1992 Legislative Session: 1st Session, 35th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, MAY 20, 1992

Afternoon Sitting

Volume 3, Number 9

[ Page 1663 ]

The House met at 2:02 p.m.

Prayers.

N. Lortie: I'm pleased to have 80 students from Seaquam Secondary School in North Delta here today -- a very great high school in my constituency. They're a grade 11 class led by Mr. McLeod. Would the House please make them welcome.

Hon. A. Petter: I'm pleased to introduce today a delegation visiting from my constituency of Saanich South. I have the pleasure of introducing students from the Ozanam Sheltered Workshop of the St. Vincent de Paul Society and their teacher, Cecile Thomson. I think the House might be interested to know that Miss Thompson's grandfather, Frank Harry Mobley, was Liberal MLA for Atlin from 1916 until he died in office in 1920. The group are visiting us today as part of their academic upgrading unit on government. I would like the House to please join me in making them very welcome.

L. Fox: I'd like the House to recognize five very good students who have excelled and, in fact, won the National Stock Market Competition for Canada. They will be travelling very shortly to Toronto to Sir Wilfrid Laurier University to pick up their trophy and $1,000 scholarship. These five students are from Fraser Lake Elementary Secondary School. Their names are John Brise, Joanna Kelly, Dan Gammond, Louise Hebert and Sarah Baker. Would the House please congratulate these individuals.

With the cooperation of the House, could I ask if the Speaker would write a letter recognizing this great accomplishment of that school?

The Speaker: Is it the wish of the House that the Speaker do so?

Hon. Members: Aye.

H. De Jong: With us today in the House is Mr. Steve Greenwood, a reporter for the Abbotsford-Matsqui News. I ask the House to give him a hearty welcome.

G. Farrell-Collins: I would ask the members of the House to make welcome today Dr. Robert Bence from North Adams State College in North Adams, Massachusetts. He is spending the summer at Simon Fraser University and has ventured over here today to do a little bit of research on our parliamentary system -- in a comparative sense, I suppose. He has been meeting with members of our caucus, and I understand he will be meeting with members of the government caucus later on. I ask the House to make him welcome.

Introduction of Bills

MISCELLANEOUS REGISTRATIONS ACT, 1992

Hon. G. Clark presented a message from His Honour the Lieutenant-Governor: a bill intituled Miscellaneous Registrations Act, 1992.

Hon. G. Clark: The Miscellaneous Registrations Act allows more information to be made available to the general public. It achieves this objective by providing authority to register prescribed types of claims at the personal property registry. The personal property registry is an established system which already registers security interests on personal property.

Hon. Speaker, I move that the bill be introduced and read a first time now.

Bill 41 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

SOFTWOOD LUMBER TARIFF

G. Wilson: My question is to the Premier, and it comes in light of the visit today of the Prime Minister of Canada to the President of the United States. Would the Premier tell us if he has been in contact with the Prime Minister of Canada in the last 48 hours to indicate that the bottom line of British Columbians is that there must be a complete reduction of the tariff on softwood lumber exports, and that British Columbians will accept nothing less in the discussions that are taking place in Washington today?

Hon. M. Harcourt: We have to do far more than see a reduction of this unfair, hypocritical countervail; I think we have to see a complete elimination of this countervail. The Prime Minister is completely aware of my feelings on this. The feelings of all British Columbians, I'm sure, were unanimous that we want to see this unfair, hypocritical action by the United States Department of Commerce eliminated entirely. I communicated that in the strongest possible terms when I spoke with the Prime Minister last Friday.

I can assure you that our Minister of Trade has had exactly the same conversations with the federal Minister of Trade, Mr. Wilson. We are backing the Prime Minister 100 percent to eliminate, as soon as possible, this unfair action by the United States.

G. Wilson: I think it is not a partisan issue that the elimination of this unfair tariff is necessary. However, the Canadian Embassy in Washington has confirmed that British Columbia has no representatives with the Prime Minister or the Deputy Minister of Trade that is with him or the delegation from the External Affairs department in Washington. Can the Premier then tell the House: if we're going to insist that there be a complete elimination, why does British Columbia not have any government representatives with the Prime

[ Page 1664 ]

Minister now, making sure that B.C.'s position is carried out?

Hon. M. Harcourt: I appreciate that question from the Leader of the Opposition. I'm sure he'll join with us in a non-partisan way to make sure the constitutional round that we're going through right now includes a formal position for the province, particularly on natural resources under our jurisdiction, in the making of treaties and in dealing with trade disputes like this. Right now we are explicitly excluded from those meetings. We have been told so and were pulled out of those meetings by the federal government. They say that this is their jurisdiction.

That's why I'm sure that the Leader of the Opposition is going to back our requirement that British Columbia be at the table before, during and after treaties being signed with the United States.

The Speaker: Final supplemental.

G. Wilson: In fact, the response leads me directly into the final supplemental. The minister responsible for constitutional reform argues today in Montreal that we should have inclusion in these meetings. However, further consultation with the Canadian Embassy in Washington suggests that not only are there formal meetings taking place, but there are also informal meetings taking place in Washington, in which there is a great deal of discussion happening and at which no members representing this government are present.

It is unacceptable to simply say that we're excluded from formal meetings, when we have the opportunity to have direct discussion and influence in making sure that the countervail is removed in its entirety. Yet this government fails to have anybody there.

The question to the Premier is this: if the Premier believes in what his minister is saying in Montreal, why is he not demonstrating so in kind by having representatives in Washington today, to make sure that in both the informal and formal meetings the B.C. position is clearly articulated and maintained?

Hon. M. Harcourt: It was B.C. that led the way in stiffening the spine of the federal government on this matter and that has had representations in Washington for many months now -- unanimous representations by the industry, by workers in the industry and by this government. We have been the most aggressive and assertive ones in this unfair, vexatious misuse of the countervail provision. We have people representing us in Washington extremely well. If the Leader of the Opposition wants us to be flying all over the world, when we have good representation....

If he wants us to be here to answer questions and conduct the business of the Legislature, we're prepared to be here to do that. We have a very clear position. I'm pleased to see that the Leader of the Opposition backs our position and is changing his mind from a reduction of tariff to agreeing with us that there should be an elimination of this unfair action, that B.C. has led the way in pushing for the total elimination of this tariff and that we should be represented during treaty negotiations. We are making headway in this Legislature, hon. Speaker.

[2:15]

NATIVE POLICE

J. Weisgerber: My question today is to the Attorney General. Over the past three months the Attorney General has received three petitions from some 493 residents in Lillooet regarding a very serious and potentially explosive situation in that community with the Stl'atl'imx tribal police unit allegedly harassing residents off-reserve. I'm wondering if the Attorney General has received these petitions, and if he can advise the House what actions he has taken in response to them.

Hon. C. Gabelmann: Yes, I have received some correspondence on the issue. I'm not certain of the extent of the petitions. I have asked staff for a report on the issue. I had a preliminary report, but I think it would serve the interests of the issue better if I were to report to the House on another day when I can give a fuller report.

J. Weisgerber: I think the Attorney General recognizes that the previous government was supportive of the notion of encouraging Indian people to have tribal peacekeepers whose domain was the reserve lands. We didn't anticipate tribal peacekeepers -- tribal police -- armed with 9-mm handguns and carrying shotguns in their vehicles, patrolling off-reserve and stopping residents who were not on reserve lands.

Has the Attorney General taken -- or does he intend to take -- any action to inform British Columbians as to the jurisdiction the tribal peacekeepers have? In other words, British Columbians should know what jurisdiction and what rights they have if they are stopped off-reserve by Indian police. Has the Attorney General decided to make that information available?

Hon. C. Gabelmann: Hon. Speaker, I indicated earlier that I would give a fuller report later. But given the second question, perhaps I should say -- in a preliminary way -- that the policing on-reserve is carried out in an appropriate manner. On occasion, the neighbouring RCMP detachment has required assistance, and they have sought the assistance of the band police. That assistance has been provided, and to the best of my knowledge, it is only when the RCMP have asked for the assistance of the band police that that has actually happened off-reserve.

As I said to the member, I want to give a fuller and more complete answer, and I will still do that on another occasion. But by way of preliminary report, I can give you that information.

The Speaker: A final, brief supplemental.

J. Weisgerber: The situation that the Attorney-General describes is not the one that the residents of Lillooet appear to be concerned with. It is my understanding that it's no request from the RCMP; it is an

[ Page 1665 ]

action taken by the Indian police themselves. The program itself is a good one, and I wouldn't for a minute want to leave the impression that it isn't. Over the last few months the federal government has committed about $117 million to this program, and since it's a cost-shared program, I'm wondering if the Attorney-General has committed any new funds to assist Indian bands with police action and, if he has entered into negotiations with any specific bands, if he could advise us which those might be.

Hon. C. Gabelmann: I think, given the series of questions, the complexity of the issue and the preciseness of the answer required, that I would prefer to come back another day with a full answer.

SOFTWOOD LUMBER TARIFF

W. Hurd: A question today for the Minister of Economic Development, Small Business and Trade. My question pertains to remarks he made in this House yesterday regarding the work of high-priced U.S. lobbyists for the B.C. government in the countervail case. The minister noted yesterday:

"...the money we've spent on Neil Goldschmidt has been well worth it. We have raised the issue of log exports, which is clearly on the agenda. While they have penalized us for log export controls, I assure you this government will do everything in its power to ensure that we never export more logs than we already have."

A question to the minister: was Mr. Goldschmidt's major role in this trade dispute to explain B.C.'s log export policies?

Hon. D. Zirnhelt: There's no problem with the amount we've spent. The answer to your question yesterday should have been just yes, the money is well spent. Mr. Goldschmidt's role was to advise us on some of the, shall we say, tactics and strategy we should take in terms of getting our message out. You need to know that Mr. Goldschmidt was well aware of our legislation with respect to restrictions of log exports. In fact, when he was Governor of that state he lobbied to have the federal government bring in log export controls that covered the state of Oregon, based on our 1906 law.

W. Hurd: A supplemental question to the Minister of Forests. The opposition understands that Mr. Goldschmidt was asked to focus on one aspect of this case during his lobbying efforts; namely, the B.C. ban on raw log exports as a potential subsidy for our softwood lumber. What exactly was this ban that Mr. Goldschmidt was being paid $36,000 to explain to the U.S. Senators?

Hon. D. Miller: Clearly the member fails to understand the issue. In 1986 the softwood countervail was led by forces in the Pacific Northwest, particularly by Senator Packwood. It was clear that in this countervail, the forces driving it came from the southern U.S., Georgia-Pacific Corp. In our view, people in the Pacific Northwest -- Washington and Oregon -- were being deceived into thinking that if the countervail was imposed, it would help those states. We hired Mr. Goldschmidt, who did a very effective job, in our view, in getting the word out in Washington State and Oregon that their interests would be compromised if the countervail went through.

