1976 Legislative Session: 1st Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, MARCH 26, 1976

Afternoon Sitting

[ Page

249 ]

CONTENTS

Routine proceedings

British Columbia Harbours Board Amendment Act, 1976 (Bill 4). Hon. Mr. Davis.

Introduction and first reading — 249

Budget address. Hon. Mr. Wolfe — 249

Privilege

Possible leak of budget information. Mr. King — 266

Hon. Mr. Bennett — 266

Mr. Speaker — 266

Routine proceedings

British Columbia Railway Company Construction Loan Amendment Act, 1976 (Bill 5). Hon. Mr. Wolfe.

Introduction and first reading — 267

British Columbia Hydro and Power Authority

(1964) Amendment Act, 1976 (Bill 6). Hon. Mr. Wolfe.

Introduction and first reading — 267

Special Funds Revenue Recovery Act, 1976 (Bill 7). Hon. Mr. Wolfe.

Introduction and first reading — 267

Revenue Amendment Act, 1976 (Bill 8). Hon. Mr. Wolfe.

Introduction and first reading — 267

Income Tax Amendment Act, 1976 (Bill 9). Hon. Mr. Wolfe.

Introduction and first reading — 267

Cigarette and Tobacco Tax Amendment Act, 1976 (Bill 12). Hon. Mr. Wolfe.

Introduction and first reading — 267

Social Services Tax Amendment Act, 1976 (Bill 11). Hon. Mr. Wolfe.

Introduction and first reading — 267

FRIDAY, MARCH 26, 1976

The House met at 2 p.m.

Prayers.

Introduction of bills.

BRITISH COLUMBIA

HARBOURS BOARD AMENDMENT ACT, 1976

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

a bill intituled British Columbia Harbours Board Amendment Act, 1976.

Bill 4 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

Orders of the day.

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, I move

that the public accounts for the fiscal year 1974-75 be referred to the

Select Standing Committee on Public Accounts and Economic Affairs.

Motion approved.

HON. MR. WOLFE: Mr. Speaker, I have the honour to present the

report of the comptroller-general, pursuant to the provisions of the

Audit Act,

chapter 22, RSBC (1960).

ESTIMATES OF SUMS REQUIRED

FOR THE SERVICE OF THE PROVINCE

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

a bill intituled Estimates of Sums Required for the Service of the Province

for the fiscal year ending March 31, 1977, including

Schedule A sums required

by Her Majesty to make good certain sums expended for the public service for

the period ended March 31, 1976, and to indemnify the several officers and persons

for making such expenditure, and recommends the same to the Legislative Assembly.

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

Motion approved.

HON. MR. WOLFE: Mr. Speaker, I move, seconded by the hon.

Attorney-General (Hon. Mr. Gardom), that Mr. Speaker do now leave the

chair for the House to go into Committee of Supply.

Motion approved.

BUDGET ADDRESS

HON. MR. WOLFE: Mr. Speaker, I consider it a distinct honour

and a privilege today to present the first budget of this new Social

Credit administration in British Columbia.

British Columbia, for the last quarter-century, has been a province

of enormous potential and growth. We were a leader in our country in

terms of population and labour force increase, capital investment, and

production. Together these provided the impetus for an expanding

economy with high employment and almost unbounded optimism. At the same

time, the government was provided with revenues to fund the necessary

government social service programmes.

Unfortunately, in recent times, a combination of world-wide events —

inflation, low world demand for our principal export products, and

taxation policies of the previous government that frightened investment

capital — sent the province into an economic decline to the point where

the real increase in the gross provincial product last year was less

than 1 per cent. The result has been lower government revenues to pay

for the growing demands on government.

Despite the declining revenues, government spending programmes

continued unchecked. In the last year or so an uneasy feeling grew

within the people of this province, the feeling that their tax money

was not being properly managed, and the result was that on December 11

last the people of the province issued a new mandate, a strong mandate,

for the management of their affairs.

Mr. Speaker, we accept this mandate gladly, convinced as we were

that the people of this province can be better served, in all ways, in

the long term with policies that encourage economic activity and good

management that ensures the money received will be judiciously spent.

