1989 Legislative Session: 3rd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, MARCH 30, 1989

Afternoon Sitting

[ Page

5765 ]

CONTENTS

Routine Proceedings

Tabling Documents –– 5765

Estimates of Sums Required for the Service of the Province.

Hon. Mr. Couvelier –– 5765

Budget Address. Hon. Mr. Couvelier –– 5765

Mr. Clark

Introduction and first reading of bills. Hon. Mr. Couvelier –– 5775

Budget Measures Implementation Act, 1989 (Bill 5)

Home Owner Grant Increase Act, 1989 (Bill 6)

Income Tax Amendment Act, 1989 (Bill 7)

Land Tax Deferment Amendment Act, 1989 (Bill 8)

Motor Fuel Tax Amendment Act, 1989 (Bill 9)

Property Purchase Tax Amendment Act, 1989 (Bill 10)

Public Trustee Amendment Act, 1989 (Bill 11)

Social Service Tax Amendment Act, 1989 (Bill 12)

Tobacco Tax Amendment Act, 1989 (Bill 13)

The House met at 2:06 p.m.

Prayers.

MR. SPEAKER : We would normally have introductions, but on behalf of all the members, I'd like to welcome all our guests today.

Orders of the Day

HON. MR. COUVELIER :

Mr. Speaker, I move that the House at its next sitting do resolve

itself for this session into a committee to consider supply to be

granted to Her Majesty.

Motion approved.

Hon.

Mr. Couvelier tabled the comptroller-general's report of interim

financial statements for the 10-month period ending January 31, 1989.

ESTIMATES OF SUMS REQUIRED

FOR THE SERVICE OF THE PROVINCE

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

Estimates of Sums Required for the Service of the Province for the fiscal year

ending March 31, 1990, and a supplement to the estimates for the fiscal year

ending March 31, 1990, recommending the same to the Legislative Assembly.

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

Motion approved.

HON. MR. COUVELIER :

Mr. Speaker, I move, seconded by the hon. Minister of Social Services

and Housing (Hon. Mr. Richmond), that Mr. Speaker do now leave the

chair for the House to go into Committee of Supply.

Budget Address

HON. MR. COUVELIER :

Mr. Speaker, members of this House, I am honoured to present to the

people of British Columbia the third budget of this administration.

This is a budget that represents a commitment both to the broad

spectrum of economic and social programs that our citizens desire and

to the sound government management that makes it possible. This is a

fair budget. Mr. Speaker, this is a balanced budget.

You will see today that we not only continue to enhance social programs, but

we also focus on environmental protection and housing. Mr. Speaker, the budget

is balanced; it is balanced with sensitivity. We will also be strengthening

the economic fabric of the province by providing more resources for the development

of our transportation network.

Let

me first review the economic progress made during 1988 that allows for

this year's exceptional budget. You will recall the great uncertainty

in the world economy early last year. We wondered whether the large

stock market decline of October '87 would have a lasting effect on

economic activity. I cautiously forecast the B.C. economy would grow

2.7 percent. I now report the economy grew by 4 percent in 1988.

In 1988 employment was 4 percent higher than in 1987. Hon. members, that is 52,000 more jobs for British Columbians.

Other

indicators suggest that growth was broadly based. Retail sales were up

8.6 percent. Over 30,000 housing units were started. Exports increased

by 11 percent. Personal incomes rose by 7.6 percent. Manufacturing

shipments increased by 5.9 percent. The value of mineral production

rose by 9.7 percent. Foreign visitors to the province increased by 2.4

percent. Pulp and paper production increased by 2.6 percent. New

capital investment increased by 18.3 percent. More important, over the

last two years capital spending has spread to all regions of the

province.

For example, in Delta, an environmentally better

paper production plant; in Coquitlam, an electronic machine shop; in

Grand Forks, an improved insulation production facility and also an

expanded particle board plant; in Armstrong, an expanded food product

plant; in Hazelton, a new high technology sawmill; in Mission, a

value-added wood products plant and a movie production facility; in

Prince George, an environmentally better chemical plant; and in Oliver,

two new beverage plants aimed at the export market that the Premier has

previously described.

Projects such as the newsprint mills

in Gold River and Mackenzie, the pulp mills in Quesnel and Taylor, the

redevelopment of the Highland Valley Copper complex and the Songhees

development here in Victoria have provided good jobs for our

construction workers and will provide long-term employment growth

throughout the entire province.

[2:15]

Many were predicting a disastrous bargaining year in 1988. That did

not happen. Today I congratulate labour and business in the province

for their willingness to renew collective agreements last year without

excessive wage or concession demands.

Mr. Speaker, it is

in the nature of things that the government should be reminded from

time to time of its shortcomings. We trust, however, that even the most

cynical of critics will concede that we are managing the economy

effectively.

January 1 of this year marked the beginning of

the historic Canada-United States free trade agreement. We believe that

the free trade agreement is a key to British Columbia's business

competitiveness in the international marketplace. By providing access

to the huge United States market, we can refine the export capability

of our home-grown industry.

To take advantage of this

agreement, this government has entered into a Pacific Northwest

economic partnership agreement with the state of Washington,

[ Page 5766 ]

and

our Premier recently opened a new office in southern California to

promote our trade, investment and tourism interests with that state.

Reflecting

our international commitment, British Columbia was well represented at

a number of important world forums during the past year. My colleague,

the Minister of International Business and Immigration (Hon. J.

Jansen), and I had the pleasure of accompanying the Premier to Davos,

Switzerland, in January. British Columbia was one of only five

jurisdictions invited to make a presentation. Accompanying us to this

prestigious event were 18 provincial business people who were

instrumental in raising B.C.'s profile among the many world business

leaders who attended.

In September 1988 I had the honour of

being part of the delegation which traveled to Seoul, South Korea, to

represent greater Victoria when the bid was won for the 1994

Commonwealth Games. Being part of the winning delegation on foreign

soil was a proud experience for me as a Canadian and as a British

Columbian.

In October 1988 we hosted the renowned

Williamsburg Conference. That conference, which was held in Saanich,

brought together some of the best and brightest economic and foreign

policy experts from Canada, the United States, the Soviet Union and

South-East Asia to discuss issues affecting the Pacific basin. The

selection of our province as the site of this event is a recognition

that we are considered an important part of the Pacific Rim community.

