had some requirement for continued financing an a longterm basis.

In other words, all we would do is still the problem or dissipate it for one year, and have to live with it in the years that succeed it.

So this is the type of programme that will contribute money to highways, to resource development in terms of mining potential in the province, and to many other areas of concern so that we can generate programmes and job opportunities quickly. I'd say that we couldn't find a better use for surplus funds than this type of programme at this particular time. It satisfies a requirement in terms of facilities, in terms of amenities that we have asked for and pleaded for under the previous administration and never received, and it will provide jobs for many, many people who at this time are very concerned about their employment from now until a year from now.

HON. MR. CURTIS : I rise in support of Bi-11 5, Revenue Surplus of 1976-77 Appropriation Act, and congratulate the Minister of Finance for the manner in which he has allocated these revenues.

Mr. Speaker, I think the time has come in this chamber to correct the record with respect to the capital funding for senior citizens' projects, because we have heard repeatedly from the hon. second member for Victoria (Mr. Barber) - and while I was out of the House a few moments ago, I believe that it was mentioned again - with respect to an alleged cutback in allocation for senior citizens' facilities. This government spends the money which is allocated for that particular function of government.

We've heard so often of $10 million being budgeted during the NDP government years and that's correct, $10 million was budgeted but I think that the facts might be of interest to the House and, indeed, to the senior citizens of the province, who are very happy with what has been done by this government since January, 1976.

In the fiscal year 1974-75, yes, $10 million was budgeted. How much was expended? Just aver half - $5,883, 872, not $10 million, but $5.8 million. So let's not hear too much more about....

MR. NICOLSON : How about 1975-76?

HON. MR. CURTIS : I'm coming to that one. do you want 1975-76, Mr. Member for Nelson-Creston? Do you really want that one, Mr. Member?

Interjections.

HON. MR. CURTIS : Thank you for the opening. In 1975-76 another $10 million was budgeted by the New Democratic Party government; expended - $3,431, 427, about one-third of the allocated amount.

SOME HON. MEMBERS : Shame!

HON. MR. CURTIS : Mr. Speaker, in 1976-77 $10 million was budgeted; expended - $9,818, 592.

HON. MR. VANDER ZALM : What do you say now, Charlie?

HON. MR. CURTIS : In 1977-78 $4 million was allocated and $4 million expended. And it should also be pointed out that the reduction in 1977-78 fiscal year coincided with the

[ Page 1375 ]

introduction and the expectation of the Shelter Aid for Elderly Renters Programme, which has met with overwhelming success and which is satisfying many thousands of senior citizens -over 16,000 to date *

As further proof If that, because I believe it is related to senior citizens' assistance, we have in the British Columbia Housing management Commission what is called a waiting list. I'm not too pleased with the term because it suggests that everyone who is listed on that particular document is in fact in desperate need of accommodation. It is more of a request list.

Within the last few days, having 30 units of accommodation available for senior citizens, it was necessary for the British Columbia Housing Management Commission to call 282 senior citizen household units -to make contact with individuals or couples, as the case may be - to place 30. In other words, Mr. Speaker, SAFER is working; this government's commitment to continued capital assistance for senior citizens projects is working. Let us not ever again hear in this House that $10 million was spent by the NDP. It was not. There was $5.8 million one year, $3.4 million another year.

Let's have accurate statements, accurate debate, Mr. Speaker, and not flim-flam.

MR. NICOLSON : Mr. Speaker, I would like to also straighten out the record on this matter for the minister. I would like the minister to tell us of one request from a non-profit society that was turned down by the New Democratic Party government. I would like to know of any requests from any non-profit society, any service club, any foundation for senior citizens' housing that was turned down for lack of funds. All the projects were in the stream, they went through the stream, and certainly projects such as the Baptist Foundation housing project which was opened fairly recently were....

Orders-in-council for projects such as that get signed at a certain stage in development when things are opened up with the consent of the planning authorities in the municipalities.

As that minister well knows, it was the experience when we came to government. With the previous Social Credit government, we realized that funds were, not being fully spent. While orders-in-council were signed in one fiscal year, the progress payments went ahead for the next two and sometimes three fiscal years, depending on the amount of construction that was taking place.

HON. MR. CURTIS : You didn't even know what was spent in 1975-76.

MR. NICOLSON : I would like that member, if he wants to be totally honest about it, to tell us how many housing projects for senior citizens have been built under sections 44 and 43 of the National Housing Act in addition to this programme under

section 15 of the National Housing Act.

DEPUTY SPEAKER : Hon. member, perhaps this subject could be better canvassed in committee on the estimates.

MR. NICOLSON : Well, Mr. Speaker, perhaps you have just taken the chair. The minister has got up here and issued some sort of a challenge. I think that a thing like this should be handled at the earliest opportunity, when statements which might tend to mislead one as to one's motivations....

HON. MR. CURTIS : Are you suggesting this is misleading information?

MR. NICOLSON : The way it's put. For one thing, the minister is putting words in the mouth of the second member for Victoria.

DEPUTY SPEAKER : Order, please. Hon. member, if you wish to correct a statement, that's one thing. However, we are on second reading of the bill now. Perhaps your argument would be better made on estimates of the Minister of Municipal Affairs and Housing, but the Revenue Surplus if 1976-77 Appropriation Act is what we are discussing now.

MR. NICOLSON : I have been recognized and have risen on second reading of this bill. To your point, Mr. Speaker, I would say that it would be more in order to try to straighten out statements at the earliest opportunity. Since I happen to have the opportunity to rise in order to straighten out statements at the earliest opportunity, and since I happen to have the opportunity to rise in this debate and since I was recognized, I would prefer to straighten that out.

DEPUTY SPEAKER : I would appreciate it if you would do that, but please let's not have any further expansion on the subject once you've straightened out the statements.

MR. NICOLSON : Mr. Speaker, I am quite satisfied, other than to say that a system of progress and of trying to reach some type of planning for the expenditures, for the progress payments.... As that minister would well know, you do not hand out under the Act a lump sum payment of $1.8 million if that is

[ Page 1376 ]

the grant that is due. You authorize an order-in-council and as work progresses - and only as work progresses - are those payments made. But that minister very well knows that some of the very people whom he has promoted in that department were under my administration at one time and were instructed and did very capably streamline that system so that these moneys would not go unspent. Mr. Speaker, I take some umbrage at those remarks. Certainly as the last word on this, I would bring up the Trinity housing project in Creston where the people did not get any money for that project until last year.

