1982 Legislative Session: 4th Session, 32nd Parliament

Hansard

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 18, 1982

Afternoon Sitting

[ Page

7645 ]

CONTENTS

Routine Proceedings

Securities Act (Bill 44). Hon. Mr. Hyndman

Introduction and first reading –– 7645

Oral Questions

Arbitration system. Ms. Sanford –– 7645

Northeast coal master agreement. Ms. Sanford –– 7645

Student employment program. Ms. Sanford –– 7646

Funding for rape relief centres. Ms. Brown –– 7646

Price of beer. Mr. Levi –– 7646

Tobacco Tax Amendment Act, 1982 (Bill 29). Committee stage. (Hon. Mr. Curtis)

section 9 –– 7647

Mr. Lauk

Mr. Leggatt

Division

Third reading –– 7651

Corporation Capital Tax (Bank Rate Increase) Amendment Act, 1982 (Bill 38).

Second reading. (Hon. Mr. Curtis)

Hon. Mr. Curtis –– 7651

Mr. Stupich –– 7653

Hon. Mr. Curtis –– 7654

Division –– 7654

Financial Administration Amendment Act, 1982 (Bill 24). Second reading.

(Hon. Mr. Curtis)

Hon. Mr. Curtis –– 7654

Mr. Stupich –– 7655

Mr. Howard –– 7655

Mrs. Wallace –– 7656

Hon. Mr. Curtis –– 7657

Division –– 7657

Compensation Stabilization Act (Bill 28). Committee stage. (Hon. Mr. Curtis)

section 9 –– 7658

Mr. Howard

Mrs. Wallace

Mr. Hanson

TUESDAY, MAY 18, 1982

The House met at 2 p.m.

Prayers.

HON. MRS. McCARTHY: We have two visitors from Trail in the House today,

and I would ask all members to welcome Mr. and Mrs. Marc Marcolin.

MRS. WALLACE: In the gallery today we have a group of 35 grade 11 and

12 students from Queen Margaret's School in Duncan. They are accompanied

by their teacher, Mrs. Beddows. I would like the House to join me in welcoming

them.

HON. MR. WOLFE:

This is a very special day. It has been set aside by the United Nations

as International Museums Day throughout the world. British Columbians

can take a great deal of pride in their community museums and the staff

and volunteers who operate them. In the gallery today as part of

Museums Day celebrations are: Anne Thompson, executive director of the

B.C. Museums Association; Yorke Edwards, director of our own Provincial

Museum; Jim Bryden, past president of the Friends of the Provincial

Museum; Pat Bovey of the Victoria Art Gallery; Diane Kelly, curator of

the Matsqui-Sumas-Abbotsford Museum; and Tammy Sturwold, whose letter

to a museum was turned into the official poster commemorating this

special day. I would ask the House to welcome these guests and invite

members to visit the Provincial Museum's open house.

MR. LEA: I'd ask the members of the Legislature to join with me

in welcoming five visitors from Prince George who are in your gallery, Mr. Speaker:

Tim Bulmer, Carmen Rose, Donna Sacuta, Cliff Flint and Sherry Flint.

HON. MR.

GARDOM: We have in the gallery today Mr. David Wilson, who is executive director

of the Alumni Society of the Youth Parliament of British Columbia. He's

come here to watch the legislators in action and I'm sure they will act

accordingly and wish him the very best.

MR. MITCHELL: I would like the House

to join with me today in welcoming two guests from my riding. The most senior

one, who has a long history in the NDP-CCF movement in his area, was more effective

as a bagman for my election than I was as his campaign manager on two occasions:

Mr. Geoff Mitchell — no relation but we share the same philosophy. He is accompanied

by his niece, Mrs. Francis Gordon, from Milton Mills, Dorset, England. I would

like the House to welcome them both.

MR. REE: In the House today I am privileged

to have visiting us 50 constituents, senior citizens from North Vancouver. They

are members from Silver Harbour Centre on the North Shore, and the Kiwanis Towers.

Chaperoning these young people: are Shirley McFarlane, who is a great supporter

and a member of our executive on the North Shore; Hal Bray, who is a director

of my executive; my constituency secretary, Marilyn Ross; and last but not least,

my lovely wife, Cheri. I'd ask the House to welcome them all.

MR. RITCHIE: Mr. Speaker, it's my pleasure today to

welcome two constituents from Central Fraser Valley with whom I had an

enjoyable lunch today: Mayor George Ferguson and Alderman Vic Wiebe of

Abbotsford.

MR. STRACHAN: In the House today, and in

the precincts, are delegates from the Amalgamated Construction

Association of British Columbia. Would the House please welcome Don

Vandervoort, Harry Alexander, Peter Sorenson, Lorne Jackson and Len

Robinson.

Introduction of Bills

SECURITIES ACT

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

a bill intituled Securities Act.

Bill

44 introduced, read a first time and ordered to be placed on orders of

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

Oral Questions

ARBITRATION SYSTEM

MS. SANFORD:

Mr. Speaker, I have a question for the Minister of Labour. Has the

minister determined when he will officially be notified of the changes

in the arbitration system as announced by Norman Spector?

HON. MR. HEINRICH: Mr. Speaker, I'm not aware of any proposed changes to the arbitration system in British Columbia whatsoever.

MS. SANFORD:

I assume then, that he has not yet been notified, because we have been

informed through Norman Spector that in fact we can anticipate changes.

I assume that the minister has not been notified yet.

NORTHEAST COAL AGREEMENT

view of the minister's stated interest in manpower training, has he now

been allowed to see the master agreement on the northeast coal project?

HON. MR. HEINRICH:

I would suggest that the member direct her questions to the minister

responsible for that particular contract.A poll that claims the BC

Liberals are ahead on Vancouver Island is not a poll asking to be taken

seriously.

MS. SANFORD: Mr. Speaker, this is unbelievable. He

is he Minister of Labour, and his professed interest is in manpower

training. One issue that the minister has talked about over and over

again is his professed interest in manpower training; and he hasn't

even seen the agreement? Has the minister seen the agreement?

HON. MR. HEINRICH:

As advised by our colleague the Minister of Industry and Small Business

Development (Hon. Mr. Phillips), that agreement will be brought to the

House in due course.

MS. SANFORD: Mr. Speaker, the minister did not answer my question. Has the minister seen the agreement?

[ Page 7646 ]

MR. SPEAKER: The minister has the question. Further questions?

MS. SANFORD: Was the minister consulted on the provisions in the northeast coal agreement with respect to manpower training?

HON. MR. HEINRICH:

Mr. Speaker, I'm not really in the habit of discussing in the House

those discussions which I have with my colleagues relating to a number

of matters. I repeat: that particular agreement will be filed in the

House in due course, as the House was advised by the Minister of

Industry and Small Business Development.

MS. SANFORD:

The minister refuses to answer the question as to whether or not he has

seen the agreement. There's nothing confidential in whether or not he's

seen the agreement. If he refuses to answer that question, I must

assume that he has not seen the agreement.

MR. SPEAKER: Order, please. This is question period, not debate.

STUDENT EMPLOYMENT PROGRAM

MS. SANFORD:

I have a further question. On April 28, in one of a series of seven

news releases announcing the same program, the minister announced some

details of the student employment program. Can the minister advise why

the level of assistance has been cut this year from last for major

elements of that program?

HON. MR. HEINRICH: Mr. Speaker, I'm not quite sure what area the member is referring to.

MS. SANFORD:

The level of assistance for the student employment program in certain

sectors has been cut — for instance, tourism, museum work, farm labour

and university jobs. Does that clarify it for the minister? Could he

please advise why they've been cut?

HON. MR. HEINRICH:

I'm glad that the member has now clarified the area. First of all,

there was no cutting whatsoever. The number of jobs available under the

program of approximately $10 million has now gone from roughly 7,200 to

approximately 8,000. In each area of both the farm and business sector

the amount made available was equivalent to or in excess of last year.

With respect to tourism, additional funds were made available in excess

of last year. With respect to colleges and universities, we placed a

ceiling of $1,200 on the amount available to each student. We felt that

it was in the interest of those who wish to participate in the program

that the government would not underwrite the full cost to it.

might further add that the full cost paid last year was running

anywhere between $2,200 and $2,300; this year we put a cap on it of

$1,200. I can further advise the member that correspondence which I

have received from two universities, as well as from the faculty of

medicine, would indicate full support for the program. I certainly

haven't had any negative comment whatsoever as a result of the press

release of those who have been participating.

I might

further add to this that in a period of four days there were just under

1,000 applications. I think the program is moving fairly well.

MS. SANFORD:

Again the minister did not answer my question. I talked about the level

of assistance. In the jobs under tourism, for instance, last year they

paid $2, 236. This year they are paying $2,000 or a decrease of $236

per job, which is a decrease of 11 percent. Why has the level of

assistance been decreased?

HON. MR. HEINRICH: The objective, in view of that particular program, was to attempt to make more jobs available to those who were interested.

MR. LEA: You should have cut it to a dollar each to create a lot of jobs.

HON. MR. HEINRICH:

What we feel on this side of the House is that not a total handout

totally, but perhaps a little help from the students and a little help

from the employers who are hiring the students and the chambers of

commerce who are helping them.... What's wrong with that?

FUNDING FOR RAPE RELIEF CENTRES

MS. BROWN:

My question is to the Attorney-General. According to the senior project

officer in the Attorney-General's department, 22,000 women in British

Columbia were raped in the 12 months of 1981. If we accept these

statistics, that would mean that something in the neighbourhood of

4,761 women have been raped in British Columbia since the ministry cut

off its funds to rape crisis centres 80 days ago. Those negotiations

and funds have been cut off. Obviously rape has not been cut off. How

much longer are the women of British Columbia going to have to suffer

rape and violent assault before the minister decides to reinstate

funding to this very vital community resource?

HON. MR. WILLIAMS:

The funding has not been cut off for this vital community resource. The

money made available earlier to an organization which was conducting

rape centres throughout the province is available to other community

organizations. A number of them have applied for the purposes of being

approved for the operation of rape relief centres, and I hope to make

an announcement very shortly which will indicate precisely which groups

have qualified.

MS. BROWN: Can the Attorney-General tell me how many groups have received any of that funding in the last 80 days?

HON. MR. WILLIAMS:

Mr. Speaker, I can't give details of that nature, but I'd be happy to

take the question as notice and bring the answer back to the member

immediately.

PRICE OF BEER

MR. LEVI: This is a question to the wine-drinking minister who waters the workers' beer, the Minister of Consumer and Corporate Affairs.

MR. SPEAKER: Order, please. I'm sure the member has a question.

[ Page 7647 ]

MR. LEVI: Yes, he does.

Despite

the temporary reduction in the price of some canned beer, B.C.

consumers are going to be slammed again in June with the identical

price increases by both Molson and Carling O'Keefe. This is the third

consecutive identical price increase since the minister deregulated the

industry last year. When is the minister going to abandon the charade

that there is competition in the brewery industry and reintroduce

controlled prices?

HON. MR. HYNDMAN: Mr. Speaker,

that's an extremely interesting question coming from the member who,

about a year ago when we announced the deregulation policy, wrongly

predicted that by now the price of beer in this province would be $10 a

case.

The fact is that we have in British Columbia today, as

a result of deregulation, a policy and practice of price decreases in

the price of beer not found anywhere else in Canada. Yesterday's

announcement included the announcement by Molson of forthcoming price

decreases on three major lines of beer. Further, this province does not

have the highest price of beer in this country. We do have the

highest-paid brewery workers. Consumers now have a choice they did not

have when the member across the aisle was a member of government in

this province: that is, a wide variety in price choice. I recommend

consumers buy the lower-priced beer announced yesterday.

MR. LEVI:

With respect to the minister's statement, I might point out to him that

Amstel breweries in Ontario received a $2.25 discount. That's to go to

the public, That's a long way from the kind of exorbitant prices we're

paying here. I was going to ask the minister if he would confirm the

statement he made to the public this morning that the consumer should

buy the cheap stuff to combat the higher prices. Has he swallowed his

own advice and decided not to buy high-priced wines via his expense

account?