As a result of hiring Mr. Goldschmidt, we've got former Governors of both those states, the current Governor and the Governor of Idaho all writing letters to the U.S. administration saying: "Get the export issue off the countervail." Mr. Goldschidt -- Goldschmidt; I apologize for mispronouncing his name -- did a very effective job in getting the necessary allies for British Columbia in Washington, Oregon and Idaho and perhaps indirectly led to the reduction in the countervail that was finally issued.

W. Hurd: I hope that the mispronunciation of his name isn't a commentary on the quality of his lobbying efforts.

We are led to understand that the Americans have levied a 6.6 percent tariff because in the opinion of the U.S. Department of Commerce, B.C. log export restrictions provide an even greater subsidy than do our stumpage rates. Did Mr. Goldschmidt even understand the log export restrictions of British Columbia before he took our case to the U.S. politicians? Does the minister understand them?

Hon. D. Miller: For the benefit of the Liberal opposition, let me first of all explain that the preliminary subsidy of 14.48 percent has been reduced to 6.51 percent. Perhaps Mr. Goldschmidt played a prominent role in having that amount reduced. Nonetheless, B.C.'s position is that no matter what the figure, there is no basis for a subsidy. There is no basis for a countervailing duty. As the Premier has outlined, we will continue to fight this issue to the fullest extent of our ability.

I think it has been acknowledged by the industry in B.C. and by other players in Canada that until British Columbia became very aggressive on the export issue, we were not making inroads in the United States. I would be happy to share the press coverage from the United States that we have now received since we hired the former Governor of Oregon to work on our behalf, in order to illustrate to the member that right across the United States, there is not support for this countervailing duty.

We will continue our aggressive efforts. With luck, we will be successful in having it eliminated. Hon. member, we are prepared to hire anyone who can be effective in delivering British Columbia's message to the United States.

HIRING OF CONSULTANT

Hon. G. Clark: Hon. Speaker, I rise to answer a question taken on notice by the Premier on my behalf yesterday.

The question was regarding Mr. Alistair Crerar. I have his curriculum vitae here, which I would be delighted to share with the members. He graduated from the University of British Columbia in 1950 with a master's degree in economics and geography. From 1950 to 1962 he was research planner for the Lower

[ Page 1666 ]

Mainland Regional Planning Board; '62 to '65, director of long-range planning for the city of Toronto planning board; '65 to '70, economist for the Atlantic Development Board; '70 to '73, manager of Atlantic region planning with the Department of Regional Economic Expansion; '73 to '77, director of Environment Land Use Committee Secretariat in Victoria; '77 to '88, chief executive officer of the Environment Council of Alberta; '88 to '90, coordinator for the development of a national conservation strategy for the government of Pakistan. He is currently assistant secretary of strategic planning.

Members on this side of the House and the government are delighted to have someone of this outstanding quality working for the government of British Columbia in a very challenging role looking at the question of Crown corporations of British Columbia. His salary is roughly equivalent to an assistant deputy minister's.

Ministerial Statement

INQUIRY INTO POLICING

Hon. C. Gabelmann: Hon. Speaker, I understand the opposition parties were given a copy of this earlier. I trust it was in time. I'm sure it's never early enough, but we tried our best this morning.

Over the past several months I have heard expressions of concern from various individuals and groups with respect to policing in our province. Some have been general expressions of concern; others have arisen from specific incidents. I share those concerns, and I have consulted with senior officials in my ministry, with people involved in law enforcement, with community representatives and with individual British Columbians. I rise today to advise the House of the course of action that will be taken.

First, however, I am sure that members of the House will want to join me in recognizing that the men and women responsible for law enforcement in our province have, for many years, served our communities with professional integrity. I would also remind members of the House that British Columbia is in the vanguard with respect to the implementation of modern alternatives to the use of force, such as the use of the pepper spray commonly known as Cap-Stun, and the training of police officers in methods for verbally defusing violent or potentially violent situations.

Our Police Commission has also established a set of professional standards for municipal police forces throughout the province, the first such set of standards in Canada.

[2:30]

It is also important to recognize the range of procedures currently operative with respect to incidents involving the use of force by police. Civilian oversight of police action is carried out by municipal police boards, the B.C. Police Commission and the complaints commissioner for municipal forces, and the federal public complaint commission for the RCMP. In addition to these means of review, specific cases will be the subject of police investigations, and where deaths have occurred, actions by the coroner's office.

Crown counsel will review investigation reports, and the Assistant Deputy Attorney General for criminal justice will be involved in decisions with respect to any criminal charges.

These procedures are currently underway with respect to recent incidents, and as Attorney General I cannot, of course, comment on any of the incidents currently under investigation. Notwithstanding my strong belief that British Columbians can have full confidence in law enforcement in our province, the fact is that it has been almost 20 years since the last independent review, and our communities have undergone very significant changes since that time.

Accordingly, I wish to advise the House today that I will be establishing an independent commission of inquiry into policing and the governance of our municipal police. Specific terms of reference will be finalized shortly, as will the name of the person chosen to conduct the inquiry. I can advise the House that the commission will be headed by a highly respected individual. The commission will be asked to give priority to providing an interim report on the issue of police investigating police, and whether the present structure of civilian oversight of police is adequate.

Beyond these issues of immediate concern, the scope of the inquiry will be broad, covering such diverse matters as the process for obtaining search warrants, community-police relations and police training. The commission will provide an opportunity for all British Columbians, including aboriginal peoples and multicultural communities, to have their concerns heard.

I'm sure all members of the House will join me in reassuring British Columbians of the integrity of the administration of law enforcement in our province, and will support the efforts of the commission of inquiry to identify areas that require improvement and to make recommendations for such improvements.

A. Warnke: I want to extend to the Attorney General our support for the statements he has made.

I believe that there are a couple of other points that need to made. Indeed, a point that has been made several times already this session is that the laws form the basis of a free, democratic society and that one of the purposes of democratic government is that the laws remain the cornerstone of civil society. We often think of the laws as reinforced by the threat of force. But a civil society, based on the rule of law, actually rests on something else: public confidence and respect for the laws and the police force. A wise government is one that understands this.

If the recent tragedy was an isolated incident, it might be tempting to slough it off, although I think the confusing stories do generate the kind of action that has been taken by this government, and for that I applaud.

Given that a pattern of similar incidents has arisen recently -- indeed, some of these questions have been raised earlier this session, perhaps in a different forum than the one we are in right now -- such a review is certainly timely. To establish an independent commission of inquiry at this particular time is certainly a wise move, and it is to be supported.

There are several issues, some of which have been described by the Attorney General. Perhaps I could

[ Page 1667 ]

even add one more: the role of informants in police investigation.

We must ensure that our police forces have public respect and support. Fortunately, for the time being, I happen to believe the police forces have that respect, but it could easily be eroded, and we would not want that respect and confidence eroded. We do not want to see our police force become so defensive to the point that they form some sort of a subculture from the rest of society. This is what we have to avoid. We are especially sensitive, given some of the events recently in the United States and here in Canada as well -- in the city of Toronto. We want to see justice prevail at all times.

For the benefit of the public, for the benefit of the police and especially for those aggrieved by recent tragedies, especially the one last week, we support this initiative of the Attorney General.

C. Serwa: We in the third party also support the independent commission of inquiry that the Attorney General has initiated with his announcement. In the police force there will always be concerns and criticisms from the public. Certainly, specific incidents where split-second decisions must be made will always be controversial: sometimes they'll be made appropriately and sometimes not. I think that's just part of the nature of their job. On the whole, I think the citizens of British Columbia and Canada have been well served by the law enforcement agencies.

The RCM Police, as well as the municipal police forces throughout the province, have served the people very well. The Victoria city police, for example, not only do an outstanding job of policing, they're also outstanding community citizens with a variety of non-policing activities to, again, strive to win the respect of the citizens that they serve.

It is most appropriate that the commission of inquiry be broad-ranging. Society has changed a great deal in the past 20 years. Certainly, we're finding problems in education. We're finding problems in policing as well. It is imperative that the commission of inquiry recognizes that the matter is not simply a police matter; it is a matter that involves all of society. If that is looked at as well.... Surely the respect for the enforcement agencies must be understood, and also the responsibility accepted by society to work alongside and support our law enforcement agencies.

All in all, I applaud the independent review that the Attorney General has set forward. We will look with interest at the comprehensive recommendations of that independent review.

J. Weisgerber: I request leave to table two documents.

Leave granted.

Orders of the Day

Hon. G. Clark: I'd like to call second reading of Bill 6, the Corporation Capital Tax Act.

CORPORATION CAPITAL TAX ACT

(continued)

G. Wilson: As I rise to speak to Bill 6, let there be no doubt that the Liberal official opposition in British Columbia is opposed to this bill. We believe that this bill is regressive in terms of its intent and can only serve to further undermine the economy of this province and retard the much-needed economic growth and development that all British Columbians want to see come forward. There are many reasons why this bill is ill-conceived. It is poorly drafted. It is one that we believe can only serve to help to undermine the economy of British Columbia.

There are many reasons why this opposition is opposed to this bill. Over the next while we will be introducing those reasons through members of the opposition speaking against it with respect to industry, the banking community and the general philosophical difficulties we have with what this government is attempting to communicate through this bill.

To put the capital tax that is being proposed in place -- I have said before, and I would say again now -- is really tantamount to theft. I say that because what they are taxing here is not profits. We're not simply putting a tax against profits earned through investment in the province. What is being attempted here is a tax on capital. Whether a company earns a profit or not, they are now going to be subject to paying very high amounts of dollars in terms of the tax demand that will be made on them.

We believe that if we're to have the kind of stimulation and growth of the economy that is required to provide for the social services, the health care system and the educational system that we all need, require and desire, it is important to have a government that recognizes the importance of investment capital and allowing that investment capital to flourish, and of developing the wealth in our communities so that all communities in the province are able to prosper and succeed.

Each of our members will be taking issue with this bill from a specific point of view. Let me, for the time that is available to me, simply point out what this is likely to do in terms of the banking community and the credit unions in British Columbia. Let me focus on those areas specifically. Let me suggest that this government and this minister -- who I trust is listening to my remarks today -- are going to be in a position where they would likely want to at least provide an amendment to this bill, if not a complete retraction. I will be speaking to those amendments.

If this bill should move to committee stage, through the failure of the members opposite to recognize how important it is for us to stop it in second reading, then we may be forced to implement amendments to at least try to make it as palatable and as harmless as possible.

Let me say it is our preference that the members opposite read carefully the contents of this bill so that they understand the negative impact it is going to have upon the economy of B.C.

I would say that if we look at the banking community, we see three levels at which this tax is going to

[ Page 1668 ]

have a negative impact upon that sector of our economy, and how that will be handed down to those -- and, I would argue, all -- British Columbians who must pay for the services that banks provide, and, through the payment of those services, cost additional dollars to the average British Columbian.

