1984 Legislative Session: 2nd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, FEBRUARY 21, 1984

Afternoon Sitting

[ Page

3365 ]

CONTENTS

Ministerial statement

Ombudsman's report on log-scaling. Hon. Mr. Smith –– 3365

Mr. Macdonald

Routine Proceedings

Oral Questions

Police investigation of Ministry of Tourism. Mr. Cocke –– 3368

Mr. Barrett

Ministry of Forests scaling practices. Mr. Barrett –– 3368

Labour Code Advisory Committee. Mr. Gabelmann –– 3369

Income assistance cheque surcharge. Mr. Barnes –– 3369

Budget debate

Mr. Stupich –– 3370

Mr. R. Fraser –– 3372

Mr. Howard –– 3374

Mr. Davis –– 3378

Mr. D'Arcy –– 3381

Mr. Michael –– 3386

Mrs. Dailly –– 3387

TUESDAY, FEBRUARY 21, 1984

The House met at 2:07 p.m.

MR. KEMPF: In the gallery and in the precincts with us this

afternoon are several members and associates of the British Columbia

Independent Logging Association. I would like this House to make them

all welcome. I would particularly welcome three of the members from the

beautiful Bulkley Valley: Mr. Rod Penway, Mr. Bill Gurney and Mr.

Harvey Burns.

MR. MOWAT: It's my pleasure to introduce to the House today

two delegations. The first is Mr. Norm Thomas, who is the registrar of

the British Columbia College of Pharmacists, formerly from Kimberley,

B.C. In the Columbia River riding of my colleague the Provincial

Secretary (Hon. Mr. Chabot). Mr. Thomas is responsible for the

licensing of the pharmacists in British Columbia, of whom there are

over 2,300. I'd ask the House to welcome Mr. Thomas to the House today.

I have another introduction. With my colleague Jack Kempf from

Omineca it's my pleasure to introduce to the House the British Columbia

Independent Logging Association. There are a number of members with us

today. Their president is Ross Martin. I'd ask the House to welcome

their president and the delegation.

HON. MRS. McCARTHY: Mr. Speaker, I'm very pleased today to

inform the House that we have visitors from Toronto, along with the

executive director of the Canadian National Institute for the Blind for

British Columbia and the Yukon, Mr. Gary Magarrell. Our visitors with

him today are Mr. Euclid Herie, the managing director of the CNIB in

Toronto, and Michael Jory, the newly-appointed national treasurer for

the CNIB, also from Toronto. I want to ask all members of the House to

give our visitors, as well as Gary Magarrell, who does such an

excellent job on behalf of all of us in British Columbia, a very warm

welcome.

MR. PELTON: Mr. Speaker, in your gallery today is one of my

nephews, who is visiting in Victoria, Reed Ratcliffe. I would like the

House to welcome him here.

MR. GABELMANN: In their introductions the member for Omineca

(Mr. Kempf) and the second member for Vancouver–Little Mountain (Mr.

Mowat) neglected to introduce a former colleague of theirs, Mr. Howard

Lloyd. I'd like the House to make him welcome.

MR. REID: Mr. Speaker, it gives me a great deal of pleasure

to introduce the chairman of the board of the school district of Delta,

Caroline Porter. She's in the precincts.

OMBUDSMAN'S REPORT ON LOG-SCALING

HON. MR. SMITH: I wish to make a statement arising out of the

filing in the Legislature in the latter part of last week of the

ombudsman's special report No. 7, entitled "An Investigation by the

Ombudsman Into a Complaint About Ministry of Forests' Scaling

Procedures at Shoal Island, British Columbia."

On January 26, Mr. Speaker, the Assistant Deputy Attorney-General in charge

of criminal justice requested the commercial crime division of the RCMP to examine

into potential criminal conduct arising out of the Shoal Island scaling. Once

a criminal investigation is underway, it is incumbent upon the government not

to make comments which might either impede the investigation or affect the ability

of persons who could later be charged with a criminal offence to obtain a fair

trial. Publication of this report by the ombudsman during a criminal investigation,

and after he was specifically apprised and warned that the investigation had

been undertaken, is a matter of serious concern to me as Attorney-General in

the administration of justice. The publication of that report at that time may

well jeopardize the investigation as well as affecting the rights of persons

who could be ultimately charged. But I wish to put this in clear perspective

and to outline to the House exactly what events took place.

In December 1982 Ian Mahood, a contract logger, made a formal

complaint to the ombudsman in which he alleged faulty scaling

procedures on Shoal Island logging contracts which he said resulted in

underscaling by ministry officials with a resultant loss of

considerable sums of money, both to contractors and provincial revenue.

During the next year the ombudsman investigated these complaints and

corresponded with various government officials and persons involved.

Having already communicated his conclusions to the Deputy Minister of

Forests by a letter dated December 19, 1983, the ombudsman finally on

January 11, 1984, submitted his report formally to the provincial

cabinet for its consideration, as is his duty under

section 22 of the

Ombudsman Act.

In this lengthy report, the ombudsman recommended that the Ministry

of Forests take certain corrective action in relation to timber

scaling. On January 16 the cabinet secretary acknowledged receipt of

that report, and he advised officials in the ombudsman's office that

the report would be studied. When reports have been received from the

ombudsman by cabinet in the past, a reasonable number of months for

study and consideration of recommendations has always been afforded to

the government by the ombudsman before he embarks upon the statutory

step that is open to him: namely, filing his report with the

Legislative Assembly.

Indeed, on February 9 of this year the cabinet secretary confirmed

again to the ombudsman's officials that the Shoal Island report was

still under study. But on February 13, Mr. Speaker, an ombudsman

official called the cabinet secretary and advised him that the

ombudsman intended to go public with his report very soon if a response

was not forthcoming. The following day, February 14, the cabinet

secretary confirmed with the ombudsman in writing that his report to

cabinet continued to be under active investigation.

[2:15]

But because this matter had been placed under criminal investigation

on January 26, the Deputy Attorney-General, concerned by the

ombudsman's haste to publish these findings, delivered to the ombudsman

on February 15, 1984, a letter in which he advised the ombudsman that a

criminal investigation was underway and that it would not therefore be

appropriate for the government to respond to the report. He indicated

as well to the ombudsman the consequences that would flow to the

investigation and to innocent persons if there were at this time public

comment on the conduct of those involved in the scaling procedures.

[ Page 3366 ]

I wish to read Mr. Hughes' letter of February 15 to the ombudsman. I

will be filing with the House all of the correspondence that I'm going

to refer to, and it will be publicly available:

"Dr. Karl Friedmann, Ombudsman

"February 15, 1984

"I write further to Mr. Hick's letter of February 14, which, I understand, was delivered to you earlier today."

That's the letter confirming that the cabinet were reviewing it

"As stated, active review and investigation of this

matter continues. As Deputy Attorney-General, I believe it is incumbent

upon me to enlarge for you on the nature and extent of the review and

investigation.

"I wish to advise you that one of those to whom you

wrote on December 19, 1983, has, both before and after your report,

been in written communication with the government about the very matter

that forms the subject of your report. On the day on which your report

is dated, that party wrote to a senior official in government with whom

he had been engaged in ongoing correspondence, providing him with

information which, for the first time, raised the question of the

presence of criminal activity within the conduct that your report

addresses. That being so, on January 26, 1984, the Royal Canadian

Mounted Police were asked to examine the matter to determine whether

any criminal conduct might be present.

"I am advised that the requested examination is now in

progress. Just as soon as it has been concluded, the

Lieutenant-Governor-in-Council will be advised and you will then be

contacted by way of a response to your January 11 letter and report,

subject only to any continuing limitation that criminal proceedings

might, for the time being, impose. It is that same limitation that

prevents, as I am sure you will appreciate, further response or comment

at this time, bearing in mind that nothing ought to be said or done

that could impair or hinder the investigation, or improperly reflect

upon those subject to investigation, and who at this stage, under our

system, as innocent persons are entitled to all the benefits that our

law provides to those in such a position. Those ministers of the Crown

holding responsibility in matters relating to the investigation have

been advised by me through concurrent mail that they should, for the

indicated reason, govern themselves within the spirit of the content of

this paragraph."

In that letter the ombudsman was formally advised of the

investigation, and also advised that that investigation had been

commenced because of a communication received from one of the

individual complainants, Mr. Ian Mahood. He wrote to the Deputy

Minister of Finance on January 11, 1983, and I will table his letter as

well. That letter was passed on to the assistant deputy minister of

criminal justice, who made the decision himself that the matter should

be referred to the RCMP. In a paragraph in that letter Mr. Mahood said:

"I have been provided a copy of scale returns taken from the files of

the ministry that are said to be falsified records. I cannot express a

view on the facts, but if the allegation is correct, it would suggest

that there has been collusion to defraud." It was following the receipt

of that letter that a senior official in my ministry, acting in the

best traditions of law enforcement, turned this over to the RCMP, who

commenced their investigations shortly after January 26.

That was the background when the deputy minister, Mr. Hughes, wrote

to the ombudsman the letter that I've just read and delivered it to him

in the late afternoon of February 15. I was absent in eastern Canada

last week when the letter was written, but its content has my full and

complete endorsement. With a police investigation underway, the

government could not make a full or proper response to the ombudsman's

report within the time demanded by him. The same situation prevails

today. The impropriety of responding to the merits of the Shoal Island

allegations, either then, now or during the course of a police

investigation, has severe implications for the administration of

justice.

The message that was inherent in Mr. Hughes letter was strong and

clear. The ombudsman's immediate response, however, was set out in a

reply to the Deputy Attorney-General on February 16, the same day that

he delivered a copy of his report to the Legislative Assembly. I will

read his reply:

"Thank you for your letter of February 15, 1984,

informing me that you have referred allegations of criminal activity

regarding some aspect of the Shoal Island complaint to the RCMP for

examination. This was the first time I was made aware that such

allegations have been raised. As you know, my investigation of this

complaint has been ongoing since December 1982, and my report, pursuant

section 22 of the Ombudsman Act, was made on December 19, 1983,

concluding my investigation of the matter.

"I do appreciate your courtesy in providing me with

this information. I understand why you do not feel at liberty to

discuss particulars of the RCMP examination. However, this poses a

difficult dilemma for me. Mr. Parfitt has been in contact with Mr. Hick

over the past two weeks and has advised Mr. Hick of the urgency

regarding this complaint. Some of the complainants are in desperate

financial circumstances and look forward to the resolution of their

complaint. I have been advised by Mr. Hick that cabinet is considering

this matter, but I have not been given any indication as to whether or

when I can expect a firm response.

"It is my opinion, based on the information that I

have been given, that a report to the Legislative Assembly will not

jeopardize the RCMP examination into allegations of criminality. In my

report I make no allegations of misconduct on the part of any employee

— or anyone else, for that matter. I am sure that if you had concerns

after being advised of the content of my report to cabinet, you would

have suggested in your letter to me that publication of the report

would jeopardize the RCMP investigation. Weighing all of this

information, I have decided to proceed with making my report to the

Legislative Assembly this day. From my assessment of the complaint and

the facts revealed by my investigation, I am convinced that the

complaint and my recommendations can be properly addressed by the

cabinet and the Legislative Assembly, even if, or even while your

ministry or the RCMP considers whether there is cause to begin an

investigation. I will advise Mr. Hick by copy of this letter.

"Again, thank you for apprising me of this information."

[ Page

3367 ]

That was his response, and he filed the report in the Legislature.