HON. MR. HYNDMAN: Dealing with several of

the member's questions, first of all, he referred to Ontario, but

failed to point out that last week citizens of Ontario were hit with an

across-the-board beer-price increase of, I believe, 35 cents a case,

which they were spared in the budget in this province, I'm happy to

say. Secondly, I would reconfirm my strong urging to B.C. consumers

this morning to give the brewers of this province a message by

supporting the lower priced beers and those brewers who are prepared to

decrease the price of beer.

MR. LEVI: On the basis of

past experience with beer price increases in this province and the

regularity with which they take place — and as we understand it, Dr.

Goldberg will not be reporting until the end of the year — is the

minister prepared to admit that there can be at least two more price

increases before we even get the report, which he has not even

mentioned?

HON. MR. HYNDMAN: The important fact for

consumers in British Columbia to know is that under the deregulation

policies of this Social Credit government consumers in British Columbia

can buy, for example, lines of Molson beer cheaper than they can under

the NDP in Manitoba.

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and orders.

Leave granted.

HON. MR. GARDOM: Committee on Bill 29.

TOBACCO TAX AMENDMENT ACT, 1982

The House in committee on Bill 29; Mr. Davidson in the chair.

Sections 1 to 8 inclusive approved.

section 9.

MR. LAUK:

Mr. Chairman, I'm gratified that both the minister and the

Attorney-General (Hon. Mr. Williams) are here. I have canvassed the

remarks made, and I'm not convinced that they're an answer to the

government's taking what I would call a severe direction in the

statutes under the penalty sections. Mr. Chairman, all members will

note that: "A person who commits an offence against this Act by failing

to pay or remit taxes as required under this Act is liable on

conviction, in addition to a fine imposed under this section, to a fine

equal to the amount of the tax, including arrears, penalties and

interest...." And then: "Subject to subsections (2), (2.1) and (2.2), a

person who contravenes

section 2, 3, 4, 5 or 14 commits an offence and

is liable (

a) on a first conviction, to a fine of not less than

$500.... (

b) on a subsequent conviction...to a fine of not less than

$500 and not more than $2,000."

What I want to take issue

with — and I wonder if the Attorney-General would provide us with some

insight on this question.... These statutes are not criminal statutes;

we re not passing criminal law in this Legislature. These are statutes

to enforce the collection of taxation, and not since medieval times at

least have criminal penalties been imposed on persons who have failed

to pay their taxes, except through some deliberate act such as income

tax evasion, where you must prove the evasion together with the intent

to commit the offence.

Interjections.

MR. LAUK:

It's a serious issue, Mr. Chairman. We can have a good laugh over a cup

of tea later on, but I think right now we'll break a cap on a bottle of

tea.

I'm glad the Minister of Intergovernmental Relations

(Hon. Mr. Gardom) pointed out that on the income tax there is no

minimum fine. There are no minimum sections anywhere, even in Criminal

Code offences, except in very exceptional sections. For years, Mr.

Chairman, we had under the liquor act in this province a minimum fine

for.... I forget what the offence was. We had a minimum fine for

failure to carry insurance on your automobile; that was a

section of

the Motor Vehicle Act. They just didn't work. A number of convictions

were dropped, first because prosecutors were loath to lay the charges

except under secure circumstances, number one; and second because

judges found every technical opportunity to acquit, because they

certainly don't like minimum penalties. I think it's a very bad mistake.

[ Page 7648 ]

have small businessmen in this province already who are suffering under

a burden of red tape: filling out government forms, answering

government questionnaires that come from the provincial and federal

administrations. They're being harassed, overburdened and overloaded

with administrative responsibilities imposed upon them by the law. In

this situation, Mr. Chairman, I could see situations where a person has

to be found even technically guilty and the court has no discretion in

dealing with these kinds of things. This is creeping into the law more

and more — particularly in this province — in dealing with quasi....

It's not even a quasi-criminal offence; I don't think the courts would

describe it as that. But it's a severe penalty.

I think it's

unfortunate that we do not have enough confidence in the courts to have

judges make a decision on each and every case, based on its own facts.

We in the Legislature are passing a sweeping law, and everybody comes

under it. Almost because of that fact alone, it's going to be an unfair

law.

The other situation that occurs to me is that under

this

section people coming before the courts are all going to be dealt

with in the same way, with a minimum fine of $500. We are going to be

discussing other sections where the minimum things are even larger. It

achieves one thing, and that's the efficiency with which the government

can gather taxes; but in a democratic system that's not the goal. The

goal is to try to have government policy carried out to its fullest,

having regard for fairness, having regard for a democratic system and

for the traditions of our administration of justice. It's traditional

not to impose minimum fines and penalties. They simply do not work.

They were found to be unworkable in the past. Why the government is

trying them on now I don't know. I find it difficult to believe that

the Minister of Finance consulted with the Attorney-General (Hon. Mr.

Williams). The Attorney-General should know, through experience and

with advice, that these penalties do not work properly, that they are

applied unfairly. We're opposed to these minimum fine penalty sections.

HON. MR. CURTIS:

In response to the hon. member, I don't know if in fact the

Attorney-General will participate in the debate on this section. I

would point out to the member, however, that while it may not be

acceptable to him, the concept of a minimum fine, as dealt with in

section 9, is not new. There is an existing minimum fine in this

statute.

Interjection.

HON. MR. CURTIS: It is $100, as the member interjected. So we are not introducing a completely new principle in this regard.

note also that the member alluded to having reviewed the comments made

yesterday by several members. I feel that in a statute such as this the

likelihood of prosecution through illness or through an oversight is

very remote. Again we must bear in mind the kind of activity that is

dealt with by this amending act: that is, the deliberate attempt to

evade the payment of tax within the province of British Columbia. I am

not a lawyer; I cannot argue with the member on his own terms. But,

indeed, there has been consultation with respect to the minimum-fine

aspect of this and other statutes. There has been consultation within

government. Again, it is not a brand-new aspect of this sort of

legislation.

MR. LAUK: I'll just round off this

point. I'm sure the the minister is sincere in his remarks, but what I

find disturbing.... If you read the House of Commons debates on

amendments to the penalty sections of the Income Tax Act, you'll see

why the House of Commons, in its infinite wisdom, did not impose

minimum penalties. Members on all sides of the House agreed that

taxation legislation is so complex that a breach of the penalty

sections is likely, even with good intentions. By this complexity, you

really create a situation where technical breaches of the law will

occur and prosecutions will be laid. The House of Commons said: "No

minimum penalty. Let the judges decide what those penalties will be for

deliberate evasion of taxes."

The second point made by the

minister justifies the basic legislative principle of penalty sections

and criminal sections: you do not leave the enforcement of the law to

the discretion of the Crown. If there is a breach of the law,

enforcement must take place. In areas of criminal law, Crown counsel

will review a case to see whether or not there is indeed sufficient

evidence to support a prosecution. He does not make a decision on the

basis of, "Oh, well, the fellow was ill," or "He made a mistake in law"

— which is no defence. That's a very serious breach of tradition in

terms of the enforcement of law in a democratic country. I do feel that

this matter is not being seriously considered by the government. I

think it's a very serious mistake to impose minimum penalties on these

businessmen who are already strapped in terms of administrative

overload, because of government programs, as it is.

MR. LEGGATT:

Mr. Chairman, I listened carefully to the minister's remarks, and he

said something that really should be replied to. He said that the

chance of oversight is remote. Now if the minister will look at the

section that we're dealing with, it provides that the minimum fine is

now to be $500 instead of $100. It says that subject to subsection 2, a

person who contravenes

section 2 — that's

section 2 of the original act

— is subject to a $500 fine.

Section 2 sets out one of these nice neat

little ways you collect tax. I just want to read the minister

section

2, so that he can put himself in the position of a small businessman

calculating his tax on tobacco and figuring out what he owes the

government. Here's

section 2: "Every consumer shall, at the time of

making a purchase of tobacco, pay to Her Majesty in the right of the

province" the following taxes.... They're listed then: 2 cents, 3

cents, so much on a cigar, etc. Then it says:

"After

March 9, 1981, and before September 1, 1981, every consumer shall, at

the time of making a purchase...pay... the province a tax at the rate

of 14/25 of I cent for every cigarette purchased by him.

"

(1.2) On and after September 1, 1981, every consumer shall, at the time of

making a purchase of tobacco in the form of cigarettes, pay to Her

Majesty in the right of the province a tax, for every cigarette

purchased by him, at a rate determined by the following formula: (34

(x/y) rounded to the next higher whole number, over 25) of 1 cent for

every cigarette purchased

"where

= the average cigarette subcomponent of the consumer price index at

Vancouver established by Statistics Canada for the most recent

available three month period preceding March I or September 1, as

applicable, in each year, and

[ Page 7649 ]

"Y=the average cigarette subcomponent of the consumer price

index at Vancouver established by Statistics Canada for the most recent available

three-month period preceding July 1, 1981."

am not going to bore the committee, Mr. Chairman, by going on farther,

but I can read pages of this gunk here. Mr. Chairman, I again urge the

minister to reconsider "a remote oversight". We are probably average

bright, you know. I can tell you, if I was a small businessman trying

to figure out what I owed the government on cigarettes, I'd be worried

to death every month that I couldn't make the right number. I'll say

this: if I don't make the right number, it doesn't matter whether I

intended to make the right number or whether I had a devious motive. I

can be as honest as can be, but this

section doesn't give me an out.

This

section says I'm absolutely guilty because I didn't understand

"the average cigarette subcomponent of the consumer price index at

Vancouver established by Statistics Canada for the most recent

available three-month period preceding March I to September 1."

The

difficulty is, and continues to be.... And I don't think the minister,

with the greatest respect to him, has quite understood what we are

trying to demonstrate here. We're not trying to dry up government

revenue. We're not trying to suggest that this is an inappropriate

product to get a substantial amount of tax on; I think it is an

appropriate product to tax. What we're saying is that the bureaucrats

have got the minister under control. First of all, they should have a

formula that's understandable, instead of this nonsense, this

gobbledegook. Secondly, surely, if after all that a mistake is made and

a charge is laid, the magistrate or the judge should have the right to

exercise compassion in these circumstances, and he doesn't. He has no

choice. He reads the statute and says: "Oh, this is just ridiculous

that this charge is before me." But not being able to find a

technicality upon which to acquit — and I can assure you that most of the

judges that I've come into contact with will desperately look for any

defence that will work, but he may not find one.... Then he sits down

and hears some poor fellow who didn't understand the average cigarette

component of the consumer price index at Vancouver — he's faced with a

minimum fine of $500, without any discretion whatsoever.

That's

wrong. We have tended to be in a polarized atmosphere, but I would

again urge — I'm glad to see the Attorney-General is in — a

reconsideration of this minimum fine principle in those offences which

have no criminal aspect at all. Those kinds of offences should be

discretionary on the part of the magistrate.

It is so easy

to make a mistake in calculating something like your tobacco tax

return. I still don't understand it.

Section 2 has two and one-third

pages of

definitions on the correct amount of tax to collect and pay.

It seems to me to be an overwhelming argument that, my gosh, if you're

going to put these small business people, through this kind of wringer,

the least you can do is be discretionary on the fine end. What the

minister should really do is take another look at the whole act and

make the whole formula a lot simpler. If he's not willing to do that,

why not go along with the opposition today and just pull the section,

or bring in a

section without a minimum?

HON. MR. CURTIS:

I am not so determined in any course of action in committee that I

would not accept an amendment if I felt that it were appropriate. I

want to make that very clear.

Twice in recent days the

member who has just taken his seat has indicated that I am controlled

by the bureaucrats. He, having made the statement earlier, left

immediately and perhaps did not hear my response. I assure the member

that that is not the case. If it were the case, the member wouldn't

have to point it out: I would leave. Do you understand that, Mr. Member?