Mr. Speaker, no one political movement can lay exclusive claim to

serving the interests of all of the people. This government, even

before approaching office, was concerned for the welfare of all groups

in society, both the people who are able to contribute to our economic

growth and those who through no fault of their own are unable to do so

— the elderly, the sick, the underprivileged, the handicapped and the

unemployable. This latter group, above all others, needs compassionate

help from governments at all levels to provide them with hope and to

free them from the indignities they may suffer.

As government, we are pledged to maintain and improve the social programmes which sustain these

[ Page 250 ]

people. At the same time, we want to make it very

clear we will not provide an atmosphere in our province which

encourages the so-called "free rider" — those who are able but

unwilling to play their

part in building for the future economic

security of all.

Social programmes can be imperilled if government fails in its

function to plan programmes carefully and to fund them properly.

Government, as we have said many times, has no money of its own. The

money which pays for our social programmes comes from all parts of our

society — companies, large and small, and individuals. Government must

encourage industry and initiative among all sections of the economy to

provide the revenues it needs. This cannot be done by taking away from

one group to give it to another. Mr. Speaker, if we are to have a

productive society, everyone must benefit.

This government has as its central objective the development of a

strong, free economy that can be translated into policies and

programmes to benefit everyone. This economy must be developed without

polluting our environment or exploiting our people.

Growth will occur on our terms without a continuing confrontation with the

business community or other governments. We want to develop cooperation

between business, labour and government to build a free, vigorous and

productive society in which everyone is able to share the benefits.

In addition to that, we will, to the best of our ability, provide

the sound financial management this province needs. Government, like

people, cannot go on spending more than it makes. What comes in must

balance what goes out. If balance is not achieved then governments must

borrow to pay the bills. But Bank of Canada Governor Gerald Boucy

warned us only the other day that too much borrowing by governments

will stifle growth of the economy. The competition by the public and

private sectors for available funds will, in a period of monetary

restraint, force interest rates to a higher level.

As public borrowing increases then more and more of the funds

received for government operation are wasted on debt payment. This then

serves only to rob needed social programmes and cripples planning for

new and expanded programmes.

We have all seen recent tragic examples of this happening in other

parts of the world. New York City is near bankruptcy because that city

is saddled with major social programmes beyond its capacity to fund.

British leaders have conceded that their social welfare programmes have

been devastating to the economy and cutbacks amounting to $3.6 billion

in one year are now planned in total public spending in that country.

Britain discovered to its sorrow that unbridled spending in the public

sector took away measurably from that country's total productive

capacity. This has happened to some extent in our province but,

fortunately, we have not reached that point where the system is out of

control.

In

summary, we want to encourage initiative once again. We want to

encourage capital investment that will provide jobs, payrolls and

income for the provincial government to maintain and expand its social

programmes.

We want to bring our financial books into balance so we can rebuild

confidence in this province, a confidence that has been eroded, Mr.

Speaker.

This budget is a start on the road back, a recovery budget, moving

us in a positive direction to restore confidence in British Columbia as

a good place to invest, to work and to live.

The British Columbia economy suffered in 1975 from weakened demand

in the export markets for many of the province's major products as well

as protracted labour disputes in several industries. These problems

were reflected by increased unemployment, continued high inflation and

very little real growth. Gross provincial product, the most

comprehensive indicator of economic activity, increased by

approximately 10 per cent to an estimated $18.4 billion in 1975. Most

of this increase, however, was attributable to a rate of inflation in

excess of 9 per cent. Gross national product increased by only 0.2 per

cent in real terms, its worst performance in 21 years.

Personal income in British Columbia increased by 16 per cent in 1975

to an estimated $14.9 billion, which equals $6,074 per capita. The

average weekly industrial wage is the highest in Canada, at least since

1939, reaching an estimated $231 in 1975 compared with $200.55 in 1974.

However, British Columbia remains second in per capita personal income

because of the lack of resident investment income.