It is axiomatic, Mr. Speaker, that when people's conduct is under

criminal investigation, responsible officials withhold comment and do

not publish material which bears on, interferes with or affects that

investigation. Having been warned in writing that a police

investigation had been undertaken for several weeks to determine the

existence of criminal activity, the ombudsman hastened to publish his

report. Taking this precipitous step, the ombudsman decided it was more

important to publicize the report than to concern himself with

jeopardizing the criminal investigation or with risking compromising

the rights of loggers, scalers and other persons involved, who are

presumed, under our system, to be innocent. By publishing this report

at this time, the ombudsman has generated wide public discussion and

extensive media coverage. He himself continues to this day to discuss

his report on the media. I can only conclude that the ombudsman has

displayed both poor judgment and inappropriate conduct.

It should be made clear that the matter was referred to the RCMP in

response to a specific written complaint. There never was any doubt

that the government would make a full response to the merits of the

ombudsman's recommendation, following completion of the criminal

investigation and in accordance with the procedures set out in Mr.

Hughes' letter to the ombudsman. Unfortunately, though, there is no

shortcut under our system for carrying out proper and even-handed

administration of justice in a way that is fair both to the public and

to innocent persons. I am filing copies of the correspondence from

which I've quoted in this statement.

I wish to emphasize most strongly that regardless of how the

ombudsman may perceive his duties in discussing conduct that he knows

is under active criminal investigation, I will never, as

Attorney-General of this province, waiver from my duty and the

responsibility that rests with me to ensure that every criminal

investigation, regardless of publicity, will continue unabated and

without interference, and in such a way as to ensure that justice has

been done to persons who might ultimately be charged with offences; and

to ensure that those persons, if they are charged, will ultimately

receive a fair trial under our system, a system which holds that people

are not prejudged as guilty, nor are they tried in headlines or in Hansard . In the event there is evidence, they are tried in a courtroom by their peers.

I will watch very closely the effects of the ombudsman's publication

of this report and the publicity and discussion that is attendant on

it, and the effects those may have on the investigation and on possible

criminal charges.

MR. MACDONALD: Mr. Speaker, on behalf of the opposition, the Attorney-General

of British Columbia, in the familiar tradition of his predecessors, is side-tracking

a public inquiry into the contents of the ombudsman's report. Any government

could, by a criminal investigation within very narrow limits as to whether John

Smith or Joe Doe can be proven in court on a particular charge of guilt beyond

a reasonable doubt, deflect the parliament and the legislatures of this country

from doing its duty to inquire, investigate and remedy, which is called for

in these recommendations. Attacking the ombudsman, as the member for West Vancouver–Howe

Sound (Mr. Reynolds) did the other day, is attacking, in a most unfair way,

the messenger, who has a statutory duty to investigate and report to this Legislature.

His recommendations have nothing to do with any criminal charge against anyone.

They're set out on page 25. The Attorney-General is obviously just derailing,

in accordance with the kinds of answers we had yesterday, a public inquiry.

I remember when, as Attorney-General, I came into office and asked

them to bring me the Butler report on the Sommers case. I got it and I

left it in my drawer for my successor. It recommended a prosecution. It

was suppressed. I'm not saying the cases are parallel. I'm saying that

police investigations and reports have traditionally been kept secret,

particularly by that government. Where is the police investigation and

report, even though it recommended a prosecution into the conduct of

the then member for Central Fraser Valley? Suppressed. Secret.

HON. MR. GARDOM: Mudslinger!

MR. BARRETT: It's the truth!

MR. SPEAKER: Order, please, hon. members....

HON. MR. GARDOM: Just like Vogel was the truth.

MR. MACDONALD: There was no public inquiry in that case

either. But I'm just going to make my statement. I'm not trying to get

into a debate with the members opposite.

It appears to me, Mr. Speaker, to be like, say, the case inquiring

into "Gracie's Finger," where evidence was taken on oath through an

attorney of the Attorney-General's department, and the evidence

suppressed; and then the ombudsman, who had proceeded with his

investigation, was blocked in court by the government, and nothing

happened. This ombudsman has the courage to stand up to government. I

hope that he will never allow himself to be intimidated by the kind of

language that has come from the mouth of the Attorney-General today.

[2:30]

The loggers who have said they have been bilked of many hundreds of

thousands of dollars are entitled to be heard through this Legislature

in open proceedings. The people of British Columbia, when there are

serious allegations — not of criminal conduct, but of gross

incompetence, gross mismanagement of our prime natural resource and

wilful blindness on the part of the government — are entitled to know.

After knowing about these matters for more than a month, the Minister

of Forests is going away, while the Legislature is sitting, on a trip

to Europe, I understand, which should be postponed. That minister is

accountable to this Legislature and these people of British Columbia

and should not be running away.

I conclude by saying that in the city of Toronto at the present time

there is a public inquiry going on, authorized by the Legislature, into

what is obviously potentially criminal conduct — the death of many

infants in a Toronto Hospital. The Legislature, the parliamentary

supremacy, has the right to investigate. Many criminal charges have

flowed out of public investigation. But the supremacy of parliament is

what is at stake. If we give up our right, as the supreme law-making

and investigatory tribunal under a democratic system of government. to

investigate, advise and remedy, then people will think very poorly of

the democratic system of government.

What we are confronted with here is a ploy on the part of government

to derail what should be called for forthwith — a public inquiry into

the contents and allegations of the ombudsman's report.

[ Page 3368 ]

Oral Questions

POLICE INVESTIGATION

OF MINISTRY OF TOURISM

MR. COCKE: Mr. Speaker, I'll direct a question to the

Attorney-General. Will he advise the House of the status of the police

investigation that was ordered into the Ministry of Tourism some months

ago?

HON. MR. SMITH: Mr. Speaker, that investigation is

proceeding. I have not received the report, which I had expected to

receive by now. I understand that it is imminent, but I have not yet

received it.

MR. BARRETT: Mr. Speaker, can the Attorney-General inform

this House as to the last time he made an inquiry as to when the

completion of the investigation could be expected?

HON. MR. SMITH: In the past week, Mr. Speaker.

MR. BARRETT: I have a supplementary question for the

Attorney-General, Mr. Speaker. Has the Attorney-General made a decision

as to whether or not he will make the police report public to this

Legislature?

HON. MR. SMITH: Mr. Speaker, not having seen the report, I

find it hard to make a decision on it. But I think the member

understands the tradition, as does his seatmate, the second member for

Vancouver East (Mr. Macdonald), who actually held the office of

Attorney-General — although it is hard to understand that after hearing

his remarks earlier this afternoon. He knows that police reports are

not ordinarily made public. Certainly what does happen following a

police investigation and the receipt of a report is that a public

statement is made, or something happens and public disclosure is made,

and that is very different from making public the entire police report.

MINISTRY OF FORESTS SCALING PRACTICES

MR. BARRETT: I have a question for the Minister of Finance,

Mr. Speaker. Yesterday I asked him the exact date that he was notified

of the allegations in the ombudsman's report relating to the treasury

not receiving its full revenue from forestry reserves. Could he tell

the House now the date that he was first notified?

MR. SPEAKER: Hon. member, I believe that question was taken on notice by the minister.

MR. BARRETT: Mr. Speaker, the question was taken as notice

and the minister said that he would check his diary. Has he checked his

diary yet?

MR. SPEAKER: A question taken on notice, hon. member, cannot be asked again. However, if the minister wishes to reply....

MR. BARRETT: No, it was a different question.

MR. SPEAKER: No, hon. member, the question in essence is the same; however, the....

The Minister of Finance.

HON. MR. CURTIS: Mr. Speaker, I undertook to check my diary

and bring that information back to the House. The hon. member will know

that I have been fairly actively engaged in the intervening hours.

MR. BARRETT: A question to the Attorney-General: has he been

asked to advise through his department whether revenues alleged to have

been missed by the Crown can be collected under existing legislation

related to the matter of Shoal Island?

HON. MR. SMITH: Not in my capacity as Attorney-General, but

the Ministry of Attorney-General has given an opinion in relation to

this matter, which is referred to and quoted in

part in Dr. Friedmann's

report. A legal opinion was given by the Ministry of Attorney-General.

Opinions were also given to Dr. Friedmann by several practising

lawyers, and an opinion was given to B.C. Forest Products, as I recall,

so there are all those legal opinions.

MR. BARRETT: To the Attorney General. Is he prepared to table with this House the mentioned opinions from his department?

HON. MR. SMITH: Mr. Speaker, I may do that. I am actively

considering doing that very thing. I might say that the normal policy

on legal opinions in relation to ombudsman investigations is this: if

there has been an opinion obtained prior to an investigation, that

opinion is normally turned over to the ombudsman so that he may examine

it as part of his investigation. But if the opinion was obtained by the

government as a result of the investigation, those are usually kept as

privilege. I don't understand that that has to be an inviolable rule.

It may be that on some occasions those opinions should be made public

or should be given to the ombudsman. I think circumstances change and

are not the same in every case. Certainly I would consider making that

opinion public, but it was obtained in the wake of an investigation. It

was obtained in a solicitor-client way by a ministry from a counsel

working for government.

MR. BARRETT: Mr. Speaker, I assume that the clients of the

Attorney-General are the people of British Columbia. In that vein, I

ask this question of the minister: could he explain the definition of

policy that would allow him to give an opinion on the ombudsman's

report regarding the recovery of money and at the same time state today

that expressing an opinion before the completion of a criminal

examination would be incorrect?

HON. MR. SMITH: Mr. Speaker, the member either doesn't

understand criminal procedure or is being somewhat facetious with this.

The member has to know that there is absolutely no requirement for

silence or lack of debate on any matter that isn't either before the

criminal courts or may be going before the criminal courts and is

imminently being examined for progress through the criminal courts.

Until such time, there is absolutely no reason why matters can't be

discussed and why opinions can't be given or even commented on. But the

general rule is that once a matter goes to criminal investigation,

responsible people.... Indeed, the Leader of the Opposition would have

to agree that it is not responsible to start discussing the merits of

conduct that is under criminal investigation, because it may be that as

[ Page 3369 ]

result there is no criminal prosecution, but it may

be that as a result there is. The people who are being investigated

don't get a chance to go before a jury who have not already for six

months read in the press various versions of the allegations, and they

don't have a chance to get a fair trial. That's endemic and deeply

rooted in the system, and the member has to know that.

MR. BARRETT: Mr. Speaker, I want to thank the

Attorney-General for the law lecture. Now that I am receiving this

lecture I would like to ask a series of questions related to the

lecture. If, sir, the criminal proceedings were being contemplated by

the government, why then, prior to the request for an investigation,

did the government come to the conclusion that it was necessary to

offer a legal opinion on whether or not the funds could be recovered?

If you were thinking of a criminal investigation, why would you ask for

a legal opinion as to whether or not the funds could be recovered? If

you feel — in the same question — that the ombudsman should not discuss

opinions, why indeed were you prepared to discuss your opinions on the

tax matter before the criminal investigation? What defines your right

to decide when your opinion should be discussed, but not the

ombudsman's?

MR. SPEAKER: Part of the question is in order. However, I

would remind all hon. members of the regulations regarding question

period. A question must not ask a solution of a legal question such as

the

interpretation of a statute.

HON. MR. SMITH: To try and distil that portion of the

question that is in order and is not convoluted and confused, as most

of it is, the determining factor there is whether there are

contemplated criminal proceedings. There were no contemplated criminal

proceedings in this case until Mr. Mahood wrote the Deputy Minister of

Finance on December 11 and alleged possible fraudulent conduct. It was

at that moment, and at that moment only, that criminal proceedings were

contemplated. The legal opinions that were obtained in this case on all

sides were well in advance of January 11. So the question doesn't

really make any sense, Mr. Speaker.