MR. LEGGATT: Yes. Now I want you to justify minimum fines.

HON. MR. CURTIS:

First of all, we debated the formula at an earlier time, and in order

that the calculation of tax be set out in the statute in a completely

correct way, that rather complicated formula had to be followed.

However, the members who have spoken on this have, in their arguments,

overlooked two or three important points. First of all, there is within

the Ministry of Finance a consumer taxation branch. It is the duty and

responsibility — in fact, I insist upon it — of the consumer taxation

branch people, notwithstanding the fact that they have the unpopular

task of collecting consumer taxes, to assist business people to the

greatest extent possible. Any member of the public could easily attain

a variety of consumer taxation bulletins which explain in lay terms

that which cannot be described in lay terms in the legislation which is

before us.

At the same time, I find — and found before I

came into this work — that the individuals who serve the public of

British Columbia in the consumer taxation branch are generally very

helpful people. They are extremely helpful people. They are good public

servants. Where an individual business person, a firm or a series of

firms has a problem with some aspect of the taxation regime in British

Columbia, they can reach a representative of the consumer taxation

branch and discuss it. In fact, last June or July the director of the

consumer taxation branch travelled with me to one northern interior

B.C. city in order that we could meet with business people in a

particular area, not to discuss this specific point, but to discuss

consumer taxation in general.

If we leave it at that, the

member makes a very telling point by reading out the formula in some

haste and then telling us to wait for what "Y" means. The fact is that

this process of calculating tax for a retailer, and the index formula

to which he alluded, is undertaken for the retailers by the

wholesalers. It is done by computer. Therefore the practice does not

present any kind of difficulty for the individual retailer. If it is

found that a business on Main Street in Vancouver has sold 3,714

cartons of cigarettes, it goes into the computer, and the tax payable

is prepared, printed out and the process is complete. We also work very

closely through the consumer taxation branch. With respect to the rate

indexed every few months, we advise wholesalers of the rate which

applies at that particular time. That is also factored into the

computer calculation.

I appreciate that the members opposite

feel that they have a very telling point here. While they may want to

discuss the principle of the minimum fine, they should not stray into

an area where, in fact, it is made quite easy and simple for the small,

medium and large retailer in this particular tax.

Why do we

have penalties of any kind at all? Certainly I think this is

appropriate to

section 9. I'm reliably informed that the province of

Ontario in the past two years has had two major convictions with

respect to evasion of tobacco tax. One involved the evasion of $477,000

in tobacco tax in that

[ Page 7650 ]

province,

and another one involved approximately $2 million in tobacco tax in the

province of Ontario being evaded. These both involved literally

trailer-loads of cigarettes being brought in — one presumes but cannot

be certain — from Alberta. Possibly they were even acquired through

theft and then offered for sale throughout a number of cities in

Ontario with no tax paid to that province. We are very concerned about

the quite clear escalation of unauthorized imports for resale. This

does not apply to small firms or to individuals bringing cigarettes in

for their own use.

I trust I have satisfied the member for

Coquitlam-Moody (Mr. Leggatt), who is a fair-minded member in this

House. I hope I've convinced him that we make it as easy as possible

for the individual retailers, so that at the end of a busy month and

faced with a lot of red tape from a variety of sources he or she has

the least difficulty in computing the number of cigarettes sold and the

tax due. I understand what you're saying, Mr. Member.

MR. LEGGATT: I do wish the minister would stop flattering me. I could lose credibility.

HON. MR. CURTIS: I suffered the same problem last week.

MR. LEGGATT:

The point that I want to respond to first of all is that when the

computer makes the mistake, the charge is not laid against the

computer; it's made against the individual, and the computer could very

well be the villain. This whole idea that the complicated formula gets

fed into the computer and then the wholesaler tells the retailer what

the answer is.... It still doesn't avoid a perfectly innocent person

facing a minimum fine of $500 for doing nothing wrong. It seems to me

that there is an easy answer, and I must say with the greatest respect

that I don't think the minister has responded to the key point.

It's

all very well to get up and say: "I'm not in the hands of my

bureaucrats. My bureaucrats are nice people and they work very hard and

they do their very best to work for the government." I agree with all

that. I have no trouble with all that. But they're human, and being

human they try to make their job as easy as they possibly can. I

understand that. I just believe that there are times when their job has

to be made slightly more difficult in order to present a system of

justice and fairness to those who are faced with collecting these taxes

on behalf of the government. These are not the people who work for the

government. The people who collect these taxes for you are small

business people, and they don't get the kind of credit they deserve, by

the way, for all the work they do in collecting taxes on your behalf.

These and sales taxes are some of the most efficient, low-cost taxes

the government has, because all the work is done by the business

community.

We are still back to the fundamental principle,

which is that particularly on these kinds of offences no minimum fine

should be imposed. The minister has still not responded to the point

made by my colleague for Vancouver Centre and myself: that the minimum

fine is inappropriate in a noncriminal statute. This is a non-criminal

statute. You could compare it to a parking ticket. There's nothing

particularly evil about what can happen under this section.

the

section said "deliberately" and had all of those adjectives in it,

I would say: "Okay, then we're on another argument about minimum

fines." If the tradition is that the courts haven't looked at the thing

seriously enough, that's another argument. But here the argument is

based strictly on these questions of tax collection and minimum fines.

It's wrong, Mr. Chairman, that the courts have no discretion.

believe the same thing is true in many ways under the Liquor Act. At

one time, the fines under the Liquor Act were absolutely ridiculous at

the minimum level; someone caught with a bottle of beer in his hand,

doing very little wrong, was faced with a very large fine. We are going

in the same direction and I again wish the minister would reconsider

the minimum-fine question.

You pointed out that some pretty

major things have happened — for example, $477,000 where the government

had not received its revenues. But your maximum under this, if that

were the case, would only be a $1,000 fine. That would hardly be

appropriate where those kinds of figures were involved, would it?

AN HON. MEMBER: What do you want, life imprisonment?

MR. LEGGATT:

I think the punishment has to fit the crime, and in this case we're not

really talking crime; we're talking something that could be

inadvertence, or where the amount of blame is absolutely miniscule. I

would again ask the minister to reconsider. Take away these silly

minimum fines. Leave it up to the court.

MR. LAUK:

Section 9 of this bill refers to "a person who contravenes

section 2" and other sections.

wonder if I could have the minister's attention because this is

important. The Attorney-General is amused. He hasn't spoken on these

sections.

HON. MR. WILLIAMS: I spoke yesterday. You left the House.

MR. LAUK:

I read your explanation and it is totally unacceptable. I want you to

listen to the questions I have today; through you, Mr. Chairman.

Section 2 is something the member for Coquitlam Moody (Mr. Leggatt) and I are

very concerned about; and I will just paraphrase it. An inspection or

audit takes place and the auditors, on their own, determine the amount that

is due and owing in taxation. Subsection (3) has been repealed and substituted

therefore is this section, which I find absolutely appalling in relation to

the penalty sections; "Evidence that an assessment has been made under

subsection (2); or that a penalty has been imposed...is proof in the absence

of evidence to the contrary that the amount stated in the assess ment or imposed

as a penalty is due and owing."

You

are making it easier by using a computer, but you are requiring the

businessman to calculate his own tax. If he doesn't calculate his own

tax but relies on the computer, and the arbitrator comes in, accepts

the computer and arbitrarily imposes an amount, that is the amount he's

stuck with — unless he hires a battery of Philadelphia lawyers and

chartered accountants to go in there and try to prove he's innocent. In

other words, it is tantamount to a reverse-onus section. It is, at the

very least, a reverse evidentiary burden

Section in the law, because on

the face of it, whatever the auditor from the Finance department says

the court has to accept. It has no alternative but to accept that in

evidence and the Crown does not have to prove it's the correct amount.

Even in a theft case, the Crown has to prove ownership and the value of

that which

[ Page 7651 ]

stolen; otherwise, the case is thrown out. You don't have to call on

the defence. In this case, the judge has to accept that evidence and,

unless you've got a battery of CAs and so on to prove it's the wrong

amount, you are guilty. You are guilty on a reverse evidentiary burden

section, and as well you get a minimum fine of $500.

I don't

know why the member for Coquitlam-Moody and myself are trying to

protect this government. I think the best thing we could do is to let

them pass this

section and incur the wrath of every small businessman

in the province, leading them to join the rest of the thousands of

British Columbians who are going to throw this government out of

office. Maybe that is what we should do.

Section 9 approved on the following division:

YEAS — 27

Waterland

Hyndman

Chabot

McClelland

Smith

Heinrich

Hewitt

Jordan

Vander Zalm

Richmond

Ritchie

Ree

Wolfe

McCarthy

Williams

Gardom

Bennett

Curtis

Phillips

McGeer

Fraser

Nielsen

Kempf

Davis

Strachan

Segarty

Mussallem

NAYS — 23

Barrett

Howard

King

Lea

Lauk

Stupich

Dailly

Nicolson

Hall

Lorimer

Leggatt

Levi

Sanford

Skelly

D'Arcy

Lockstead

Barnes

Brown

Barber

Wallace

Hanson

Mitchell

Passarell

An hon. member requested that leave be asked to record the division in the

Journals of the House.

Sections 10 and 11 approved.

Title approved.

HON. MR. CURTIS: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Division in committee ordered to be recorded in the Journals of the House.

Bill 29, Tobacco Tax Amendment Act, 1982, reported complete without amendment, read a third time and passed.

HON. MR. WILLIAMS: Second reading of Bill 38, Mr. Speaker.

CORPORATION CAPITAL TAX (BANK RATE

INCREASE) AMENDMENT ACT, 1982

HON. MR. CURTIS: With

respect to Bill 38, the Corporation Capital Tax (Bank Rate Increase)

Amendment Act, 1982, I would like to make a few remarks to elaborate on

that which was said at the time of the budget. On April 5, Mr. Speaker,

I noted that due to prevailing economic conditions the government had

decided that we could not and would not justify general tax increases

in the province of British Columbia this year. There were some

exceptions to that, and one has been dealt with in this House in recent

days.

I've also become aware over the last 18 months or so

of another inequity in our provincial tax system. In fact, this one is

of such large proportions that some would term it approaching an

injustice. I'm specifically referring to a substantial reduction in

British Columbia corporation income tax payments by the major chartered

banks. As all hon. members are well aware, Canadian chartered banks

have recorded very impressive profits in recent years. These have been

consistently higher than those earned by other financial institutions

and firms in the industrial sector.

For example, according

to StatsCan, after-tax profits of the chartered banks expressed as a

rate of return on the average shareholder's equity, the most widely

accepted and accurate method for measuring profitability, have averaged

21 percent over the 1977-1981 period inclusive. The next most

profitable grouping of financial institutions was trust companies,

which averaged 9.5 percent over the same period — well less than

one-half of the after-tax rate of return earned by banks.

terms of industrial corporations, the most profitable sector over this

same period — that is, 1977 to 1981 — has been the oil, gas and coal

sector, which recorded a 17.9 percent after-tax rate of return, still

well below that earned by Canada's chartered banks. For 1981 alone the

banks are estimated to have increased their after-tax rate of return to

22.6 percent, a substantial rise over the 20.2 percent they recorded in

I say parenthetically, Mr. Speaker, that there will be

some comments within this chamber and outside with respect to the same

percentage increase in 1982; nonetheless I believe....

Interjection.

HON. MR. CURTIS:

I've just observed that in general, through you, Mr. Speaker, to the

member, the chartered banks could argue that perhaps that lift each

year has not occurred this particular year. But I would like to

conclude my remarks. We have introduced this not just for the present

circumstance but for a number of reasons as well. Almost all other

groups of financial institutions and industrial sectors recorded a

decline in their after-tax rates of return over the past four years.

Mr.