Unemployment in British Columbia reached its highest level in 15

years, increasing 29,000 people in 1975 to 94,000, or from 6.2 per

cent to 8.5 per cent of the labour force on the basis of the new

Canadian Labour Force Survey. In this period the labour force grew by

51,000 people. All this occurred, Mr. Speaker, despite the former

government's so-called job security budget.

Inflation continued to erode the value of the Canadian dollar in

1975, although at a pace somewhat reduced from the peak level of 1974.

The consumer price index for Canada increased by 9.5 per cent during

1975, compared with a 12.4 per cent increase in 1974. In comparison,

the Vancouver index rose 8.7 per cent versus a 14 per cent rise in 1974.

Price increases have been moderating in recent months, particularly at the wholesale level.

Labour disputes caused substantial disruptions in British Columbia

in 1975. Time loss due to strikes and lockouts was an estimated 1.8

million man-days, the second highest in the province's history, and

almost 16 per cent more than in the previous year.

[ Page 251 ]

Recessions experienced by British Columbia's major trading partners,

the United States and Japan, resulted in reduced demand for some of our

major products, particularly wood products, pulp and paper, copper and

molybdenum. Some other products, notably coal and zinc, registered

gains as market conditions strengthened.

Other recently released data give a picture of the mixed performance of British Columbia's economy in 1975.

The value of retail sales increased by 9 per cent to over $5.9

billion. The selling value of factory shipments increased by a marginal

0.4 per cent to an estimated $7.1 billion, while value added in

manufacturing rose by 0.6 per cent to an estimated $3.289 billion.

Employment in manufacturing fell by 8.8 per cent to 145,000 people.

The total value of shipments in the forest products sector declined

10.6 per cent from the 1974 level to an estimated $2.9 billion. The

wood products component experienced a 17 per cent decline to an

estimated $1.5 billion, while the pulp and paper component suffered

only a marginal decline to an estimated $1.4 billion. Prices for pulp

and paper remained firm, but volume declined as a result of some

shutdowns in the spring which were intended to reduce inventory and a

12 week strike in the summer and fall by the two pulp unions. Capital

and repair spending in the forest sector in 1975 is estimated at $650

million, approximately the same as in 1974.

The value of mining production increased by 2.2 per cent to an

estimated $1.22 billion in 1975. Coal became the major mineral product

of British Columbia for the first time since 1903 as the value of

production increased by 125 per cent to an estimated $348.5 million.

This increase was largely the result of a substantial increase in the

price received for coal. Copper lost its position as the major mineral

product as a result of a 42 per cent decline in the value of production

to an estimated $312.1 million as price and volume both fell

substantially. The performance of other mineral products was mixed in

Farm cash receipts rose by 2 per cent to an estimated $373 million.

The wholesale marketed value of fish and fish products declined by

34 per cent to an estimated $146 million as a result of a lengthy

labour dispute and an off year for salmon runs.

The growth of the travel industry moderated somewhat as travel

receipts are estimated to have risen by only 10 per cent to $856

million, after much larger increases in previous years.

Capital and repair investment in British Columbia increased by 8.9

per cent in 1975 to an estimated $5.7 billion. Construction spending

increased by 9.6 per cent, while spending on machinery and equipment

rose by 7.9 per cent. Housing was the weakest sector, showing a decline

of 5 per cent, further reducing the supply of affordable housing.

Now to the budgetary position for the current year 1975-76.

Mr. Speaker, I would like to direct the attention of the House to

the financial situation we found ourselves in as a new government on

December 22.

The budget presented in this Legislature one year ago forecast

revenues of $3.223 billion and government expenditures only slightly

less to provide for a small revenue surplus. When we took office, we

needed an immediate assessment of the budget position to be able to

develop a sound programme of government spending for the next budget

year.

One of the first decisions was to establish an independent review of

the province's financial affairs inherited from the previous government

and projected through to the end of the current budget year. The

national firm of Clarkson, Gordon and Co., chartered accountants, of

Toronto, was appointed to review the financial statements and forecasts

for the fiscal year of the government, its agencies and Crown

corporations. Mr. Speaker, I would like to table that report in the

House at this time with your permission. The report to the Minister of

Finance from Clarkson, Gordon dated February, 1976.