LABOUR CODE ADVISORY COMMITTEE

MR. GABELMANN: I have a question for the Minister of Labour.

On February 15 the minister announced the membership of the Labour Code

Advisory Committee. Does the committee have the right to set its own

terms of reference?

HON. MR. McCLELLAND: No, Mr. Speaker.

MR. GABELMANN: In that event, will the minister advise what the terms of reference are for that committee?

HON. MR. McCLELLAND: I don't have the specific terms of

reference in front of me, but the committee's general terms of

reference were agreed to at the so-called "Kelowna accord" meeting with

Jack Munro of the IWA and Premier Bennett. At that time it was agreed

that there would be a five-member committee which would be made up of

two members from names submitted by the B.C. Federation of Labour, two

members from names submitted by me, and a chairman to be chosen by me.

That committee was to review, first of all, the briefs and

submissions which were given to the minister over the last 18 months

regarding changes to the Labour Code of British Columbia. These total

in the neighbourhood of 250, so there has been a lot of public input. I

have also asked that anyone else from the public who wishes to have

further submissions heard should get them to me as quickly as possible

so that I can send them to the committee. The committee will then,

basically, review those. I understand the members have them in their

hands at the present time. They will also consider their own views of

the Labour Code and whether or not it needs changes. Then they will,

through the chairman and through written reports by the individual

members, advise me of those views.

[2:45]

MR. GABELMANN: Mr. Speaker, is the minister saying that

interested members of the public will not have the opportunity to

present their views and opinions to this committee?

HON. MR. McCLELLAND: Interested members of the public can

present their views to the minister. The committee is an advisory

committee to the Minister of Labour. It was agreed by Mr. Munro and Mr.

Bennett, the Premier, and subsequently by other officials of the B.C.

Federation of Labour, that this would not be a committee which would

hold public hearings or receive briefs, nor would it make

recommendations or write a final report. It would be an advisory

committee to the Minister of Labour, and that's the obligation to which

we've lived up.

MR. GABELMANN: Has the minister given any direction to

members of this committee as to what subject matter they should

consider? And has the minister given his opinion as to what conclusions

they should reach on those subject matters?

HON. MR. McCLELLAND: No, Mr. Speaker. Well, first of all,

have I given them any directions about what they might consider. Yes. I

have. I've already said that. I have given them a complete list of all

the briefs submitted, with a review of what those briefs generally have

outlined. The briefs are available to all members of the committee.

They have that list in their hands now. So yes, I have given them those

briefs to study, because those are the 250 briefs from either

individual members of the public or organizations of one kind or

another. From that point of view, yes, they've been given some

information about what information they should be looking at. But as to

what conclusions I want, there's been nothing of that nature

transmitted to anyone.

INCOME ASSISTANCE CHEQUE SURCHARGE

MR. BARNES: My question is to the Minister of Human

Resources. A company called Money Mart has responded to a lack of

cooperation on the part of chartered banks by cashing provincial

welfare cheques and charging a 6 percent commission. Does the minister

agree that this Legislature has voted social assistance funds to

provide for the needs of recipients and not to enrich discount

cheque-cashers such as Money Mart?

HON. MRS. McCARTHY: We have never dictated to recipients of income assistance as to where they should cash

[ Page 3370 ]

cheques, or given them restrictions. However, I am

aware of the concern expressed by the member regarding the surcharge,

and also the concern regarding availability of cheque-cashing areas for

some welfare recipients. I will be able to bring a report back to the

Legislature, which will perhaps clarify that situation, in the next

little while. If I may take that question as notice, I will certainly

get the material to the Legislature.

Orders of the Day

ON THE BUDGET

(continued debate)

MR. STUPICH: Mr. Speaker, in speaking before lunch I got to

the point where I dealt with the budget's treatment of youth in the

province — so much for the budget's offerings to youth. But the bad

news does not stop there.

Municipal governments face a 17 percent cut in funding. The point

has passed where the provincial government can hope to force these

savings through reduced wage settlements. There are real cutbacks ahead

as a result of this announcement. Seniors' day centres are completely

eliminated in this budget. These are political judgments respecting

community preferences. The government is imposing certain preferences

upon the community. The government continues to use its financial

resources to support construction of high income condominiums and ski

resorts, and to subsidize business enterprises, while continuing to

slash away at the basic needs of seniors, unemployed youth and disabled

people.

[Mr. Pelton in the chair.]

The Health minister has clearly borne a sizeable brunt of the

restraint axe, pious talk notwithstanding. Far from maintaining

services, even with the 8 percent tax hike blamed on Health, the

important field of preventive health care has been decimated. Homemaker

services face a further 2 percent net reduction this year, making a

combined 15 percent decrease since 1982-83. Adult day care is reduced

15 percent this year, a 38 percent reduction over the last two years.

Speech and hearing services are down 7.4 percent, a total 14 percent

reduction in the last two years. The dental care program is down 32

percent. Contributions to municipalities for preventive programs are

reduced 4 percent. The Provincial Laboratory is reduced 10 percent. VD

control is reduced by 5 percent. Program management for alcohol and

drug abuse is down 18 percent in this year. This is a total of a 28

percent reduction in a period of two years. Four percent has been

purloined from funded agencies in the area of alcohol and drug abuse.

Overall the government proposes to spend $18.7 million on alcohol and

drug programs. This compares with an increase of $37 million in liquor

revenues for the current period.

Mental health centres are slashed by $181,000. A total of $2.2

million has been slashed from the ambulance program. One could go on at

great length on the reduction in spending which has taken place over

the last couple of years. No device, no slogan, no words of mine can

match the harsh impact of these spending cuts on health, safety,

well-being and life itself.

The question has to be asked: what will it take for the government

to re-examine these political preferences which are packaged in the

form of a budget before us today? What volume of suffering or loss of

life is sufficient to cause re-evaluation? We already know that the

unfortunate deaths of two young people on a Mt. Washington road is not

sufficient to re-evaluate the lack of vehicle inspections in this

province. Can it be said that nothing will stand in the way of the

government's political commitment to expenditure reduction?

Unfortunately, the situation is that serious now. It is not projected

to be that serious in the future; it is that serious today.

Because of the artful reorganization in spending estimates it will

take many months to determine the true impact on British Columbia

society of expenditure proposals tabled yesterday. I have no

hesitation, however, in saying that the impact will be as severe as it

will be harmful to the well-being of our society. All of those who have

worked, saved and paid taxes had hoped for something better than is

offered in the budget before us. Today is not a day for pride; it is a

day of sorrow and of sober reassessment.

Mr. Speaker, I'd just like to talk about the way ahead, in

conclusion. May I comment on the future of this province, a subject

this government is incapable of addressing with any substance. The

people of British Columbia want more than worn-out platitudes and

simplistic clichés. The people of British Columbia want a

well-conceived long-term strategy for economic recovery, a recovery

that will create jobs that will endure. In laying the foundation for

real recovery, the government must be prepared to invest jointly with

the people of B.C. in our future.

British Columbia has been ravaged by the current economic recession.

The cyclical downturn of our traditional export markets has left its

mark on thousands of British Columbians in the form of unemployment,

bankruptcies and despair. The Socred government talks about attracting

investment capital and breaking into the so-called "high tech," yet the

citizens of British Columbia have seen no results. All they have heard

are empty promises and rhetoric. Time and sacrifice have been wasted.

If British Columbia is to experience any substantial development in

secondary industry or to realize the growth of an indigenous

manufacturing sector based upon the presence of natural resources, then

we are going to have to do it ourselves. There is no magic process by

which ideological crusade is translated into economic results. In order

to make inroads into the new industries, British Columbia will have to

take advantage of its present comparative advantages and develop new

ones. The basis for that development of our economy and real recovery

will have to be a sense of direction defined by careful research and

consultation. There is no evidence that the politicians opposite even

understand the requirements of an economy which can compete in the

future. For them the whole matter is reduced to the eighteenth century

incantation of the Fraser Institute.

There is, to begin with, an urgent need for some practical research.

It has been done before in the province of British Columbia, Mr.

Speaker. I've said earlier in this House that it was done when the

government was anticipating the end of the war and knew that it was

going to have to do something with all the returning veterans. It set

up a postwar rehabilitation and reconstruction committee to look at the

possibilities for increasing secondary industry development in the

province. When the NDP administration was in office, they too looked at

the possibilities. We had studies done. We did research.

Recommendations were made which were in the process of being put into

action when the Socreds were re-

[ Page 3371 ]

elected. Everything that we had done, while it was

available to the Socreds, was presumably filed in the ashcan, because

nothing positive has happened since the NDP left office in December

Such crucial inquiries have to be undertaken to develop a social

consensus. All sectors of the community must be fully consulted. That's

what was done during the war years; that's what was done when we were

in office. Each must have some basis for believing costs and benefits

will be distributed as equitably as possible. Universities are a prime

component in the network of research and development work. Prior to

1977, the B.C. provincial government spent an average of 59 percent of

federal higher education funds on universities. The remainder funded

programs in colleges and some in high schools. Assuming the same

distribution of post-secondary programs, in 1982-83 the federal

government funded 63.45 percent of university operating grants, while

the province accounted for 36.55 percent. One year later, in 1983-84,

the situation has deteriorated to a point where the provincial share of

B.C. university operating grants is only 11 percent — down from 36.55

percent. The impact on research is obvious. British Columbia is tied

for last place in Canada in funding research in universities. That's

not a record to be proud of.

Such neglect has very serious implications for the province's

future. Allowing vital elements of strategic planning to deteriorate is

a mistake to be paid for by future generations. As a resource-based

country, we are poorly represented industrially in these

knowledge-intensive areas. Canada is likely to miss out on these areas

of rapid growth and will probably instead become a large-scale importer

of such new product developments.

This should not come as a surprise to members of the government, as

they have been hearing — but ignoring — these warnings for quite some

time. In 1976, in a report on research and research funding in B.C.

submitted to the Ministers of Education and Industry and Small

Business, Roger Gaudry argued:

"Not only are ongoing projects and research teams

affected deleteriously, but also potential research activities of value

to this province cannot be initiated. There is a real danger of falling

below a basic level of research activities in certain areas and of a

failure to provide for the future highly skilled scientific manpower

needs of the province."

Mr. Speaker, that was eight years ago. I wonder what Mr. Gaudry would have to say about the state of research in 1984.

The problem with the government is that they employ a K-Tel approach

to research and development: quick, easy and preferably as cheap as

possible. The Social Credit government, which enjoys so much unearned

support from business and managerial people, simply does not understand

the value of a long-term investment. The quick buck, especially in tax

returns, is just about the only thing they do understand.

Research in our universities is suffering. Accountability is limited

to enforcing cutbacks. The only result valued by members opposite is

the one which brings money and power back to the political machine in

Victoria. There it can be redeployed for some useless ministerial

travel and more propaganda pamphlets full of half-truths and outright

fabrications. Even in a time of restraint, the government must realize

it has a priority mixup. The damage being done in the field of primary

and secondary research will take years to undo, if it can be undone at

all. Politicians do not conduct research and development work, yet it

is they who control and, in B.C.'s case, slash funding. It is extremely

difficult to guarantee success in scientific work. It is easy, however,

to guarantee failure. Research is a high-risk operation. No doubt there

will be failures. But research at levels the Socreds are prepared to

fund will be unlikely to yield anything of economic value.