Speaker, there are two aspects to this measure which is before us

today. One of the contributing factors to the banks high after-tax

earnings over the past five years has been a substantial decline in the

amount of corporation income taxes they have paid to both the federal

and provincial governments. In 1976 the seven largest chartered banks

paid a total of $15.5 million of corporation income tax to British

Columbia. This represented 13.3 percent of the banks' net income for

income tax purposes allocated to British Columbia, very

[ Page 7652 ]

close to the then prevailing 15 percent British Columbia corporation income tax rate.

However,

the income tax payments declined in subsequent years — that is,

following 1976 — despite large increases in the banks' earnings. In

1980, which would have to be admitted to have been a very good year,

they totalled only $5.8 million or 4.2 percent of net income, well

below the 15 percent statutory tax rate. The large decline in income

tax payments to the province has been a direct result of the dramatic

rise over the same period in bank income received in the form of

nontaxable dividends. In 1976 the seven chartered banks received $83

million of their income in the form of nontaxable dividends. By 1980

this amount had risen to $906 million, nearly an eleven fold increase

over four years.

Mr. Speaker, a brief history is perhaps

necessary in order that all of us and the people of the province

understand how this situation developed. In the 1930s, as members will

know — I don't think there are any who would recall, with one or two

exceptions perhaps — the federal government introduced special income

tax provisions establishing income bonds and debentures to encourage

chartered banks to extend low-interest rate loans to firms in financial

distress. Interest earned on these debt securities or loans qualifies

as dividend income for tax purposes, and so it is exempted from

corporation income tax. Dividend income is exempted as it represents

earnings upon which tax has already been paid. In more recent years

we've heard of things such as "retractable preferred shares," which

may be redeemed at any time at the holder's option, and "term-preferred

shares" have also qualified for similar tax treatment when this

financing is extended to firms reporting no taxable income, the

criteria used by the federal government to determine firms in financial

distress. Both of these financing instruments are close substitutes for

bank-demand loans.

In the mid-1970s many large profitable

international and Canadian corporations started to report no taxable

income, even though they were earning substantial profits because of

accelerated capital-cost allowances, rapid writeoffs of exploration and

development expenses, depiction allowances and other special income tax

provisions. The banks realized that these corporations could now

qualify for tax-exempt term preferred share loans, and so beginning in

1977 they started to heavily engage in this form of financing instead

of the more traditional taxable business loans. The federal government,

it appears, did not see this trend developing until the November 16,

1978 federal budget, when it moved to prohibit chartered banks from

making any further term-preferred share loans with maturities of less

than ten years. More recently the federal government — in the latest

budget of November 12, 1981 — moved to completely prohibit chartered

banks from making any such loans, regardless of term. Nonetheless, the

favourable tax treatment on all outstanding term-preferred share loans

will continue until the shares mature or the terms of the financing

arrangements are changed. Since most of these shares have terms of from

five to ten years or more, substantial income tax losses for both

federal and provincial governments will continue for a number of years.

a result of the chartered banks taking advantage of this form of

lending prior to the November, 1978 restrictions I spoke of, we

estimate that British Columbia lost approximately $16.8 million of

corporation income tax revenue in the 1980 taxation year. While

taxation data is not yet available for the 1981 and, obviously, the

1982 taxation years, it is not unreasonable to expect that revenue

losses will be in the range of $15 million for each of these years.

These revenue losses should begin to decline in subsequent years as

existing term preferred shares reach their maturity. Chartered banks

have recently stated that much of their nontaxable term-preferred share

income is in the form of interest earned on small business development

bonds and that the resulting income tax savings have been passed on to

small businesses in the form of lower interest rates. I have to point

out, however, that these bonds were not introduced until mid-1980, so

they could not be included in the estimate of lost revenue to which I

referred.

This unfortunate development clearly shows the

problems of current tax collection agreements or arrangements, whereby

deliberate or inadvertent federal taxation policies can dramatically

affect provincial revenues without the provinces being either consulted

or informed. It is important, I think, for the House to understand that

chartered banks have not captured all this lost tax revenue. Some of

the tax savings have been passed on to borrowers in the form of lower

interest rates on term-preferred share loans than would otherwise be

charged on traditional bank loans, but that is minuscule, I think, when

one considers the whole situation. The banks have captured a portion of

the tax savings; and as I pointed out in the budget speech, at a time

when many families, individuals and businesses, large and small, are

struggling to cope with very high interest rates, are paying their fair

share of taxes and are faced with a variety of uncertainties, I feel

that any privileged position for the chartered banks is unfair,

inappropriate and a problem that governments have avoided for far too

long.

I do not know what will be said by members in second

reading debate. I hope that all members will support Bill 38, which is

intended to rectify this situation. Certain clauses in the bill will

increase the corporation capital tax rate for chartered banks with

taxable paid-up capital in excess of $500 million to 2 percent from the

current 0.8 percent which applies elsewhere in corporation capital tax

matters. Banks with taxable paid-up capital of $500 million or less

will not be subject to this increase. As a result, only Canada's five

major chartered banks will see their capital tax liabilities increase.

The government has exempted the smaller regional banks with knowledge,

with understanding. An example, of course, would be the Bank of British

Columbia, exempted from this tax increase as it would, for the most

part, not have been earning excessive profits nor would it have engaged

in term-preferred share financing to — if I may say — artificially

reduce the corporation income tax liabilities to the extent of the

major chartered banks. The exemption of smaller banks, credit unions,

trust companies and other financial institutions offering banking

services of one level or another to the public will also help to

prevent the chartered banks from passing this tax increase on to their

customers. Competition will certainly make itself felt in that

particular respect. The tax rate increase will cause corporation

capital tax revenue to rise by approximately $9 million — I speak of

1982-83 — so the total corporation capital tax revenue received from

the chartered banks in 1982-83 will be $15 million. I want to stress

that the $15 million of total — not incremental — revenue will be

credited to the newly established employment development account. This

may not have been made clear at the time of the budget speech.

The

change in the tax rate is to become effective, retroactively to a

limited extent, as of May 1, 1982. This date was chosen as the

government wishes to avoid retroactive tax

[ Page 7653 ]

legislation

wherever possible, and May 1 coincides with the midpoint of the several

banks' fiscal year. This in turn will reduce difficulties associated

with transitional and administrative adjustments. In this regard,

another aspect of the bill requires the affected banks to increase

their capital tax instalment payments for the third and fourth quarters

of their fiscal year, which would be due on August 15 and November 15,

by an amount proportionate to the tax rate increase. Instalment

payments for the 1983 taxation year will be increased in a similar

manner. Another aspect of the bill provides that the increased tax rate

applies only to the second half of the affected banks' fiscal year when

computing actual capital tax liabilities at the end of the year.

Mr.

Speaker, I referred earlier to the budget address of April 5. The

government is committed to a restraint program that is fair to all

British Columbians. I believe and I am confident in saying that those

in the financial community will agree that, under the circumstances I

have just described, this taxation measure is fully warranted —

particularly by crediting the revenue to new employment initiatives

undertaken by this government. When seen together, this represents a

reasonable and a fair contribution to those British Columbians who are

being hurt by high interest rates and unemployment.

second reading members may ask if in fact I have met with

representatives of the chartered banks, and the answer is yes. I met

with a group comprising senior officials of banks under the aegis of

the Canadian Bankers Association, Mr. R.M. MacIntosh, president, We had

a good discussion. I did not expect them to greet the measure with open

arms or to rush into my office and congratulate me on this measure. But

I think we had the kind of discussion which was appropriate in terms of

what is being undertaken through this particular bill.

There

may be an opportunity at some point in the future to reduce the capital

tax when corporate income tax revenues from the affected banks are

comparable in size to revenues now contemplated from the capital tax.

That is not dealt with in the bill. It's an appropriate comment, I

think, in second reading. I do not know — it's not up to me to say —

that this increase in the corporate capital tax rate will remain

appropriate for an indefinite period: 5 years, 10 years, 15 years.

There may be an opportunity when the government of the day and when the

Minister of Finance of the day and members of this House will want to

make an adjustment. Upward? More likely downward. I offer that opinion

to you, Mr. Speaker, but I think this measure is appropriate for the

circumstances in which the banks have found themselves and in which the

people of British Columbia and indeed in other provinces find

themselves at a time which is clearly very difficult.

I move

second reading of Bill 38. I look forward to the members' comments, and

I will attempt to answer their questions in closing debate on second

reading.

MR. STUPICH: The minister spoke at some

length, and it was obviously a well-researched presentation that he

made. One would be tempted to ask for an adjournment until one had time

to review that material. However, the opposition has no intention of

holding up this particular bill, although I would like to take issue

with at least some of the arguments that were raised. So we will not

ask for an adjournment. I do look forward to reading the remarks in Hansard at a later date and perhaps being able to comment, not directly on the bill itself but somehow during the minister's estimates.

It's

rather amusing to sit here and listen to the minister extolling the

virtues of the Corporation Capital Tax Act. When that particular member

was a member of the Conservative Party in this Legislature, he had

nothing good to say about that particular legislation. When most of the

members of the Social Credit cabinet were members of the Liberal Party

— and indeed, four of them were members of this Legislature — they had

nothing to say in support of the corporation capital tax principle, but

now they welcome it with open arms and look on it as a way of raising

more money.

On the other hand, now that we're in opposition,

we recognize that it is not good legislation. We recognize that it is

not a good approach to tax corporations — and I'm speaking generally

now. I know there's a difference here in the definition of the tax

base. But we believe it is not good to tax anyone on the basis — in

many instances — of debt. I would think that the Provincial Secretary

(Hon. Mr. Wolfe) recognizes that this can work a hardship on the sort

of business that he was involved in and, I expect, soon will be fully

involved in again. The minister will be running, but not fast enough.

The

Minister of Finance tells us, in support of this legislation, that the

increased revenue will go into the new employment initiative program. I

don't take very much reassurance in that. I believe him when he says

that will happen this year, but I can recall some years ago when the

revenue-sharing program was introduced by this administration to share

certain revenues with the municipalities. When the shoe started to

pinch this year it didn't take them very long to change that sharing

formula so that it worked to the advantage of the provincial government

and to the disadvantage of the municipalities. While the minister may

tell us today that this is going into the new employment initiative

program, I take no comfort in hoping that any revenue from this source

will be there next year and the year after or, indeed, that the new

employment initiative program will survive that long.

I am

at a disadvantage because I tried to take notes but I missed some

things. The minister did tell us of one particular industrial endeavour

activity where the profits were second only to those achieved by the

banks without paying tax. I missed what that was.

HON. MR. CURTIS: Other financial institutions.

MR. STUPICH:

The minister helps me by saying that the other financial institutions

attain almost as high a profit on their shareholders' equity....

Interjection.

MR. STUPICH: I am sure going to have to look at Hansard ,

because I understand the third one was 17 percent. That was the oil,

gas and coal industries. Their return on equity was 17 percent. That is

the way I took it down, and I thought there was another one even

higher. My question was: if there are companies making that kind of a

profit on shareholder equity. why is one particular activity being

singled out for this special attention when there is that opportunity

there to be getting far more revenue for the Crown from people who can

a&rd to pay and should be paying?

With respect to coal

in particular I would remind you, Mr. Speaker, and the minister,

through you, that the dollar-a-ton increase that we proposed late in

1975, to take effect in April, 1976, to this date has never been

imposed. Certainly the coal industry is an industry very able to afford

that. What I am

[ Page 7654 ]

saying

is that if it is this important to get money — certainly it is

important to get funds into this new employment initiative program —

the minister need not have stopped with this group of five particular

corporate entities that are being attacked in this particular

legislation.