The full amount was given at the very end - instead of in progress payments - long after the project was built and occupied. So whether or not the money was forwarded in one year or another.... I guess it was paid out of the 1977-78 fiscal year. But I just say that as an example of how moneys or commitments are made, orders-in-Council are signed and authorized and yet the actual moneys may be given one or two years later very, very commonly.

DEPUTY SPEAKER : The Minister of Finance closes the debate.

HON. MR. WOLFE : I presume that anyone who wished to speak has already spoken, Mr. Speaker. I have listened very closely and haven't heard too much valid argument against the purpose of this bill. In fact, I think it is fair to say, or guess, that most members will support the bill. I hope that any member who is opposed to the nature of this bill will stand up and vote against it if he doesn't want to see employment creation in this province.

The former Minister of Finance and member for Nanaimo (Mr. Stupich) dealt on his favourite topic. He made reference to the fact that we don't really have a surplus in the year 1976-77, that it was sort of engineered by sales of ferries or whatever other transactions may have taken place in what is a very large government operation.

The fact is, Mr. Speaker, $76 million is the surplus, certified by the comptroller-general. Just look at page A7 in your public accounts. That is the surplus for the year 1976-77. You can't argue with that; it's certified by the comptroller-general. So that is the amount of money we are dedicating to these programmes.

Mr. Speaker, another member referred to reforestation, saying that we still

were not spending enough on reforestation, that the acceleration programme of

$10 million was still not enough. That's a 50 per cent increase, including

the amount in the estimates plus the amount in this special programme, totalling

almost $30 million. That's a 50 per cent increase aver the previous year.

That's a real, positive effort towards reforestation and to create not just

short-term jobs but long-term jobs.

Furthermore, the usual snide reference was made by the member for Vancouver Centre (Mr. Lauk) to the jobs that are going to be created by this legislation. He said that 10,000 jobs were peanuts, Mr. Speaker. I think any member would be happy to see that kind of job acceleration take place, and I'm advised that that's a very conservative estimate of what these 11 programmes will in fact produce.

Finally, Mr. Speaker, I can only say that one member opposite referred to the fact that this surplus was a bungle in our original budget, that we bungled our original estimates. I think we've got a long way to go to learn how to bungle when you look at the year 1974-75 and see an overexpenditure in the aggregate amount of $358 million. I mean, that's high-class bungling.

In any event we have today a $261 million deficit, and I would say that's the result of opposition bungling. The government of the day produced a deficit of $261 million. Now that is a bungle: an overexpenditure in one single year alone of $358 million and an accumulated deficit for their term of office of $261 million. They wiped out any surplus that was there, they lost $400 million in their last year of office and left us with a debt of $261 million.

That's the thrust of this bill. In our first year in office, faced with difficult economic problems, we did produce a modest surplus of $76 million. This bill puts this amount to good purpose. So, Mr. Speaker, I move the bill be now read a second time.

Motion approved.

Bill 5, Revenue Surplus of 1976-77 Appropriation Act, 1978, read a second time and referred to Committee of the Whole House for consideration at the next sitting after today.

HON. MR. WILLIAMS : Second reading of Bill 6, Mr. Speaker.

PARI MUTUEL BETTING TAX

AMENDMENT ACT, 1978

HON. MR. WOLFE : Mr. Speaker, the racing industry is a large employer of people in the province and by expansion can contribute even more to the economy. However, to enable this, the quality of the racing and hence the

[ Page 1377 ]

quality of British Columbia-bred horses must be improved. This in turn requires better breeding stock within the province of British Columbia. Accordingly, amendments to the Pari Mutuel Betting Tax Act are proposed to provide increased incentives for horse breeders in the province which will result in better breeding stock.

It is proposed to reduce the rate of the parimutuel betting tax by 0.5 per cent to 6.5 per cent. In its place, 0.5 per cent is to be collected for a breeders' incentive fund. This fund will be administered by the British Columbia Racing Commission and used for a programme for incentives for owners of British Columbia stallions and brood mares.

The incentives paid from this fund will be fourfold: (1) 10 per cent of the winnings of British Columbia-bred horses to the owners of the mares; (2) 10 per cent of the winnings of British Columbia-bred horses in stake races to the owners of the stallions; (3) supplements to the purses for stake races for fillies or mares owned by British Columbia residents; (4) the sponsoring of a sire stakes programme for the offspring of British Columbia-owned stallions.

The rate changes will not affect persons betting at the tracks but will result in a loss in revenue to the government of an estimated $500,000 per year. This proposed amendment is to be effective from midnight April 10 as referred to in our budget speech of that date.

I move second reading of the bill.

MRS. WALLACE : We in the opposition do not oppose this bill. However, we are a little concerned about the smallness of the contribution to the horse breeders. It certainly isn't what the horse breeders were asking for in any way, shape or form. There are some 750 horse breeders scattered around this province. They represent small, individual activities which is the kind of enterprise that this government is purportedly in favour of. Yet this kind of small contribution is not going to give a return that would allow them the kind of competitive arrangement which they would like to see in British Columbia.

One of the problems is that just simply reducing this tax by 0.5 per cent to the provincial government makes no changes in the other areas the breeders are concerned about. It does nothing to allow an increase in the purses or to encourage more people to invest their betting dollars here in British Columbia. If we are going to involve ourselves in this type of activity, then we should at least do it on a competitive basis with the areas across the line where people can go and, for the same amount of money, have a better chance to win a much larger purse.

One thing the breeders wanted very much was Sunday racing. There is no inclusion of Sunday racing in the bill. Our people are going across the border on Sundays and taking funds out of the British Columbia industry.

DEPUTY SPEAKER : Hon. member, during second reading we should not be discussing things that are not in the bill but rather things that are in the bill. Omissions that some group may feel should have been included would be better canvassed at another point.

MRS. WALLACE : Well, Mr. Speaker, when there is nothing in the bill, it's very hard to talk about the bill. There is nothing in this bill. One half of 1 per cent - $500,000 - from this government to be distributed to the whole horse-breeding industry gives a very small token donation to those horse breeders. It's very minimal; it's far less than the breeders were asking for. It is not going to make any significant difference in the whole position in British Columbia where we are not able to get into the breeding business.