[3:00]

In short, unless this government significantly increases its

financial commitment to primary research in B.C., the economic recovery

they have promised will never materialize. The government members

probably feel that expenditure on research is simply a waste of the

taxpayers' money, but every successful economy spends more on research

and development than does B.C. There is money to be made through

developing primary research and through the discovery of new uses for

our natural resources. New business ventures could be launched. There

could be jobs for more people.

Our problem is not so much how to import foreign capital, scientists

and technologies. Our problem is our failure to properly deploy our own

financial and human resources. The Socreds talk about the need to

attract investment capital to B.C. Well, facts speak for themselves.

The necessary investment capital is already in the province. The

problem lies with this government. It is simply incapable of developing

a strategy for investing our own resources.

In a recent paper by the B.C. Economic Policy Institute, British

Columbia was ranked fourth in Canada in terms of gross capital

formation as a percentage of gross provincial product, well ahead of

the manufacturing provinces of Ontario and Quebec. Only four of 25 OECD

jurisdictions have higher investment rates. In other words, Mr.

Speaker, the Socred argument that B.C., lacks the necessary investment

capital for economic recovery is simply not true. The truth lies in the

fact that this government either refuses or is incapable of uniting

B.C. society behind realistic economic goals.

A recent study in the United States refers to the fact that 75

percent of research cited in patents is basic research carried on in

university departments. The potential for success is on our doorstep.

All we are missing is the vision and the leadership.

In terms of research and development expenditures, British

Columbia's record is atrocious. In the 1982 report of the Science

Council of B.C., expenditures on research and development as a

percentage of provincial gross domestic product for B.C. in 1979-80

were 0.5 percent and 0.55 percent. The Canadian averages for the same

years were almost double: 0.99 percent and 1.04 percent. The Alberta

government committed 0.7 percent and 0.8 percent, while comparative

figures for Ontario were 1.28 percent and 1.4 percent. It simply does

not make sense for this government to talk about breaking into the

world market for high tech when B.C.'s commitment to research and

development is less than half the Canadian average.

But even if we met the Canadian average, we would still be far

behind most of the industrialized nations of the world. In a 1979

survey of OECD countries, Canada ranked a poor twelfth, with a ratio of

1 percent of gross national product to research and development. The

U.S., Germany, Switzerland, the U.K. and Japan all committed in excess

of 2 percent of GNP. The numbers don't lie. Without increased funding

for research and development, both in universities

[ Page 3372 ]

and industry, B.C. will not be able to compete in

the international marketplace. Clearly this government's commitment to

economic diversification is without direction, without substance.

Lacking basic research funds, it is no wonder the B.C. Research

Council has no money for development work. In 1981 only 6 percent of

their $7.52 million budget was committed to development work — a paltry

expenditure of $451,680. In comparison, the next lowest commitments to

development by provincial research organizations were in New Brunswick

and Saskatchewan, where 9 percent and 12 percent respectively were

spent for this purpose. In Ontario and Quebec the figures for 1981 were

40 percent and 70 percent. Clearly, the evidence that we are not

developing basic research is related to the fact that development and

application of new technology receives less than 2 percent of the

government's propaganda budget.

Application of new technology, whether developed in B.C. or not, is

critical to our future economic success. It is far more important than

a few highly subsidized show projects can ever be. Yet for every dollar

spent on such development work, the government spends $50 on media

manipulation and the telling of direct lies to the electorate. Even if

we were committing the necessary financial resources to research and

development, there is no guarantee that British Columbia would gain

access to world markets. Our experience is in offering commodities for

sale; we are not accustomed to door-to-door salesmanship in the offices

and factories of distant countries. Since we are not in the business of

developing our own research, we have nothing to sell. It should come as

no surprise to learn that industry and government in B.C. have little

experience in marketing, save for the natural resource sector.

The Innovation Office, which is a component of the Science Council

of B.C.'s secretariat, employs only three full-time staff, and its role

is extremely limited. It has only been established on a trial basis,

and its future will be decided in 1985. We call on the government, in

consultation with the private sector, to expand the size and role of

the Innovation Office in order that British Columbia companies can

penetrate world markets. In the end, supplementary provincial funding

is necessary if only for two simple reasons: to provide for the

development of industrial research capabilities within B.C. and to

restore confidence among actual and potential researchers in the value

of their work. This is a necessary precondition to successfully

diversifying the provincial economy.

If this government persists with its current failures, the province

will be sorely prepared for future attacks upon its social and economic

problems. While we can prepare for the next decade by ensuring the

survival and growth of the research potential within our provincial

universities, we must at the same time prepare ourselves for the

immediate challenges we face. The government should develop fiscal

initiatives that would encourage the private sector to increase its

commitment to research and development. The government should encourage

research that would be of importance to the province. Agriculture and

food, aquatic science and mariculture, electronics and communications,

forestry and forest products: these are just some of the areas to which

British Columbia firms could be increasing their commitment, following

initiative from the government. Besides developing a body of local

expertise, we would also be adding a high added value to our natural

resources, ensuring that B.C. remain competitive in its traditional

markets.

The government's commitment to research and development should be

multi-dimensional in nature in that it encompasses both short- and

long-term objectives and recognizes the importance of both the

universities and industries in fostering long-term economic growth. To

date, the government's commitment can be categorized as window-dressing

at best. It simply does not recognize that we must invest now in order

to reap a dividend in the future. Rather than spending hard-to-come-by

tax dollars on no-interest, multimillion dollar loans in an attempt to

have established foreign-owned and — controlled branch plants — for

example the Toyota wheel plant or the Dynatek dream — we should be

concentrating on research and development efforts and dollars to

manufacture new and different products using raw materials produced in

the province of British Columbia as well as B.C. labour and energy.

Mr. Speaker, if you begin a journey, you must first know where you

are going. Only then can you choose the means and plan the route. This

government has no idea where it is going or where it wants to take the

people of British Columbia. They can't choose the means and plan the

route, because they don't know where they want to go.

MR. R. FRASER: Mr. Speaker, I rise to support the budget

speech presented by the Minister of Finance. As I read the budget I

noted the historic and landmark turn that we took — the reality of

fact. We are debating a budget today that is a reflection of the world

economy. I suspect that the people of B.C. may have known the

circumstances before we did. They called on government to do what

they're doing in their own homes: that is, to practise restraint. That

is what we intend to do.

Certainly there are those who would call for more government

spending, who would favour more public spending and lower taxes, the

net effect of which would be higher debt. We see one example after

another of error in judgment. Countless people go bankrupt. Countries

can go bankrupt. Too much debt causes more pain and an inevitable fall

that is worse than facing the hard times of cutting back. I support the

government's program of restraint.

From time to time we hear arguments that the government has spent

too much money building a prison that is too fancy for the prisoners.

From time to time we also hear, I suppose, that the prisons aren't

fancy enough. So we get constant complaints — a litany of complaints —

from those who don't seem to understand that the solution to the

problem is the contribution of thought and thoughtful process. We could

use some of that.

Privatization. I would support the government's idea to look at all

aspects of the government that may in fact be better handled by the

private sector. For example, I see no reason why the distribution of

alcohol and beer couldn't be done through private stores. I see no

reason why we should be in the retail business. I'm not sure that we

ever will be in the retail business, but I would have no qualms

whatsoever about investigating any aspect of the government that would

get us out of the marketplace that we shouldn't be in and get those

people who know how to run businesses into the private sector.

Certainly, as the Finance minister said, productivity is the key to

everything. There is no doubt in my mind that if we do not produce more

per man per hour, per woman per week, we will never be competitive. You

and I know that we can

[ Page 3373 ]

ship raw materials overseas, have them processed,

ship them back and get them cheaper than if we did it ourselves. If we

want to do that manufacturing here, and if we want to have the value

added to the products here, then, in fact, what we must do is to find a

way to be more productive so that we can keep the wages we've now got

and still be competitive on a world market. Until we learn how to do

that it won't happen. We simply have to find out how to do that, and we

shall.

Certainly there was one hyphenated word in that budget speech, Mr.

Speaker, that I happen to endorse and have used often myself:

self-reliance. To the limit of our own individual ability,

self-reliance is what we will need to relive. That is the theme that

has built this country, and that is the theme that will rebuild this

country. Those who understand these facts understand the call for

restraint, They understand that each and every person in this province

must do his or her

part in this new era. We were rudely awakened from

our dream world of recent years, but we are awake now. If I know the

people of this province — as I believe I do — they will respond with

vigour so that those who need help can receive it. Certainly the

responsibility of those who are legally entitled to social benefits,

but do not need them, is to let those who need them get the help first.

As we learn the difference between rights and privileges, we learn how

to make this democratic system work better. As we learn that the funds

we save in good times should not be frivolously spent in good times, we

will find a way to store funds for the use and times that we hope will

never come again. I hope we will learn that. Certainly UIC is a fund

you put away for a rainy day that will never come. In my opinion, you

are not entitled to those funds if you do not need the money, even

though you may be legally entitled to take them. That is my philosophy.

That is the philosophy that built this country. If we're going to help

those who need help, those of us who have been lucky will have to pay,

and pay we will.

[3:15]

With respect to the resource stabilization fund, I support that

idea. Certainly if we can save money by paying off that long-term debt,

then we should do it. There is simply no other way to think. There are

two kinds of debt: productive debt and non-productive debt. If in fact

we can get rid of all debt, particularly the non-productive, then we

should. Productive debt creates money; non-productive debt doesn't. In

fact, we should eliminate all debt if we can. I happen to have that

personal philosophy. There is every reason to create a fund for a rainy

day, which, as I said before, we hope will never come again.

With respect to education, I support the shift from grants to loans

for students going to university. Certainly the students benefit from

that education, and certainly the community will benefit ultimately, I

hope, from the education that those students receive. But in fact, if

those students do not have any faith in themselves and are not willing

to gamble on their own future, then there's no reason why the taxpayer

should gamble on it for them. So I support the change to the loans.

Interjection.

MR. R. FRASER: Well, I don't think you're gambling, hon.

member. You don't gamble with higher education. You know it perfectly

well. You've got one yourself, and it's not been a gamble for you. Mind

you, you had a luckier start than most. By the way, how's your

Rolls-Royce these days, Madam Member?

Certainly those at university do better and have a better life.

They're willing to invest in their own future, I should hope, because

if they're not, I'm not either.

With respect to secondary education, I know those teachers. I think

they, like everyone else, will understand that unlimited funding is not

the answer to every problem. It can't be. Everybody knows that. I know

that those teachers are resourceful, and that they, as they have in the

past, will find a way to use the time resourcefully, and will find a

way to use the education money resourcefully. Certainly there can't be

very many professions that can have the instant response to output that

the teachers have. I can think of the few days that I spent in

classrooms myself, and there is simply a wonderful response from the

students when you teach them something or tell them something they want

to hear. I know you can't get that every day. I know that at least one

member of the opposition was a teacher, and certainly one member over

here. From a point of view of job satisfaction, there can't be very

many professions that will give to you like the teaching profession

does. The teachers will be resourceful. They will take their part. I'm

very confident about what they will do. They will make the system work

like they always have and always will.

With respect to health care, I am one who would openly endorse the

concept of user fees, as long as those who cannot afford to pay have

access to health care services. I could not disagree more with the

federal government on this issue. There are those who will suggest that

health care is a right, that it is only fair to give everybody equal

service at the same price — in other words, at the cost to the state —

without regard to personal financial circumstances. But I for one see

no harm in charging those who can pay a small fee to go to the hospital

or, in fact, even to the doctor. I see no reason why the whole

tax-paying base should pay for any one of us in this chamber to go to a

doctor when we can afford it. I think it's a crime. However, if they

are determined to make it universal, then they will have to support the

suggested and, I hope, temporary tax increases suggested by the

Minister of Finance.