I am interested that the minister did have a

meeting with the banks on it. I have some concern that, as he pointed

out, a very little bit of the revenue.... I think it was a very weak

argument on the part of the banks that the small business development

bonds contribute to this nontaxable revenue, because that is a very new

program. There is another program ongoing, and that is the

small-business bonds. I wonder whether there was any discussion between

the minister and the representatives of the banks as to whether or not

they would look less favourably upon promoting small-business bonds in

the province of British Columbia as a result of this special attention

being devoted to them by the Minister of Finance. I am not holding any

brief — for the large chartered banks right now, but I do know they are

supporting some very large industrial concerns in this province,

particularly in the forest industry — and, I would think, even in

mining. I hope they don't feel that B.C. Is not a good place in which

to do business and start calling some of those loans. I just fear what

might happen to the economy of British Columbia if the banks felt that

they had to react in some way or another against the government because

of this particular attention. I would hope that the minister would tell

us that in the good discussions he said he had with the banks he had

some assurances from them that they're not going to try to get even

with the people in B.C. for what this particular administration is

doing to them.

I suppose the second question is: since the

other financing institutions make almost as much profit as the banks

while paying very little tax, why are the trust companies exempt from

this particular legislation? Why is the Bank of B.C. exempt? I wonder

how far above the $500 million figure they are. Do they just escape

being caught in this net, or are they substantially below it? I wonder

about the other banks. The minister might say that he was trying to be

fair to the regional banks. Some of these regional banks are

international banks that are now being established in B.C. Some of them

are regional only in the fact that they are Canadian rather than North

American banks or world banks, I would think. The trust companies are

generally anything but part of B.C. They are national firms, at least.

I don't understand why the minister chose to pick on these five in

particular, because I think that the level of profit he quotes.... I

understand that the figures he has used for the level of profits are

not supported by the banks themselves. They say that his figures are in

error. I would think, for example, that the percentage rate of profit

being attained by the Bank of B.C., paying very little tax must be very

close to what it is for the other five banks. Thai being the case, why

set a figure perhaps just high enough — this is a wild guess because I

have no idea — to exclude the Bank of B.C.? We recognize the need for

revenue. We recognize the need for the new employment initiative

program. We are opposed to the corporation capital tax approach in

total, but we will support this particular amendment at this time.

HON. MR. CURTIS:

Mr. Speaker, I thank the hon. member for Nanaimo for his comments with

respect to Bill 38. We examined other possible routes to follow, rather

than that of increasing the corporation capital tax. I can say candidly

that if I had a preference I would have pursued another route. However,

those who advise me and those who advise government in matters of this

kind recognize this as being not only the most appropriate route, but

perhaps the only route which would bring into effect that which we seek.

The

member spoke of a punitive reaction by Canada's major banks. He

expressed it in a negative sense as well, Mr. Speaker. I agree with

him, and I would be very surprised and extremely disturbed if I were to

find that some action had been taken because this has been introduced

in the province of British Columbia. That could lead to an escalation

which, I think, would not serve any useful purpose, because we are not

only taxing the large chartered banks; we are also major customers of

two of them. So I think that it is unlikely. The discussion which I

had, as I indicated to the hon. member, was positive, and it was, I

think, constructive in many respects. I did not expect them to come in

and say this is the greatest thing since they were given their

charters; quite the contrary. I think we understand the positions held

by both sides — the banks on the one hand, and the government of

British Columbia on the other.

I do not have it readily

available, but I commit to bring to committee debate, Mr. Speaker, the

amount below $500 million which applies to the Bank of British

Columbia. Off the top of my head, I do not have that figure, and I

apologize for that.

I thank the member for indicating

official opposition support, and there will be an opportunity in

committee to get into some details.

Mr. Speaker, I move second reading of Bill 38.

Motion approved unanimously on a division.

Division ordered to be recorded in the Journals of the House.

Bill

38, Corporation Capital Tax (Bank Rate Increase) Amendment Act, 1982,

read a second time and referred to a Committee of the Whole House for

consideration at the next sitting of the House after today.

HON. MR. WILLIAMS: Second reading of Bill 24, Mr. Speaker.

FINANCIAL ADMINISTRATION

AMENDMENT ACT, 1982

HON. MR. CURTIS: Mr. Speaker, the

Financial Administration Act was enacted by the Legislative Assembly

last year and was proclaimed in final stages on November 26, 1981. You

will recall, sir, that it replaces two pieces of legislation: the

Revenue Act and the Financial Control Act, which had provided the

framework for the province's financial operation for many years — in

fact, for decades — and had become substantially outdated for

present-day management practices and requirements.

Members

will recall the procedure that was followed in the development of the

FAA. In brief, a discussion paper on the new act was released. This was

followed by the appointment of a task force comprising representation

from the business sector, representatives of Crown corporations and

senior public servants, all of whom met to receive briefs and to hold

public hearings prior to filing a report on their findings

[ Page 7655 ]

and

recommendations. As a consequence of the very broad public exposure

given the discussion paper, the draft legislation contained in that

paper was revised substantially, resulting in the bill that was

introduced in this House in the course of 1981.

The generous

response to the bill by both parties in this House with the resulting

speedy passage, was, if I may say, very satisfying to me and to the

government. It reflected highly upon the efforts of the task force in

providing a superior piece of legislation. I think that members will

know that the Financial Administration Act has attracted considerable

positive attention across Canada since it was introduced, passed and

proclaimed. The completeness or totality of the new act as a financial

administration instrument is evident from the amending bill that is now

before us. An amendment in the

interpretation

section will remove a

redundancy. A provision for certain delegatory powers and clarification

of the government's authority to charge fees for government services

and of the indemnity provisions are reflected in the amending bill.

could go into greater detail, Mr. Speaker, if members required, but, as

I indicated this morning, I think that perhaps this one is more

appropriately dealt with in committee stage, where the members can

examine individual aspects of the amendments in relative isolation. If

I were to expand further. I think I would be mildly contravening the

rules of second reading debate. It is an amending bill to a major piece

of legislation which was passed in last year's session. I think from

time to time it will be found necessary to introduce minor amendments

to the FAA because of the very wide scope which it covers. I therefore

move second reading.

MR. STUPICH: I think this time we won't be quite so cooperative in agreeing that it should be postponed until committee stage.

I see it, there are two principles in the bill, one being that the

government once again is out to grab money wherever it can. In this

case it is proposing to impose fees on all existing special and

perpetual funds. I recognize that some of these will go out of

existence if other legislation is passed by the House, but at the

present time it deals with all special and perpetual funds, some of

them set up several decades ago. In some of them interest only was

spent for the purpose of those funds; in others, interest and capital

amounts are available. The government is now going to start charging

fees for the administration of those funds. It appears the government

can charge fees under this legislation for whatever administrative

services it deems. If the government feels that trust funds of almost

every kind and, I gather, all Crown corporations should be receiving

some kind of service from the government, the government can determine

what service to give them and what fees should be assessed for those

services.

It appears the government is simply widening the

loop, looking for more ways of collecting funds. I would like to ask

the minister, either now or at committee stage, just how much revenue

he expects to earn by having this legislation adopted in the course of

the current fiscal period. We are opposed to this revenue grab. We are

opposed to raiding the special funds. I wonder whether or not it

applies to pension funds. I am just not clear on this, perhaps because

I haven't studied the legislation hard enough. If it does apply to

pension funds, it is a second raid, or stealing almost, from pension

funds. You will recall that the government previously financed the

deficit that they created on March 31, 1976 by borrowing money from the

pension funds at approximately 9 percent interest, while at the same

time they were earning something between 16 and 18 percent on deposits

in excess of $1 billion in the various chartered banks. I can perhaps

understand why they want to get it out of the chartered banks right

now, after the previous bill, but that is another matter. It appears

there could be a very wide loop thrown among many trust funds, Crown

corporations, perpetual funds, all kinds of funds, and it could be a

very significant source of revenue.

My second concern is the

very phrase "could be." It is going to be entirely up to the

Lieutenant-Governor-in-Council to determine the range of fees; what

fees will be set; how often they will be changed; whether or not they

will be different from one Crown corporation to another; whether this

is simply one'more way of getting electricity users to pay more money

into government coffers. A very good way was found earlier this year

when, by increasing the licence fee, they were able to extract another

$150 million from those who pay electric light bills. Is this simply

another way of getting electricity-users to pay more money into

government coffers without imposing any tax increase? If nothing else,

it certainly gives the lie to a statement the minister made in a

previous speech, when he said there was no general increase in taxation

apart from special cases. He didn't identify it but I am sure he was

thinking about the rural taxation increase.

We are opposed

to this legislation on those two grounds: first, that it is simply

another grab by the government to get revenue from sources from which

we believe they should not be getting revenue; and secondly, that the

fees are going to be set behind the closed doors of a cabinet room, and

they may be set and reset as often as the

Lieutenant-Governor-in-Council thinks they need changing in order to

get more revenue for the Crown.

MR. HOWARD: In 1969

the late W.A.C. Bennett, who was then Minister of Finance, used the

aged commitment to the native Indian people that for so long as the sun

shines and the river flows and the grass grows, a certain set of

conditions would prevail. With those remarks, the late W.A.C. Bennett

introduced a bill dealing at that time with revenue surplus. One of the

funds set up under the revenue surplus appropriation act of 1969 was

the First Citizens Fund — $25 million to be invested as the Minister of

Finance saw fit, with certain circumscriptions such as in government of

Canada securities or provincial government securities, and so on.

The

other commitment was that the interest from that particular fund of $25

million would be available for all time for people of native Indian

origin in this province. Apart from the fact that the investments were

made in securities that carried, by today's standards, very low coupon

rates, and apart from the fact that the $25 million earns somewhere in

the neighbourhood of a 7 percent return, which is another question

entirely, the commitment was made that that interest would be available

for people of native Indian origin for all time. The same commitment

was made about other special funds established by that 1969 legislation.

want to deal particularly with the First Citizens Fund, because the

emphasis at the time by the late.W.A.C. Bennett was on that firm

commitment that for all time the interest earned would be available to

the first citizens of this province. We now see, as outlined by the

member for Nanaimo (Mr. Stupich), a move to grab some of that money and

to charge against that fund. Contrary to the commitment made not only

by the late W.A.C. Bennett but by the entire Legislature,

[ Page 7656 ]

because

it voted unanimously to establish those funds at the time, the Minister

of Finance and this government are denying this commitment and flying

in the face of that obligation. It's like denying and flying in the

face of a treaty commitment. I know the native Indian people will

define it either as a doublecross, the minister speaking with a forked

tongue, a stab in the back or some other appropriate phrase to identify

what this particular bill means.

While the minister may be

desperate in his attempts to find money from whatever source and any

source without restriction because he and his own government have

squandered the funds of this province over the last couple of years and

have driven us into an impossible fiscal position, and while I can

understand his desire to supplement the shortfall wherever he can, I

think he goes too far when he now seeks to deny the commitment made to

native Indian people about that particular amount of money. The member

for Nanaimo has very adequately covered the other aspect of it — the

trust funds, which presumably include pension funds and how it would be

a money grab from that as well. So on those grounds, I must completely

oppose this particular bill because

section 3 is very central to the

principle of the bill.

I'm opposing it on another ground that relates to a provision of the

bill which seeks to amend

section 59 of the Financial Administration

Act itself. It may be worthwhile, in the first instance, to read

section 59 in order to indicate the point I'm getting at.

Section 59 of

the act that we are now seeking to amend says:

"The Lieutenant-Governor-in-Council may make regulations

restricting or limiting the circumstances under which a government corporation

may enter banking arrangements, lend money, borrow money, give a guarantee or

indemnity, give, grant or assume a mortgage or lien on property or acquire property

by way of lease...."

want to talk about that authority given to the

Lieutenant-Governor-in-Council with respect to Crown corporations to

intrude into the question of the very bank which the Crown corporation

may want to invest its money.