Further

strengthening our relationship with Pacific Rim countries, a new

British Columbia trade development office was opened in Singapore last

year, complementing the eight existing trade offices.

The

legislative and administrative framework to establish Vancouver as an

international banking centre is now substantially in place. To date,

nine firms have been registered as international financial businesses

under this legislation. Three more are in process. Several others have

expressed strong interest in making application.

The House

should know that our captive insurance initiative has already

registered nine firms. There continues to be strong interest in the

world insurance industry. This increased level of expertise moving to

Vancouver further enhances our financial sector.

I am also

pleased to tell this House that preliminary discussions are underway

between the Vancouver and Hong Kong stock exchanges concerning the

prospects of trading linkages. Such a development could see a segment

of each market eventually being traded on a number of exchanges around

the Pacific Rim.

Our efforts to strengthen current ties

with the Pacific Rim have paid handsome dividends. During 1988, the

value of our exports to those countries was 45 percent higher than

during 1986.

Young people must learn more about our important trading partners.

These future leaders are benefiting from our Pacific Rim education

initiatives. About 1,000 students will be studying Japanese or Mandarin

in British Columbia schools this year. All students will benefit from

the Pacific Rim focus being added to the entire education curriculum.

These are important

initiatives, but government can only be a catalyst for change. We can

promote the province and provide responsible fiscal management. But the

private sector must take the lead, be competitive and aggressively use

our advantages if we are to maximize our potential in the world

marketplace.

It is satisfying to note the efforts of this

government, and the entrepreneurship of our residents are now being

recognized throughout Canada and the world. In its most recent report

on British Columbia, the Investment Dealers' Association of Canada

said: "Positive structural developments introduced by business and

government in the past few years will sustain economic growth in

British Columbia and avoid repetition of the boom-bust cycles that have

characterized the B.C. economy in the past."

In addition,

the recent increase in the province's credit rating by Dominion Bond

Rating Service further illustrates how others see us.

It is

this type of recognized leadership that has allowed all British

Columbians to benefit from this budget. The budget is balanced — by

acknowledged good management.

I would now like to outline

the economic forecast that underlies our fiscal plan for 1989-90. I

expect the B.C. economy will grow 3 percent in 1989. This decline from

4 percent growth in '88 partly reflects a widely expected moderation of

growth in the Canadian, American and Japanese economies this year. As

well, I expect the rate of increase in capital spending to moderate

slightly from its rapid growth of the last two years. Retail sales

growth, however, should remain strong, underpinned by growth in

personal income.

I expect that employment will increase 2.5

percent, representing 34,000 jobs. Although large numbers of people are

migrating to British Columbia because of our strong economy, I

anticipate that the unemployment rate will still decline to 9.7

percent. That would be the lowest unemployment rate since 1981.

Our

economic prospects, even in a cooling world economy, are bright. Our

recovery, however, requires prudence and caution in government actions

and those of labour and management. Recent wage settlements in the

public school sector are of concern to our government. Those

settlements must not of themselves become the floor for future

negotiations. At the same time, we are cognizant of the importance of

amicably completing the important contract negotiations with the health

care sector in the immediate months ahead. Our government pledges to

treat those in this most vital of service areas fairly and honourably.

Interest

rate increases, inflationary pressures and currency fluctuations are

also a source of concern and uncertainty for the economic outlook. Some

governments in Canada are adding to inflationary pressures through

unwise deficit spending, particularly where the economy is strong and

unemployment rates are low. If this deficit spending was curtailed,

inflation-

[ Page

5767 ]

ary pressures would diminish and the Bank of Canada could lower interest rates.

Hon.

members, we in this province are not contributing to this problem. We

were all encouraged to hear the Prime Minister reaffirm that deficit

reduction is a primary goal of his government. It is, however, the

problem of both the federal government and the provincial governments.

We all have to contribute to the solution. The provincial governments

must do their share, but not by accepting funding obligations

historically performed by the federal government. Our government will

strongly resist any attempt to merely shift the federal deficit to

provincial governments through cuts in transfer payments. Our taxpayers

have paid their fair share.

Mr. Speaker, we are responsible Canadians. Our budget is balanced in the national interest.

would now like to review the government's fiscal performance for '88-89

and our fiscal plan for '89-90. Because of unexpectedly strong economic

growth, total '88-89 revenue is now forecast at $12.102 billion, some

$538 million more than originally estimated. This revenue windfall will

be transferred to the budget stabilization fund. In addition, we have

received $302 million from privatization and asset sales during '88-89.

This entire amount will be placed in the privatization benefits fund.

Final expenditures for '88-89 are now expected to be slightly under the

original budget estimate. After the transfer of excess revenue to the

budget stabilization fund, the government will have an '88-89 general

fund deficit of $375 million, $20 million less than originally

anticipated.

Mr. Speaker, in setting the '89-90 expenditure

plan, I received the generous assistance of a caucus committee

consisting of Members of the Legislative Assembly from all parts of the

province. The committee met 17 times to review budget proposals. I

sincerely appreciate the dedication, hard work and valuable

contribution of each of those members. Using this committee's useful

advice on how to focus our expenditure plan, '89-90 general fund

expenditures have been budgeted at $13.487 billion.

It is

our government's view that essential social service expenditures must

be increased significantly in the coming year. Therefore we are

transferring $500 million from the budget stabilization fund to the

general fund. Even with this transfer, over $1 billion will remain in

the budget stabilization fund at the end of next year, an ample reserve

that will enable us to maintain social and other programs should an

economic downturn occur.

Including the transfer from the budget stabilization fund, I expect '89-90 general fund revenue to reach $13.487 billion.

Hon. members, this budget meets our commitment to taxpayers that budgets be

balanced over the business cycle. Deficits initially have a seductive appeal,

but soon the debt begins to grow and interest payments squeeze out expenditures

for important services. When this administration took office in 1986-87, the

provincial government's annual deficit was almost $1.2 billion. At that

time, I emphasized prudent fiscal management and our government's objectives

of eliminating the deficit and reducing the debt.