Interjection.

MR. R. FRASER: I don't believe they'll go along with it, but

I hope they will. Certainly as one who has paid a lot of taxes and

really doesn't like it all that much, Madam Member, I would support the

reduction of the taxes. In fact, I support the user-fee concept, as

long as those who can't afford it can go. The people who defend this

no-user-fee system are trying to defend motherhood, when in fact

they're attacking mother. If they burden the entire system with no fees

and no incentive to look after one's personal health, and everybody

goes all the time because it doesn't seem to cost anything, the whole

health care program is going to go down the drain. Nothing would be

more depressing than that. There's no folly like an old folly. It isn't

free; somebody has to pay. Those of us who can pay should pay a little

more, but we won't under this new system. We'll all pay the same. It's

crazy. We will pay.

Interjection.

[ Page 3374 ]

MR. R. FRASER: We'll pay even more, in fact. I don't disagree

with the fact that we should pay more. It seems to me that when you get

a service, there should be something coming out of an individual pocket

— unless you don't have it, and then you should get it. There should be

a way to look after those circumstances.

Today one member of the opposition talked about adolescent

competition as if competition in the free world was an adolescent

behaviour pattern. It is not. It is a normal behaviour pattern that we

should encourage. If, in fact, I suspected that the subject of the

budget speech was not substantive, then I would have heard nice, clear,

sharp debate this morning. But I didn't hear that. How easy it is to

complain, and how difficult to find the answers. As I said last week, I

intend to be part of the solution and not part of the problem. We

cannot deal in vague illusions. We have to deal in realities, and we're

all dealing in that today.

There is no sense talking about a strategy for the future if you're

just going to go back to talking about what happened in the past and

recount all the moneys that were spent, or were not spent when you

thought they should have been. When it is said that we should have some

research programs here, can we not point with pride to the funding and

the building of discovery parks in the province of British Columbia?

I think we do very well here, Mr. Speaker. Every time I watch the

world news in the evening I can't help but be grateful to live in this

country and in this province. Anybody who thinks that we're not well

off is not facing the real facts of the matter. In this province and in

this country we've learned, time and time again, that what we really

need is more people pulling the wagon and fewer people riding on it.

MR. HOWARD: Mr. Speaker, I had made some notes to do things

in a rather formal way, having looked at the subject matter before, but

I was interested in listening to the member who has just concluded

talking about productive and non-productive debt. I can see now what my

problem is. Here I've been dealing with the bank and all I've got is a

non-productive debt, and that's why the interest rates that I have to

pay the bank are higher than they would be if I had productive debt. So

I'm going back to the bank when I get a chance and I'm going to ask

them to transfer all my non-productive debt — that's the mortgage on my

home — over to this productive side of debt. I bet you I won't get a

cent taken off in interest.

In any event, I know what the member was talking about. He was

talking in the context of this government. Non-productive debt is money

borrowed for the Ministry of Human Resources, and that's what the

government is doing — borrowing $1.2 billion in order to put that $1.2

billion into the Ministry of Human Resources. That's non-productive

debt, in my view — false economy. At the end of it all they will not

have created any hope for those people of becoming gainfully employed,

and they will still have the debt on top of it all — and have to pay

the interest for it.

MR. REID: What would you do?

MR. HOWARD: I'd just advise my friend from Surrey if he would

just pay attention for a change — that the major reason he has two ears

and one mouth is so that he can listen twice as much as he speaks.

I want to deal with four aspects of the budget. One is the economy

of the province; second is the debt situation; third is the

fictionalized — to be polite about it — aspect of the budget; and the

fourth is fault — error, fault, mistake.

On the fault side, one of the very interesting things to notice

about this government is that it has consistently laid the blame on

anybody else but itself. It consistently finds fault with everybody in

the world except itself. Reagan is at fault; Trudeau is at fault;

federal Liberals are at fault; world copper prices are at fault;

interest rates are at fault; inflation and labour are at fault. They

just stopped short of blaming it all on the Almighty. Not once has this

government, to my knowledge, made a mistake. They're absolutely

infallible — incapable of making a mistake. Mr. Speaker, you know from

your vast experience in dealing with human beings — and everybody in

this House knows — that there's something seriously wrong with somebody

who doesn't make a mistake. There's something seriously at fault with

someone who doesn't make an error once in a while, but we've got it in

this government. That's one of the reasons that this budget will not be

helpful, will not be accommodating and is not the correct thing to do.

In it there is no admission in it of error on the part of its producers.

I realize from the outset that sometimes people don't actually read

the words in this thing, but I want to tell you about the fictionalized

part of this budget. Page 27 says: "All ministries, with the exception

of the Ministry of Health, show a decline in expenditure in 1984-85

when compared to the 1983-84 budget estimates." Now that same fiction

is reproduced in different words in other parts of the budget,

specifically right at the beginning, where it reiterates the whole

thing.

Mr. Speaker, that's hokum; that is just not true. Look on page 26

and I'll tell you exactly. Take, for instance, the office of the

Premier. It points out that the estimate for 1983-84 was $742,000. That

is not true. Here is the book of estimates presented to this

Legislature which this Legislature dealt with. That book, the document

presented by the Minister of Finance a year ago, in the Premier's

office does not contain $742,000; it contains $660,000. If they had

used the true statement, if the Minister of Finance had not used a

false figure in his budget speech the other day, but had used the true

figure, it would have shown that the estimates for the Premier's office

went up, not down. It would have shown the same thing for the estimates

of my very dear friend the Minister of Intergovernmental Relations

(Hon. Mr. Gardom).

MR. REID: How about the ombudsman?

MR. HOWARD: I'll get to the ombudsman, if my friend will just

be patient. I told him to use his ears and not his mouth, and he may

learn something.

The estimates of the Ministry of Intergovernmental Relations show a

false figure for 1983-84. The accurate figure is in the estimates book

presented by the Minister of Finance last July as being $2,423,000, not

the $2,734,000 that he told us the other day. That shows an increase.

[3:30]

[Mr. Speaker in the chair.]

Do you want to know about the ombudsman? It is exactly the same.

MR. REID: No, it's not.

[ Page 3375 ]

MR. HOWARD: It's not? The Minister of Finance told us

yesterday that the amount of money set aside for the ombudsman in the

estimates of 1983-84 was $2,046,000. The accurate figure in this

document for the estimates of the fiscal year ending March 31, 1984,

presented last July, was $1,618,000. A false figure is contained

throughout. If the Minister of Finance had used the accurate figures,

Mr. Speaker — the ones in the estimates presented to this House, which

were voted by this House — he would have found out, and I'll count

them, that nine of the ministries had an increase in their budget this

coming fiscal year over the current one.

Let's have a look at something else where I submit that the matter

has not been thoroughly dealt with. In the supplement of the estimates

for this year — and this is the fictionalized part that I am telling

you about — the first thing that occurs is that the rules are changed.

We have a new set of circumstances, a new set of identifying factors,

new coding operations, so that it's not possible to compare this year

with last year; just as it was not possible, as I told you here earlier

— that they used different figures to present a different picture. Now

we've got "Communication expenses" as a title. It never existed before,

so we don't know what amount was in there last year. That sort of thing

seeks to hide the facts of budgetary and fiscal matters.

We've got an item in here that used to be called advertising and

publications that is now called "Informational advertising and

publications," and an item called "Statutory notices" in addition to

that. That's the old Doug Heal approach. They've tidied it up and given

it a different name so we can't find out what is occurring.

Dealing with Doug Heal, let's, for the edification of my colleague

from Surrey and others, point out that on page 92 of this supplement,

dealing with government information services, it says this: "Total

1983-84 voted expenditure: $19,881,000." That is a false figure. That

is an incorrect figure. The real figure, the accurate figure, the

truthful figure out of the estimates of last year and the amount of

money that this Legislature voted was not $19 million; it was

$17,861,000. Why the padding of the account to show something which is

not accurate? Is that standard? Incidentally, Mr. Speaker, maybe the

Minister of Finance increased the figure so that he could claim there

was a reduction.

AN HON. MEMBER: Oh, he wouldn't do that.

MR. HOWARD: Well, maybe. I didn't say he did that; maybe he

did that. Maybe he increased the figure so that he could say they were

going to spend less there this coming year. The fact of the matter is

that last year it was $17 million; this coming year it's going to be

$18,900,000. It's an increase in government information services, which

is Doug Heal and associates. That's the fictionalized part of the

budget.

Even the so-called 6.2 percent reduction is a fictionalized figure,

because the minister conveniently excluded — although he mentions it in

passing — the $470 million that's going to be a gift to B.C. Rail out

of general revenue. It's coming out of the general pot and it's going

to B.C. Rail. You've got to add that on top of it; that's an

expenditure. I mean, they're just not going to send a blank cheque, you

know, or a piece of paper. They're going to put a figure on it. So when

you add that on top of it, you find that the 6.2 percent decline is a

fictionalized figure.

Let me deal briefly with the debt. I'm going to have to draw upon

the words used by a national figure whom most Social Crediters adore,

the leader of the federal Progressive Conservative Party.

AN HON. MEMBER: Myron Baloney.

MR. HOWARD: Myron Baloney? No, I wouldn't be so unkind as to

call.... I've heard that reference, though. I think it may be

appropriate. Even the Conservatives use that designation — some of

them. But this is what Brian Mulroney said about the federal budget

that came down just a little while ago. He said it has taken successive

Prime Ministers, including Mr. Pearson, Mr. King, Diefenbaker, Borden

and all the rest of them, 108 years to get the federal debt to where it

was prior to Trudeau coming to office. And in the last eight years Mr.

Trudeau and the Liberals have tripled that federal debt. He found that

the most disgusting thing he could think of with respect to federal

fiscal policy. I agree with him. I want to thank Mr. Mulroney for

giving me the opportunity to examine what he said to see whether it was

accurate — and it was — and to give me the thought that I wonder what

would happen if I looked at this province's books to see what Mr.

Mulroney would say about them. Let me tell you.

On December 31, 1975, the total debt of the province, according to

government books, was $4,425,000,000. All of that at that time was

indirect debt. There was no direct debt on December 31, 1975. That was

a few weeks after we left office. It took this province 104 years of

successive Ministers of Finance, and successive Premiers — including

the late W.A.C. Bennett, including the late Byron Johnson, the

coalition Premier for a while, including the present first member for

Vancouver East (Mr. Barrett) — to move the debt of this province from

nothing to $4, 425,000,000. In the short period that this government,

under this Premier, has been in office — eight years, the same period

of time that Mr. Mulroney was talking about — they have increased the

debt of the province of British Columbia three and a half times. In

eight years there's been an increase from roughly $4.5 billion to

roughly $15.5 billion loaded on the people of the province of British

Columbia, three and a half times the debt that was there when this

Premier became the Premier. The per capita amount of debt has increased

by the same ratio — from $1,800 to $5,400. Do you know how much people

in British Columbia are now required to fork out of their pockets just

to pay the interest on the total debt of this province? Computing it at

a figure of 10 percent — some of it has a coupon rate lower than that

and some of it is higher, but I'm taking an arbitrary figure of 10

percent — the daily interest charges that the people of this province

have to meet are $4.2 million. That's every day, 365 days of the year.