The Crown corporations

committee charged with the responsibility of dealing with Crown

corporations submitted a report to this House in April of this year and

expressed deep concern about

section 59. The committee unanimously

concluded:

"...places with the Lieutenant-Governor-in-Council,

and by assignment the Minister of Finance in his role as corporate fiscal agent,

considerable control over the day to day financial management of B.C. Rail and

other Crown corporations. The statute gives the Lieutenant-Governor-in-Council

corporations may enter banking arrangements, lend or borrow money, enter lease

arrangements, or pledge their assets as guarantee or security. Even a conservative

interpretation of these provisions indicates that the Minister of Finance could

be empowered to stipulate the locations, number and type of corporate bank accounts;

to have access to those accounts; to control the timing of even routine financial

transactions; to manage the short-term cash surpluses; and to make binding decision

on behalf of Crown corporations with respect to the timing and type of borrowing

undertaken."

That's

an opinion, given unanimously by members of the Legislature's Committee

on Crown Corporations. It wasn't an opinion that was given lightly, or

given out of a casual examination of the section. It was an opinion

given with serious concern about the extraordinary powers that are in

the Financial Administration Act under

section 59.

MR. SPEAKER:

May I interrupt the hon. member just long enough to ask whether or not

he's aware that the amendment to the

section is certainly subject to

debate, but the

section 1tself is not subject to debate. As long as the

member keeps that in mind....

MR. HOWARD: Mr.

Speaker, what I was referring to was the

section of the act which this

bill seeks to amend. The argument I'm putting forward is that I wonder

why the minister, once, by this bill, having opened up the

section

under consideration — namely 59 — didn't go further and pay attention

to the unanimous recommendation of the Crown corporations committee

that expressed tremendous concern about the impact of

section 59 upon

Crown corporations. I think the minister should have responded to that

in a memo.

So I oppose it for two reasons. One, in the face

of a unanimous suggestion — it wasn't identified specifically as a

recommendation, but a unanimous opinion — expressed by the Committee on

Crown Corporations after many months of deliberation, the minister

refuses to respond to it, even though he seeks to amend the

section

which the committee expressed concern about. The other reason is that

it is a denial of a very firm and very fundamental, absolute, forever

commitment made by the late W.A.C. Bennett and this Legislature to the

native Indian people of this province.

MRS. WALLACE:

The member for Skeena has been talking about the First Citizen's Fund,

a fund which has not been recouped. I want to speak on the particular

amendment 3(b), where it talks about trust funds, and talk about a fund

which has been recouped. That's the Farm Income Assurance Fund. This

fund has been recouped, yet it is being held here, assured by the

Minister of Finance and the Minister of Agriculture and Food (Hon. Mr.

Hewitt). This fund is, being held in trust. It is comprised not only of

government funds but also of funds paid in by the producers.

HON. MR. CURTIS:

On a point of order, it seems to me that the member for

Cowichan-Malahat is directing her remarks to another bill which is

before the House. I may be mistaken, but the member for Skeena also

started in that direction.

MR. SPEAKER: Order,

please. As I understand it, the member is directing herself to

section

3(b), which

section perhaps ought better to be debated during

committee. However, she was making introductory remarks which appeared

to the Chair to be directed toward the principle of recouping, as she

says, trust funds. As long as the member continues with the principle,

she will be in order.

MRS. WALLACE: I'm talking about

the principle of this bill, which seems to be to utilize any funds any

way it can to bring more money into government coffers. That principle

is certainly demonstrated by the fact that they are now going to charge

a management fee for managing trust funds. What I'm

[ Page 7657 ]

pointing

out, Mr. Speaker, in the case of the Farm Income Assurance Fund, which

we are told is going to be held in trust now that the fund has been

recouped, is that that trust fund will not only be made up of

taxpayers' dollars but also of producers' dollars. The question of

whether or not any interest, which normally would have accrued to that

fund, is going to be credited for the purposes of paying farm income

assurance is something that we will debate under another bill at

another time, as the minister has indicated. In this particular

instance, I'm suggesting that to charge a management fee for a trust

fund, 50 percent of which is made up of producer's dollars with no

assurance that any interest is going to be paid or allowed into the

total amount of that money, seems to be a real money grab. I just

couldn't let this bill go by, and this principle go by, without

bringing to the attention of the House the kind of thing that can well

occur as a result of this piece of legislation. That's just one of the

many reasons why I'm opposed to it.

HON. MR. CURTIS:

Mr. Speaker, as you observed, some of these observations may be more

appropriate in committee. I made that point when I opened second

reading debate on the bill. However, there are a couple of things I

think I could put to rest immediately.

With respect to the

member for Skeena (Mr. Howard) and his reference to the First Citizens

Fund, any management fee which is contemplated by this amendment would

not apply, as this forms part of the consolidated revenue fund, which

is not subject to a charge. What we have attempted to do in the

section

dealing with fees is recover the costs of providing certain services to

these funds. If I might just stay with this for a moment, the treasury

division in the Ministry of Finance employs approximately 43 persons at

an estimated annual cost before recoveries of $4.9 million. Much of

their time is spent in administering, overseeing and working with some

$7.4 billion in cash, securities, loans and other investments, I

indicated that while these employees also have other work to do and

manage some of the province's own funds and do other tasks, the largest

portion of their time is devoted to managing trusteed funds and

performing other financial services for Crown corporations. The

charging of fees for a service such as is rendered by these people in

the treasury division is, I think, not unknown elsewhere in the public

sector and certainly not in the private sector. I recall that during my

time with a regional district, the Capital Regional District, if two or

three areas within the region wanted to undertake a specific function

and there was brought into play the management and accounting expertise

within the total regional district staff, there was an administration

fee levied for that particular service — whether it was internal audit

of a swimming pool, arena complex or whatever.

To repeat, I

don't think that the principle of levying a relatively small fee for a

service rendered to a fund should be found offensive by those who have

a particular interest in the fund or by those who observe our attempt

to make sure that the appropriate cost is assigned to a variety of

activities undertaken by government. Otherwise, we have all the

taxpayers of the province, through consolidated general revenue,

underwriting, if you will, or subsidizing the specific activity to

which I have referred.

The member for Skeena also alluded to

the Crown corporations reporting committee report which is now before

us. I will happily respond in my way on that. I wonder if that wouldn't

be more appropriate during estimates. Fin sure I can count on the

member to raise that matter when My estimates are presented.

MR. SPEAKER: Any debate on the report itself would be in order upon the motion for the adoption of the report.

HON. MR. CURTIS:

We may do it, then, on more than one occasion. However. I think I will

leave that until another time, when I'm sure that within the rules of

this House the member for Skeena, who has a particular interest in

this, will raise it directly, and I shall respond in detail.

I indicated, it is an amendment to a major piece of legislation. I

believe it is appropriate on the basis of our several months'

experience with the Financial Administration Act to date. Insofar as

those who criticize the Financial Administration Act for one reason or

another, and therefore criticize the amending bill before us, are

concerned, I still submit that it is one of the finest pieces of

legislation to have been introduced in Canada or any of its provinces

in a number of years. I think independent — not partisan — interested

observers will concur in that observation.

I move second reading of Bill 24.

Motion approved on the following division:

YEAS — 28

Wolfe

McCarthy

Williams

Gardom

Bennett

Curtis

Phillips

McGeer

Fraser

Nielsen

Kempf

Davis

Strachan

Segarty

Waterland

Hyndman

Chabot

McClelland

Smith

Heinrich

Hewitt

Jordan

Vander Zalm

Ritchie

Richmond

Ree

Davidson

Mussallem

NAYS — 21

Barrett

Howard

Lea

Lauk

Stupich

Dailly

Hall

Lorimer

Leggatt

Levi

Sanford

Skelly

D'Arcy

Lockstead

Barnes

Brown

Barber

Wallace

Hanson

Mitchell

Passarell

Division ordered to be recorded in the Journals of the House.

Bill 29, Financial Administration Amendment Act, 1982, read a second

time and referred to a Committee of the Whole House for consideration

at the next sitting of the House after today.

HON. MR. WILLIAMS: Committee on Bill 28, Mr. Speaker,

[ Page 7658 ]

COMPENSATION STABILIZATION ACT

(continued)

The House in committee on Bill 2; Mr. Davidson in the chair.

section 9.

MR. HOWARD: On this particular

section 9 I want to ask the Minister

of Finance an uncomplicated question. Let him look across the floor, if he will,

to a publication, the Interior News , published in Smithers Wednesday, May 12.

The headline there — the minister can see it, but I'll read it to him —

says "Don't Get Sick." That's the advice of Ev Person, chairman

of the Bulkley Valley District Hospital Board. He was commenting on the budget

cutbacks and the effect that this particular piece of legislation is having.

upon the Bulkley Valley District Hospital Board. I wonder if I could ask

the minister what advice he can give to the chairman of the hospital board in

Smithers and to residents in the area served by that hospital to allay their

fears about hospital cutbacks as a result of the program of his government.

HON. MR. CURTIS:

I wonder if the member could indicate how he relates this to

section 9,

which is the discretionary part of Bill 28, and which deals only with

guidelines to be paid by groups of employers rather than the expense

stabilization aspect of our total program. I am sorry but I don't see

the relevance to

section 9.

MR. HOWARD: The fact of

the matter is that the minister doesn't see any relevancy in people

being injured and not being able to find hospital care and hospital

beds. That is what the minister doesn't see. any relevancy in, not

whether this particular section, which he classified as voluntary, and

yet it contains the word "shall".... In addition, the chairman of

the hospital board doesn't know what the guidelines are. He hasn't been

advised what has happened. All he knows is that he's got an order and

that the hospital administrator has an order to do certain things.

They've done those certain things — they are required and forced to by

this government and by the piece of legislation that's before us now —

and the only response he could make to the general public around there

was: "Please don't get sick." I am not asking the minister to slough

off the comment about relevancy to the bill or anything else. It is

relevant. This is the Minister of Finance who is causing the problem.

This is the minister and the bill that's causing the problem. What

advice can the minister give to the chairman of the hospital board to

allay the fears of people in the Smithers area who are feeling the

effects of this particular piece of legislation?

I thought

for a moment the minister was going to get up and give a rational

explanation of something instead of trying to slough the thing off on

some procedural matter. Obviously the minister really doesn't care what

happens to people in Smithers who may need hospital care. Obviously

that's beyond his comprehension, understanding or concern.

Interjection.

MR. HOWARD: Well, I think it is beyond his concern. Otherwise, he'd respond to the questions. He'd deal with these subject matters.

Ask

him to look at another headline in the same paper. Since he's not

looking at it, I'll have to read it to him. "Hospital cuts" says the

article in the Interior News for Wednesday, May 12, 1982. The headline

says: "Like having a flat tire at 80 mph."

If the member for

Omineca (Mr. Kempf) would express as much concern about the people he

purports to represent as he wastes breath and time muttering from his

seat in the House, we'd be better off.

Interjections.

MR. CHAIRMAN:

Order, please, hon. members. First, the member for Skeena has the

floor; secondly, the member for Skeena must make his remarks, as our

standing orders indicate, strictly relevant to the

section under

consideration, which is

section 9. While members may feel strongly

about certain points that may reflect on their own constituencies, the

Chair has an obligation to enforce the standing orders, and our

standing orders are such that we must be strictly relevant dealing with

committee.

MR. HOWARD: I was seeking to do that, Mr.

Chairman, realizing that

section 9 talks about public-sector employers

who are hospitals. I'm talking about a particular one.

Here

is what one of the doctors in Smithers said, and I wonder what advice

the minister can provide to this medical practitioner who has to

concern himself with treating patients who need hospital care. Talking

about the hospital cuts forced on it by this government, he said: "It's

like having a flat tire at 80 miles per hour. Nine times out of ten

you'll survive,, although you have no business surviving. It will be

the same at the hospital with emergency situations. Nine times out of

ten we'll squeak by. This hospital has been cut to the limit for the

past four or five years. I think we are now down below that safety

level."

The doctor is talking about the one in ten, by his

words, who may not survive, who may die as a result of hospital

cutbacks. What suggestions can the minister make on how this particular

section 9 can prevent that happening to the one person in ten whom the

doctor in Smithers expresses concern about? Can the minister tell us

how

section 9 will prevent that one person in ten from being visited

with a very sad situation, as the doctor predicts?