'87-88 we reduced the deficit to under $800 million. In '88-89 we will

reduce it to $375 million. In '89-90 the budget is balanced as we

promised two and one-half years ago. We have achieved our first

objective: eliminating the deficit. We are making progress on the

second objective: reducing the debt. During '88-89, we managed to

reduce government purpose debt by $96 million and will reduce it by a

further $250 million during the upcoming year.

This

progress has resulted in tangible benefits. This year's estimates

provide for a $69 million reduction in government interest payments.

This significant saving can be used to increase funding for important

social services. Mr. Speaker, the budget is balanced, and the people of

British Columbia benefit.

Our government not only believes

in prudent fiscal management but also in enhancing the social and

economic well-being of all of our residents, as you will see.

is folly to send young people into the future ill-prepared to meet the

challenges they will face. We must have an education system that

enables our children to realize their individual potential and win the

competitive marathon of the future. This isn't simply a matter of

writing a cheque and hoping to produce favourable results. Numerous

studies have proven that the level of government spending devoted to

education is not the sole determinant of student performance. A strong

education system also reflects the efforts of parents, teachers and, of

course, the students themselves.

[2:30]

Two years ago, this government established a Royal Commission on

Education to determine the appropriate direction for education and to

make recommendations on ways to improve quality and accountability in

the system. My colleague the Minister of Education (Hon. Mr. Brummet)

recently outlined the details of the government's important initiatives

in this critical area. For '89-90, we shall be providing $44 million in

new funding and redirecting $20 million in existing program funding to

start implementing the commission's recommendations.

This

budget includes a $149 million increase for a total of $1.6 billion in

provincial contributions to school districts' operating budgets and

debt service costs.

Grants to independent schools will rise

by over 17 percent to $57 million. Independent schools meeting specific

criteria will receive per-pupil grants equal to 50 percent of public

schools' per-pupil operating costs. Funding for special education in

independent schools will also increase.

Contributions to

teachers' pension funds will rise by 11 percent to $135 million as a

result of increases in the number of teachers and the rising salaries.

The

Pacific Rim initiatives program will also receive additional funding.

Designed to help establish closer cultural, educational and economic

links, this program will receive $5.3 million in '89-90.

[ Page 5768 ]

Overall,

the budget for the Ministry of Education will rise by $253 million in

the next fiscal year to over $2.2 billion, a 12.8 percent increase. The

government has also approved a $250 million capital plan for '89-90 for

schools to meet new space requirements and to provide for upgrading and

renovations.

Continuing our commitment to post-secondary

education, the '89-90 budget of the Ministry of Advanced Education and

Job Training will increase by 13.9 percent, or $121 million. Provincial

contributions to colleges' and institutes' operating budgets will

increase by $26 million to $318 million.

University

operating grants will increase by $30 million to $371 million. In

addition, $20 million will be provided in 1989-90 for the universities

matching program which encourages private sector donations.

believe our student financial assistance programs have given all

British Columbians a better opportunity to obtain higher education. In

1989-90, $51 million will assist 33,000 students in obtaining

post-secondary education.

Mr. Speaker, this program has

been a great success in bringing the students to our universities. Now

it is time to bring the universities closer to the students.

my colleague the Minister of Advanced Education and Job Training (Hon.

S. Hagen) recently announced, over $35 million will be provided in the

coming year to implement the provincial "Access for All" strategy for

post-secondary education. Included will be $8 million for the

establishment of full university degree programs at Kelowna, Kamloops

and Nanaimo. The degree programs will be offered by new partnerships

between the colleges and provincial universities.

Other

important access funding includes $19 million for enrolment growth at

universities, colleges, institutes and distance education, and $5

million to help increase adult literacy rates, expansion of

training for adult native people. We will also be spending over $3

million to improve regional program access as well as expanding

programs for remote communities.

Implementing the access

strategy will also require capital expenditures. The $99 million

post-secondary education capital budget includes $29 million for this

purpose.

Mr. Speaker, we have balanced the budget and provided new opportunities for our young people.

Hon. members, spending on health care will total $4.3 billion during 1989-90: an increase of $388 million.

Over

$178 million of the increase will go to hospital programs, which will

receive almost $2.1 billion next year. The Medical Services Commission,

which funds services provided by physicians and other health

practitioners, will receive an increase of $79 million to nearly $1.2

billion in the next fiscal year. An additional $18 million will be

provided for Pharmacare. Community and family health services will

receive over $28 million more next year, and continuing care services

will receive an additional $74 million.

In addition to the

increases in operating funding, $155 million in capital funding has

been provided to add almost 700 acute-, intermediate- and extended-care

beds to our extensive health care system.

This year we are

expanding Medical Services Plan premium assistance coverage for low

income groups at an additional cost of $16 million. In total, premium

assistance is expected to help 540,000 British Columbians next year.

All

should note that the budget for the Ministry of Health is one-third of

total provincial government expenditure, and the increase in funds

provided for health in 1989-90 exceeds the total budget of 16 of the 21

government ministries.

Mr. Speaker, I want to assure the

House that this government is committed to preserving and improving our

excellent health care system. Adequate funding is not the issue. Rather

we must refocus on sickness prevention techniques. We are becoming too

reliant on a health care system designed to treat sickness rather than

staying well.

We are starting to prove that we can contain costs and improve effectiveness.

The Victoria Health Project, which will have its first year of operation in

1989-90, is a good example of the innovation that will reduce cost pressures

by integrating and improving the coordination of services to seniors and, at

the same time, enhance services through innovations such as senior care centres.

An important ongoing initiative is the three-year $137 million alcohol and

drug program. It is designed to reduce the immense health and other social costs

created by substance abuse through prevention, education, treatment and research.

Another

example is the special support teams of health care professionals.

These allow elderly patients to be treated and spend their recovery

periods in the comfort and familiar surroundings of their homes,

thereby freeing acute care facilities for other patients.

Another

important new initiative in the coming year is the hospital innovation

incentive program. This provides $4 million in seed funding which

allows hospitals to make investments that will reduce operating costs.

Hospitals will pay back the funds by sharing future cost savings with

the province.

We have balanced the budget, and we are increasing health care spending by over $1 million per day.