Mr. Speaker, last month the hon. Premier reported the financial

results of that review to the people of this province. The picture

presented of the province's finances was not a happy one.

The review substantiated that revenue projections to the end of the

current budget year, March 31, would more realistically approach $2.9

billion, a drop of $323 million from the original estimate.

Expenditures were running about $218 million higher than the budgeted

figure. The forecast for British Columbia at March 31, 1976, is

therefore $541 million.

AN HON. MEMBER: Shame!

HON. MR. WOLFE: This is a staggering deficit from half a million dollars surplus forecast.

It will wipe out the $143 million provincial surplus account and it

means the province for the first time in 24 years will have to borrow

money to pay its bills.

What became obvious in our studies was that the government of the

day was apparently quite aware that its 1975-76 budget was a

speculative one. Revenues were indicated to be about $200 million less

than required to meet the spending estimates. Even with this knowledge,

the NDP government chose a questionable route.

Their solution: inflate the revenue projections and gamble that the economy would recover.

When it became obvious that revenues would fail to meet projections,

reductions in public service employment and other expenditures were

implemented. Despite this action, the fiscal year

[ Page 252 ]

1975-76 expenditures budget approved by the Legislature was reduced

by only 1.6 per cent. Revenues, on the other hand, are expected to be

9.4 per cent lower than the original forecast.

Dealing first with the revenue shortfall, Mr. Speaker, note should

be taken of those revenues which fell short of original anticipations.

The most noticeable drop in resource revenues relates to timber

sales. The declining world market for lumber, coupled with slow

domestic demand, has caused provincial timber sales revenues to fall

from the originally estimated $135 million to just $35 million for the

current fiscal year. This one item alone accounts for $100 million, or

31 per cent of the total $323 million revenue shortfall. This should

not have come as any surprise last year. The present Premier said on

March 3, 1975, in the budget debate, that the revenue estimates were

subject to serious question in view of the pessimistic economic climate

at that time.

In the budget presented a year ago, it was noted that corporation

income tax revenue had risen substantially as a result of strong profit

gains for British Columbia businesses. Considering this trend, it was

originally expected that the government would realize $260 million in

corporation tax revenue. However, in view of the reported losses by

major companies operating in this province, the current forecast of

$200 million indicates revenue from this source will fall $60 million

short. Again, the signs were there for the former government to read,

but they just closed their eyes.

A decrease of $83.1 million is now anticipated in collections from

the federal government under joint service programmes. Recoveries under

the Hospital Insurance Act are forecast to decrease to $233 million

from the originally estimated $285 million, while those under the

Canada Assistance Plan will fall from $207 million to $180 million.

Revenue derived from the social services tax will be $40 million

less than expected. Instead of the planned $480 million, only $440

million revenue is expected to be realized.

Revenue from motor fuel taxes will be 14.2 per cent less than

originally estimated, contributing $28 million toward the current-year

deficit.

The Liquor Act revenues this year are now forecast at $136 million, 12.3 per cent below the $155 million estimated figure.

Revenue collected under the Mineral Land Tax Act and mineral

royalties legislation will be 21.7 per cent lower than originally

estimated, due mainly to substantially lower levels of production.

Compounding revenue shortfalls are the over expenditures encountered

in administering current year programmes. The previous government

underestimated the cost of providing health services during the 1975-76

fiscal year by $27 million. At March 31, 1975, the British Columbia Medical Services Plan held $46

million in cash and investments to meet future claims. This cash

reserve has now been used up and by March 31, 1976, there will be no

money in the plan to cover claims costs.

Premium collections were plainly inadequate. It is estimated that if

the province continued to operate the Medicare plan on the same

financial basis, the transfer of $51 million would be necessary to

meet future claims.

Mr. Speaker, the Clarkson, Gordon report showed that non-budgetary

expenses will total about $260 million in the fiscal year 1975-76.

These are expenditures for which the previous government made no

provisions whatsoever.