This is not a tax that is simply going to go after the wealthy, big corporations that somehow aren't paying any tax at all. That is a myth which has been perpetrated in British Columbia by members opposite. It is a myth that is part of the election rhetoric of the NDP -- and has been both federally and provincially. It is a myth, because if we look at what is proposed here, profit is not a question. What is in question is the capital that exists within the organization itself.

If we look at what this means in terms of the punitive, regressive tax on our banking community, we will see that not only will this affect the large chartered banks in the province, but also the smaller chartered banks. As well, it will have a serious negative impact on credit unions, which are a different lending organization.

[D. Streifel in the chair.]

Let me for a moment turn my attention to the question of the credit unions. Credit unions are put in a particularly interesting position with respect to this tax. It's one that I don't believe this government has given serious consideration to, and they should think a little more clearly about what they are doing. I don't know if this government is aware that B.C. credit unions are the prime resource of personal banking services in this province. There are 107 credit unions, with 281 locals serving over 1.1 million members in 125 communities throughout British Columbia.

In 27 of those communities they are the only financial institution available to the people who are seeking to have their investment maintained through their deposits.

[2:45]

This current legislation is to a large extent going to provide for taxation not only on the independent credit unions -- the credit unions as they exist -- but also on the B.C. Central Credit Union. If that isn't an inconsistency with respect to the moneys on deposit in the individual credit unions, we see that they will also be taxed through B.C. Central. Insofar as the vast majority are members, I would suggest that this bill brings about, in its first instance, a double taxing authority.

I would seriously suggest that if this bill is to pass second reading -- and I hope that it would not -- at the very least.... If I can get the attention of the Minister of Finance at least on this point, there should not be a tax levied against the credit unions as individual members as well as on B.C. Central. There should at least be an amendment to recognize that there should not be double taxation there. Hopefully we can get that message across to the government and see that kind of amendment put forward, if this bill has to pass at all.

Let us also recognize that the credit unions have a role in protecting the public and members' interests through the responsibilities they have with deposit insurance fees. They pay higher deposit insurance fees than federally-insured institutions. Through these fees and prudent management, they have been able to build an insurance fund that has no taxpayer support. We've also seen that the cost of regulating credit unions has been moved from a cost-share arrangement between governments and general revenue and credit union assessments to one that is fully funded by industry assessments.

This has substantially reduced the cost to the provincial treasury. This government still intends to bring forward this punitive measure against the credit unions.

Similarly we would see that, practically speaking, the B.C. credit unions have no access to the traditional capital markets, yet they will still be a part of this bill, with no exemption provided. Credit unions are capitalized by member-owners, either through their retained earnings generated from the usage of services by members or through equity shares purchased by members. Credit unions have built capital, almost exclusively from members forgoing dividends and buying equity shares, from approximately $131 million in 1987 to $460 million in 1991.

This is an organization that is deserving of the support of government and is not deserving of the punitive taxation measures that this government is now bringing in in the form of a capital tax. I would suggest that the application of this corporate capital tax to credit unions will have a seriously detrimental effect on the credit union system in British Columbia. It will discourage the building of capital. It could encourage the maximum distribution of members through the patronage allocation of dividends.

First of all, that will in turn restrict the ability of credit unions to grow, since capital requirements increase proportionately with assets. Secondly, it will encourage credit unions to hold the minimum capital required by legislation. This will also minimize their cushion against hard times, with possible consequences to the deposit guaranty fund and the government's optional backstopping of that fund.

We would say that that's a very important measure for this minister to understand. With the measures that have been brought down in this budget, it would seem that the hard times in the province are going to continue, because this government has no foresight, no economic strategy, no plan to try and deliver the people from ever-increasing taxation without the potential for expanding revenue generation. We would say that that point alone is reason for this bill to be hoisted and not brought forward and passed through this second stage.

We would also say that it will minimize the credit unions' willingness to consider loans for small businesses, as such loans require higher levels of capital. Small businesses, which are the engine that drives the economy of the province, as I mentioned earlier, depend upon the credit union system in many communities outside the lower mainland and outside areas where the larger chartered banks have facilities.

Those small businesses will find it more difficult to get the capital financing that is required for them to do business in the province, because this government has not had the foresight to understand what it is doing with respect to this bill. I would suggest that it will also hamper credit unions' ability to participate in the economic development of the province, because there

[ Page 1669 ]

will be no incentive for the provision and development of the capital required in order to have this proposition go forward.

It is clear that this government has not clearly thought through what it intends to do with Bill 6. It is clear that this government is stepping forward with an ideological position that is based and steeped in a socialist ideological concept that if people involved in finance, in large corporate business and in small business and people who are entrepreneurs and who seek to see economic growth and wealth occur should see profit emerge, they have somehow been villains in our society rather than those who develop and help build our society.

It has become even more insidious in Bill 6, because they have now allowed this philosophy to go one step further to say that whether or not they make a profit, they ought to be taxed, and the government should essentially be able to put its hands into the pockets of these corporations, banks and credit unions to take taxation off the capital that is accrued by these corporations. It is no wonder that this government has received the nickname "N-Dipper" -- one more example of how the NDP will be dipping into the pockets of taxpayers, whether they are a credit union, a chartered bank or a corporation and whether or not that corporation has made a profit in British Columbia.

Let me say that a cushion of capital investment is critically important to the survival of credit unions, because those who have close ties to the community they serve cannot diversify to the extent that other financial institutions can. Nor is it possible for credit unions to simply abandon a community that is experiencing difficult economic times. Those credit unions must be there to provide support. In the 27 communities that I alluded to earlier, where those credit unions are effectively the only financial institution....

I certainly hope that this government will recognize that this punitive measure is going to make it extremely difficult for those credit unions to maintain a strong and effective role in terms of the provision of service to those communities.

As it is presented, Bill 6 will set a negative precedent for all credit unions across Canada. As a result of their unique structure, credit unions across the country have been exempted from capital tax. Only Alberta and Ontario subject credit unions to capital tax. There is a flat rate of $100 per credit union.

Quite clearly, we in B.C. are again leading the way in taxation, but it is not progressive taxation. It is not tax reform, which is so desperately needed. This is simply a cash grab. I reiterate that it is tantamount to nothing more than theft that this government should go after not only the profits that are generated from capital invested, where profits are earned, but also the capital that essentially is on deposit. That is a shameful thing for this government to do.

I would argue that if the passion of those who are involved in trying to maintain, protect and push the credit union as a major service to communities -- because they are, after all, cooperative institutions that have their membership deeply involved in the development and maintenance of their financial organization.... If this government sees no sympathy with that, I say that that is shame indeed.

Let me say this. We do not just single out the credit union as an example -- although it is one that is clearly an important retrogressive step, because in other provinces right across this country and in other jurisdictions they have been exempted. Let us also look at some of the smaller chartered banks that are not going to be able to withstand those issues. I have a letter with me that is provided by the Canadian Western Bank, which has outlined their position in terms of what this punitive and regressive tax will cost their bank: roughly a quarter of a million dollars over a 12-month period ending April 1993.

Of course, that will increase by 1 percent any capital increase the bank raises during that period. That is not only regressive; that is punitive, to the extent that this bank itself cannot support -- should not be put in a position to support -- that kind of tax increase without having some major revision to their investment portfolio and to their ability to provide service to members of that banking organization.

Let me say that while the credit union movement is now putting forward a strong and active lobby, it is difficult for the smaller chartered banks -- the Canadian Bankers' Association -- to essentially advocate for the same level and the same kind of sympathy from this government. We have seen this government's response in the past to those people who are involved in this most necessary financial industry in the province. We have seen, as we looked through the countless material that has come into the offices of the official opposition on banking alone....

Let me tell you that this isn't the only information we get. We also see recognition of the punitive tax on small business, and we'll be speaking to that; we'll be talking about the punitive tax on our forest sector; we'll be addressing the kind of onerous and punitive tax on other corporate sectors and new investment sectors, especially with respect to new industry in the development of new technologies in British Columbia.

Let me tell you that if you look at the annualized estimated cost in terms of this tax, you can see that the banking institutions in this province will have no choice whatsoever but to pass on this tax to those whose services they are dependent upon. Those people who depend upon the banking services in the province will find themselves having to absorb higher service costs.

The payment of those higher service costs is going to -- once again; we cannot reiterate this more strongly -- diminish the competitive advantage that people in British Columbia have to look for when they start to go up against people whose investment capital in British Columbia is done on borrowed money, where they are not only dealing with lower interest rates but lower banking costs -- service costs -- and they're looking at far less restriction on the mobility and development of that investment capital in British Columbia.

I stand today to speak against this, not simply because it is a good thing for the Liberal Party to be doing in the province, not simply because we're trying to oppose this bill for the sake of opposition, but because we are convinced by the data that we have seen that a thorough and complete review of the impact of

[ Page 1670 ]

Bill 6.... We are convinced that this will have a serious dilatory effect on the ability of British Columbia to maintain its competitive economic advantage over its trading partners.

I find it interesting that, as we debate this bill alone, the Minister of Finance seems not to be listening to the kind of amendments that we were talking about earlier on with respect to the credit union, and not to be listening to what kind of punitive taxation this measure of Bill 6 will bring against the people of British Columbia. How is it possible that we can have effective opposition? How is it possible that we can put forward constructive opposition? When we decide how we're going to be dealing with these kinds of issues, it falls upon deaf ears or no ears at all.

Hon. Speaker, it is critically important that this government understands that this is not a question of political rhetoric; this is not a question of grandstanding; this is not a question of simply trying to go out and buy votes at election time. This is an important bill. It will have a serious and dilatory effect on the financial institutions of British Columbia, on major corporations and through the transfer of those costs down to every single British Columbia taxpayer.

This is the most insidious bill that has yet come before this House, and I urge all members in this House, whether they are on the government side or on the opposition benches, to review it carefully and with wisdom. When they do, I don't believe they will allow this bill to pass second reading.

[3:00]

Hon. Speaker, let me also say that in this bill and what this bill requires, there is not a proposition that is availed that will recognize clearly that where institutions are not earning profit, they cannot essentially defer taxes, not pay taxes or somehow allow themselves to be maintained in a competitive position, as a result of their inability to pay.

Let me tell you that in the representations that we have had from virtually every single group, including the Canadian Bankers' Association, we have found that of the amount of revenue that this government is attempting to develop and to increase in this proposition, the amount of revenue that this government intends to try to steal from the people of British Columbia, the banks alone will contribute between one-quarter and one-third of the $268 million that will be raised from corporations in increased taxes, while the banks are already paying an estimated 8 percent of provincial income and capital tax revenues.

The capital tax rate levied on financial institutions is ten times higher than that applied to the general corporations. These are not mystical numbers that have been dragged from the air; these are facts.