Those of you who are visiting the chamber today, think of it: you're

going to fork out $4.2 million every day of your life to pay the

interest on the debt that this government levered on top of you.

AN HON. MEMBER: That's leadership.

MR. REID: That's good government.

MR. HOWARD: I like that statement, Mr. Speaker. I'm going to

tell the people in Skeena about that. "That's good government, — I'm

going to say. "You've got to fork out to pay the interest on the debt."

That's good government. Good for what?

[ Page 3376 ]

MR. REID: The programs are all in place, that's what matters.

MR. HOWARD: That's what matters — the programs are in place.

Yes, I know they are. I know the programs are in place. The Premier is

off to Disneyland today on one of those programs. The Minister of

Forests (Hon. Mr. Waterland) is going to escape his responsibility by

going to Europe on one of those programs. Last year the Minister of

Forests was in China on one of those programs. The Minister of Industry

and Small Business Development (Hon. Mr. Phillips) is off in some part

of the world on one of those programs. That's what we like, good

government.

Interjections.

MR. HOWARD: I'm sure the member for Surrey will have an

opportunity to make a formal presentation to us. When he does, I say to

him now that I'll listen attentively and I won't interrupt one word. I

don't mind his interruption, Mr. Speaker. It affords me an opportunity

to show how foolish this budget is.

This budget contains, talking again about debt — I just want to make

a brief reference to it — the $470 million that's going to B.C.

Railway. All that's doing is that the province of British Columbia

borrows the $470 million, the people of British Columbia, through their

taxes, pay the interest on that $470 million, and B.C. Rail gets the

bookkeeping benefit of it. B.C. Rail can put the money in a sinking

fund — and who knows, they might even lend it back to the province of

B.C. on some of its treasury bill programs, so we'll be paying the

interest on that as well. That is in addition to the $70 million a year

this government decided to give B.C. Rail, supposedly to pay the

interest on its historic debt. But an examination of B.C. Rail's books

shows that some of that $70 million wasn't used for that purpose. It

went into the equity side of their ledger as contributed surplus, and

they used it for some other purpose. That's in addition to the $45

million cheque that was written to B.C. Rail on March 31, 1982,

spirited out of the provincial treasury on the last day of the fiscal

year and sent to B.C. Rail so that B.C. Rail could camouflage and buy

down the interest on its Tumbler Ridge branch line debt. It's nothing

more than the use of taxpayers' money to subsidize the Japanese steel

industry.

I want to talk a bit about privatization as well, because that's a

reference point here. What privatization really means is public

taxpayers' subsidization of the private enterprise system. The taxpayer

publicly — and privately in some cases, because you have to ferret this

information out — is subsidizing the private sector. Take Beautiful British Columbia

as an example, a magazine sold to Mainland, one of the Jim Pattison

industries group. When the government announced the sale they said that

they sold it for $700,000, but they received only $400,000 cash. In

addition — and this is the way the taxpayer subsidizes these outfits;

no wonder they can make a profit out of it — as has been mentioned at

other times, the agreement made on September 14 last year, which this

government kept hidden and didn't want disclosed to the general public,

shows that the province agreed to mail, at no cost to Mainland, the

renewal notices to all those whose subscriptions were coming due. So

the taxpayer put out the money to mail those notices.

[3:45]

They also agreed that twice a year B.C. Hydro would send a mailing to everybody

in the province, along with the Hydro bill. That was a subsidy worth a couple

of hundred thousand dollars to Mainland Magazine. This great free enterprise

government had a chance to make a profit but they didn't want to do that.

They also sold, for cost of production only, the entire inventory of the Fraser

River special edition. That was a gift. They also said that the provincial government

would make available to Mainland Magazine, for their exclusive use and without

charge — another subsidy — the Pertec data entry system, together with the CRT

terminals and the processor, collectively known as the Pertec computer. Another

gift from the taxpayers of B.C. That's what privatization is.

[Mr. Strachan in the chair.]

I don't know whether you want to explore what's liable to happen

here, but the government is now in the process — and has been so for

some time — of seeking to find ways and means of selling off ICBC,

either its general insurance side or autoplan side, or both. They are

also seeking to sell off B.C. Systems Corporation, which, although it

has some debt, has a net asset value. This is the desperate attempt of

a government that has so mismanaged the finances of this province that

it's taking the last-ditch stand that a private corporation would take:

namely, selling off assets for cash flow. A wrong principle. Private

corporations sell off assets that are losers. They sell off assets if

they want to consolidate in a certain direction, insofar as their

activities are concerned. It's only as a last-ditch effort that a

private corporation will sell an asset for cash flow. But that's what

this government is doing. It wouldn't surprise me a bit if that's their

attempt with ICBC and B.C. Systems Corporation — nothing to do with any

ideological direction, simply a desperate move to get its hands on some

cash, after having squandered a fair amount of it over the years.

In the last part of my comments I want to deal with the economy. Let

me start by pointing out what the budget of July 7, 1983, did. Without

referring to the precise figures — although I will certainly do that if

members want me to — it shows that because of the impact of the July

budget last year, the number of people employed in the province

steadily declined until January of this year, which is the last month

for which I have figures. It shows that the number of unemployed —

there was some movement in those figures prior to the introduction of

the budget — increased month by month from the introduction of the

budget last year to January of this year, the last month for which I

have figures available. Over that period of time the total number of

unemployed, as a percentage of the workforce, increased each month.

From the introduction of the budget last July until January of this

year the effect on the economy of this province was that the numbers of

people who were employed went down, the numbers of people who were

unemployed went up, and the percentage of the workforce unemployed went

up as well. That was last year's budget.

In the minister's budget speech of yesterday there are some economic

indicators that I think should be looked at, to show just what has been

occurring in the economy and how this budget fails to pay any heed

whatsoever to those economic indicators. In the economic and financial

table on page 57 of the budget, for the period of time for which these

[ Page 3377 ]

figures are given, we see that there's a slight

increase in the labour force. We see that employment over the years —

not only since the last budget but over a four-year period — has gone

down. We see that the unemployment rate has gone up. It has nearly

doubled over that four-year period. We see that the provincial gross

domestic product has declined in terms of constant dollars — which is

the measure that one must use, with the inflation factor built in. We

see that capital investment — and it makes the point that this is new

capital investment and capital investment for repair purposes — has a

slight increase over that period of time. What it doesn't show, and

what needs to be examined, is what amount of that capital investment

was for new plants which create jobs — new employment, new productive

capacity — and what amount was simply for repairs in maintaining the

old plant. That isn't indicated in here. Because there is such a slight

increase in capital investment, both new and repair over that four-year

period, and because we know from what industry tells us.... We know

from what the forest industry says — some aspects of it — that it

hasn't got the money for new plants, that it has got to make do with

repairs to the old ones, and that a fair proportion of that is in

repairs. You don't create jobs when the capital investment is not there

to do it on new plants. So that's all.

Housing starts are down. The value of building permits is down.

Business incorporations are down, regardless of what the throne speech

says. Business bankruptcies are up threefold. Timber scaling is down,

and after listening to what's been going on recently about the scaling

of timber, no wonder it's down. Those are economic indicators to which

this government, while it puts in its documentation, pays no attention.

I don't usually read correspondence into the record. It's a matter

of personal practice, that's all. We get lots of it. This is a letter

that came to me today. I would like to read it. I think it makes the

point more appropriately and more dramatically than I could, because

it's from a person who is affected by what's happening in the economy

of British Columbia.

"Dear Mr. Howard:

"I would like to know if the Social Credit government really

cares about people. I am a 23-year-old male, unemployed, and have no income

whatsoever. What is the government doing to create jobs? It seems to me Bill

Bennett and company enjoy putting people out of work, rather than trying to

get people back to work. What can I do?"

Interjections.

MR. HOWARD: Well, members down at the end can giggle and

laugh about this, but I'm talking about a young kid in my own riding

who happened to write me a letter expressing his views about it. If the

member who is chattering away there like a magpie wants to do it in a

more formal way, I'd be glad to listen to him.

To continue reading the letter:

"I've been unemployed for about two years. The government

won't help me get an education, with all the cutbacks. I can't even

get a job as a janitor at the hospital. What are we supposed to do? Rob banks?

Mug people? Break and enter into a house? Man, I'm going crazy. If I don't

get a job or some kind of income, I'm going to have to do something drastic.

Please tell the government for me to work to create new jobs for not just me

but for the thousands of young people my age who can't find work. Please

help us."

I don't hesitate to say that I get a catch in my throat when I read

letters like that and when I talk with some of these young kids,

because it seems such a hopeless and desperate situation that they're

faced with. I'm not 23 myself; I'm not faced with the problems that

he's faced with — none of us in this chamber are. But as I said, it

indicates more succinctly than I could what has happened to one

individual, one human being, duplicated thousands of times over. This

budget deals with no aspects of the questions which he poses.

The other day I listened with interest to the Minister of

Universities, Science and Technology (Hon. Mr. McGeer) talking about

the need for British Columbia to engage in greater production of

wealth. I was pleased that he has finally grasped that fundamental fact

of economic life. It's something that we in the NDP have been talking

about and urging governments to do for a long period of time — to move

into the area of production of wealth. That is the foundation upon

which other things, like services, live. Our production of wealth — I

put the figures on the record on another occasion within the last two

or three weeks, and I'm not going to repeat them here — show that we

are primarily resting our economy upon raw resource extraction and

export and, in a limited way, on manufacturing and processing. We do

not have or appear to have the intelligence within government to

recognize the need for a value-added activity in this province.

As I said on another occasion, we did produce at one time about 20

percent of the copper that is produced in Canada. We ship all of it out

of the province to other countries in concentrate form, the next step

upwards from either raw ore or rock. We export coal. We export logs in

their raw form. By doing that we employ workers in other lands to

produce them into finished products and ship them back again, and we

lose. What we need is a strategy in this province for economic revival.

The word "revival" itself means the bringing into our economy of a new

vitality, not just the recovery to get us back to where we were before

but a vitality and a resurrection.

[4:00]

I submit we need to have some indication on the part of government,

and if it is not prepared to do it, then we are in a sad way. Certainly

I advocate a conference on the future — involving business, government,

the academic world, labour and working people — to sit down and give

some emphasis to identify in a research way what it is we want for this

province and its generations into the future. What do we have to do for

a revival of productivity? What do we have to do for a revival of the

concept of secondary processing and manufacturing? What do we have to

do for wealth production? What cooperation do we need to attain those

objectives and provide the citizens of this province with some hope for

the future, some vision that future generations will be faced with the

prospect of being gainfully employed and not simply the prospect of

being one of the hundreds of thousands that are unemployed in this

province? Incidentally, that is a prediction being made by quite a

number of people in the economic world.

The only salvation is the activity of government acting on the whole

ship of state of the province of British Columbia, and not just

individual segments of it. As I said on another occasion, maybe the

driving engine behind this ship of state is the capitalist system. But

we need a captain, someone

[ Page 3378 ]

controlling the rudder and someone steering us in

the direction in which we want to go. If we don't have that, we're

fraught with the continuation of difficulties. The government has a

budget which ignores the future, which denies hope and which rejects a

vision which is required. It rejects the concept of a revival of our

economy and a revival of hope and aspiration in our citizens. The

government may have a budget that's of that nature. We have provided,

and will continue to provide, alternatives to that, and I have

suggested one of them today, namely an alternative of drawing together

forces and groups within this society and this economy to look at the

prospects of what we can do for the future, not the hopeless

desperation of this budget that tells us what we can't do.