We are not able to buy the studs and to raise the brood mares that we should be raising in order to have a truly competitive industry. This is going to do little or nothing because there is simply not enough money there. The 0.5 per cent less that the government is taking and handing back in a small token contribution to the horse breeder is simply not enough. They have completely ignored the things that the breeders were asking for.

While we support the bill because it is a token at least, it is a long way off what could have been done to assist that industry.

MR. STEPHENS : Mr. Speaker, I'd just like to address a few remarks at this time on this bill. The associations concerned with this are the British Columbia Thoroughbred Breeders Society, the Horsemen's Benevolent and Protective Association, and the British Columbia Jockey Club. Those are the three basic organizations that are responsible for racing in this province.

They submitted a brief to the Attorney-General, which I'm sure that the Minister of Finance has seen. It was also submitted to the Provincial Secretary (Hon. Mrs. McCarthy) and many letters concerning it went out to various members of this government. This is a very excellent brief. It's a brief that is well reasoned, well planned and well presented.

The unfortunate part about it is that the

[ Page 1378 ]

government seems to have completely ignored the brief, even with respect to the reduction that was given on the provincial government share - that is to say that the reduction from 8 per cent of the betting amounts to 7.5 per cent has not had the overall effect, or even contributed to the effect, that these people were asking for. In other words, the total take-out which comes from the betting dollar is still 18.1 per cent, which is what it was prior to the passing of this bill.

The failure to recognize the great need in British Columbia to reduce the total take-out in order to enhance this industry is a total failure of the problems facing this industry. I submit that this reduction of 0.5 per cent - which results, as the minister has said, in a $.5 million a year loss in revenue to the government - is of no value to the industry, and certainly of no value to the people of British Columbia if the effect is going to be to lose $.5 million in taxes.

It seem.- to me, Mr. Speaker, that what this government should have done is reduce the total take-out, because the statistics show that in major racing areas throughout North America, if you increase the take-out past a certain point, the betting public ceases to bet, or the amount being placed at the tracks is reduced. Bettors know that the higher the percentage of take-out by the government, the lower the return on the bet will be.

The statistical comparisons made throughout North America will show that, wherever the total percentage of take-out is reduced, the betting increases and the net result is that the state or provincial governments involved increase their income. That this government would not reduce the total take-out and at the same time would give up $.5 million is just not sound financially or otherwise.

The thoroughbred racing industry employs 2,600 men and women directly, and indirectly provides a livelihood for several thousand others. Thoroughbred racing produces in excess of $6.5 million in revenue to the provincial and local governments and it is a major corporate taxpayer in British Columbia. The failure of this government to recognize the importance of that industry, the failure of the government to back off a little bit and reduce the amount of taxation is foolish and ill considered.

[Mr. Speaker in the chair.]

I would like to read from the brief into the record so that the racing public who are interested will know what this government ignored. The brief says:

"Due in large measure to inflation and a generally depressed economy, all segments within the thoroughbred horse industry in British Columbia are finding it difficult, if not impossible, to meet current costs and to continue in operation. At the same time, however, the gross parimutuel betting tax of 8 per cent currently levied by the provincial government is the highest for any province in Canada where major racing is conducted and one of the highest in any jurisdiction in North America.

There is substantial evidence to indicate that a decrease in the total take-out percentage will produce gains in attendance and the parimutuel handle. Fewer bettors wager when the possible winnings do not compensate for the risk of loss. As more of the pool is removed due to the total take-outs, less remains for distribution to winning ticket-holders and the odds grow shorter in comparison with the risk.

"Additionally, winning bettors have less to bet on remaining races, with the result that the turnover is less and the total parimutuel handle is reduced - as, of course, are the province's receipts.

"The experience in New York and elsewhere shows that there has been great resistance on the part of bettors to each increase in the parimutuel take-out. But in the reduction of the pool of money paid to winning ticket-holders, each increase has been accompanied by a significant decrease in attendance."

To make a comparison, Mr. Speaker, with some states of the United States, where populations and per-capita incomes are comparable to those in British Columbia, we find that British Columbia is way ahead of the state of Colorado, which takes a total of only 16 per cent, with only 4 to 5 per cent of that going to the state levy. Delaware takes 17 per cent; Kentucky, 15 per cent; Louisiana, 16 per cent; Maryland, 15 to 16 per cent; Nebraska, 15 per cent; Oregon, 16 per cent; Washington, 16 per cent and West Virginia, 16 per cent. The highest that any of those states takes as its share is 5.75 per cent in Maryland.

This province continues to take 7.5 per cent, being the highest in Canada of any of the major provinces dealing in racing, and certainly higher than any of the major states of the United States.

This bill totally fails to recognize the importance of this industry and does not give the racing industry anything to be happy about. It will change very little. It appears that perhaps the only people who might get some slight benefit from it will be the

[ Page 1379 ]

thoroughbred breeders, of whom the Premier's brother is one.

Interjections.

MR. STEPHENS : Well, is somebody going to deny that?

MS. BROWN : No.

MR. STEPHENS : There were a number of recommendations put forward in the brief, Mr. Speaker, some very fine and well-thought-out and well-planned recommendations. All but the one small recommendation have been ignored. I would find it very difficult to support this bill in its present condition because if I stood and voted for this bill, I would be voting simply for one very tiny, small segment of the racing industry and I don't want to create the opinion that I'm at all happy with this bill. The racing industry is suffering very badly and it's getting no relief from this government.

HON. MR. FRASER : Mr. Speaker, I want to take the opposite position from the hon. member for Oak Bay and support this bill heartily. I want to speak from a voice of experience. I'm a regular attender of the track for the last 25 years and I happen to know a little of what's going on there and suggest maybe the member for Oak Bay would find something if he went there too. But as far as this bill is concerned, this does help the B.C. breeders. It allocates $500,000 to them, and I don't know why we play down that. The same observation was made by the member for Cowichan-Malahat (Mrs.

Wallace) that we really weren't helping. Well, I don't know how we value $500,000, but I consider that a fair amount of help.

The member for Oak Bay remarked. that it was not helping except just a few, and in the same speech he said that 2,000 or 2,700 people were involved in this employment of the thoroughbred racing people. I would think that's significant help. They are in difficulty. In my opinion, certainly the government hasn't given in to all their requests, and neither do we to those of other people who ask, but we have recognized there is a problem and we are going to divert this money. I might say it will be administered by the B.C. Racing Commission and they will decide how it's done, but I am sure that: they will follow along the line that is spelled out in here.