And when you look at these facts, when you understand these facts, when the members opposite understand these facts, they will understand that if you are to be there as government for all of the people of British Columbia, you will recognize that it is foolhardy in the extreme to assume that it is possible to put forward such a punitive tax on the financial corporations of this province and to expect that those financial corporations will not somehow pass down that cost to those that use them. They will be passed on, and not just to the small investors.

I am always amused by those that hold the belief -- and it seems that there are many members opposite that hold the belief, perhaps because of their lack of understanding of how the finances of the province work -- that when they go there and they put their money in the bank, the money is not simply tucked in a drawer until they're ready to come and take it out, that that money is essentially going to be invested, and that we need to have that capital that is in a bank so that that bank can make investment a possibility for people who are engaged in the economy of B.C.

I'm amazed when I hear frequently from members opposite that they think there is a proposition whereby taxing on capital is going to provide necessary revenue for this province to be able to put money into the programs that all of us want: health care, education, social services.

Let's be clear: we on this side, the Liberal opposition, want comprehensive tax reform. We on the Liberal side of the House want to make sure that there is a provision for fairer, more equitable and better taxation. But taxing on capital is not the answer. Expecting the financial institutions of the province to essentially put forward this kind of revenue for government on the basis of capital tax is not a solution. This will mean that this taxation will deter capital investment, and that can only be a negative for British Columbia.

All members of this House would have to agree that to deter capital investment in British Columbia is a negative. Secondly, it will retard the financial institutions from developing a strong capital base that could ultimately be extended in terms of investment into the communities, especially those in the interior, the north and the Kootenays, to offset some of the problems we face with a shrinking economy as a result of the mining or forestry policies of this government.

Surely members opposite must agree that it's a positive for us to see those kinds of investment occur. Surely members must understand and at least have enough rudimentary understanding of the way the economy of British Columbia works to recognize that this kind of investment is necessary in the development of the economy of British Columbia.

Even if we are, for some short moment, to buy into the rhetoric that we hear constantly from the opposite benches in government that somehow there are a lot of fat cats out there who aren't paying their fair share of tax -- if only the fat cats would pay tax, there would be all kinds of medical and educational services and all kinds of social service dollars -- doesn't this government understand that all British Columbians use banks or credit unions? By putting this corporate capital tax against the capital that the banks have accrued, the cost of that institution essentially rises.

Therefore if their cost of doing business rises, the way they will offset that is to pass it down to the ordinary British Columbians whom this government purports to represent.

There is no virtue in what is being proposed here. Not only is it ideologically unsound, but it is also economically unfounded in any measure or by any way that you try to assess that this kind of taxation should be available. I have pointed out already, with respect to the banking institutions and credit unions in particular, that there is one glaring obvious oversight in this bill. It

[ Page 1671 ]

is the proposition that tax will be assessed not only against the member credit unions but also against B.C. Central. Surely this government can at the very least see the wisdom of changing that portion of the act so that there will only be capital tax assessed against B.C. Central -- if they don't see the ultimate wisdom in getting rid of this altogether. What this government should do is get rid of this capital corporate tax in its entirety.

Let me say in closing that this opposition took up the gauntlet that was thrown down by this Minister of Finance with respect to this punitive and regressive tax. We sought to find out from British Columbians, not just from those who are chairmen of the boards of large corporations, who sit in the Canadian Bankers' Association, or who are involved with the B.C. Central Credit Union. We went to talk to all British Columbians. We went out into the province, and we had our 17 members communicating, consulting and discussing with British Columbians. We asked British Columbians: "What do you think about a capital tax?" We explained to them what this tax will do.

Let me say that all British Columbians understand that government needs revenue to provide the services we require -- all of us understand that. We all understand that there are increased costs of health care, that there are increased costs of social services and there are increased costs to our education dollar. All British Columbians understand that.

And British Columbians, almost to an individual, communicated to me as Leader of the Official Opposition and to the members of my caucus, and said -- and let me paraphrase as closely as I can for the majority opinion -- that we do not mind paying tax to government if the tax is fair, if it is an open tax, if it is honest and if it will provide the services we demand. We don't mind paying our share of taxes, because we understand that government needs revenue.

The people are not foolish, they are not ignorant, they are not without eyes and ears, they can read and they can hear. But to an individual, they said that if you are going to put in a taxation system, then let it be levied upon those who have the ability to pay tax when the taxation is going to be put upon them. Let tax be upon those who have profit, and if that profit is substantial, then let there be a percentage tax on that profit. Let the government recognize what that percentage of tax will be.

But how is it fair when there is a tax assessed against a company that may not even make a profit? And what happens in this instance in this bill, this Bill 6 that we are supposed to be passing and which we are going to vote against, if a corporation makes no profit in year one? They will still have to pay tax. What if they make no profit in year two? Now they have to pay tax for year one and year two. And what if they don't make profit in year three? How many years will this government allow corporations that are seeking to try to maintain at least a level of development and service...?

How many years will this government allow to be accrued before they finally lower the boom on these corporations?

How are these corporations supposed to pay the tax? If they can't even pay dividends to their shareholders, if they can't even make profit, if they can't even show to their banker -- who incidentally is also going to be paying the same tax -- an ability to pay off what it is they have in their normal financing situation, if they are having to borrow capital to try to bridge themselves over the time when the economy of the province is at a low, then how on earth is this government going to try and collect that money? Well, there's nothing in here that tells anything about that.

How is this government going to be able to collect when in year four perhaps they're lucky enough to show profit? By what measure is profit defined? There is nothing in here that says anything about that. Does it mean a 1 percent profit, a 4 percent profit, an 8 percent profit, a 20 percent profit? And what if they finally do show a 15 or 20 percent return? Is this government going to come along and simply take it all so once again they're back in the situation they were when the economy was down?

How on earth can this government expect there to be any faith or confidence in its policy and its position on taxation when it has such a ridiculous bill as Bill 6 with respect to the provision of taxation and this corporate capital tax. Hon. Speaker, it is ridiculous. If this bill has to pass.... And let's be quite clear that the members opposite have 51 members. I wonder how many will have an understanding -- hopefully all will have read in detail and understand the impact this will have on their riding associations, on their communities and on their constituencies.

I hope they're prepared to carry the weight of this bill home to their constituents who are in small business. I hope they are prepared to take responsibility for what this government has done.

How is this government going to put a tax on those that don't have profit? How many years will they allow it to accrue?

If this bill is to pass, then why don't they consider an amendment that would allow a proposition whereby a corporation that makes no profit can defer; where there is a limit to the number of years that can it have accrual; where there is a margin of profit that needs to be maintained prior to payment against that accrual; and where only a proportion of the payment will be demanded in those years where profits are shown, so this government doesn't simply tax people right back into the red and so it doesn't tax a corporation that is finally in a position to show some dollars in profit and finds itself back once again in a loss situation?

There is no provision for any of that in this bill. Who drafted this legislation? Did the individual who drafted this legislation have any knowledge at all about the current state of the finances of this province with respect to the corporations that are doing business, the banking institutions and the credit unions? Or was this crafted by somebody sitting in the Ministry of Finance and looking at a large deficit, thinking: who can we go after now?

[3:15]

Hon. Speaker, I tell you that this Minister of Finance is just like a well-trained pointer who's sniffing out profits. When he sees one he goes rigid on the leash and points, while this government drafts another bill to go out and bag them. Only this time, this well-trained

[ Page 1672 ]

pointer has pointed at those whose profits aren't even there. They've drafted a bill to go out and bag the capital assets that have been accrued by the corporations and the banks.

Hon. Speaker, I find this to be a regressive bill. I find it unfortunate that, as we try to put our attention to some progressive, positive and constructive ideas as to what they can do with this -- if in fact they have to pass it -- we find that my comments are falling upon deaf ears or no ears, as the case may be. If this government really is interested in trying to do something positive for the province of British Columbia, then this government has to realize there is a tax limit beyond which people cannot pay.

This is such a regressive bill with respect to the banking institutions and the credit unions that if the Minister of Finance is going to force this bill through, then he does so at the peril not of this government, because they've got four years until their day of accountability.... In four years their accountability will come because of this kind of regressive legislation.

Unfortunately the people who will have to carry the can for this are the people of British Columbia, who will find themselves now faced with an increased demand upon their bank accounts, their service costs and their corporations, which will no longer be able to do effective business in the province as a result of this kind of punitive legislation.

Let me summarize in closing with respect to the banking institution itself. I find it quite incredible that this government -- indeed this Minister of Finance, wherever he may be -- has not the wisdom and foresight to understand that this is going to be a serious impediment to the credit union system in British Columbia. Furthermore, there is a huge and major flaw in that there is a double taxation against the credit unions, and that has to be addressed. There cannot be a double taxation against the credit union movement.

With respect to the chartered banks, this minister clearly doesn't understand that not all of the banks that operate in the province are large chartered banks such as the Royal, the Commerce and the Toronto-Dominion. Other much smaller chartered banks do not have the leverage that the larger banks have. They have been encouraged by former administrations and by this administration in its first six months to have on hand large capital that they're now going to be paying tax on. This has got to be the most dishonest way of taxing that I have witnessed yet in any bill that has come before this House.

I hope that my words have been listened to by this government. Wherever the Minister of Finance may be today, I suspect that we may see his presence in this House as soon as I sit down and refrain from my comments. The Minister of Finance does not come in to hear me speak because he knows that what I speak of is true. He cannot face the comments that he hears from me. When I speak of the credit unions, he knows that what I say is true. Those who work behind the scenes in this province, those who really are the string pullers of this government....

That Darth Vader who drifts down the halls of this Legislature, the individual who makes financial policy -- I think all British Columbians know of whom I refer -- that eminence grise of the NDP, is only too familiar with the credit union system, because he's been actively involved in it. I believe that in a private moment in the hallway -- if you could ever find him -- you would know that he would say that what we have said about the credit union itself is true. That is why the Minister of Finance can't be here to face these comments right now.

He knows that this is punitive legislation that will negatively impact on the credit union movement.

Believe me, we will have members rise and talk about the forest industry, which is going to be seriously affected. We will have members rise with respect to the small business sector and virtually every other economic sector of investment in the province.

With respect to banking institutions, a tax is going to be levied that will require that roughly one-quarter to one-third of the $268 million demanded of this tax bill will be picked up by these institutions. You have to understand, Hon. Speaker, that this is indeed a punitive piece of legislation and one that will simply be handed down to those average British Columbians who have their moneys deposited and invested in the banks of B.C.

The official opposition in British Columbia wants tax reform. We are advocates of comprehensive tax reform. We recognize that government needs money to operate. But this bill, Bill 6, is not the way to get it. Hon. Speaker, I can tell you that we will launch a campaign, and we will use every measure at our disposal to block the passage of this bill through this stage.

If the government should invoke its power of 51 representatives here, we will recognize that this bill must, at the very least, go through amendments. I've already raised one amendment with respect to the credit unions, and there will be other amendments that will come forward with respect to the corporations.