MR. DAVIS: Mr. Speaker, this budget, if nothing else, is

resolute. Its determination to balance, at least by 1985 or 1986, the

budget of the province is evident for all to see. I think the hon.

member who just sat down basically agreed with that resolve when he

underlined the size of the present debt of the province, direct and

indirect. The direct debt, opposite which there are assets — the debt

of B.C. Hydro, for example — is large. It's of the order, in total, of

some $13 billion. Of the $13 billion, some $9 billion is B.C. Hydro

debt. It's money borrowed with a view to building dams, transmission

lines and repaying those who lent the money over the lifetime of the

dams and the transmission lines. That kind of debt, therefore, is

easily understood. It's of the nature of a mortgage. But there is a

very useful asset created. It can pay off the mortgage by simply

producing, in the case of B.C. Hydro, power, or in the case of other

utilities, useful services for which people will gladly pay. We have

something else, though — the indirect debt, which isn't really new to

this province in the mid-1980s. It's the result of current income to

the government being less than current outgo on operations, on services

— basically of the nature of health care, education and human

resources. We have been in deficit. We began a deficit in 1981 of the

order of half a billion dollars, and in 1982 of the order of $1

billion. Now we're concluding a year in which the deficit has been of

the order of $1.3 billion. The government is determined to turn that

trend around. The trend, essentially, was one of expenditure rising

continuously and of income, largely from the resource sector, but also

to a lesser extent from people, levelling off and in some instances

declining. With outgo rising and income disappointing, the deficit

grew. We're now looking ahead into a year where income is beginning to

recover and where expenditure is under a tight rein, levelling off. So

we're looking at a year in which the deficit will be substantially cut

in half.

This is as it must be. The province has to be concerned about, among other

things, its credit rating. Its credit rating relates basically to its indirect

debt — the latter type of debt, which is now of the order in total of $2 billion.

If you, Mr. Speaker, were working for one of the principal financial houses

in New York, you'd be looking across this continent — overseas, admittedly,

but also at the different levels of government in North America. You would note

that at the federal or national level there's a very large deficit in the

running an exceptionally large deficit. The national governments of the two

countries are piling up substantial debt and, for the moment, anyway, don't

show any ability to turn the situation around. A debt at the national level

in the United States is increasing to the extent of about 20 percent a year

— 20 percent of the income of the government of the United States is in deficit.

That's $100 in, $120 out. At the federal level in Canada, it is more of

the nature of $100 in and $135 to $140 out. So if you are rating those governments,

you're concerned. You are concerned because this kind of thing has been

going on, increasing year after year. There is no indication of a turnaround.

If you look at the state level in the United States, equivalent to

the provincial level in Canada, the states, almost without exception,

have balanced their budgets. A few were in apparently serious

difficulties in 1981-82, but they have all managed to balance their

budgets in the interim. They have undertaken some very drastic

measures. It is interesting to note that they all trimmed their

expenditures on the so-called people's programs: health, education,

welfare and so on. It is interesting to note also that many of them put

a surtax on income to increase the size of revenue. You have a

development in the United States which is in some ways parallel to the

development of this budget here in British Columbia: curtailment of

expenditure, increase in taxation and latterly an increase in the state

income tax — in our case the provincial income tax — in order to come

towards — and, in their case, actually achieve — a favourable net

balance. On balance, the states have a budget surplus of $60 billion

this year, so they, at least at that level of government, have turned

the point — not at the federal level but at the state level.

In Canada, without exception, our provinces are still running

deficits, some of them substantial deficits. The deficit this year in

Ontario is of the order of $2.5 billion; in Quebec $3 billion. There

they are dealing with larger provinces than British Columbia, in terms

of population, revenue and so on, but it is an indication that, not

only at the national level in Canada but also at the provincial level,

deficits are continuing to run in this country. British Columbia's

determination, now into the fourth year, to bring its deficits under

control and eliminate them within the next year or two or three is

refreshing. If you are looking at the credit rating of the province of

British Columbia, the kind of interest rates you'd demand from the

province when the province came to you, cap in hand, and wanted another

billion dollars, you'd be saying: "Well, there are signs of

improvement, there are signs of recovery. Perhaps we will review the

credit rating of the province in another year or two, and if, as and

when it achieves a balance, fine. Its credit rating will go up. The

interest rates we'll charge to the province will go down." That is a

very important consideration, especially when we are borrowing large

amounts of money for major works of the nature of power dams, highways,

railway construction and so on.

There are two schools of thought when it comes to the difficult

problem of employment and inflation. But particularly in employment,

one school of thought has it that demand must be stimulated; that

governments must somehow put more money in the pockets of people so

that people can spend, and in spending they will buy goods that will

call forth more production of goods, and that in turn will mean more

jobs. That is referred to as the demand-pull approach to curing

unemployment — to resolving the unemployment problems of the state,

national or regional economy. In contrast to that there are the

supply-siders, those who believe that instead of putting money into

people's pockets and allowing them to choose what they wish to buy, and

encouraging the economy that way, money should be channelled into

worthy projects — subsidizing production along certain lines, giving

[ Page 3379 ]

contract to firms to produce goods, whether they be

military goods, highways or other investments which the public needs in

the long term. That will create jobs specifically and directly.

It seems to me, Mr. Speaker, that in our situation in British

Columbia, where we have an economy which is very much open-sided, we

have little choice between the demand-driven policy and the supply-side

policy. If we as a provincial administration put money in the pockets

of people, they will be buying goods, the vast majority of which are

produced outside the province. Whether they be citrus fruits or

automobiles, they're goods which are produced elsewhere. A

demand-driven policy, while it may well make sense for a largely

self-sufficient nation, doesn't make any sense at all in the case of a

relatively small economy that is very trade-dependent and

import-dependent. We will simply be lining the pockets of others

elsewhere and presumably providing employment elsewhere. The approach

has to be much more one of directing moneys, subsidies and incentives

toward specific production in this province. At least that will

generate the first layer of jobs among British Columbians.

[4:15]

To the extent that we have any surplus, to the extent that we have

any savings, to the extent that we can borrow elsewhere and pump money

into our economy, we should direct it toward the supply-side — to

projects which will create jobs. I think this government has to be

complimented at least in this area with respect to several obvious

projects which have fortunately been undertaken when the economy is in

recession — northeast coal, light rapid transit and the development of

B.C. Place. They are, in greater or lesser degrees, public works.

Nevertheless they have provided employment for many people,

particularly those on the construction side who would not otherwise

have been employed.

I think we need a sense of perspective here. The government's

expenditure on those several projects year by year has been a tiny

fraction of its total outlay on all goods and services. It's been of

the order of five or at most ten percent of the total budget. So it has

not been a dominant feature of the budget of this administration. But

it has been aimed at the supply-side. It's been aimed at job creation

now — jobs for British Columbians. It has not been of the more foolish

kind — that of putting money into the pockets of people who would

simply purchase goods from anywhere and everywhere, principally from

outside the province. It would not have as direct and immediate effect

on the economy of the province. Both of these arguments are not all

that relevant, because we are not a self-contained economy. We have to

concern ourselves with world markets and particularly our

competitiveness. So we have to discipline our expenditures. We have to

be concerned with the long-term productivity of the investments we make.

I'll aim a criticism at the budget. It is a criticism which can be

aimed at any budget presented by a provincial administration in Canada

and, to quite an extent, federal budgets and certainly budgets in the

United States. I believe that budgets should be in two parts and not

one part. There should be an operations budget — current income,

current outgo, current taxes coming in, salaries, wages and materials

consumed here and now should be in one budget. The other budget should

be a capital budget where investments are made which pay out over the

long-term — not this year and not perhaps in the next few years but in

some instances over periods of 20, 30, 40 or even 50 years.

There should be those two budgets. The operations budget would go on

year after year, hopefully with continuity, and projected fairly

smoothly from year to year over a long period of time. The other — the

capital budget — would tend to be bunched, with spending occurring

fitfully but counter-cyclically. When there is a slump in the economy

developing, then blueprints are taken off the shelf, contracts are let,

public works accelerate and there is more employment. This is much

easier said than done. Few administrations have ever managed this at

all well. First, the presentation of budgets. I feel they should be

under the two headings: the operational, current, ongoing budget and

the more intermittent, lumpy capital budget. To that extent, this

government is moving somewhat in that direction, certainly to the

extent that it did bunch several major capital works in the last few

years and fortunately have the blueprints ready and fortunately let the

contracts on northeast coal, B.C. Place, ALRT and so on. That is the

kind of program and the kind of budgeting I would prefer.

You can say this is Keynesian economics. John Maynard Keynes wrote

at a time when the private sector certainly dominated the economies of

the countries he was writing about — western Europe and the United

States. He idealized the situation. He hoped that governments would

hold back on capital investment, not current operations, at times when

business was going very well — during a boom, for example — but that

when a slump was imminent the government then spent. In theory that's

fine, but governments rarely hold back. Governments spend, many of them

up to their limits, in good times, and then in bad times they don't

have the reserves or the plans. But ideally, if we had a capital budget

and we budget for slumps as well as booms, we would have a capital

program which was intermittent, and an ongoing operations program as

well.

In this budget there is reference to moneys for buying out the

long-term debt of B.C. Rail. I've said first that the northeast coal

investment was timed about right. B.C. Rail will be operating — not

owning, as I understand it — the Tumbler Ridge line. The debt talked

about in the budget is the historic debt which was incurred in building

B.C. Rail's lines and facilities up to the Peace River area, some

distance towards Dease Lake and so on, but not the Tumbler Ridge line.

The debt is of the order of $600 million; some $470 million will be

lifted off the shoulders of the directors of B.C. Rail by the province.

Presumably the province is borrowing elsewhere to pay off that historic

debt. B.C. Rail, or at least its directors, will be debt free. This is

certainly not a precedent in Canada; it has happened in various other

jurisdictions. It has happened intermittently with the CNR. The federal

government has periodically paid off the debt of the CNR and then told

its directors: "You won't get any more help; now go and run a railway,

but a railway which is debt-free. Your income from now on must match or

exceed your outgo." And I gather that's what the government has decided

to do with B.C. Rail. "We'll relieve you of past debt, but from now on

you must run the railway on your own without expecting any assistance."

This was recommended by the royal commission which looked into the

affairs of B.C. Rail a few years ago. It was recommended by the

Committee on Crown Corporations, whose chairman sits beside me.

It's the right way to go, I believe. There was no way, at least in

the next few years — perhaps in the next several decades — that B.C.

Rail could possibly pay off that debt. The railway was built to open up

the north, if you like. It was

[ Page 3380 ]

built to get the Cariboo moving and the Peace River

area developing. It was a purpose above and beyond that of simply

running a railway, so perhaps that investment was worthwhile. But it's

not an obligation which the railway in future should by itself be

expected to honour. So I'm in favour of lifting the debt off B.C. Rail

and having it run from now on on a businesslike basis, ensuring that

its rates cover its costs. I would hope that from now on B.C. Rail

would also be able to pay the normal taxes that other businesses pay,

including municipal taxes, sales taxes and so on, and that it would

report four-square all its costs, out in the open for all to see.

I am intrigued, however, by another aspect of all this. B.C. Rail's

historic debt is of the order of $600 million. A similar amount of

money has been spent on the northeast coal line, and sometime in this

session I'd like to know from the minister and the government how that

was, is and will be financed. I assume, because we've been in deficit

as a provincial administration for several years now, that on balance

those moneys have been borrowed, that the province has borrowed this

money and paid it out to contractors to build the line, and that the

province now holds what is termed equity in that line, to the extent of

some $600 million. B.C. Rail will operate it, but B.C. Rail, as I

understand it, does not own it.