During

1989-90 funding for the entire range of government programs directly

targeted to seniors will increase by $97 million. We recognize that

senior citizens have unique needs. Therefore next year two new

initiatives will be introduced to improve the sensitivity of government

programs to those needs.

A task force will be appointed

which will assist communities across the province to discuss issues

raised in a soon to-be-released discussion paper entitled "Towards a

Better Age: Strategies for Improving the Lives of Senior British

Columbians."

A seniors' advisory council will be appointed

to provide advice to the Minister Responsible for Seniors (Hon. Mr.

Dueck) on matters of importance to

[ Page 5769 ]

seniors. This council will be supported by an office for seniors in the Ministry of Health.

More

importantly, this government can assure seniors of stability in

government taxation and expenditure policies that allow them to plan

financial and family affairs.

Thanks to the province's

strong economy, I am pleased to report that the income assistance

caseload declined during 1988-89 for the third year in a row. I expect

a further decline next year. Nevertheless, the budget of the Ministry

of Social Services and Housing will be increased by $165 million, or

more than 11 percent, to over $1.6 billion next year. Shelter and

support allowances paid to income assistance recipients will be

increased on July 1 at a cost of $33 million. As announced by my

colleague the Minister of Social Services and Housing (Hon. Mr.

Richmond), we will also provide a $37-per-month increase in social

assistance payments to 13,000 single handicapped recipients, effective

April 1.

The budget for services to families and children

has been increased by 12.6 percent to $140 million to provide for an

increase in foster care rates and the intervention, assessment and

treatment of children with severe behavioural and emotional problems.

This funding increase includes increased day care subsidies for

low-income workers. An additional $20 million will be made available

for the care of the physically and mentally handicapped and to continue

the phasing-out of institutional care.

I turn now to a

problem that troubles me deeply. Despite strong economic growth, our

province still has an unacceptably high unemployment rate. Experts

suggest that the current unemployment rate has a structural component

which is not shrinking as the economy expands. This structural

unemployment seems to be caused by significant mismatches between the

types of skills offered by job-seekers and the types of skills required

by employers. It seems clear that at least part of the solution to this

problem involves retraining these unemployed individuals and better

matching their skills to available jobs.

While there are

programs already in place which deal with unemployment and job

training, we need to develop a more comprehensive and coordinated

attack on structural unemployment. What is required is a cooperative

strategy to deal with the problem. As announced in the Speech from the

Throne, developing such a strategy will be the priority of a task force

of members of the Legislative Assembly, businessmen and labour.

is essential that British Columbians have a justice system they can

count on, understand and access. We are addressing the recommendations

of the justice Reform Committee. Measures to be implemented include a

new small claims act, streamlined trial procedures and drafting of

legislation and forms in plain language.

An important part

of the system is access to legal services. In 1989-90 funds for legal

aid services will increase by more than 20 percent. We will be

providing additional funds for Crown counsel offices to ensure that the

needs of victims and witnesses are met during the justice process. The

Attorney-General (Hon. S.D. Smith) will also ensure that the victims of

crime are compensated for costs by perpetrators of the illegal acts.

This

budget provides S4 million for full implementation of the family

maintenance enforcement program. This program helps those with

maintenance orders obtain the support to which they are legally

entitled.

During 1989-90 the Ministry of Attorney-General's

capital budget includes $16 million for upgrading, expansion and

replacement of court facilities throughout the province. Approximately

$80 million will be spent by the Ministry of Solicitor-General on three

new correctional facilities. This will complete the government's

commitment to close the Oakalla prison by the end of next year.

have already mentioned some of the international activities undertaken

by the Premier and members of cabinet over the past year. Our economic

development efforts in the coming year will continue to focus on trade

development and the attraction of international investors.

Legislative

authority will be sought to establish the B.C. Trade Development

Corporation. This new corporation will help increase goods and service

exports from the province. An integral part of the Trade Development

Corporation's activities will be to help firms obtain export financing

and to help small and medium-sized business enter foreign markets for

the first time.

Funding will also be provided to expand the

province's trade offices in Ottawa and San Francisco. These offices

will provide advice to British Columbia business seeking federal

government contracts, help our local high technology companies doing

business in the Silicon Valley and assist firms exploring free trade

opportunities south of the border.

[2:45]

Mr. Speaker, the Canada-U.S. free trade agreement and recent rulings

against Canadian provincial liquor board practices, under the General

Agreement on Tariffs and Trade, will necessitate substantial

adjustments by producers in some of B.C.'s industries. The government

is complying with the provisions of the free trade agreement and the

GATT which require that we reduce markup differentials between B.C.

products and those from other countries.

I am pleased to

see steps being taken by our wine industry to enhance the quality of

our local wines through adoption of appellation and quality standards.

However, I recognize that some growers will still need help in

adjusting to the new rules. Accordingly, this budget provides $12

million in funding to complete the first phase of a $28 million

federal-provincial grape and wine sector adjustment assistance program.

Mr.

Speaker, a number of other important economic development initiatives

by various ministries will receive new or enhanced funding in '89-90.

This funding is designed to assist economic development in all regions

of the province.

[ Page 5770 ]

The

Ministry of Agriculture and Fisheries will receive $6.7 million for a

major expansion of agrifood industry development programs cost-shared

with the federal government.

Together with the Ministry of

Energy, Mines and Petroleum Resources, the Ministry of Regional

Development will establish a $5 million loan program for the building

of roads to access mineral resources. The Ministry of Forests will

continue to expand opportunities for small business firms to establish

themselves in the industry by increasing the volume of wood available

through competitive timber sales under the small business forest

enterprise program. This program encourages the production of

higher-valued solid wood products.

The Ministry of Regional

Development will receive $3.9 million in new funding for expansion of

community-based initiatives, such as the Community Organizations for

Economic Development program, which assists in local economic

development.

The Ministry of Regional Development will also

be expanding its regional seed capital program. Up to $48 million in

loan guarantees will be provided next year, compared to the previous

year's authorization of $16 million.