Bill 6 is the most regressive, punitive taxation method the NDP have brought against the people of British Columbia to date. I hope that all members of this Legislature, be they government members, opposition members or members of the third party, will recognize the folly that this bill invokes upon British Columbians and will vote it down.

We would be happy to sit with government to redraft propositions for a comprehensive, fair tax reform. We would be happy to work with government to find a more sensible way to provide those kinds of taxation services. We would be happy to use whatever powers and knowledge we have to assist this government in putting in place a fair taxation measure. But this is not the way to do it.

W. Hurd: It's a privilege for me to rise today in debate on Bill 6, the Corporation Capital Tax Act. It was interesting to listen to the magnanimous way in which the Minister of Finance introduced this bill into the House. He pointed out to us that Treasury Board had agonized over the implications of this tax, and had thought about raising the sales tax as an alternative. He pointed out that he felt that 80 percent of the corporations in this province wouldn't even pay the tax, and that it was a measure that introduced fairness and

[ Page 1673 ]

equity to corporate taxation in this province. That was his message when the bill was introduced.

But if we want to know the real intent of the minister in introducing this bill to the House, I think we have to go back to the remarks he made when he closed the budget debate in this House, when he talked about the need to redress the balance, to ensure that the greedy corporations paid their fair share. He sketched a scenario of widows and children paying an unfair burden of taxation while greedy corporate executives snubbed their nose at the government and failed to pay their fair share. I believe that's the kind of philosophy behind this bill, the philosophy of the Minister of Finance when he closed budget debate in this House.

It's important for us to note that the NDP government promised that there would be a tax only on profitable corporations, when they took their message to the polls during the last election -- only on profitable corporations -- and that equity and fairness would reign supreme in corporate taxation. Hon. Speaker, what we see in this bill is a complete abandonment of that type of commitment made during the election campaign.

It's important for us to point out some of the corporations in this province that will be paying the corporation capital tax -- companies like MacMillan Bloedel, which in this province during the last fiscal year lost $94 million. Yet if this tax were in place during the upcoming fiscal year, they would pay an additional $4 million to $5 million in corporation capital tax, in addition to losses they've already sustained. Westmin Resources, which lost $15 million, will also pay the corporation capital tax. Westar Resources, and Westar Mining -- of which the Minister of Forests is certainly aware -- is under the corporations review procedure in the courts, the Canadian equivalent of

chapter 11 bankruptcy, and they will pay the corporation capital tax. Marks and Spencer, which closed stores in Nanaimo, Port Coquitlam, Kelowna, and even in the Pacific Centre, would have paid the corporation capital tax on their B.C. assets. It isn't just corporations. It's also, we understand, B.C. Crown corporations, Air Canada, B.C. Rail, CN Railways. And we understand that on the basis of the corporation capital tax, Hydro's rates alone could increase by 1 percent to consumers in British Columbia.

Interjections.

W. Hurd: Thank you for those interesting remarks from the member for Nelson-Creston, who understands taxation very well, I'm sure.

As I recall the remarks of the Minister of Finance, he debunked the idea of the trickle-down effect, the idea that somehow if corporations were competitive and had fair taxes, the benefits would move down through the system and benefit all British Columbians. It's interesting to note that Stats Canada came out with some very intriguing statistics during the past week which would seem to give a great deal of credence to the idea that if the corporate sector is competitive in the province of British Columbia, the benefits do trickle down, or flow down, to British Columbians as a whole.

Stats Canada noted that British Columbia has fared better during the current recession than any other province in this country.

An Hon. Member: Until now.

W. Hurd: Until now, absolutely.

As I look through some of these statistics, we note that British Columbia's good fortunes were mostly due to us emerging relatively unscathed from the recession because of strong investment and trade links with Pacific Rim countries. And while families lost ground to the economy and the tax collector, British Columbians managed to hold their own.

It's interesting that British Columbia, because of its taxation policies and encouragement of capital investment, has fared better than any other province in this country. Statistics Canada notes that British Columbia was the only province to buck the nationwide trend set by hard economic times and the tax collector's grab. Income taxes have soared, but in British Columbia they remain very competitive with what we've seen in the province in the past four or five years. What we're seeing is an abandonment of the idea that investment in corporations is beneficial to the wealth of the province.

We look at the companies that will be paying this tax; it's going to rob them of investment capital that they need to create wealth.

The Minister of Environment has introduced legislation in this House that would require massive capital investment -- in particular, the pulp and paper industry -- to meet new environmental regulations. The money they spend on meeting environmental improvements will eventually be taxed in this province. Not only is this a tax on profits but also it's a tax on corporations attempting to meet improved environmental standards in this province. It makes absolutely no sense. Pure and simple, the corporation capital tax is a tax on wealth; it's payable whether your business is profitable or not. There is no doubt that this new tax will cost the province existing jobs and prospects for future jobs.

It's difficult to believe that the Minister of Finance, having assessed where the province has been over the past five years and its prospect for the future, would introduce such a regressive tax in the form of a corporation capital tax. It sends out one of the most negative signals to the investment community that the government has sent out in the past twenty years in this province. It doesn't matter how much you make or what situation your company is in. If you've got $1 million in paid-up share capital, you're going to pay a tax, and your balance sheet is going to be reduced.

It's an indefensible bill, and I hope that the Liberal opposition and other members of this House will join in rejecting it, or as a more constructive alternative, will join in amending and changing it, so that we continue to see the flow of investment into this province that we need to protect our standard of living.

D. Symons: I'm concerned about this bill. The government should assess the full implication of the corporate capital tax. The tendency of this government

[ Page 1674 ]

is to increase taxes that bear no relationship whatsoever to a company's capacity to remain competitive and earn a fair return on their investments. This tax is going to be taxing companies on their capital assets, and it will not necessarily mean the company is making money, as has been pointed out by previous members here today. My concern is that in doing this we are going to slow down the economy at a time when we must be stimulating the economy to bring more investment into the province. We must be creating jobs, not destroying jobs. This bill seems to be doing the latter.

In my riding there are some rather large transportation and equipment companies -- large trucks, cranes and light building equipment that you see on the streets in building large buildings. By this bill, if they expand by buying new equipment, they're going to be taxed on these new assets. By this bill, if they replace old equipment with new, they're going to be taxed. This does not encourage a business to invest money or expand; rather it discourages it. Companies are going to be penalized for any capital expansion.

[3:30]

This is not going to create jobs in the province at a time when we desperately need them. It's not going to create the wealth to pay for health care, social services and education that your government has put as priority items. By putting them as priority items and neglecting other fields of economic development in the province, you are not going to be able to create the money to pay for those priority items. This government is not addressing that issue.

Is this what the Premier meant, in doing this sort of business here, when he went around the world saying: "B.C. is open for business"? This act will change that slogan to "B.C. is open for taxes." This is not an increase in tax on profits; it is an increased tax on doing business in British Columbia. The Liberals on this side of the House believe in encouraging business, to stimulate the economy, not in discouraging business as your government appears to be doing.

Bill 6 will not attract business; it will discourage it. Bill 6 will not encourage the expansion of existing businesses; it will discourage it. It will encourage businesses, such as the companies in my riding, to look elsewhere and to locate outside the province to avoid this tax and to simply come into the province to do business. It will encourage businesses to lease equipment rather than purchasing it, thus avoiding the tax.

Earlier last month Mr. Robert Stewart, president of the Vancouver Board of Trade, stated: "The effect for virtually all business will be higher costs, higher prices, lower growth prospects and lower profits." Who is going to pay those higher costs and prices? It will be the people of British Columbia.

An. Hon. Member: ...who voted NDP for the last time.

D. Symons: Yes, they made a little mistake.

This will also tax Crown corporations. It will tax B.C. Rail and B.C. Ferries. Where will the corporations get the money to pay those taxes? Out of our pockets, again. I need not hold up my credit card, as the Premier did. Basically, we're going to be nibbled away at everywhere we go because of this tax.

Mr. Stewart went on to say: "There are businesses for which this will be the last straw that breaks their back. For others this will be the trigger that moves them across the border." The business community is probably well aware of that.

This tax is not in the best interests of British Columbians. It will raise a few taxes for the government in the way it's planned. But unfortunately it will be a regressive tax, and it will not help to increase business in the communities, which is going to be needed to pay the other expenses in operating this government. We must, therefore, defeat this bill. We must not have this bill go through as it is currently written.

C. Tanner: I rise to address the House on Bill 6, the Corporation Capital Tax Act. During earlier debate on other bills I asked the minister why he wasn't taxing all professions instead of just raising a tax on the legal profession to pay for legal costs. I realize now why he wasn't. This great wad of paper of 50 clauses, which calls itself a bill, is his way of taxing business in another fashion altogether. He's in league with the accountants, because the accountants of the world are the only ones who will be able to interpret this act.

They're going to charge business through their pocketbooks in order to put into effect the convoluted, complex and difficult acts in this bill, which are going to be impossible to implement. The minister has already made one withdrawal and one amendment, and I suspect he will make others which, to me, only admit that either he or his department officials who drew up this bill are incompetent.

My particular interest today is the effect on assets that this bill is going to have on the hotel industry, which is the backbone of the tourism business in this province. It might be well for every member from those rural districts to keep in mind that in many cases the largest municipal taxpayer in their towns and smaller cities is a hotel.

Those hotels are now going to be expected to pay further tax not on profits, but on the hotel building itself, the land it sits on, the assets within the hotel, the crockery it uses to serve its meals on, the glasses it uses to serve its wines and liquors, and the beds, sheets and implements. All the assets of the hotel are now going to be taxed, not whether they make a profit -- which incidentally most of them aren't -- but whether or not they're just standing there.

If a hotel in a small town is not making a profit, it makes no difference to this minister; he's going to hit them again. He's going to lift some more money out of their pockets. He will say, when he's replying to the addresses from this side of the House, that he has given hotels an exemption of two years before they pay the tax. In my view, that's merely an admission of the fact that hotels in particular are going to be hit more radically than any other small business, for the simple reason that most hotels, as every member knows, do not buy and sell merchandise. All they've got to sell are the very assets he's going to tax.

The hotel industry in this province survived the last year in spite of very stiff competition from the United

[ Page 1675 ]

States, where an overbuilding of hotels has meant a massive reduction in prices. In spite of the rest of Canada experiencing a very difficult year, B.C. held on by the skin of its teeth. This minister has introduced more taxes on business and more fees for doing business, and now it's introducing another tax on standing assets; this is not profit. This is a very retrograde tax, and it's going to impinge on the very parts of the province that this minister and that side of the House supposedly represent: the smaller towns, villages and cities of the province.

Mr. Speaker, the hotel industry cannot stand any more tax. The fact that the minister has allowed a two-year moratorium on the assets of the hotels that are already in existence merely gives emphasis to the fact that he knows that what he's attempting here is incorrect.