HON. MR. CURTIS:

Mr. Chairman, again I take offence when the member infers that, under

the strictly relevant clause in our standing orders, I appear to

decline to be concerned about injured and sick people within the

province of British Columbia. We are dealing with one

section of Bill

28, a bill that covers the entire compensation stabilization program in

virtually every respect — in over 36 sections. I do not see how I can

answer the questions that are posed in this context by that member.

This

is the guideline

section as opposed to another

section that deals with

regulations. It does not deal with the question of the amount by which

a hospital has been lifted, 1982-83 over 1980-81, in terms of its

budget. This simply deals with the fact that the executive council of

British Columbia can issue compensation stabilization guidelines which

are flexible in terms of how they are dealt with by the two parties in

a bargaining situation. Mr. Chairman, I am unable to answer that

question under this section. If the member can guide me as to how I

could answer it without violating the rule of strict

[ Page 7659 ]

relevance, then I would be happy to do so; but I know of no way.

MR. HOWARD:

I think what the minister should have said is that he is unwilling to

try to answer the question, not unable to. There's no point in having

the minister hide himself procedurally behind the screen of the rules

of this House. It's only the desperate mountebanks like the minister

who hide behind the flimsiest excuse instead of answering a question.

MR. CHAIRMAN:

Order, please. Hon. members, in committee we deal only with the strict

relevance of a particular section. Personal allusions to any member are

out of order at all times; certainly under this particular

section they

are even more so. Again I would ask the member, in continuing his

debate, to adhere to the rules which guide us in committee: we must be

strictly relevant to the

section at hand.

Hon. members,

there are other opportunities before us to canvass the estimates of any

particular minister or ministry; this is not that occasion.

MR. HOWARD:

Well, Mr. Chairman, I suppose I’ll simply have to regretfully advise

the chairman of the hospital board in Smithers that the minister failed

to respond to the question put to him. The minister felt that he was

unable — that was the word he used — to respond to the question; the

minister was unable to provide any advice to the chairman of the

hospital board or to the doctor whose quotation I read earlier who

expressed concern about the one in ten emergency patients who might not

make it as a result of these cutbacks. I'll relate to them that the

minister was unable to do that because of the rules of this House, Mr.

Chairman. I'll also tell them that when the House adjourns, the

minister will have an opportunity outside in the corridor, where he is

not bound by the rules, not confined by the rules.... I think he's

only using the rules as a flimsy excuse....

HON. MR. CURTIS: Order!

MR. HOWARD: I think the minister is only using the rules as a flimsy excuse not to answer the question. He won't find that excuse outside.

MR. CHAIRMAN:

Hon. member, while the conversation being engaged in is possibly of

interest to the member, it certainly doesn't fall within the confines

section 9. As has been the occasion on several instances in debate

on this

Section in the past, we have strayed into what should have been

canvassed in second reading, on the principle of the bill. Again, hon.

member, please proceed, strictly on

section 9.

MR. HOWARD:

When we get outside this chamber.

section 9 won't be before us, and

neither will the rules. I'm sure the minister will then take the

opportunity to explain to the chairman of the hospital board in

Smithers and to the doctor in Smithers who expressed those sentiments,

and to give them advice on how they can better serve the patients in

that particular hospital, I'm sure the minister would jump at the

chance to do that. In fact, it might be appropriate if we were to

recess for a few moments. The minister and I could step outside, and he

could tell me privately what his advice is; then we could come back and

proceed to deal with the bill. Will the minister accept that

proposition?

HON. MR. CURTIS: No.

MR. HOWARD: No. of course he won't. He just said no.

MR. CHAIRMAN: Order, please.

MR. HOWARD: Hansard

doesn't show it, because the minister didn't utter it, but he just said

no, he would not follow that advice, indicating to me that he has no

concern whatever about the misery visited upon hospital patients by

virtue of this particular bill.

HON. MR. CURTIS: Do we usually recess at 22 minutes to five, Frank?

MR. HOWARD: How about six o'clock? Will you do it at six o'clock?

HON. MR. CURTIS: I'm in the corridor often.

MR. HOWARD:

Will you do it at six o'clock? I ask the minister a question through

you, Mr. Chairman. He said that we usually don't recess at 20 minutes

to five. I think he meant adjourn. I was just talking about a brief

two-minute recess, and then we could come back again. Would the

minister be prepared to tell me the advice that he would be prepared to

give at another time to the chairman of the hospital board in Smithers?

Six o'clock tonight, when the House adjourns — how about that. Mr.

Minister?

MR. CHAIRMAN: Again, hon. member, in no way can the remarks by the member

be construed as being in order under this section.

MR. HOWARD:

That's right. I agree with you that that particular question is not in

order, but the other ones were. Anyway, I'll proceed to something else.

Another

question I want to ask the minister is this. This particular

section

says that the executive council shall issue compensation stabilization

guidelines, etc. Now that doesn't mean by order-in-council. could I ask

the minister whether the term "executive council" is the same as the

other phrase in

section 17 — and I have to refer to this only for

comparison's sake — where it says that the

Lieutenant-Governor-in-Council may do certain flings? What's the

difference, if any?

HON. MR. CURTIS:

Mr. Chairman.

there is a clear distinction between that which the executive council

undertakes by order — the traditional and historic order-in-council —

and that which the executive council would in this case release as, if

you will, guidelines — a directive. an instruction, but not an order

as such.

MR. HOWARD: If that is the case — and I

thought that that was the situation — why then did the minister say on

another occasion that the compensation guidelines would be established

by order of the Lieutenant-Governor-in-Council?

HON. MR. CURTIS: Mr. Chairman, could the member cite the specific reference in order that I can answer the question accurately?

[ Page 7660 ]

MR. HOWARD:

The document I have here is issued by the Ministry of Finance under his

name on March 18, 1982. He says: "The compensation guidelines will be

established by order of the Lieutenant-Governor-in-Council." Can the

minister tell me why he said that then and now he's saying something

else in this act?

HON. MR. CURTIS: I will endeavour to answer that in due course, Mr. Chairman.

MR. HOWARD:

The minister also said, when asked about these guidelines — and he has

so far indicated that they don't exist.... Could the minister tell

us why he told us earlier that the guidelines, in fact, do exist and

were established? Can the minister tell us why at one point he told us

the guidelines were established, but now refuses to say what they are?

HON. MR. CURTIS: Mr. Chairman, once again, would the member please cite the reference.

MR. HOWARD: Well, doesn't the minister know what he has said in this matter?

HON. MR. CURTIS: Yes.

MR. HOWARD:

He does? Well, again, they're his own words. The first one was that the

compensation guidelines would be established by order of the

Lieutenant-Governor-in-Council. But that's completely contrary — he

said he'd attempt to find an answer for that — to what is before us

now, that the executive council shall issue them. Those are two

separate things. On which occasion was the minister in error — now or

on March 18? He must have been in error on one occasion.

HON. MR. CURTIS:

Mr. Chairman, as I take it, with respect to

section 9, the member

opposite has referred to two specific references to guidelines. In

order that I can answer very clearly, I would like him to indicate the

manner in which these statements were made — whether he's citing

something from Hansard or whether he has a document in front of

him. It is only in that way that I can fully respond to his second

question; I have undertaken to examine the first question. I also think

that a great deal has been said about this matter. I want to be

completely sure that I understand the reference the member has in front

of him so I can give him the correct and appropriate answer. But I need

a full citation.

MR. HOWARD: I don't know what's

wrong with the minister, Mr. Chairman. Doesn't he pay attention? Has he

got his mind set, Mr. Chairman, and refuses to listen to what I said?

MR. CHAIRMAN: Order, please, hon. member. On

section 9.

MR. HOWARD:

Well, it relates to this particular section. I gave the minister the

reference. He asked what it was and I told him what it was — issued

under the Ministry of Finance, March 18, 1982, Hon. H. Curtis. Is that

the same person, the Minister of Finance? I'm inclined to think that it

is, in that he said that the guidelines were initially established on

February 18, 1982. He said that the guidelines were initially

established. What are they? Or was he in error on March 18, when the

minister issued that statement and said that the guidelines were

initially established on February 18, 1982? There is nothing

complicated about that type of question.

We are talking about the guidelines that the executive council shall is sue.

Presumably they have already been is sued. What are they? When was the minister

in error — today or on March 18 when he said one thing and now has before us

a piece of legislation which says something else? Could the Minister of Finance

tell us whether he was not in error on either occasion? Is the Minister of Finance

interested in the question? He is staring at the clock. He is hoping that time

will pass quickly and we'll get to 6 o'clock so that he can come out

in the corridor and tell me what advice I can give to the chairman of the hospital

board in Smithers.

has taken one question and said he'll pursue that and see whether he

can tell the House why on March 18 he said the compensation guidelines

will be established by order of the Lieutenant-Governor-in-Council, but

in the bill he denies that and says it is going to be the executive

council. I can understand making an error of that nature. I can

understand, perhaps, that somebody else wrote this statement for the

minister. I can understand it might be the words of the Premier, who is

usually off base quite a bit in talking about these subject matters.

But it is a very serious conflict, because if the minister — and he is

— is going to operate on the basis of asking this Legislature to have

faith and trust in his and the government's capacity to deal with this

matter, then when matters arise which tend to challenge the

credibility, I believe the minister is obliged to indicate to the House

which situation is correct. If one was made in error, so what? We all

tend to make errors.

Can the minister tell me whether his

statement on March 18 which says that the compensation guidelines will

be established by order of the Lieutenant-Governor-in-Council was a

mistake?

HON. MR. CURTIS: With respect to the

specific point made by the member for Skeena in his last question, I

have already indicated that I will check that carefully and report back.

MR. HOWARD:

He is not sure it is a mistake. I would think that the minister,

careful, knowledgeable, with his intimate detailed understanding of

what he's put before the House and the committee, would probably know

right off the top of his head whether he has made a mistake, but he

says he doesn't remember whether he did or not but he will check it out

and see in which instance he is in error.

Could I ask him

further whether the guidelines referred to under

section 9 have been

established? Could I ask the minister if the guidelines were initially

established on February 18, 1982?

HON. MR. CURTIS:

The member knows, I think, that the basis of the compensation

stabilization program and that which is dealt with in

section 9 which

is presently before the committee was announced on February 18 and has

been expanded upon on a number of occasions, not only in this House in

second reading and in committee but also in a variety of meetings which

have occurred with interested groups of employees and employers in the

public sector representing all sorts of areas of the province of

British Columbia. The question ignores that which is a matter of public

record.

[ Page 7661 ]

MR. HOWARD:

On the contrary, the question does not ignore that which is a matter of

public record. I just wanted to I have a current emphasis from the

minister as to what the situation is today. He is now telling us that,

yes, the guidelines were initially established on February 18, 1982.

They were established by one man on television.

HON. MR. FRASER: What's wrong with that?

MR. HOWARD:

The Minister of Transportation and Highways poses a question in the

negative, as if there is something wrong with it. He may think that

there is something wrong with what the Premier does. Maybe that is what

that slip of the tongue indicates. He just turned around and smiled at

me; I don't know if I take that as agreement with what I am saying or

not. The fact of the matter is that the Premier — so the Minister of

Finance has now said — said that the guidelines were initially

established on February 18, 1982, on television — one man.

Interjections.

MR. HOWARD:

I don't want to hear them because I know they're out of order, but I

have difficulty understanding the out-of-order comments by members

opposite. If they could speak up a bit, maybe you too would hear them,

Mr. Chairman. Maybe they don't want you to hear them, Mr. Chairman. Now

they're silent, the best condition prevalent on that side of the House.