The total, I must point out, excludes the province's statutory

obligation for payment of the natural gas producers' federal income tax

on deemed income, commonly known as producers' gas tax. This liability

is estimated to be as much as $52 million.

Included in expenditures for which no money was budgeted are the

estimated $175 million accumulated operating deficit to February

28, 1976, of the Insurance Corp. of British Columbia; the $32.6 million

estimated operating deficit of British Columbia Hydro and Power

Authority; the $26 million capital grant to the transit bureau; and the

$20 million grant to the British Columbia Railway to meet part of the

estimated $47 million operating loss.

Now criticism has been leveled at the auditor's report for the

inclusion of these items, particularly the large ICBC deficit. The

members of the former government who were directors of ICBC, and the

Minister of Finance (Mr. Stupich) who was chairman of the Treasury

Board, having full knowledge of the financial loss being forecast for

the insurance corporation, in my opinion, engaged in a massive coverup.

Mr. Speaker, you could call it nothing less. These people concealed

the problem from the public by failing to provide any amount in the

provincial budget for this loss when they had ample evidence from

senior management, as early as July, 1974, of the impending deficit.

In spite of increased accident experience, rising claim costs and

advice on how to overcome the deficit, these people chose to play with

the rates. They should have been honest with the public and increased

the rates a year ago to put ICBC on a sound financial footing. Instead,

their fiscal irresponsibility and political cowardice created serious

financial consequences for the corporation, and led directly to the

premium increases of this year, which were necessary to rescue the

corporation.

Certainly, legislation was enacted allowing a transfer of a portion

of existing provincial motor fuel taxes and motor vehicle licence fees,

but no action was taken by the previous government to transfer these

taxes to ICBC. Mr. Speaker, you will find it

[ Page 253 ]

impossible to believe the former administration was financially

naive enough to believe any deficit in the insurance corporation would

disappear as if by magic, or that there was a "pot of gold" at the end

of the Autoplan rainbow. That pot was empty by the time we lifted off

the lid. One really wonders what the former government, were it still

in power, would have done in 1976 to save ICBC from financial ruin.

The government's decision to have the province pay the insurance

corporation deficit to the end of the 1975 licence year, and require

the corporation to stand on its own feet from that point on, was an

agonizing one. However, it is our firm belief that if government enters

the marketplace in a field served by private endeavour, that operation

should not be subsidized from the general public purse. While

government does not usually enter into business to make excessive

profits, the principle of non-subsidization motivates management to

achieve an efficient and low-cost operation.

Insuranced motorists play a vital role in any low-cost insurance

operation; lower Autoplan insurance rates are largely dependent upon

a reduction in both the number and value of accident claims which can

result from more cautious and defensive driving. Evidence is that the

low premiums have encouraged careless driving with attendant higher

social costs.

There are other financial balances, both profit and loss, of other

provincially owned operations not included in the report's provincial

deficit. The British Columbia Railway, for example, was forecasting a

loss in 1975 of $47 million.

If this government had undertaken to pick up the entire net income or loss

of all operations owned by the province, maintained the Medical Services Plan

outstanding accounts reserve, and paid our liability in respect of the natural

gas producers additional federal income tax, the total deficit would have been

almost $700 million, Mr. Speaker.

Whether we just look at the budgetary deficit of $281 million, the

$541 million in the Clarkson, Gordon report, or the total aggregate of

almost $700 million, the financial policies and investments of the

former NDP government resulted in the largest deficit ever for the

province and, for the first time in the last quarter-century, plunged

this province heavily into debt.

With $142.7 million in the bank our minimum cash shortage exceeds

$400 million, and for the first time since the great Depression, the

province must borrow to pay operating expenditures. There was, however,

borrowing for government capital projects before 1952.

This should be a clear indication to the citizens of British

Columbia that this year's budget, ending this March 31, as planned by

the former government, was excessive. However, everyone should realize

that the inflation of the 1975-76 budget had its beginnings at an

earlier date.