So B.C. Rail has been looked after, I think adequately and

appropriately, but there still remains the question of how the $600

million in the Tumbler Ridge branch line will be managed and how it

will be recovered over time. I know that at least in the first few

years the revenue coming in from the movement of coal will be but a

fraction of the interest and other charges involved, but again I think

that the northeast coal line development must be seen in the context of

the larger transportation policies of the province, and certainly in

the context of developing the middle and northern parts of this

province. At least 50 percent, maybe more like 60 percent, of the

province lies north of Prince George, so that development has to be

seen as opening up an important segment of the province and providing a

much more efficient transportation artery out to the coast — in this

case, Prince Rupert. It's an investment in the longer-term future. I

think that if it is properly accounted and fully understood by

everyone, the critics will be less vocal than they have been in recent

times. Still, there has to be a full reporting, and there has to be an

indication of how this investment will pay out in the long term.

Another investment being timed fortuitously but correctly is light

rapid transit. Some 800 million current dollars will be invested in a

system which will be complete two years from now. Again, how is that to

be financed? Currently the province is borrowing money, and that money

is being invested in the contracts and hardware which will be running

on a rapid transit line in the lower mainland. In that case it is a

partnership between the province and the municipalities.

Currently the municipalities are concerned about a very large debt

which is being incurred, and they will be involved in the paying out of

it. Perhaps I am anticipating pronouncements of policy, but I think the

government should do as it has done in the past with other projects,

and certainly as it did with B.C. Rail. It should capitalize the

interest for a period. Ideally it would map out payments in and

payments out over the lifetime of the project and not just a few years.

Admittedly in the early years there would be a deficit. You don't fully

load these systems in year one or year five but by year 10 or 15 — and

certainly this will be the case with rapid transit — the ridership will

be sufficient to pay for a large part of the operating and capital

costs by capitalizing interest for a few years and then reversing the

process. Once the system is paying for itself and paying the province

and the municipalities back, the system will have been well-timed in

terms of job creation.

More important in this case is that it will be seen to have been

built at a time when there still was an opportunity to lay a

right-of-way through the lower mainland without upsetting too many

people, anticipating a population of not just a million or a million

and a quarter as it is now in the lower mainland, but several million

or, God forbid, five or ten million in 25 years time.

A rail system built now is timed right in terms of job creation and

timed right in terms of the longer-term needs of the whole community.

But that's a capital item — at least it is while it is being built. It

should be in the capital budget as opposed to the operating budget of

the government. There should be a long-term financial

schedule

developed which sees it paid out in the long term and not paid out in

year one or even year five. Similar to railway financing, it should be

built when there is a good deal of unemployment around, when contracts

are bid very competitively, when the government — in this case the

municipalities included — can get real value for their money. Certainly

I would urge that that project, which will be much more economic if it

crosses the Fraser River than if it stops just short of crossing the

Fraser River, be completed at least as far as Surrey and in the longer

term to Coquitlam. The time is now. It is appropriate to do it now. It

is appropriate to add a few tens of millions of dollars to a

billion-dollar project and have one operating that is really

functional, supplies a real need and supplies it relatively early.

[4:30]

Another big capital project is B.C. Place. It's a substantial

investment at an early stage with a long-term payout. Again, that

should be seen in the fullness of time. It should be seen in a period

of decades and not analyzed in terms of next week or, indeed, next

year, but say the year 2000 or 2010. By that time, it will be seen to

have been a very wise investment. It is by far the biggest downtown

redevelopment scheme anywhere in North America. That's foresight.

There's an element of statesmanship there. But we should present our

accounts so that we show that it makes sense in the longer term. It is

unlikely to — and, in fact, we don't expect it to — pay out 100 percent

in the short run. It isn't a short-run decision; it wasn't one taken

lightly. I think it's been taken wisely, and I think the payout will be

handsome indeed.

Resource revenues to the government have been volatile. They have

been substantial in some years and disappointing in others. They go up

with the booms in the business cycle. They come swinging down with the

slump, as the business cycle turns around and markets are off abroad.

Our resource revenues tend to drop when prices drop abroad — not

necessarily as volume of sales abroad, but simply prices. When forest

product prices fall off, the government takes the swings. The industry

is cushioned. There is an exaggerated swing in the revenue to

government. It's as much as five to one. We have a similar, longer-term

development with natural gas prices. They have tended to come over, but

in their case the volume is also off. The revenue to the province from

natural gas, as from forestry, is disappointing now in contrast to the

revenue from those same industries in, let's say, 1979. The pool of

moneys that comes to the government from the resource industries

varies. They vary from

[ Page 3381 ]

year to year. That's a volatile situation. It's one

that takes a fair amount of managing. I agree that we should therefore

have a resource revenue pool or fund, and that it should be used as

something of a flywheel to our provincial economy. I wonder a bit at

the wisdom of allocating a portion of that — pro rata, at least — to

the municipalities. The municipalities much prefer to get a regular

income from the provincial government, not one that varies with the

business cycle, one that goes down when business is off and goes up

when business is good. So that policy might be questioned. Taking the

long view again, I think the idea of a fund is wise and relevant. On

whether or not it should be used in the short term exclusively for

paying off the debt of B.C. Rail, I really don't have an opinion. It's

income to the government, just like the income tax from individuals or

the sales tax from purchases by individuals. Why separate it out? Why

allocate it specifically to one job and then another, like the funding

of the B.C. Rail debt? I don't know the answer to that one.

Employment. Jobs has to be a matter of great concern. We do have

some signs on the horizon of job prospects. Fortunately the Crow rate

was changed. The federal government has permitted — encouraging, indeed

— the two national railways to spend a lot of money in improving their

trackage, their equipment. We're going to see some $6 billion spent by

the CNR and CPR here in British Columbia over the next few years.

That's a lot of money. It's like a northeast coal project every year

for the next few years. That's big. I personally hope that Alcan goes

ahead with its aluminium development in the northwest. That's a $3

billion development. Hopefully it can proceed with a minimum of

environmental impact. Then if the liquefied natural gas export project

to Japan goes ahead, that's a further $3 billion. So there is $12

billion of work in prospect. At least half of it is going ahead — we

know that now. The other half could well go ahead, especially if the

government of this province decides that these projects should proceed

and puts its back behind them. Lesser projects, much smaller ones, like

the pipeline to Vancouver Island and so on, I'm skeptical about,

because they would involve provincial money, provincial savings. In the

case of these other projects that I've mentioned, substantially it's

money from outside the province, from the private sector. It's

new-found money. They're new-found jobs. They're jobs for many of the

same people who worked on northeast coal. But it'll mean more jobs than

northeast coal created. So I think that's encouraging. I think that

that is the kind of initiative which will generate jobs in the

province. Clearly, because of it's debt position, the government is

unable to expand its employment programs — at least, to expand them in

competition with health care and education and welfare — so it has to

look to the private sector. It has to look outside the province for

capital to put people to work. That is happening.

[Mr. Pelton in the chair.]

I have a few further thoughts. I was concerned in Ottawa and

increasingly here about a few big programs squeezing out small

programs. With the priority that health care has, it now uses up more

than a third of our total budget. The priority that Education has and

the priority that Human Resources must have in periods of high

unemployment are squeezing out very useful small programs that cost a

tiny fraction — in many instances less than 1 percent — of the total

budget of the province. They're squeezing them out altogether. Where

has airport assistance gone? That was a very useful program, and it

should be revived and continued. Paving the odd little airstrip out in

remote places and providing navigational aids are very necessary and

very useful functions, and certainly in remote, outlying areas of the

province are very valuable ones from the point of view of both money

and life and limb. I hope that some of those programs either survive

our current period of stringency and budget-trimming or are brought

back in the not-too-distant future. They are important.

I want to say a few words about taxation. We levy some of the

highest taxes anywhere in Canada right here in British Columbia. Our

corporation tax rate is the highest in Canada. We charge 16 percent. I

think the next highest is 14 percent. There is a federal tax as well.

I'm talking about what the province charges as corporation income tax

on companies. We charge more than any other province. We received

literature from the Mining Association of British Columbia the other

day which indicated that in total our taxation on mining and mineral

processing in this province was, by quite a margin, the highest in

Canada. We've got a capital tax we should do away with. We brought in a

little tax on ships' bunkering last fall, which I opposed and I'll

continue to oppose. That, I think, is just foolish. We shouldn't have

nuisance taxes like that which make no sense from an economic or

industrial development point of view. We have high property taxes. We

have high assessments in this province. I'm glad to see that the

Minister of Finance is going to meet with industry, invite briefs and

consult with a view to assessing the impact of the totality of taxation

on industry in the province. If he's really listening he'll get an

earful, and I know the message will be: "Taxes are too high in this

province." If you want to attract capital, trim them back a bit. Be

reasonable. Provide some incentives in terms of less than average taxes

rather than higher than average taxes. You'll find more activity

occurring here that in turn will generate more revenue. The province

will be better off in terms of income to the provincial treasury, and

we'll all be better off in terms of more jobs. I think that is the

approach he should follow and I hope the government follows.

A few critical comments about the budget. Last year, the year before

and again this year there was no reference to gross provincial product.

I'd like to know what the official estimate of gross provincial product

is, because I'd like to know how much of the gross provincial product

is being taken away from the people in terms of provincial taxation and

that sort of thing. I'd like to see a tax table comparing our taxes

with those of other provinces. Finally — and I see my time is running

out — I'd like the province to address itself to this awkward question

of the unitary tax which California and certain other states in the

U.S. are thinking about — taxing foreign corporations on the proportion

of their business they do in the state jurisdiction or the provincial

jurisdiction. I think I'm against the tax but I'd certainly like the

province to have a good look at it, because at least we'd be on top of

a current development of world-wide significance, and it might be

another source of revenue for the administration.

MR. D'ARCY: Mr. Speaker, it's a pleasure to take a few

moments in this debate to give myself the opportunity to talk to the

House about some of my thoughts and proposals for the provincial

economy in general as well as for specific needs in my own constituency

of Rossland-Trail.

I want to compliment the member for North Vancouver–Seymour, who has

left the House. While I disagree with much of what he said, he did take

a positive approach and did

[ Page 3382 ]

seek some initiatives to improve the economic

situation in this province — an initiative and attitude which was sadly

lacking, I'm sorry to say, in the speech by the member for Saanich and

the Islands (Hon. Mr. Curtis) yesterday when he unveiled his budget and

economic program for 1984-85. That is my major concern about the budget

document and all the attendant material that was tabled yesterday. This

is the first time in my 12 years in the House that a Finance minister —

and the member for Saanich and the Islands is the fourth in that time —

gave no hope for economic improvement in the 12 months covered by the

budget. He gave no hope that job opportunities and business

opportunities in this great province are going to see some improvement.

There were no initiatives for industry to invest or modernize.

It is all very well to talk about attracting various exotic forms of

new economic activity in the province of British Columbia, and I

sincerely hope that the government and the private sector are

successful in that regard. But we have a tremendous amount of capital

already invested in this province. We have a tremendous amount of

industrial strength here. We have a tremendous amount of valuable raw

materials in this province which today, even in a recession, have

substantial markets beyond our borders and in some cases even within

our borders. That investment is already captive; it's already in place.

In many cases, Mr. Speaker, that investment is not being utilized. That

human resource, that wealth of training and experience, that

opportunity to continue to operate those industries has been seriously

curtailed, in