I would also like to tell the people who are crying about it that all you have to do is check the attendance records at Exhibition Park. You can't move there on a Saturday.

There are 10,000 to 12,000 people there betting. They have many, many million-dollar days in the parimutuel at Hastings Park and it's on a steady increase. To say that it's going down is not the case; it's going up. The only effect that they have at Exhibition Park on betting and the attendance there is that the weather is a big factor. If you have a rainy day, it will certainly drop; if you have good weather it zooms up. On long weekends, on the Saturdays and the Mondays that are a holiday, they have successive million-dollar days in the parimutuel.

So I think that the citizens of the province are very interested in this. I'm sure that the B.C. breeders will be greatly helped by this. I look forward to the advancement of that industry in our province and strongly support this bill.

MRS. JORDAN : Mr. Speaker, I rise to support this bill. I certainly support the efforts being made both by the industry and by this government to increase the standard of breeding in this province. Unlike the member for Oak Bay I happen to feel that by and large the racing industry in British Columbia is very healthy; I think it could be healthier if it was expanded.

I certainly believe that the time is coming very shortly when facilities through political negotiations at various levels must come together in order to expand racing opportunities for different breeds in this province. My reason, sir, is not particularly related to the racing industry. I acknowledge it as a very important industry in this province. It has not been my privilege to have the time to attend. But I do recognize, as do many other members and I'm sure you yourself, Mr. Speaker, that the horse industry in this province is a very large industry. It encompasses a great number of people, both professional and amateur and it encompasses many little pony areas.

Mr. Speaker, I feel that next year this bill should be amended to include funds to do a very broad study of the horse industry in this province through the Ministry of Economic Development, the Ministry of Finance, the Ministry of Agriculture and the Ministry of Education, because I believe there is not one person in this province who realizes the extent of the impact of this industry in a dollar sense throughout this province or the extent of the impact of this industry in terms of recreational opportunities and activities or in terms of social development of many young people in this province.

So that would be my first recommendation for next year to the Minister of Finance through you, Mr.

[ Page 1380 ]

Speaker, in addressing myself to Bill 6.

Mr. Speaker, one of the most serious problems facing our equestrian competitors in British Columbia is the opportunity to have access at a reasonable cost to quality bred horses, to horses of size and horses of a temperament that can be developed into the finely tuned animal, the athletic animal and the very intelligent animal that is needed for equestrian competition.

One of the advantages of racing to the amateur in British Columbia is that the so-called fallout horses become available and many of our equestrians purchase them. This worked very well, to a degree, for some years but now the price, because there is not enough breeding in British Columbia, is really prohibitive for an untried horse. I suggest to you, Mr. Speaker, that young people used to be able to go to the tracks and pick up a well-bred thoroughbred or a cross breed for around $200 to $500. We must recognize that these horses have failed on the track for a reason.

That reason is not always a reason that would prohibit them from excelling in equestrian sports. But it can be a reason that slows their training, if they have tendon problems or other physical disabilities or if the treatment at the track has not been such that they are of a very settled nature.

Mr. Speaker, if we expand breeding in this province, not only in the thoroughbred areas but into other areas, and encourage breeding into the quarter horse, the pinto and these other breeds and cross-breedings through racing, there will be a greater number of horses available for our amateur equestrians.

Mr. Speaker, I believe that this is a legacy that the racing interests in this province could leave that would put them in a place of honour for years to come. I frankly believe it is an obligation that the racing industry and, through its requests, this government has to take a very profitable, very exciting industry that benefits from an amateur interest and ensure that that industry contributes on a positive basis to that amateur interest.

Mr. Speaker, in supporting this bill, I leave you with these two recommendations:

the establishment next year of a five-year fundraising commitment by the racing

industry, as well as a provincewide study undertaken through the Ministry of

Finance, the Ministry of Economic Development, the Ministry of Agriculture and

the Ministry of Education, to analyze completely and bring forward the impact

that the equestrian industry, from racing to amateur, competitive, from recreation

to breeding, has in this province.

MR. SPEAKER : The Minister of 'Finance closes the debate.

HON. MR. WOLFE : In closing the debate on second reading of this bill, I would just like to mention a few pertinent points. The change that is being made here to reduce the government tax by one-half of I per cent and, at the same time, provide a breeders' incentive fund of the same amount was endorsed and recommended, in fact, by the B.C. Racing Commission.

Now we have studied very closely the brief referred to by the Conservative leader (Mr. Stephens) - a joint brief of the B.C. Jockey Club, the Horsemen's Benevolent Association and the Thoroughbred Society - in which they recommended, as I believe they have from time to time, that the government tax be reduced by two whole percentage points, from 7 per cent to 5 per cent. In its place would be 1 per cent allocated to a whole group of proposals associated with breeding, with a stallion station. There were a series of recommendations involved in this. This would have meant a reduction in the government revenue of at least $1 million per year, which was one very important consideration.

I should say that many of these proposals embodied in this 1 per cent allocated to a breeders' incentive fund put forward by the group proposal were quite advanced in terms of

[ Page 1381 ]

Canadian tracks and might be termed as more associated with Kentucky Downs and what a few very advanced operations in North America have attempted and have used. I don't profess to be an expert on this subject, but the recommendation from the Racing Commission was that several of these components in the proposal were too far ahead of what could be contemplated in the proposal for British Columbia at this stage.

I could not agree, Mr. Speaker, that the provision of half a million dollars per year towards a breeders' incentive fund, allocated in the manner I described earlier, will be insignificant. I think this will certainly be studied and I think should not be termed as being insignificant.

This group brief indicated that we would, by reducing the tax, increase the handle by an equivalent amount. This is the experience across North America. The last time this tax was revised was in 1972, and if you examine the government revenues for the period starting in March 31,1972, up to date, you will see that the revenues increase upwards of $1 million per year in each of those years, until, in the current year's estimates, we're providing for revenues of $8.5 million. The only exception to that was a reduction in the year immediately following this previous tax reduction.

I don't think it's really a fair assumption to assume that by reducing the tax you are, in fact, going to increase the handle. It has been said that this is the highest take down of any track or province in Canada, but my information would differ from that. British Columbia's total take-out is 18.1 per cent. Certainly this is higher than Alberta. Saskatchewan's is 22.5 per cent. Quebec has a series of take-downs, depending on the track, varying from 18.1 per cent to 20.6 per cent - at least 2 per cent higher than British Columbia's.