Mr. Speaker, there is

a need for business, labour and government to cooperate in all aspects

of economic development, including the search for new markets and new

ways of producing products. Often the spur to cooperative innovation is

common economic interest. Therefore I am pleased to announce that over

$1.5 million will be authorized for a new employee equity program,

which will provide incentives for employees to invest in their firms or

in worker-sponsored venture capital funds. My colleague the Minister of

Regional Development (Hon. Mr. Veitch) will be announcing the details

of this program shortly.

Mr. Speaker, we have balanced the

budget and we are further diversifying our economy. Privatization has

been a major success. Not only has it generated over $300 million for

the benefits fund but it has also provided opportunities for expansion.

A good example is the sale of the assets of the B.C. Steamship Company,

a Crown corporation which has provided the government with a legacy of

losses in its years of operating the Princess Marguerite and, more recently, the Vancouver Island Princess .

Upon the sale of these vessels to the private sector, the purchaser

announced an expansion of service between Victoria, Seattle and

Vancouver and the introduction of a new vessel into service. The new

owner will also be undertaking significant refit work in Victoria.

Other

successful privatization examples that will result in new jobs include

the sale of the mainland and Victoria gas distribution networks which,

with the new pipeline, opens up all of the Sunshine Coast and southern

Vancouver Island to a new, clean source of energy.

Over the

next year we will continue to examine other facets of the government's

activities to identify functions more appropriately located in the

private sector.

Mr. Speaker, British Columbians want a

strong economy and employment opportunities, but not at the expense of

their environment. That is why we set up the Task Force on the

Environment and the Economy in January 1989. We believe that

sustainable development is possible, and we look forward to receiving

the report of the task force at the end of May.

We must

think globally and act locally. There is a growing recognition that

developing solutions to environmental problems will require cooperation

among all jurisdictions. The importance of cooperation and coordination

was illustrated by the response to the oil spill off Washington State

which soiled our coastline. This incident made clear that environmental

efforts of various jurisdictions need to be better coordinated. To this

end, a task force on oil spills, co-chaired by B.C. and Washington

State, has been established.

Cooperation among

jurisdictions to deal with environmental disasters is one thing, but we

believe that environmental protection is everyone's responsibility.

Environmental protection requires a dedicated, cooperative approach by

all levels of government, industry, business and individuals. This

budget applies that principle. This budget provides an almost 90

percent increase, to nearly $200 million, for environment programs.

Included is new funding of $28 million from the lottery fund.

The

Vancouver Island pipeline will provide a clean and efficient source of

energy for homes and businesses on Vancouver Island, Howe Sound, the

Sechelt Peninsula and Powell River. The several pulp mills along the

pipeline's route will be provided with an alternative to heavy fuel

oil. Substitution of natural gas for fuel oil will reduce acid rain and

cut oil barge traffic, reducing the risk of oil spills in Georgia

Strait. I expect the economic impact of this project to be significant.

My colleague the Minister of Energy, Mines and Petroleum Resources

(Hon. Mr. Davis) estimates that the construction of the pipeline will

provide 700 person-years of employment.

One of the tools we

have to protect the environment is government regulation and monitoring

of industry. The government has recently taken a number of important

steps in this regard. My colleague the Minister of Environment (Hon.

Mr. Strachan) has announced that we will be restricting the use of

chlorofluorocarbons, which are depleting the earth's ozone layer, and

that industry's use of high-sulphur-content fuel, a major contributor

to acid rain, will no longer be allowed. My colleague will also be

providing an additional $7.4 million for monitoring of special wastes

and toxic chemicals and enforcement of existing environmental

legislation. The Ministry of Energy, Mines and Petroleum Resources will

be strengthening its mines inspection function to ensure that mines in

B.C. are developed and operated in a manner that is sensitive to

environmental concerns.

Our balanced and cooperative

approach to the environment requires incentives for industry, local

governments and individuals to work together. This budget includes

funding for the following initiatives.

[ Page 5771 ]

The

Ministry of Energy, Mines and Petroleum Resources will be spending $3.1

million this year on a new program to produce energy from waste

products, including municipal garbage, wood waste and possibly coal

waste. The province will be seeking matching federal funds for this

initiative.

The province has already announced major

financial support under the Go B.C. program for recycling initiatives

in Nanaimo and Surrey. We will also be assisting other municipalities

and regional districts wishing to establish recycling programs.

The

government will increase funding available to municipalities for water

and sewer infrastructure under the revenue-sharing fund and dedicate

money from the Lottery Fund to address other local waste management

priorities.

Establishment of centres of excellence in

environmental research and engineering in cooperation with the federal

government will be funded with grants from the Lottery Fund.

The

government will expand and upgrade toxic waste storage facilities and

work towards establishment of a provincial toxic waste disposal plant.

The

initiatives I have announced so far are targeted at environmental

cleanup. The government is also committed to preserving our

environment. The government will create one of the largest urban parks

in the world from the University Endowment Lands on Point Grey, a

legacy for all future generations to enjoy. There will also be a major

increase in spending to acquire and enhance fish and wildlife habitat

and funding made available to establish a new provincial fish hatchery.

Another

important initiative is the new environmental youth services program

which will be administered by the Minister of Environment. This program

will employ young people to perform non-hazardous work, such as

enhancing fish and wildlife habitats and improving facilities and

outdoor recreational opportunities in provincial parks.

Mr.

Speaker, polluters should pay for the damage they cause. This

government intends to significantly raise the fines it levies for

polluting the environment.

Forestry continues to be

important for the environment and economy of the province, and it is

essential that we renew this precious resource. Since 1981, one billion

seedlings have been planted, more than in the previous 50 years. The

government and the forest industry expect to accelerate plantings, and

over one billion seedlings will be planted over the next several years.

Reflecting our commitment to the renewal of the forest resource,

Ministry of Forests expenditures on silviculture will increase to over

$250 million next year.

Mr. Speaker, the budget is balanced — as we progress towards totally sustainable development.

important government role in the economic development of our province

has been the building of a transportation network. In a province as

geographically and climatically diverse as ours, that has been an

expensive but vital task. As members will recall, the government

recently announced a unique transportation planning process, which we

have called "Freedom to Move." Flowing from this announcement, local

committees are at work in each of the eight development regions

collecting ideas from the public and community organizations and

developing regional plans for improving the transportation system over

the next decade.