On behalf of the tourism industry, the hotel industry and the food industry, I plead with the minister to at the very least give this bill a six-month hoist, so that he can sit down with a committee and thoroughly discuss with experts in his department and the members from this side the shortcomings of this bill, and so that he won't further jeopardize a vital industry that generates so much revenue for this province.

R. Chisholm: Bill 6, otherwise known as the corporate capital tax, is nothing more than a tax grab. Substantial numbers of farms are limited companies and are subject to this tax grab.

I wonder if this government realizes what it costs to buy the land, barns, equipment and quota. This tax is applied on every $1 million worth of investment. A million dollars does not go very far in the farming community. Farmers are operating very close to the margin, and this tax will cost every farmer $3,000 for every $1 million invested every year, at a time when they can ill afford it. This tax applies even if the farm is not profitable. This tax is very unfair, at a time when our farmers are barely surviving and are not sure of their survival because of GATT

article 11 and free trade problems. Farmers in the Peace River area are in jeopardy. In the Saanich area they're going out of business. In Cloverdale they are not sure whether to plant a crop or not. And still they are subject to this tax of $3,000 on every $1 million invested.

Another area where this tax is unfair is that if a farmer bought a piece of property 25 years ago for $150,000, he would not pay the tax; if another farmer bought the same piece of property two years ago for $1 million, he would pay the tax. The first is not subject to it because of the price of the property. It's very discretionary and a very unfair practice.

The NDP promised a better way -- this was to tax profitable corporations -- in their election platform. When are the NDP going to keep their promise and show British Columbia farmers the better way? This is a punitive tax against assets, not on profit or on wealth. This plan of the government is only going to force farmers out of business and cost this province existing jobs and future jobs.

If we look at the fishing industry, it is in exactly the same position and has exactly the same problems with GATT, free trade and this tax. They are very marginal businesses. If we look at the small business areas in places like Chilliwack, they have the same problems.

This tax is a regressive tax. It will only do more harm in an economy which is already reeling in this recession. When is the government going to listen to its citizens and businesses and react to what they're trying to say to them, that we cannot take any more, and we want a comprehensive tax reform.

It is really too bad that there is no one across the floor in the cabinet seats here listening to this debate, especially the Agriculture minister, whose duty it is to speak for these people, the fishermen and the farmers, who cannot afford any more abuse from this government.

J. Dalton: Hon. Speaker, there are many things that other members have pointed out that are wrong with this bill, and we don't want to go over old ground. I'm going to make some particular references that the Minister of Finance commented on when he introduced this legislation -- this pending legislation. Hopefully it will never be legislation. We'll certainly do our best to ensure that that never comes to be.

The Minister of Finance, in his opening remarks of last week, made reference to the fact that even some large corporations will be adversely affected by this pending legislation -- even large corporations. He's obviously indicating by that comment that he doesn't care much about the small corporations, so perhaps we can pick on the large ones, who will be the ultimate taxpayers coming out of this Bill 6.

The particular comment that I want to read into the record from the minister's comments last week, particularly referring to large corporations, is: "...some of which are not doing well this year." So the minister has admitted that even some large corporations are not doing well financially, and yet he is obviously prepared to go ahead and tax those corporations. Well, it doesn't take a financial genius to figure out that he's going to adversely affect their competitive position, and in a moment I'm going to refer to one particular example of a large corporation that will, without question, be adversely affected.

One other comment or observation as well that the Minister of Finance continuously makes in this House is that the government has been forced to make choices when it introduces its proposed legislation. The question I might pose to the minister and to the government in general is: why is it that this government continually makes the wrong choices? Are they incapable of making right choices? I think it's very clear that Bill 6 is, without question, a wrong choice. It's a piece of legislation badly thought out. It has no real purpose behind it other than another tax grab, and B.C. business at this time does not need more tax grabs. It needs some incentive to establish itself and grow.

[3:45]

However, putting that aside, the particular example that I want to refer to today about a large corporation that will be adversely affected by Bill 6 is Vancouver Wharves, which is located on the north shore of greater Vancouver, east of the Lions Gate Bridge. Some of the

[ Page 1676 ]

members will know where Vancouver Wharves is located. It's the operation where all the sulphur is shipped to other destinations in the world.

We have been advised by the administrators of Vancouver Wharves that this proposed capital corporation tax will cost Vancouver Wharves at least $250,000 per year in taxes, and I can assure you that Vancouver Wharves -- even though I suppose the minister would say: "Well, it's just one of those large corporations that may be in difficulty, but so what, we're going to tax it anyway." -- is in a difficult competitive picture right now in the world situation.

In particular, I would also point out, with regard to competing with other shipping companies and operations in the Vancouver port area, that many of these other operations are within the jurisdiction of the Vancouver Port Corporation, such as Vanterm and Lynnterm. Those corporations may not even be affected by this tax. It may be that because of jurisdiction those companies will not have this tax imposed upon them.

We're not clear on that particular point, but the fact is that Vancouver Wharves certainly will be affected by this tax, and in comparison with the other local companies in similar operations, it will be quite likely adversely affected.

I would point out as well -- going outside of the Vancouver port area and jurisdiction -- that Vancouver Wharves also, of course, has to compete with U.S. port operations, and there's no question whatsoever that Vancouver Wharves will be adversely affected with regard to its position with the U.S. ports, in particular in the Seattle area.

If this government was in any way interested in allowing British Columbia companies to remain competitive, the last thing it would do is introduce such an insidious tax as this one contained in Bill 6. It is quite clear that many corporations, such as Vancouver Wharves, are in a difficult position with regard to both local and world economies, and the last thing these companies need is the imposition of an unfair and unwarranted tax.

I would point out that this tax does not reflect economic reality. It doesn't reflect the profit-making picture of these corporations. It simply says, as many other speakers have pointed out, that we are going to tax according to a certain paid-up capital base. That reflects nothing. You may have companies that on a year-to-year basis are losing money, yet they will still have to pay the capital tax according to this bill. It makes no sense to simply impose a tax on such a basis.

If a tax cannot reflect some profit-making or income-earning picture, then there can be no justification whatsoever for its implementation. This tax has no correlation to reality. It has anything but a correlation to reality. We measure the paid-up capital of the corporation, send out the bill and the money has to be forthcoming whether that company is earning money and in a profit-making picture or not.

If this government's intention is to place corporations in an even more adverse economic situation -- and I would like to think not -- then this bill will certainly accomplish that. If that's the intention of the government, I would certainly encourage them to vote in favour of it. I don't think that any right-minded member, including members of the New Democratic Party, would be thinking along those lines.

I would invite this government to give serious consideration to the implications of Bill 6. As I said before, this bill makes no economic or taxing sense. It is a piece of legislation that is going to adversely affect our economy. It's going to pick on corporations, large or small, that are not necessarily in an economic picture to even afford the tax, let alone consider being able to pay it. It's going to affect our competitive picture vis-�-vis both local corporations and international corporations.

I would direct a question across the floor to the government side. Why are you imposing a tax of this nature when the government should be contemplating providing incentives to our economy? This tax is a disincentive, and it must be defeated.

K. Jones: I rise to speak to Bill 6 as the most unfortunate piece of legislation that's come before this House so far. I'm sure there may be a few others that will be even worse, but so far this has got to be the worst type of legislation we could possibly have. It's shifting a major portion of the tax base to capital-intensive companies. Those are the resource-based companies and the utilities of our province. These are the backbone of the province. These companies are the creators of permanent jobs in this province.

I'll give you an example of one that we've researched. When you exclude income tax, the impact of increasing provincial taxation will be an increase of 11 percent, which this company will have to pay. Now in one year that 11 percent represents $11 million that is coming out of that company. That company has some choices. This is a business expense; and therefore this is an expense that the company will have to pass on to the people that receive their services.

If they have certain restrictions on their ability to increase their prices, then they will have only one choice: they will have to turn to an internal cost-cutting process, which in many of these resource-based and utility companies is made primarily out of the major cost factor in their operations, and that is labour; that's the cost of their employees. In order to make those cost cuts, it now puts a threat upon those people who work in that company. In many of these companies it gives their employees a feeling of uncertainty about their future.

This type of taxation has directly affected the union workers in these companies, because their jobs are now on the line. If the company is going to reduce the costs of operation, they're going to have to cut the employees and make their operation more efficient.

Is that the kind of approach this government wants to take? Do they realize the impact that they are making when they make such an attack on the capital of the major companies in this province? I think they have not thought this out very well. I think they need to take it back and reconsider it. They should take it back and scrap the whole bill, because it's of no value to the province. It only means that there will be more unemployed people, and there will be no revenue coming in as a result of that, because it'll cost more to pay for those people who have been laid off from their jobs.

[ Page 1677 ]

I understand that there's quite a concern in Ottawa with regard to the types of taxation that this province is doing. The Minister of Finance, Mazankowski, has expressed a great deal of concern about the fact that when they were trying to stimulate the economy of British Columbia and all of Canada, they gave a tax reduction, and now the provinces, like British Columbia, are increasing the taxation on our businesses, thereby making that attempt to stimulate the economy have no effect, because this government has taken away that stimulus to the industry to create new jobs.

I really ask the government to reconsider this. Withdraw this bill. Use your sense, and get rid of a bill that is absolutely unfair to the working people of British Columbia.

L. Stephens: It is my pleasure to rise today in the second reading debate of Bill 6, the Corporation Capital Tax Act.

First of all, let's be very clear on the fact that this is a regressive tax in the extreme. To tax profitable enterprises is one thing, but this capital tax has nothing to do with profits. This is a tax on assets and wealth. It reduces the incentive for economic development in this province.

There is no magic to business investment. Money will be invested where it can make more money. Whether this government likes it or not, that's what makes our world go round. In the current, very difficult recession, the retail industry, as one example, has been very hard hit. Cross-border shopping is a classic Canadian revolt against taxation, and cross-border shopping is having a direct impact on B.C. retailers. Consumers are travelling in record numbers to the U.S. and spending record amounts.

It is estimated that cross-border shopping in Canada will continue to grow by as much as 10 percent per annum, potentially amounting to $7.7 billion in 1992. Since British Columbia represents 27.7 percent of all trips to the United States, cross-border shopping will continue to represent a major problem for retailers.

Hon. Speaker, I cannot stress too strongly my opposition to Bill 6. I encourage all members of this House to vote against this truly regressive tax.

L. Fox: I, too, as have the others who spoke before me, rise to oppose this bill and its intent. I find it totally regressive. It hits industry and the business sector at a time when the economy is in an extreme downturn and when we should be encouraging, not discouraging, development. I find it rather difficult to understand how we spend so many dollars to send the Premier around the world, saying that B.C. is open for business and that we want and encourage investment, and in the other vein we tax the corporations and the business community right out of business.

The previous speaker spoke briefly on the fact that this would add to the cross-border shopping problems we presently have along the 49th parallel. I concur that any fixed costs placed on the business sector will indeed lessen their opportunity to retain any kind of competitive edge with our friendly neighbours to the south.