The Minister of Finance has just now said — reiterated, reconfirmed,

put it in today's atmosphere — that yes, the guidelines were initially

established on February 18, 1982 by the Premier. He didn't say by the

Premier, but that's who did it. A few days ago the Premier out in the

corridor, in another declaration, said they were going to be 5 percent

or less. We get back to the initial questions posed by the Leader of

the Opposition to the Minister of Finance — posed only because of the

absolute confusion and uncertainty in the minds or hearts of this

government as to what it's talking about. If guidelines are things

developed out of the blurtings of the Premier, so be it, as long as the

general public and the people who are going to be affected by them know.

Maybe

this is a mistake by the minister, which he can clear up later, but

it's got to be read in the context of the item: "Given that the

compensation guidelines will be established by order of the

Lieutenant-Governor-in-Council." That is a quotation from the minister

on March 18. I want to ask the minister this: if that is correct, will

the executive council have the power to vary or amend the guidelines

established by the Lieutenant-Governor-in-Council? If the guidelines

are established by the Lieutenant-Governor-in-Council, which is a

superior body to the executive council, will the executive council have

the authority to vary or amend those guidelines?

Did the

minister hear the question? He heard the question; he doesn't consider

it worth answering, just as he didn't consider it worth answering the

question as to what advice he could give the chairman of the school

board or the hospital board. Now he hears. He doesn't like that. The

minister doesn't like being reminded that he refused to reply to

hospital cutbacks in Smithers, but he did.

MR. CHAIRMAN: Hon. member, we've canvassed this issue, and we seem

to come back to the fact that we have before us

section 9, we have before us

standing order 61 (2) and it's up to the member speaking to put those two

together n their proper context.

MR. HOWARD: That's exactly what I'm doing, Mr. Chairman.

We have the Times-Colonist

Tuesday, May 18, item that I'm sure the minister has heard about. This

is a statement by the Premier that basically puts us in the

position.... After all, the Premier is the one who knows exactly

what he's talking about, and he said basically that this bill should

not be proceeded with; it's not needed: it's not necessary. The Premier

and the Minister of Finance are willing to spend $882, 890 this year

for Mr. Peck, the so-called restraint czar, but the Premier, out in the

corridor again — he won't come in the House and take us into his

confidence as to what he thinks this should all be about — told us that

this $880,000-a-year man won't have anything to do. He said we're

spending $882,000 in this fiscal year for nothing- to employ Mr. Peck

as a Maytag repairman. If that is the Premier's assessment of the

abilities and the worthiness of Mr. Peck, then he should ask Maytag to

pay the bill, not us.

On the basis of that comment from the

Premier that Mr. Peck won't have anything to do, yet we're going to set

aside $880,000 for him not to have anything to do, could the minister

tell the House whether on the strength of what the Premier said about

the valuelessness of this piece of legislation, he would consider

withdrawing it?

HON. MR. CURTIS: Mr. Chairman, the

member has clearly based his last observation on a completely incorrect

assumption. Those are his words when he refers to this as being

"valueless legislation." That is his view, and let the people of B.C.

know that that is his view of the bill. Mr. Member, don't, through an

echo, attribute that to the Premier or any other member of the

government.

You've asked on a number of occasions this

afternoon what the guidelines are. Mr. Chairman, I can give one

reference immediately from the Hansard Blues for yesterday

afternoon, tape 573-1, at 4:54 p.m., where I indicated what the

guidelines were. I referred to their announcement on May 18. I referred

to the fact that they had been dealt with in second reading of Bill 28,

and repeatedly in the course of debate on this section. If the member

cannot accept what has been said on a number of occasions, then that is

also his problem. It is not my problem and it is not the problem of the

government.

MR. HOWARD: Is that the reference, Mr.

Chairman, where the Minister of Finance said the Premier didn't know

what he was talking about and that he should keep his mouth shut when

he is talking about the guidelines? Is that the area that the minister

dealt with? I'm sure that's what it is.

HON. MR. CURTIS: Do I understand that the member is paraphrasing something

from Hansard , Mr. Chairman?

MR. CHAIRMAN: Shall

section 9 pass?

The member for Cowichan-Malahat.

MRS. WALLACE: Thank you, Mr. Chairman.

I'm

certainly surprised that the Minister of Finance, in response to my

colleague from Skeena (Mr. Howard), has indicated that the guidelines

are as were indicated by him on February 18, by him in second reading

and by him earlier in

[ Page 7662 ]

this

debate, because confusion reigns supreme on these guidelines. The

minister keeps telling us this in sort of roundabout ways. He doesn't

come out and say: "This is what it is." He refers to previous quotes.

At the same time we have the Premier telling us that it's something

different — 0 to 5. We have the Minister of Education (Hon. Mr. Smith)

telling us it's something under 8 percent. We have hospital boards

being allocated 7.7 percent in the funds that they're being allocated

for wage increases. Then we have the Premier's classic statement about

the Maytag repairman: "Poor Mr. Peck, he's going to be as lonely as the

Maytag repairman." We're paying him $325 a day, allowing him something

in excess or $880,080 for his budget, and he's going to be as lonely

as a Maytag repairman. Is it any wonder, Mr. Chairman, that confusion

reigns?

In second reading I spoke, as did many members on

this side of the House, about the very awesome, sweeping powers that

are included in this particular section, where it's wide open. You

know, we had some guidelines originally, and then we get this. It's no

wonder we're in the state of confusion we're in, because obviously

that's the intent of

section 9 — to leave it wide open, to leave it to

the executive council. That's an interesting point which was raised by

the member for Skeena, because certainly the executive council's

decision is much more readily and easily changed than is a decision by

the Lieutenant-Governor-in-Council, where an order-in-council is

required. So it seems that these guidelines can be changed day in, day

out to suit the political needs of this government, Mr. Chairman, and

that's the concern that we have.

The Minister of Finance has

a habit, Mr. Chairman, of getting up and suggesting to you that I'm out

of order when I speak. So I want to be very careful.

HON. MR. CURTIS: Twice.

MRS. WALLACE:

Well, it's happened a few times. I've sort of won the argument in every

instance, and I want to be very sure that he doesn't get up and call me

out of order this time, because I'm going to be very much in order.

I'm

going to talk about the guidelines that refer to stabilization and

compensation plans of public-sector employers and public-sector

employees —

section 9. I'd like to read you a quote, Mr. Chairman, then

I'm going to ask the minister if he can tell me the source of this

quote. "The provincial government, in deciding to impose a restraint

program on the whole public sector, was well aware of the implications

of such actions on social programs and on the personnel who work within

them." I wonder if the minister has any idea of the source of that

quotation. It is from a letter dated April 28 to the chairman of a

school board, signed by the Minister of Education (Hon. Mr. Smith). I'm

sure the Minister of Finance will not dispute the remarks of his

colleague.

I'm talking about the guidelines that are set up under the restraint

program and the implications they have on social programs, as indicated

by the Minister of Education. I would like to ask the Minister of

Finance if when they considered the implications of these guidelines,

as the Minister of Education has indicated, they considered the fact

that they were going to result in the closure of 1,200 hospital beds

and the layoff of 2,100 staff? Did they consider that when they

considered these guidelines and the problems that would occur as a

result of them? Did they consider that possibility — as the Minister of

Education said, the effect on the social programs?

[Mr. Strachan in the chair.]

wonder whether the Minister of Finance knew when he first considered

the restraint program and the guidelines that a laboratory staff member

working at a Victoria hospital received a 4 percent raise last year and

in 1980 received the same 4 percent raise. I wonder whether the

Minister of Finance was aware of that when he talked about those

guidelines. This is in a letter from Jean Parker of Victoria. It

appeared in today's Province .

"I am a

laboratory staff member. Last year I received a 4 percent raise; in

1980 I received the same. We work hard, frequently have no time for

coffee and are paged back during our 30-minute supper break — 30

minutes from start to finish....

"In a hospital environment we are trained to assess our priorities. I suggest that the government attempt to do the same.

"Who

will tell the parents of a young cancer patient that their child will

have to wait eight months for his surgery because there isn't a bed for

him? Not the Minister of Health" — or the Minister of Finance —

"probably a nurse" — or a doctor.

Certainly when the

guidelines that we're discussing in

section 9 were considered, it was

considered and acknowledged by the government that the whole public

sector would be affected. They were aware of the implications that such

actions would have on social programs. That is what the Minister of

Education has said. I think I am very much in order in asking the

minister if, when they considered these specific things, they did

consider, as the minister has said, that they would have severe

implications for the social programs.

MR. CHAIRMAN:

Hon. member, the Chair will comment this way. With respect to standing

order 61 and strict relevancy, the member is in order when we talk

about compensation guidelines for public-sector employees. Discussion

of programs would not be in order. The Chair so rules.

MRS. WALLACE:

Mr. Chairman, certainly these guidelines are imposing a restraint

program on the whole public sector. It seems to me to be completely and

strictly relevant to cite examples of how this is working. An example

is the quickest and easiest way of explaining or pointing out the

problems with the program. I would submit, Mr. Chairman, that an

example relative to the social programs is completely in order, and

certainly the Minister of Education has indicated that this was

discussed in cabinet, it was a consideration and that they knew this

was going to happen. I am suggesting that these examples could perhaps

cause them to reconsider the program, because only by example — by

actually seeing what is happening even before the program is fully in

place — can we be fully aware of the implications of this program.

We've

heard from doctors who have said that doctors will be leaving this

province. Certainly that is going to reflect on the social programs if

we don't have adequate and skilled medical expertise here. I suggest

that that is one example of the way the social programs are being

eroded as a result of these guidelines.

[ Page 7663 ]

They

talk of doctors who formerly waited a week to have a bed for a patient

— not for elective surgery but for emergency surgery — now having to

wait up to a month. These are the sorts of social programs which are

being eroded. I think the minister should be aware of them so he is

fully cognizant of what this piece of legislation is doing.

MR. RITCHIE:

On a point of order, it would appear that this member is not only

missing the

section but the bill. I don't see how this can be relevant

to that

section of Bill 28.

MR. CHAIRMAN: Your point

is well taken. Hon. members of the committee, the Chair for many days

now has advised all members to be relevant to the

section before us.

Strict relevance must be adhered to. It is in our standing orders, and

we must follow our standing orders.

Section 9 clearly deals with

public-sector employees, the compensation stabilization program and

public-sector employers. I would ask all members of the committee not

to stray from the strict relevancy of that

section before us. We cannot

discuss programs in this section.

MRS. WALLACE: I

agree that we are discussing the guidelines that impose the restraint

program on the public sector employers and the public-sector employees.

I am quoting again from the Minister of Education: "The provincial

government, in deciding to impose a restraint program on the whole

public sector, was well aware of the implications of such actions on

social programs and on the personnel who work within them." I am

suggesting that if the cabinet was well aware of the implications, they

must then have been aware that hospitals would find themselves in the

position they are in. They must have been aware that, for example, the

Nanaimo Regional Hospital would have to close its rehabilitation wing.

That particular wing has been evaluated as one of the best in the

northwest with the exception, possibly, of one in Washington.

HON. MR. CURTIS:

I rise on a point of order. The question of health care, the

availability of a health system and the adequacy of government's

ability to fund a health system must be of concern to any thinking

person in this House or in the province of British Columbia. I have

great difficulty, however, relating that highly emotionally-charged

issue to

section 9 of Bill 28. That is not to ignore the topic, but I

cannot see how — as has been observed by others who have intervened on

points of order — it relates to one

section of a bill of more than 30

sections which has been debated in second reading.

MR. CHAIRMAN:

Once again the Chair must comment that the point of order raised by the

Minister of Finance is relevant to our standing order 61: "Speeches in

Committee of the Whole House must be strictly relevant to the item or

clause under consideration." The Chair so rules and would ask all

members of the committee to make speeches strictly relevant. Further, I

would refer all members of the committee to standing order 43, which

states:

"Mr. Speaker, or the Chairman, after

having called the attention of the House, or of the committee, to the

conduct of a member, who persists in irrelevance, or tedious

repetition, either of his own arguments or of th