In the meantime, there is a great deal of

work that can begin. As the Premier announced in January, we are

accelerating the completion date of the Okanagan connector to the fall

of 1990. Originally it was planned to be completed a year later.

The

Vancouver Island Highway is not forgotten. This project will provide

better transportation linkages among Vancouver Island communities for

both tourism and economic development. Over $30 million will be spent

next year on this project.

Other projects will be announced

shortly by my colleague the Minister of Transportation and Highways

(Hon. Mr. Vant). Overall, highways construction capital funding in

1989-90 will be more than twice the '88-89 level.

Although

new construction is required in some areas, it is important and cost

effective to maintain and enhance our existing highways. Accordingly,

this year we will be funding a 50 percent increase in the Ministry of

Transportation and Highways budget for highway rehabilitation.

The

activities I have just outlined and a number of smaller highway

projects will not only provide a better transportation system but they

will also stimulate employment opportunities and give a boost to local

economies in all regions of the province.

[3:00]

The significance of these commitments to areas throughout British

Columbia can be seen in the fact that we are providing over $1 billion

for the Ministry of Transportation and Highways in this budget.

colleague has also examined the B.C. ferry fleet to ensure that it is

responsive to the growing needs of local service and tourism. Therefore

the government has approved a ten-year, $550 million capital

maintenance and expansion program for the B.C. Ferry Corporation. This

program includes construction of two super ferries and two smaller

ferries by 1994 at an estimated cost of $372 million, improvements of

all major terminal facilities and reorganization of the Gulf Islands

ferry service.

In order to finance this program, our

government will continue to provide the annual operating subsidy while

allowing the B.C. Ferry Corporation to raise its fares in line with

inflation.

The B.C. Ferry Corporation estimates that the

five-year shipbuilding phase of the program alone will generate almost

3,900 person-years of employment and many more benefits from purchases

of materials and equipment.

As a former mayor of Saanich, I

am well aware of the importance of local governments in this province.

Therefore I am very proud that our government is able to share its

buoyant tax revenues with municipal governments in all regions of the

province. This year we will be transferring $286 million to

municipalities under the municipal revenue-sharing program. For

[ Page 5772 ]

the

first time, the municipal revenue-sharing program will also transfer

funds to assist with the cost of policing and community health services

in those municipalities which until now have covered the cost of these

services themselves.

In addition to the lottery funding for

environmental projects, which I announced earlier, the municipal

revenue-sharing transfer includes $35 million in conditional grants for

water and sewer projects, a $20 million increase.

At the

Union of B.C. Municipalities' annual meeting in Whistler, the Premier

introduced the three-year, $162 million Go B.C. program. Funding comes

from provincial lottery revenues and will provide up to one-third of

the cost of worthwhile community "growth and opportunity" capital

projects, up to a project maximum of $1 million.

During

'89-90, $50 million will be set aside for Go B.C. projects ranging from

a child development centre in the Comox Valley, to a heritage museum in

Burnaby, to a swimming pool in Castlegar, to instructional space at the

Art Gallery of Greater Victoria. The Royal British Columbia Museum here

in Victoria will receive $1 million in '89-90 to upgrade its physical

plant and begin computerizing its catalogue system.

Mr.

Speaker, we have balanced the budget, and we have done so without tax

increases. We are managing the public's money with care.

The

strong growth of the provincial economy, combined with access to

low-cost power over the next decade and revenues from export sales,

will result in substantial increases in the earnings of the B.C. Hydro

and Power Authority. As a result, the corporation will return to its

shareholder, the provincial government, an estimated $102 million of

surplus net income next year. B.C. Hydro will continue to pay a

dividend to the province in future years, related to its surplus net

income. Further, B.C. Hydro is expected to limit rate increases to less

than inflation.

Mr. Speaker, I am pleased that

extensive consultation between the financial services industry and the

government will result in the tabling of a major piece of legislation

in this legislative session concerning the regulation of financial

institutions. The Financial Institutions Act will provide an up-to-date

regulatory framework for credit unions, trust companies and insurance

companies operating in British Columbia.

Another

significant piece of legislation I intend to introduce this session is

the Personal Property Security Act. This legislation will provide for

the establishment of a consolidated personal property security registry

in our province. This is an important initiative which will provide a

comprehensive and modern regulatory structure for secured loan and

credit transactions in the province. It will remove some existing

impediments to investment and, in a general way, enhance the

environment for business activity in British Columbia. It will also

allow us to provide better and faster service to the public at a lower

average cost to the taxpayer.

I am now pleased to provide

details of a set of major initiatives combined in a provincial housing

action plan, a plan which addresses the issues of the affordability of

housing, property taxes and the supply of rental accommodation.

Our

buoyant and growing economy has resulted in significant in-migration to

the province, with the lower mainland and Victoria areas being the

primary destinations. This has resulted in low vacancy rates for rental

accommodation, rising rents and generally higher property values. The

free market's neighbourhood preferences have resulted in considerable

tax shifts within jurisdictions, which are also of concern. Major

government intervention to reverse market-determined trends has been

shown to be harmful whenever it has been attempted in the past. There

are some actions, however, that government can take: we can relieve the

hardship caused by rapid changes in the housing market; we can assist

those unable to afford market-priced housing; and, most important, we

can help increase the supply of housing. We will do all three.

This

government will be spending almost $900 million on housing-related and

mobile home programs in the coming fiscal year. In order to facilitate

the implementation of the provincial housing action plan, we propose to

present legislation authorizing the formation of a new Crown

corporation, the B.C. Housing Corporation. The objective of this

corporation will be to increase private sector and government

cooperation in the housing market and to assume the functions of the

B.C. Housing Management Commission and the Provincial Rental Housing

Corporation.

Most homeowners are facing school property tax

increases this year that are larger than usual, partly as a result of

higher-than-anticipated wage increases. To reduce the impact of these

increases, we are increasing the basic homeowner grant for the 1989

taxation year from $380 to $430. For seniors, the handicapped and

others entitled to the supplementary grant, the homeowner grant for the

1989 taxation year will rise from $630 to $700. Over 640,000 homeowners

are expected to receive this increased grant, which should ensure that,

on a provincial average, property taxes will rise by less than the rate

of inflation. Indeed, many homeowners will experience a decline in

their net property taxes.