[4:00]

In the last five years the business sector has generated most of the new jobs within this province. I think the fact that it has done that is that prior to this administration there was a positive climate for investment. There was known to be a consistent climate to do business in. What we've done with this budget, and particularly with this bill, is to say: "Look, businesses, you've made a little money; you've got the ability to pay; even though some of you may not have made a profit, you have huge capital assets, and we want a part of them." I'm extremely concerned that investors outside of as well as inside of this province really did not want to hear that message.

As I mentioned earlier, the Premier travelled over to Asia in order to sell B.C. as a positive investment, a positive future and a great opportunity. We find now that people come into this country looking to find out where those opportunities are. They find that the opportunities in British Columbia are really to put more dollars into the provincial government.

This government and this minister have consistently said that they have had no choice -- that in order to deal with the deficit, they must have these kinds of taxation measures. I submit to you that there were choices. As I said before, and as other members of my caucus have stated before, one clear choice has been the fair wage, or fixed-wage, policy, which will cost the taxpayers of this province in the vicinity of $200 million a year. I would suggest to you that that is one choice this government made. Another choice that this government made was to increase the size of government.

I submit to you that while we're in the present pattern of economics in this province, it is not the time that we should be increasing government. We should, in fact, be decreasing government and providing less need for these tax dollars.

Let's talk a brief moment or two on the impact of this particular bill on the industrial sector. We've heard the Premier earlier today in question period. We've heard the Forests minister in the past suggest how seriously the forest sector is in trouble in this province. This particular bill will add $40 million worth of impact on that industry, which is already, in many sectors of this province, having an extremely difficult time to stay in business.

In this Corporation Capital Tax Act we will be taxing road networks capitalized within the forest sector, logging camps and the fixed assets of the respective sawmills to the tune of $40 million. It's something this sector cannot afford at this time.

With respect to the mining industry, we have already passed on huge costs through other acts and through other actions of this budget. The mining industry is already feeling a 15 percent increase in water rates. It has been hit -- as has the sawmill sector -- with a 6 percent non-residential school tax increase. It's faced with as high as a 5 percent increase in some other rural areas.

Now we add an additional cost to a mining sector that I know has told the government -- as it has told our caucus -- that if this continues and the climate does not change within this province, they will be out of business by the year 2000. I submit to you that this bill is trying to put them out of business before the year 2000. I'm really concerned that we are once again

[ Page 1678 ]

sending that industry to other parts of the world where they're wanted and encouraged -- and not discouraged, as this government has been doing.

The tourism industry is another one. Here we are marketing for tourists, going out into California and the western parts of the U.S. and selling B.C. as a place to come to. This particular tax will have the effect of increasing the gasoline prices, because the capital tax will affect directly the corporations that have those assets. It's going to increase the cost of hotel rooms and the services provided through B.C. Hydro, B.C. Tel and all those agencies connected with the tourism industry. Every one of them is going to increase.

I submit that this surely combats a lot of the dollars that are spent by this province trying to promote it as a place to visit. They may come once, but they won't come back again.

With respect to how it affects the banking industry.... I heard the leader of the official opposition articulate very well the impact this will have on the credit union movement. I had the privilege of being president of a credit union for six years, and I understand that the earlier government encouraged these credit unions to increase their reserves with B.C. Central. As the leader of the official opposition pointed out, this particular act has an impact on both those reserves, because they show up on B.C. Central's balance sheet as well as on the respective credit union's balance sheet as a capital asset.

There will be double taxation on the credit union movement, something that I'm sure was not understood by this minister. I really believe that this minister drafted this with closed eyes; he was not looking at the overall well-being of this province when he drafted this document.

As other speakers have suggested, this is probably the most regressive piece of legislation that we'll see come before this House. It bears no resemblance at all to the ability of the corporations or the business sector to pay. It does not understand that. It merely says: "Here's a chunk. Here's an asset. Let's grab some taxation dollars out of it; whether they can pay or not, we really don't care." I submit to you once again that that's not the message that we want to get out there.

If we want to build confidence in the investment world, if we want to see more new jobs provided by the business sector and the industrial sector, this is the wrong kind of legislation to bring forward. I will be voting against it.

A. Cowie: I too will be speaking against the Corporation Capital Tax Act, which conflicts, oddly enough, with some other objectives that the government has. I'm going to speak very briefly on this and give just one example to prove my point. In Vancouver, for example, the Vancouver Land Corp. was set up to provide affordable housing. The builders' union contributes to that and is a shareholder in the corporation; the banks are shareholders; and so are some individuals. It is a profit-making corporation. What this modest tax will do is make it more difficult to provide housing.

The Vancouver Land Corp. had to be very innovative in the first place looking at very long-term money in order to achieve their ability to put housing projects together. What this bill does is just add a tax on capital. In fact, what that means is that there will be a tax on buildings that they build and rent out. I assure you that the tax will simply be passed on to the renters. To that extent, this bill is regressive, just one further example of why it should be withdrawn. I encourage this government to do that.

R. Neufeld: I also rise to oppose the Corporation Capital Tax Act, Bill 6.

I am of the opinion that this is a negative tax to all of the corporations in British Columbia, in fact one of the more insidious ones that this government is bringing forward. It's regressive; it does not encourage any kind of growth in British Columbia at all. In fact, it continues along with the thoughts on the Mineral Land Tax Amendment Act, 1992, that we just spoke about recently to where mining corporations specifically are taxed on land held, not on profits.

If we are to have a province that is going to be able to continue to provide the services to people that they have become accustomed to, the NDP government is at some point going to have to encourage corporations in some way to stay in British Columbia. We cannot continue to milk all of them as a cash cow.

The idea of having corporations and businesses in British Columbia is to have them grow, to make the economy grow, and that way you get more revenue for the government to provide those services that we sorely need and the ones that we've come to enjoy. By continuing to apply flat taxes that have nothing to do with profit -- they're not profit-generated in any way -- we are not going to encourage corporations, businesses, mining, petroleum or any type of economic development in this province.

It's interesting to note that this government states they are concerned about the average person working for these rich corporations that have all this money flowing around. It's obvious that this government feels that if you own your own home or have a corporation or a business, you're rich. That's just the simple philosophy over there. That is far from true.

We cannot continue down this road, or soon there is going to be no one to tax. Then it'll be interesting to see just where the revenue is going to come from to supply the schools, hospitals and the social services that we all enjoy. If corporations and business do not grow in British Columbia to a point where we receive more revenue, there will be a lot of people who do not have jobs. Those jobs will go by the wayside.

[4:15]

I can't quite understand how the NDP feel that they are looking after the ordinary worker. They are concerned about that person, yet they want to tax totally out of existence the corporations that provide those jobs for those people. How are we going to do it? Where is it going to come from? If we continue to tax, continue to drive the corporations out of the province of British Columbia.... In fact, it's called something like "room to move," and the corporations are getting more room to move out of British Columbia.

I think the Minister of Finance stated, when the Peat Marwick report was done, that there was room to move for taxation. I can assure the Minister of Finance that there is room to move for corporations, and the room to move is out of

[ Page 1679 ]

British Columbia into a more hospitable environment. Those environments, I might add, are very close to our borders -- in Alberta and just south of the border -- and we see it happening all the time.

[E. Barnes in the chair.]

Jobs are very important to all of us; it doesn't matter on which side of the House you sit. In the community of Fort St. John, where I live, and in the communities I represent -- Hudson Hope, Fort Nelson and Taylor -- all the jobs that those people who work for corporations have are important jobs. They are jobs that are needed, and they bring revenue to the province through taxation. Those people spend their money within the province and it comes back to the government in some form or another.

If we continue to tax those corporations so that they want to move, we will not have that, and I am afraid that at some point in time we won't have anybody left to tax. I can understand that there are demands on government. There are always demands on government for more; it continues all the time. Everybody wants more, and when we go through estimates, everyone stands here and questions every minister as to why they didn't do this or that in their areas. I understand that.

There are only so many dollars, but there is a way of distributing those dollars, and it comes with priorities. But the priorities of this government are not to try and stretch the dollar as far as they can or to make wise use of that dollar, which they campaigned on but has not been evident since then. It is a government that is determined to employ more people within the government -- 1,500 FTEs, I believe, in this next year. We cannot continue to support that type of growth as an economy. It will just not happen.

The taxing of Crown corporations with this corporation capital tax will have a negative effect also. B.C. Hydro will not be taxed, as I understand, but other corporations will be taxed. BCDC -- massive holdings. It will apply to them. B.C. Rail -- massive holdings, and it will apply to them. Where do you think B.C. Rail is going to get its share of money to pay the government? It's going to get it by increasing freight rates. That's the only way it can. Or else it's going to cut jobs -- one or the other. I doubt whether it will cut jobs, but it will probably try to increase its freight rates so that it can afford to pay the government what the government requires.

This is not all that this government is asking B.C. Rail to contribute to. They want a fairly healthy dividend at the end of the year, too. That's to help pay for some of the programs they're instituting. It all comes back to passing this on, to trickling down through the economy, and it all impacts very heavily on the average person in British Columbia.

ICBC is another one. We recently witnessed an increase in ICBC rates of some 19 percent. We witnessed the government firing everyone on the ICBC board and telling us that they're going to increase ICBC rates by another 15 percent. I tell you, this is just absolutely amazing: a corporation that made money the year before is now imposing increases on ordinary British Columbians. When ICBC is required to pay the corporation capital tax on its assets, which is in the bill before us, they are just going to increase what they're going to charge each person.

That person who drives from his house to work every day is slowly going to have to quit driving to work. Either that or he's going to have to get a bicycle, because as we continue to see the income tax rates increase, and corporation capital taxes increase, which increases the cost of these corporations.... There's only one way that these corporations pass on those costs, and that's to every British Columbian.

It's the same for any corporation that's going to have to pay this tax. Where do you think the mining industry and forest industry, both facing some massive problems -- not all of their own making, but the making of some governments, of foreign investment, of mineral prices around the world.... Here they're faced with another tax. We just lay on a little more tax, and soon we won't have any mining corporations left in British Columbia. They will be gone.

They tell us that if we do not change how government handles mining and the corporation capital tax, by the year 2000 we are not going to have any mining companies. Then what are we going to do? All those jobs will be gone, and there we'll be. Then we'll be going to the Minister of Finance -- by that time he'll be back on this side of the House, if he's still around -- asking him: "What do you expect to do now? How are you going to look after the people of British Columbia?"

Our leader, the member for Peace River South, spoke at length about the impact this double taxation will have on credit unions. I see that most members on the other side of the House just smile when they say: "Tax the corporations more. Double-tax the corporations. Tax that rich person. Take a little bit out of that person because he's got a job. My goodness, he owns a car, so let's increase it a bit more." That seems to be the attitude on that side of the House.