New Brunswick is 23.5 per cent, Nova Scotia 23.5 per cent, Prince Edward Island 24 per cent and Newfoundland 23.5 per cent. So it is not really fair to say that we have the highest provincial take-out of the parimutuel. dollar.

This is broken down, I should explain, by net provincial tax of 6.8 per cent; collector's commission, .2 per cent; Horsemen's Association grants, I per cent; federal government fees, .6 per cent; allowance allowed to track under federal Criminal Code, 9.5 per cent - a total take-out percentage of 18.1 per cent. This has received very careful study and it is felt that the move in the direction of a breeders' incentive fund was long overdue and was a worthwhile experiment.

Mr. Speaker, I view this as a step in the right direction and I hope the House will support it. I move second reading.

Motion approved.

Bill 6, Pari Mutuel Betting Tax Amendment Act, 1978, read a second time and referred to Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS : Second reading of Bill 7, Mr. Speaker.

CORPORATION CAPITAL TAX AMENDMENT ACT, 1978

HON. MR. WOLFE : This is an amendment to the Corporation Capital Tax Act, 1978. This Act was first introduced in 1973. The Corporation Capital Tax Act imposes a tax of one fifth of I per cent on capital used by a company to carry on its business in British Columbia. The base for capital taxable under the Act is comprised of share capital surpluses, reserves, sums or credits advanced or loaned by shareholders, and all indebtedness represented by bonds, mortgages, lien notes and any other securities to %which the property of the corporation is subject.

A recent Supreme Court of Canada decision substantially reduced the base upon which the tax is calculated by ruling that only share capital, surpluses, and any other loans or financing of a capital nature which were for borrowings for fixed assets were subject to tax under the present Act. This has eliminated all borrowings for current working capital purposes and would result in the revenue from the tax being severely reduced.

Therefore, Mr. Speaker, amendments to the Act are proposed to clearly state that the tax base includes all borrowings. These amendments are effective October 1,1977. They do not impose any new tax but are for the purpose of confirming the application of the tax in the past. The government wishes to encourage small businesses to expand production and employment. As a part of this encouragement, it is proposed to raise the exemption below which companies pay no tax from the present $100,000 to $500,000 taxable capital. This will mean an additional 13,000 companies will not be subject to corporation capital tax.

A notch provision is proposed to apply to companies whose taxable capital is between $500,000 and $600,000.

This will graduate the tax for those companies just over the exemption level. The proposed scale will mean tax of $111 for companies with between $500,000 and $510,000 taxable capital. The tax rises just aver $100

[ Page 1382 ]

for each additional $10,000 taxable capital to $1,140.50 for companies with between $590,000 and $600,000. The increased exemption and notch provision will cost an estimated $6 million and will be effective from April 1,1978.

With this new exemption, 53,000 companies in the province will not be subject to the corporation capital tax at all. An amendment to the Corporation Capital Tax Act is also proposed to change the present requirement that tax be paid on the increase in capital due to the book write-up of assets. This has arisen because some companies believe their financial Position can only be correctly shown by using current appraisal values for assets.

The Act's present requirement that tax be paid on the book write-up places these companies in an unfair position compared to companies which do not use the current appraisal value of assets. Not too many companies are affected by this amendment so that the revenue loss is minimal. The effective date of the amendment is April 1,1978.

Mr. Speaker, I move the bill be read a second time.

MR. STUPICH : Hr. Speaker, it's almost like dealing with an omnibus bill and being asked to support or reject a bill on general principle when there is one

section that proposes a tax reduction and then there's another

section that is retroactive. While it doesn't impose an increase, it certainly establishes the government's right to collect more tax than would otherwise be the case if the supreme court decision were to remain.

Certainly the opposition will support Bill 7 in second reading. With respect to

section 2, we will oppose that when it comes to committee stage. I recall many opportunities when the NDP were in government and the Social Credit were in opposition - the speeches they made in this House against the idea of retroactive legislation. In the last session we had one example of that when mining legislation was changed retroactively, and here we have a case where the Corporation Capital Tax Act is changed retroactively. We don't like that way of doing business and we will certainly have a good deal more to say about that in committee stage.

With respect to the change that is made in that the legislation is called the Corporation Capital Tax Act, it would seem to me that had the government accepted the court decision, and agreed that the capital referred to should be capital in the sense of long-term assets rather than trying to make sure that the legislation does apply not only to long-term assets but to inventory, as it does now and as this bill is affirming, then I think it would be more properly a tax on capital.

At the present time, the tax - and this legislation before us now is trying to make certain that it does continue to apply - is not a tax on capital only but is also a tax on the financing of inventory. We think that is not the way that this particular legislation should work.

We will support it in second reading; we will oppose

section 2 in the committee stage.

MR. VEITCH : First of all, I must say that I've watched this capital tax legislation expand throughout this country until its implementation in British Columbia by the previous socialist government. I hasten to add at the outset that I consider this type of taxation unfair; I consider this type of taxation regressive. I believe it was 1973 when it was brought in, and I consider it that way today. I haven't changed my mind.

To many small businesses back there at the outset when the NDP introduced this type of legislation, it was a source of very severe aggravation indeed. It wasn't all that costly; it was just a source of dismay that a government would consider bringing in this type of regressive taxation. It was a source of severe irritation.

To the tax people and accountants there were mixed blessings. It should have been called the Accountants Benevolent Act. At the very worst, it was an absolute nuisance. I've done up many of these returns, and preparing the return was far more than the tax imposition that was sent to government. I can remember time after time after time when you would spend several hours, or maybe even a day, and reluctantly charge a client $60 to prepare the return and send in something like $30 by way of tax imposition.

It was a stupid, silly Act by a government at that time that wanted to get at business at any cost - regressive, anti-business legislation. It was antibusiness legislation then; it is not probusiness legislation now.

I hasten to add that I congratulate the hon. minister for the step in the right direction. I remember back then that even the NDP finally realized that the $50,000 limit on taxable capital that they had on this type of tax was silly.

Perhaps it's better to explain the tax. I'll explain it as simply as I can. It's simply a tax on a tax on a tax on a tax. It's a tax on money that you borrow to go into business; it's a tax on working capital. You don't have to make one cent in your business and you

[ Page 1383 ]

still have to pay tax to the government, unlike any other tax that we have - even if you lose money.