Of particular benefit to seniors

is an expansion of our land tax deferment program. The eligible age for

participation in this program will be lowered from 65 to 60 years,

effective January 1. Those 60 years and older and the handicapped can

have their annual property taxes paid by the provincial government if

they so choose. The deferred taxes and interest, at a lower-than-market

rate, are registered as a charge against the property, to be recovered

when the property is eventually sold or transferred.

will also provide start-up grants for non-profit societies undertaking

to construct rental housing for seniors. Experience has shown that a

small amount of assistance to those societies in the initial phase can

be extremely useful.

Our provincial housing action plan provides assistance to home-buyers. Today I am announcing

[ Page 5773 ]

property

purchase tax relief which will apply to buyers of modestly priced

housing for whom a registered mortgage or other financing exceeds 75

percent of the purchase price of the home. Relief will be on a sliding

scale to allow for greater tax reductions for those with low down

payments. For example, a one-year resident buying a $100,000 home with

a 10 percent down payment will receive property purchase tax relief of

$600, equal to 60 percent of the tax otherwise payable. Relief will be

limited to property purchases not exceeding $150,000. This relief

measure will be effective for property transfers registered after

today, and can be claimed for a period of one year following

registration of the transfer. This measure is expected to reduce

property purchase tax revenue by almost $13 million next year and will

benefit an estimated 25,000 home-buyers, not just the first-time buyer.

Increased

assistance will also be provided homebuyers by changes to the British

Columbia second mortgage program. The eligible house price limit will

be raised from $85,000 to $100,000, and the maximum assistance

available will increase from $10,000 to $12,000. To facilitate delivery

of the program by the private sector, second mortgages will be replaced

by loan guarantees. The guarantees will be attached to first mortgages

that are traditionally issued by financial institutions.

Our

provincial housing action plan considers renters. The Ministry of

Social Services and Housing will add over 1,800 units to the over

50,000 social housing units in the province. These units will be

cost-shared with the federal government. My colleague the Minister of

Social Services and Housing (Hon. Mr. Richmond) will also request of

his federal counterpart an increase in the number of housing units to

be cost-shared.

As I announced earlier, those on income

assistance will benefit from an increase in the shelter allowance this

year. Eligible rent levels under the Shelter Aid for Elderly Renters

program will also be increased, which will provide assistance to an

additional 5,700 seniors and increase support to those already in the

program. This improvement is expected to more than double the cost of

SAFER to almost $15 million.

To assist other low-income

British Columbians who rent accommodation, the government will

introduce a renter's tax reduction this year that will be available to

all renters who pay provincial income tax. The tax reduction will

amount to $200 for every person in a family and will be phased out as

income rises. For a family of four with an income of $20,000, the tax

reduction will normally amount to $500. When the federal government

agrees to administer this measure, British Columbia residents will be

able to claim the tax reduction when they file their '89 tax returns

early next year. Because this measure is intended to reduce hardship

during this period of rising rents, it will be phased out over the

subsequent four years.

The supply of rental housing,

especially in greater Victoria and greater Vancouver, is a matter for

concern. The essential ingredient to increasing rental housing supply

is cooperation among the players involved. Municipal governments have a

major role to play through the regulation of new developments;

developers must play a role by building affordable housing; and the

provincial government can play a role by providing land suitable for

development and some financial assistance.

Municipalities

and the federal government are also major landowners in greater

Vancouver and Victoria. We shall ask them to participate by providing

land for rental housing. Accordingly, the provincial government is

appointing a task force for this purpose, with a wide mandate to pursue

cooperation among all the potential participants.

[3:15]

For our part, we have already identified provincial government and

Crown-owned land in greater Victoria and greater Vancouver sufficient

to provide many new units of rental housing over the next two or three

years, and I challenge the municipal governments and developers to work

with us in ensuring those units are built. Our target is an additional

4,000 units of rental housing to be started over the next 18 months.

Our

proposal is to sell or lease this Crown land, when zoned, on an

open-ender basis to developers who agree to build rental housing. I

also propose to exclude the sale of this land from the property

purchase tax. Those municipalities which participate in this program by

providing the appropriate density requirements that facilitate an early

start on this initiative will share in up to one-third of the proceeds

from the sale or lease of those Crown lands and any other provincial

government land used for these developments.

We are also

introducing a municipal incentive grants program to encourage

municipalities to approve rental housing developments. The amount of

the grant, which will be available to all municipalities, will vary

with the extent of rezoning required, but is expected to be up to

$2,500 per unit. My colleagues the Minister of Social Services and

Housing (Hon. Mr. Richmond), the Minister of Municipal Affairs,

Recreation and Culture (Hon. Mrs. Johnston) and the Minister

Responsible for Crown Lands (Hon. Mr. Dirks) have the major

responsibilities for this initiative and will be announcing details in

the near future.

Rising interest rates have also caused

developers' costs to increase. To reduce this added burden, the

government will provide interest subsidies to developers who are

willing to make investments in affordable rental housing with suitable

commitments on the level of rents. The proposed Crown corporation will

examine the feasibility of establishing a rental housing development

fund for this purpose.

The corporation will also work with

my colleague the Minister of International Business and Immigration

(Hon. J. Jansen) to explore the possibility of attracting investments

by new Canadians in rental housing.

[ Page 5774 ]

We have balanced the budget and brought forward the most sweeping and innovative housing program ever presented to this House.

Mr.

Speaker, I have had the privilege of presenting three budgets to this

Legislative Assembly, and I believe that each has served as a

building-block on the other. In these three budgets this government has

delivered substantially more funding for a range of services required

by our citizens.

Over the three years we have increased

Ministry of Health funding by almost $1 billion. Over three years we

have increased primary, secondary and post-secondary education funding

by over $700 million. We have increased Ministry of Social Services and

Housing funding by over $250 million, even though the number of people

in need on income assistance has declined.