I can tell you, hon. Speaker, that at some point the people of British Columbia are going to say enough is enough. They have almost come to that point already. This government has only been in and had to perform for five and a half or six months, and they have already angered almost every

section of British Columbia, right down to their own supporters, through increases in taxation on all their own corporations, which pass it on and trickle it on down to the ordinary person. Hon. Speaker, for those reasons I cannot support the corporation capital tax, and I will be voting against it.

D. Schreck: I find it interesting to listen to some of the misuse of economic language on the opposite side of the House. While it is extremely important that we have informed debate on public taxation policy, it does a disservice to understanding that debate when the parties misuse the language. I heard repeatedly from the members opposite the use of the term "regressive taxation" to discuss the concept of the capital tax. I've always understood -- and I think most economists in this world have always understood -- the concept of regressive taxation to be one that applies to individuals.

If an individual pays a proportionately higher share of his or her income as income decreases, then we call that

[ Page 1680 ]

tax regressive, as opposed to a tax which is proportionate if we all pay the same percentage or progressive if the percentage goes down as income goes down.

We have the members opposite taking a tax on capital and saying by implication that it somehow has a disproportionate impact on lower-income people, for which there is no evidence; it's not true. What we have the members opposite doing is protecting those who will be paying taxes as a result of this but who are not the lowest income tax payers, on the backs of the lowest income tax payers. That invites a challenge. No politician on any side of this House favours any tax. By definition, it would be nice if everything were free and no one had to pay the bill.

Unfortunately, it's necessary to have a few taxes if we are going to have things like medicare, education and social services. So at some point, if we are to be honest, all of us have to say where that money is going to come from, and in what form of taxation. My government has had to make some very difficult choices. My government has had the problem of inheriting a financial mess and the biggest deficit that this province has ever faced.

Interjections.

D. Schreck: If we were to follow the advice of the members opposite, hon. Speaker....

Interjections.

Deputy Speaker: Order, hon. members.

D. Schreck: If we were to follow the advice of the members opposite and not have this tax, it would push the deficit of this province this year alone over the $2 billion point. Are these members saying that they would like to increase the deficit of this province and get us into the financial problems that Alberta has? Are these members saying that instead they would do as their predecessors did and systematically change the tax burden to a truly regressive form? What the governments prior to my government have done is to systematically shift the tax burden down the ladder to those least able to pay.

We had the choice, hon. Speaker. We could have increased the sales tax. If we had increased the sales tax, it could be truly described as proportionate at best and, in all likelihood, truly regressive. But we have these members opposite essentially advocating by implication that we should increase tax on consumption and on lower-income people and continue the pattern of the past governments by shifting the burden in order to avoid the painful decision of tax reform and implementing the corporation capital tax.

Hon. Speaker, it is not with great joy that any of us implement a tax measure, but it's with considerable responsibility that we bite the bullet, make the painful decisions and say where we are going to get the money. We don't want to see any of those corporations that my friend from West Vancouver-Capilano described in my riding -- that's North Vancouver-Lonsdale, the industrial heart of the North Shore -- having to bear those increased taxes. But my constituents want to have access to the health, education and social services that those tax revenues are needed for.

My constituents want to see the fiscal responsibility of bringing this budget deficit under control. My constituents want to see an end to the pattern of the previous governments of continually shifting the tax burden, through increased consumption taxes or through what is basically a head tax in the form of the medicare premium, onto those least able to pay.

What really is the difference between a medicare premium and a capital tax? Well, I'll tell you. A medicare premium is a flat tax that virtually everyone must pay as an individual....

An Hon. Member: Depending on your income.

D. Schreck: Irrespective of level of income.

Interjection.

D. Schreck: When those at the lowest level begged for temporary premium assistance, what they were more likely to do was not to pay the premium at all and have some difficulty getting coverage backdated. By contrast, what we're talking about here is the best the province can do within its tax jurisdiction to bring about a little more corporate tax fairness -- not that any of us would like to tax any corporation, but at some point we have to make a choice. Hon. Speaker, my choice is clear.

Given a choice between an increase in the sales tax or the medicare premium, and an unfortunate capital tax, I will take the responsible road and choose the capital tax. That is why I support Bill 6. I support my constituents.

[4:30]

F. Randall: I have some concerns that I'd like addressed by the minister. First of all, I don't like this bill, and I don't think anybody in this House does. Unfortunately, all we hear is "scrap the bill." It's important to offer some alternatives. If there is some revenue needed, you have to, in effect.... The opposition should put forward some suggestions and say: "This is where we think we should get the money." The bill is necessary because the money is needed. I don't have to repeat the mess that was inherited, because that has been mentioned numerous times.

A member of the official opposition raised the matter of a tax on the Vancouver Land Corp. and on pension plans. I've got a concern about that myself. I would like to get clarification from the Minister of Finance with regard to pension investments. As you're aware, all pension plans are exempt; they're a non-taxable entity in Canada. You pay tax when the money comes out. A lot of pension plans are investing in real estate. They maybe own a hotel or a shopping mall, or do development, as was mentioned with regard to the Vancouver Land Corp.

I would certainly be concerned if this capital tax actually applied to investments by pension plans. I would appreciate a comment from the minister regarding that.

[ Page 1681 ]

G. Farrell-Collins: We'll hopefully get those answers from the minister sometime in the future -- I assume in committee stage. It's nice of you to give him advance notice so he can go back and do a bit of work on this and see if he can find somebody with some of those answers.

It's always intriguing and entertaining when the member for North Vancouver-Lonsdale blesses us with his intelligence and gives us a little lecture on words and

definitions, pulls out the books and falls into his professorial mode and tries to educate the members of this House. I wish he would spend an equal amount of time educating his own Finance minister about the implications of this tax and what it's going to do to the businesses and eventually to the consumers and taxpayers of this province.

This government doesn't seem to understand what a capital tax does. Our economy in British Columbia has built up a base of working capital over the years that's there to invest, to act as seed money, to further build our economy, to broaden the tax base and to make our economy strong, so that we can then implement a fair tax system to raise revenues to ensure that we have funds for education, health care and social services -- three of the priorities we're always hearing about from government members.

With a corporate capital tax, the government is dipping into the collected wealth and spending it. That money has been built up by the hard-working people of this province, by the corporations and workers. It's capital wealth that benefits this province.

The member from whatever -- Trail, I think -- is snickering. I noticed him snicker once before in the debate when we talked the wealth in B.C. Hydro that is going to be taxed.

Interjection.

G. Farrell-Collins: I'm sure you do, in your caucus.

The member laughed when he talked about B.C. Hydro. What does he think is going to happen when B.C. Hydro is taxed? Who is going to pay for that tax? Who is going to pay for the tax on the infrastructure that the ratepayers of this province have paid into to build up? It won't be B.C. Hydro. They're going to pass that tax on to the consumers, the businesses and, yes, the people who scrape every month to pay their hydro bills. Those are the people who are going to be paying for this capital tax.

The government is dipping into the heritage of the people of this province and using that money to spend on their pet programs. The fair wage policy is a great example. Education, health and social services are wonderful things. They all need to be done, and we do have to have the money to invest in those programs. What this government fails to understand is that you cannot steal from the heritage of this province, from our capital infrastructure, and use that to pay this off. Eventually you're going to run out. You're going to put these corporations out of business.

The capital is going to leave this province, period. There won't be anything left to tax. That's exactly the direction that we're headed in with this government.

It's almost like having a house on a piece of land. You've got a fireplace. Instead of going out, chopping down a tree, spending the time to build a woodshed and then going out in the winter to bring that wood in and put it in the fireplace, it's like walking over to the door, ripping it off its hinges, shoving it in the fireplace, pulling the wall panelling off and putting it in the fireplace. It's going to the foundations of the very building that you're living in, and starting to burn it in order to get heat. This government is using the capital wealth, the investments that hard-working people have built into this province, on an ongoing, ad hoc basis to pay for programs.

The Leader of the Opposition talked at some length today about the fact that people in this province don't mind paying taxes. People do not mind paying taxes if they think the money is being gathered fairly and is being spent in an efficient and cost-effective way.

We've seen this government deal with health care. Instead of trying to find a better way to deliver health care, they go in and put an across-the-board cap on doctors' salaries. That doesn't do anything to the structure of health care. It doesn't improve the way we deliver health care; it doesn't find new and creative and inventive ways to deliver health care. All it does is put an artificial cap -- and not a very creative cap, I might add -- on a cost and hope that that's going to solve the problem. That's not what we need to be doing in this province.

This corporation capital tax is going to be handed down to the people of the province. When they're asked to pay taxes again in increased hydro rates, they're going to wonder what the government is doing with that money. Are they spending it fairly? Are they spending it wisely? They look at the government and at the budget that this government tabled and the throne speech we had, and they see that the government has no new plans or ways of spending this money in more efficient ways. How can you not expect the people of this province to be upset when they get this type of tax imposed on them?

The NDP has a hard time grasping the concept that when you tax a corporation, you're not just taxing the corporation. The corporation is not going to just suddenly create money and fork it over to pay the taxes. They're going to turn around and pass it down to the people who pay for the services that that corporation provides. Eventually it's the people in this province who pay the taxes; it's not the corporations. You're taxing the people. You're constantly doing this, time and time again.

All you're doing by bringing in taxes like this corporation capital tax is causing the corporations of this province to go elsewhere. It's dipping into the resources and infrastructure of this province and spending it now. What's going to be left for my children? What's going to be left for your children and their children if we tax the heck out of B.C. Hydro and use that money to pay for programs today? If we want this economy to become more vibrant, and if we want this economy to be built, and if we want people to come to this country and to this province and build up British

[ Page 1682 ]

Columbia, we have to ensure that the investments we put into infrastructure and capital remain there for the next generation to use, to invest and to build, so we have a better economy and a broader tax base for the things that this government speaks so strongly about, like education, health care and social services.

We heard the Premier. I love to refer to this commercial. It sticks in my mind every time this government comes in with another tax. During the campaign we had this Premier sit there with a little piggy bank. We all saw this nice, little, pink, round, robust piggy bank and a penny in his hand as he talked about how frugal he is and how frugal he was as the mayor of Vancouver. If people remember, when he was the mayor of Vancouver, he raised commercial taxes 52 percent. Now that he is the mayor of British Columbia, is he going to do exactly the same thing?

Is he going to increase the taxes on corporations and the commercial sector in this province by 52 percent? That's not a very good record to run on. I always find it interesting when the Premier stands up in this House and talks about being the mayor of Vancouver and all the wonderful things he did for Vancouver.

An Hon. Member: He says he balanced the budget.

G. Farrell-Collins: Yes, he balanced the budget as the mayor of Vancouver, but how did he do it? He did it by raising taxes. He didn't do it by becoming more efficient. He didn't do it by finding creative ways to deliver programs to the people of Vancouver. He did it by raising taxes. We have another instance of this government doing exactly the same thing; it's the same thing all over again. The Premier stood there on