I hasten to associate myself with the minister and his moves in the right directions; I dissociate myself completely with this type of regressive taxation. As I said before, it's a tax that taxes a tax that taxes a tax. It's a tax that is anti-business; it's a tax that does nothing whatsoever to promote business or help small business people. I'm very happy that the hon. minister saw fit to remove between 14,500 people from the tax rolls. But I will continue to press until this type of taxation is repealed. May it never show its head again in this province. I support the bill.

MR. STEPHENS : I would just like to associate myself with the remarks of the last speaker, the member for Burnaby-Willingdon. I wholeheartedly support him when he looks forward to the day when this Act is entirely repealed. I wish it was happening now. Thank you.

MR. COCKE : I once in a while become amused, sitting in the House, listening to some of the utterings from the back bench of the Social Credit coalition. I'm particularly amused this afternoon when I listen to a member stand up in the House, admonishing the minister for not having completely eliminated this particular kind of tax. That member has never said a word about the way this government has so grievously hurt small business in this province by taxing and by increasing rates to the extent in other areas that were not quite so direct but were far more harmful. Why don't they talk about that? They don't dare.

MR. SPEAKER : The hon. minister closes debate.

HON. MR. WOLFE : In closing the debate on the amendment to the corporation capital tax, I think the nature of these amendments has been covered in my first remarks.

I would only like to say that with regard to the member for Burnaby-Willingdon (Mr. Veitch) , who has strong feelings about the corporation capital tax, I think these feelings are shared by many people in business in British Columbia. I think, and the Premier and others have mentioned on previous occasions, that it would be our intention to attempt to alleviate this tax at some point in the future, but it is not possible to leap before you jump or crawl or whatever you do first.

With regard to the amendment having to do with the supreme court case, which we'll discuss further in committee, this has a very serious impact on the revenue base under this Act. The corporation capital tax revenue estimated for the current year is $36 million. Without amending the Act to cover for the inclusion of bank loans for working capital purposes, which is the nature of this amendment, we would have had a revenue loss of over $20 million, speaking conservatively of the impact of this on our revenue for the year.

So I am in accord with many of the things that the member for Burnaby-Willingdon has said, and I think we have made a worthwhile change in the Act by advancing the exemption to remove a great many small corporations.

There is the opinion that the corporation capital tax is the only tax, mind you, which applies, whether you make a profit or whether you don't. I would just like to remind the members that there are other taxes which are of this fixed nature. For instance, property taxes do not vary with the revenue that a company generates. There are business taxes and other taxes which are fixed in nature. It is important for government to have a predictable revenue from certain sources which do not vary up and down with the economy.

Having said that, I move second reading of Bill 7.

Motion approved.

Bill 7, Corporation Capital Tax Amendment Act, 1978, read a second time and referred to Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WOLFE : On a point of order, before introducing the next bill

I have two minor message amendments which I should have referred to before dealing

with second reading of the Corporation Capital Tax Amendment Act, 1978. Could

I, proceed with that?

MR. SPEAKER : If the amendments are by message, they are in order at any time.

REVENUE SURPLUS OF 1976-77

APPROPRIATION ACT, 1978

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

amendments to Bill 5, Revenue Surplus of 1976-77 Appropriation Act, 1978.

HON. MR. WOLFE : Mr. Speaker, I ask leave to move that the said message and the amendments accompanying same be referred to the committee of the House having charge of Bill 5.

[ Page 1384 ]

Leave granted.

Motion approved.

HON. MR. WILLIAMS : Second reading of Bill 8, Mr. Speaker.

SOCIAL SERVICES TAX

AMENDMENT ACT, 1978

HON. MR. WOLFE : In my recent budget I mentioned two evils facing the country. They are inflation and unemployment, and the government believes that amendments being proposed to the Social Services Tax Act will assist in lessening the impact of both. An amendment is proposed to reduce the rate of the tax from 7 per cent to 5 per cent on all taxable purchases, except liquor purchased from the liquor distribution branch outlets or winery stores. This change was effective after midnight, April 10. This reduction of tax will significantly reduce the cost of living for all British Columbians.

It will provide the average family in the province with tax savings of $125 a year and exert downward pressure upon inflationary forces. In addition, it will lower the cost of doing business in the province by reducing the tax rate by 2 per cent on all taxable purchases used in operating businesses.

This is part of the government's job stimulation programme. In this instance, for the period from midnight April 10,1978, to March 31,1979, the tax is to be removed from production machinery having a unit value of $100 or more when purchased by a small business. Production machinery covered by this exemption includes machinery used directly in the manufacture or production of tangible, personal property by altering or making contact with it.

The exemption includes repair parts having a unit price of $100 or more acquired to repair production machinery, but does not include self-propelled vehicles of any type nor tools of any kind used to repair production machinery or store fixtures or equipment generally classified as office equipment.

A small business, Mr. Speaker, is a person, partnership or corporation which is a Canadian-owned and -operated business not dominant in its field which, in the case of a corporation, has qualified for the small business deduction under

section 125 of the Income Tax Act of Canada in the 1977 or 1978 taxation year, estimated in 1978 for new businesses, and which has a taxable income, inclusive of rental and investment income, not in excess of $150,000 in that taxation year. In the case of an unincorporated business, licensed municipally or provincially as a business and having had a total taxable income from the business, inclusive of investment and rental income, not in excess of $150,000 in the 1977 or 1978 taxation year, estimated for 1978 for new business, a small business includes farmers and fishermen.

The revenue loss for the production machinery exemption is estimated to be $15 million in the 1978-79 year. A recent supreme court decision ruled that the sales tax of another province did not apply to catalogues. This decision would also apply to all promotional materials, samples, timetables, calendars and the like. As a substantial amount of revenue is involved, an amendment is proposed to protect British Columbia's tax to clearly state such promotional materials are subject to tax. This amendment is retroactive to January 1,1975.

The Social Services Tax Act has a

section stating that tax collected is trust funds. However, in attempting to recover such tax collections, the ministry has found the

Section 1s now not as strong as that needed or already in force in other statutes. Mr. Speaker, I do not believe there should be any doubt that when a person pays tax to a seller, that tax should be paid over to the government and should not be used to settle other debts or obligations of the seller. For this reason an amendment is proposed to reinforce the point that tax collections are trust funds and must be paid over to the government. Regular sellers of taxable items are required to register under the Social Services Tax Act and to collect and remit the tax.