In the last

three years we have delivered economic development policies which have

generated significant economic growth for the province. That growth

has, in turn, helped fund our social programs. Natural resource levies

paid by business have increased from approximately $650 million in

1986-87 to over $1.2 billion in 1989-90. Corporation income tax

payments have risen from less than $300 million to almost $750 million

during the same period, despite the fact that we reduced the rate.

this budget we have addressed the continuing need for environmental

protection and housing. In this budget we are providing more resources

to equip our children with education and skills for tomorrow. In this

budget we have significantly increased our funding for highways and our

contributions to municipalities. In this budget we have provided more

support than ever for our health care system.

Our taxes

remain fair compared to other provinces, with our personal income tax

rates and social service tax rates being the second-lowest in the

country.

Starting from a deficit of $1.2 billion in 1986-87, we have delivered the first balanced budget in a decade.

Mr.

Speaker, our economy is strong, our budget is balanced and we have the

fiscal resources to weather any squalls. I trust every British

Columbian is as proud as I am this day.

MR. CLARK :

At the outset I would like to thank the Minister of Finance and

Corporate Relations for providing us with an advance copy of the

budget. As is the custom, I will be adjourning shortly. My major

remarks will be made tomorrow. I would like to make some very brief

remarks.

This budget — as the minister himself said just a

minute ago — must be viewed in the context of the last few years of

Social Credit administration. In the last two years we have seen tax

increases of $500 million on middle-income people. We have seen deep

cuts in virtually every government program over the last few years of

Social Credit. Over 10 percent of the civil service left through early

retirement last year alone as a result of the policies of this

government, and they have not been replaced.

Over the past

few years we have seen a reduction in Environment staff of 20 percent.

We have seen a dismal record of enforcement. We have seen a Premier

visit Alaska but not visit the west coast of Vancouver Island. Now the

government expects British Columbians to believe that the environment

is a priority for this administration.

In education there

have been per capita funding cuts in the last five years of 6 percent

in real terms. Now the government expects British Columbians to believe

that education is its number one priority. In universities we have seen

8,000 to 10,000 students turned away last year due to the lack of

space. We need 15,000 to 20,000 post-secondary spaces to bring us up to

the national average. We have seen the elimination of a university in

the interior — in Nelson — in recent years. Today the government

expects us to believe that post-secondary education is a priority.

housing we have seen neglect, poor planning and underfunding by

successive Social Credit administrations, which has created in many

respects the crisis we now have in the lower mainland. Now the

government expects us to believe that housing is a priority.

have a government without a plan and without a vision. It is erratic

and unstable. There have been wild policy swings from one year to the

next, from cuts one year to promises of spending increases now. What we

really have with Social Credit is a kind of yo-yo economics.

is clearly a desperate attempt to buy back favour with the electorate.

The problem is that they have no credibility. That is why this budget

will fail to be the salvation that they think it might.

Tomorrow

I will deal in more detail with substantive criticisms and concerns I

have about the erratic policy swings that we have seen with this

administration. As well, I will deal with what can only be described as

fictional and exaggerated revenue projections contained in this budget.

I move adjournment of the debate until the next sitting of the House.

Motion approved.

MR. ROSE :

Mr. Speaker, I rise on a point of order concerning the accuracy of a

document tabled by the Minister of Finance earlier today. When our

researcher phoned and asked for copies of the financial statements of

revenue and expenditures, he was told that they were withdrawn because

of an error in printing and wouldn't be available until next week. I

would like to ask the Minister of Finance whether this is the copy with

the misprint or the accurate one.

HON. MR. COUVELIER :

To the best of my knowledge, it's the accurate one. The misprint, as I

understand it, was a one-figure typo which was caught after printing.

But I must commend the staff: when you look at the thousands and

thousands of

[ Page 5775 ]

figures that are reproduced in the document, a typo of one figure strikes me as an outstanding record.

Introduction of Bills

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

bills intituled: Budget Measures Implementation Act, 1989; Home Owner Grant

Increase Act, 1989; Income Tax Amendment Act, 1989; Land Tax Deferment Amendment

Act, 1989; Motor Fuel Tax Amendment Act, 1989; Property Purchase Tax Amendment

Act, 1989; Public Trustee Amendment Act, 1989; Social Service Tax Amendment

Act, 1989; Tobacco Tax Amendment Act, 1989.

HON. MR. COUVELIER :

Mr. Speaker, these nine bills implement the budget measures that I

announced earlier today. In moving first reading of each of these

bills, I will state their primary purpose.

Bill 5, Budget

Measures Implementation Act, 1989, establishes a social housing special

account. It provides for a special payment from the budget

stabilization fund to the general fund, converts several special funds

to special accounts under the general fund and clarifies several

administrative measures.

Bill 6, Home Owner Grant Increase Act, 1989, increases homeowner grants for 1989.

Bill 7, Income Tax Amendment Act, 1989, introduces a renter's tax reduction for low-income renters.

Bill 8, Land Tax Deferment Amendment Act, 1989, lowers the age at which homeowners can defer property taxes to 60 from 65.

Bill

9, Motor Fuel Tax Amendment Act, 1989, extends the use of coloured fuel

in the mining industry and makes a series of administrative changes.

Bill

10, Property Purchase Tax Amendment Act, 1989, introduces property

purchase tax relief for purchasers requiring high-ratio financing and

enacts a series of administrative changes.

Bill 11, Public Trustee Amendment Act, 1989, establishes a special account for the office of the public trustee.

Bill

12, Social Service Tax Amendment Act, 1989, provides for the exemption

from tax of magnetite used in the coal industry and makes a series of

administrative changes.

Bill 13, Tobacco Tax Amendment Act, 1989, increases the tax rate on loose tobacco and makes a number of administrative changes.

I now move first reading.

Motion approved.

HON. MR. COUVELIER :

Mr. Speaker, I move that the said bills be placed on orders of the day

for second reading at the next sitting of the House after today.

Motion approved.

HON. MR. RICHMOND :

I rise to thank the minister for his budget and to remind the House

that we will sit at the regular time tomorrow, 10 a.m., when we will

continue with the address in reply with the second member for Vancouver

East (Mr. Clark). I'm sure we're all awaiting that with bated breath.

By prior arrangement with my counterpart in the opposition, there will be no private members' statements tomorrow.

Hon. Mr. Richmond moved adjournment of the House.

Motion approved.

The House adjourned at 3:30 p.m.

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