Audits are made to ensure the tax is properly accounted for and sent to the government. Since the inception of the audit programme shortly after the Act came into effect in 1948, the seller has been assessed for any tax not collected when it should have been. Other provinces administering sales taxes have amended their Acts recently to provide for this auditing procedure. Accordingly an amendment is proposed to

[ Page 1385 ]

provide for a penalty equal to the tax against the seller who should have, but failed, to collect the tax as required under the Act. This amendment is to be effective April 1,1975, to cover the usual three-year audit period.

Mr. Speaker, I move the bill be read a second time.

MR. STUPICH : Mr. Speaker, the minister has dealt with the detail of the bill, item by item, and I think it's the only way to respond. Certainly in his opening remark he might well have been reading from Hansard of 1976, at the time when that same minister, speaking on behalf of the same government, imposed a 40 per cent increase in the rate of sales tax in the province.

At that time, in response to his first remark that this tax reduction would significantly reduce the cost of living, more than two years ago now, the members of the opposition - every one, I believe - joined in the argument at the time that the imposition of a 40 per cent increase in the rate of sales tax collection would significantly increase the cost of living.

It was particularly disastrous that the government chose that timing - at a very time when we had embarked nationally and with provincial government support - on an anti-inflation programme, and were attempting, as a nation, to restrict increases in the cost of living, and were hoping to decrease the rate of increase in the cost of living over a period of three years. At that very point in time the minister chose to increase the sales tax by some 40 per cent. He was told at the time that the effect of that would be to significantly increase the cost of living.

He's telling us now that this reduction will significantly reduce the cost of living. With that we certainly agree, and we'll support the legislation before us.

We think he should have paid some attention to us two years ago when we were telling him the very things that he is telling us now. He tells us today that the effect of the reduction in sales tax will be a downward pressure on prices. Well, that's the same thing as saying that it is going to decrease the cost of living. But again, Mr. Speaker, we have no quarrel with that statement. We agree that the increase in sales tax did exert an upward pressure on prices. We agree that a reduction in the rate of sales tax will have a downward pressure on prices.

This decrease has been in effect for over a month, and there already is evidence of some downward pressure, at least in the increase in prices, if not an prices themselves.

Reduce the cost of doing business - yes, it will do that as well, Mr. Speaker, although that is not our main concern. Our main concern is with the heavy increases in the cost of living that arose, not just because the sales tax was increased 40 per cent, but because of the many other measures that this government chose to embark upon in the spring of 1976. Of course, every one of these had an extreme downward pressure - not only the upward pressure on the cost of living, but a tremendous downward pressure on the economic circumstances in the province generally.

It was bad legislation at the time, Mr. Speaker. The proposal today in the legislation before us that will reduce this tax is not good legislation; it simply corrects one of the mistakes that was made by this government in the past. It's a mistake that they should not have made. They should have known what the effect of a 40 per cent increase in the sales tax would be, just as, with respect to one of the other user rates, when they increased the ferry rates by more than 100 per cent, they actually had a report before them that warned them of the effect of increasing the rates by 50 per cent.

Yet in spite of that, and in the face of that report, they proceeded to more than double the ferry rates.

In spite of their knowledge.... They must have had the knowledge; they mu t have had warnings from people in their own ministries. We've had countless warnings since then and countless appraisals since then. Every economist who has spoken on the subject at all, every research institute that has spoken on the subject, the heads of various retail chains - everybody - has been telling the government from the time they first proposed to increase the sales tax by 40 per cent the effect that it would have on our whole economic situation.

As I say, Mr. Speaker, the fact that they did it at a time when government should have been trying to keep the cost of living down, when the government should have been trying to encourage the economy rather than to discourage it, was the most reprehensible feature of the legislation at the time. Today they are at least admitting their mistake in part. At least today, contrary to the minister's budget speech, during which time he took full credit for this with no mention at all of the fact that the federal government was contributing to it, he is acknowledging in his remarks that the federal government is making up 50 per cent of the loss from this.

The reduction of the sales tax on certain production machinery - I can't see that having the effect that the government is hoping for,

[ Page 1386 ]

Mr. Speaker. It would seem to me that industry is going to acquire production machinery if there is a market for the goods that it is producing. If there is any increase in the market, it will be because of the consumer tax reduction, rather than because of any decrease in the cost of the machinery that it is using. Businessmen generally will find ways of acquiring plant, of acquiring machinery, if there is an increase in the market for their product. They depend upon increased markets, not upon cheaper costs for equipment or for plant generally. So I can't see that, in itself, having any effect on our economy.

I think that's perhaps a reward to people who have made contributions; to other programmes, rather than anything to do with the economy itself.

[Mr. Kerster in the chair.]

I certainly agree that the collection of the sales tax with respect to promotional material should be protected. That's one portion of the minister's remarks that I can wholeheartedly agree with. There's so much of that material coming through the mail and to think that they might get away without paying sales tax on it was very disturbing. I agree we should tighten up on that.

To reinforce the trust nature of tax collections is also something with which we can agree.

Mr. Speaker, I want some further information from the minister as to why the penalty should be 100 per cent. I'm not clear as to whether that applies in every case, or whether there is discretion on the part of the minister as to whether or not the 100 per cent penalty should apply. In the event of people deliberately not collecting it and there is no question at all that they have broken the law and had every intention of doing so, then 100 per cent penalty might be appropriate. But often, it would seem to me, there are circumstances whereby the accused person might not be guilty to the extent of a 100 per cent penalty of the tax.

Mr. Speaker, we support the legislation. It's correcting a deliberate mistake made by the government over two years ago. It's a mistake that was made for political reasons rather than for economic reasons - there's no doubt about it, Mr. Speaker. They had every opportunity to know that what they were doing was bad for B.C. They did it only because what they were doing would, they hoped, be bad for the New Democratic Party, and they weren't really concerned about the effect on the people of B.C. Now, some two years later, they're ready to recognize their mistake.

They're ready to make some correction in one of the very heavy imposts they levied against the people of this province in the hope that they would remember the election of December, 1975. We support the legislation, Mr. Speaker.

MR. COCKE : Mr. Speaker, the Minister of Finance reminds me of a surgeon who, having operated on an individual, leaves a pair of scissors in and the poor patient goes around for some time with the scissors inside him and he knows that there's a great discomfort. A year or two later, they do an X-ray on the patient and there they find a pair of scissors on the plate. So the surgeon operates again, takes out the scissors, the patient feels more comfortable and blesses the surgeon. Blesses, of all things, the surgeon for saving him all that discomfort that he caused in the first place.

This Minister of Finance is the kind of surgeon, however, who did it on purpose. He actually lost those scissors in the patient and said to his cronies: "You know what I did? I'm going to make that patient uncomfortable for the next little while, and then when I pull out those scissors the patient is going to feel oh so much better, and he's going to thank me and thank me and thank me."

Mr. Speaker, he did it at the wrong time. He did the wrong thing and if those great fighters for the Corporation Capital Tax Act would get up on this one and indicate that it didn't hurt small business, I would like them to do so now. Instead of that, the member for Burnaby is aver there talking to the leadership candidate about his chances at the next leadership convention for the Social Credit Party. He's just been promised a cabinet post.

. Mr. Speaker, we support the legislation, but we sure didn't support what occurred to precede this and to make this new Act necessary in this House.

HON. MR. WOLFE : Mr. Speaker, this has been a fantastic debate on a very important bill. Are you sure you don't want to speak to it too?

Just very briefly, Mr. Speaker, certainly when you raise sales tax you do increase the cost of living, and when you reduce sales tax you reduce the cost of living. It's just as simple as that and I think we can all agree that this is so.

There ums reference made that we did not refer to the federal participation in the recent budget. Mr. Speaker, at the time our budget was presented there had been no federal budget introduced. Until that actually was introduced, we could not really be sure what

[ Page

1387 ]

measures would be adopted. We had a pretty good idea, but until that budget

was introduced there was no knowledge of what these measures would be.

What is more important, Mr. Speaker, is the federal participation in this tax drop is really $115 million. We've mentioned that the tax drop will cost this province in one year $230 million. In other words, the federal participation is roughly one half of the cost of one year's tax drop. The federal proposal was based on a six-month only reduction, after which point in time it was proposed that any provincial tax would be restored to the original level. There's no such limitation on the introduction of this measure of the budget.

It's an unlimited reduction of two points in our sales tax, without any termination date on it. That's our commitment to the people of British Columbia, which we have done at the earliest opportunity, primarily as a result of the balanced budget policy, Mr. Speaker. It wasn't before such time as we could afford to do so that these measures were adopted by the province of British Columbia.

A reference was made to the measure on exempting production machinery as a gesture towards small business. Mr. Speaker, this is a venture into a policy which we really believe will generate an incentive for small business. We're estimating a cost of $15 million affecting the current years revenues.

At this early stage it appears to the Ministry of Finance that there is considerable interest in this proposal. I can only hope that for the sake of the government and all members of this House, this will succeed in generating expansion and incentive towards production of small business. With that, Mr. Speaker, without even commenting on the reference to the surgeon leaving scissors - such a despicable case was mentioned by the member opposite - I move second reading of Bill 8.

Motion approved.

Bill 8, Social Services Tax Amendment Act, 1978, read a second time and referred to Committee of the Whole House for consideration at the next sitting of the House after today.

HON. MR. WILLIAMS : Second reading of Bill 9, Mr. Speaker.

CIGARETTE AND TOBACCO TAX

AMENDMENT ACT, 1978

HON. MR. WOLFE : In order to stimulate the provincial economy and create

employment, the government has made substantial reductions in the social services

and corporation capital taxes this year, which have resulted in an estimated

total of $250 million in revenue loss. As one of the moves to offset somewhat

that decrease in revenue, this bill increases the rate of tax payable on the

purchase of cigarettes and tobacco products.

The effect of the increase is to raise the tax on a package of 25 cigarettes from 12 cents to 24 cents; I cent on cigars whose individual selling price is up to 9 cents, ranging up to 15 cents on cigars whose individual selling price is 50 cents or higher; and on tobacco by 2.5 cents for each one-half ounce of tobacco purchased. With the new tax increase British Columbia's tax is the same as the province of Saskatchewan, and is less than Ontario, Manitoba and Newfoundland. The increase was effective at midnight on April 10,1978, and is expected to yield an additional $24 million revenue in the 1978-1979 fiscal year. I move the bill be read a second time.

MS. BROWN : Mr. Speaker, we're going to support this piece of legislation. I would have hoped that it would have a deterrent effect on smokers, but I'm sure that the minister will assure us that it's not having any such effect.

HON. MR. VANDER ZALM : It has. I've quit -almost.

MS. BROWN : Oh, the Minister of Human Resources assures me that it's having a deterrent effect on smokers.

HON. MR. VANDER ZALM : I can't afford it.

MS. BROWN : I think we live in a very strange world when we have to use a product which we know is harmful as a means of raising money. We all know that smoking is harmful, yet we sell it and wee tax it as a means of raising finances for our coffers. That's an indication of how schizophrenic, 1 guess, we all are, and governments in particular.

I'm particularly saddened by the fact that all of the statistics show that the greatest increase in smoking is in that group in our society among young women. I feel very badly about the fact that at a time when we are fighting for our liberation, so many women are allowing themselves to be enslaved by this very pernicious habit. However, I recognize that this tax is going to be a burden on a number of people who can't afford it. They'll be asked to cough up additional [illegible] the very people who can ill afford it. Did you get

[ Page 1388 ]

that? Cough up! A number of people who can't afford it will be asked to do so, but these unpopular habits are very popular in terms of our taxation.

I would very much like to see, if it were possible, that this bill have an accompanying bill - one which would ban smoking in all public places and in all forms of public transportation. I think that if we had that kind of accompanying bill, it would be even more popular than this particular bill is.

At the same time I would also like to see an increase in the amount of funds set aside by the government for the education of the community at large to the evils of smoking, and the detrimental effect that it has on the health, not just of the smokers, but the rest of us who have to inhale the smoke that's in any room where we happen to be.

On a more personal note, I am particularly pleased by the tax on cigars, having been married for 23 years to a cigar smoker, and I'm certainly looking forward to some personal benefits from this particular....

Interjections.

MS. BROWN : He hasn't cut down one bit, but I'm hoping that a further increase on the tax on cigars might have some beneficial effects on my personal relationship with him.

MRS. JORDAN : Cut off his allowance, Rosemary.

MS. BROWN : The member for Okanagan suggests that I cut off his allowance, Mr. Speaker, and I'll certainly bring up that issue with him when we see each other again at the end of the week.

In any event, I am very pleas