In the three years between 1972, when the NDP was elected, and

1975-76, the provincial budget increased by 112 per cent — a compound

annual rate of growth of over 30 per cent. Most of the increase was for

operating expenses, not capital projects. The consequences for such

budget acceleration are obvious: capital expenditures can be restrained

without serious consequences, but operating expenditures are more

difficult to contain and almost impossible, once established, to cut

back.

It would be a relief to us all if, by meeting and settling the

deficit problem head-on, balance is restored to the province's

finances. Unfortunately, this is not the case. The excesses which exist

in the budget for the fiscal year just ending provide built-in momentum

affecting next year's budget. For instance, the previous government

left us a time bomb of retroactive pay going back to 1974 for all

professionals in government. Benefits programmes negotiated for the

total provincial public service will increase our employee costs by an

estimated 281 per cent — and this after a 54.5 per cent increase in

wage costs over the last three years.

These legacies, Mr. Speaker, are of serious concern, for until the

budget balance can be restored and real growth accelerated in the

provincial economy, the government will be unable to fulfil its pledge

to provide for the real needs of the people of British Columbia.

The financial events detailed in the auditor's review demonstrate

the need for more frequent government accountability with the citizen.

Perhaps if such had been the case, the budget situation today might be

somewhat different or, at the least, British Columbians would have had

earlier indication of the problems. Just as a well-run business reports

upon its finances to shareholders periodically through a financial

year, so this administration believes the provincial government should

report also. The comptroller-general prepares for submission to the

Legislature a statement of revenues and expenditures for the nine

months of the fiscal year, that is to December 31, pursuant to the

Audit Act. However, this government is working towards publishing a

quarterly financial review of the provincial accounts. This quarterly

review should be a matter of interest to the financial community and to

the general public. The review, along with our proposal to establish

the office of auditor-general, reflects this administration's policy

to improve the public disclosure of the province's business which,

after all, is the people's business.

As you know, Mr. Speaker, this new Social Credit government is

committed to a financial policy of balanced budgets. British Columbia

is rich in resources and the economy can support such a policy,

[ Page 254 ]

but not at the present time with the level of expenditures in the

1975-76 budget, or the level of expenditures originally requested by

the departments for the next fiscal year. The problem confronting this

administration in establishing the provincial government's expenditure

programme for the fiscal year 1976-77 was how to balance the books,

having in mind our social and economic goals and the ability of the

individual and business taxpayer to pay the government spending. It has

been extremely difficult for us to pick our options. The provincial

budget, if allowed to grow at the excessive rates of the past three

years, would seriously disrupt the federal and British Columbia

government's programme of combating inflation.

Inflation is an insidious disease that feeds on itself and inflicts

a heavier penalty upon the least protected members of the community.

But it must be brought under control, and part of this solution, as

this government sees it, is to restore balance and order to the

provincial budget.

Mr. Speaker, under this balanced budget, we are unable to have

complete freedom in introducing new programmes and are greatly

restricted in augmenting existing ones. Even at that it will be

necessary for the province to increase taxes. The taxpayers of British

Columbia should need no further evidence of the stewardship of the

previous administration when tax rates must be increased just to

support the same level for many government programmes.

Now to the economic outlook for 1976, which provides cause for

cautious optimism. Much depends on how well recovery proceeds in the

economies of the United States and Japan, particularly the former. The

pace of world recovery has been less rapid and not as broadly based as

in past business cycles and there have been setbacks just when it

appeared recovery was about to take hold.

On balance, however, it appears the United States will be able to

emerge from the latest recession slowly and avoid the inflationary boom

that followed the previous one. In particular, it appears there will be

some improvement in the American housing market, on which this

province's lumber industry depends so heavily. From a peak of 2.4

million in 1972, the number of housing starts in the United States

declined steadily to 1.2 million last year. It is expected this will

rise to 1.5 million in 1976.

Another influencing factor is the anti-inflation programme in

Canada. It was originally feared the export levy proposed by the

federal government would remove the incentive for export industries to

increase production in response to expected price increases. Mr.

Speaker, I was the first provincial minister to raise objection to this

levy at the meeting of federal and provincial Ministers of Finance in

early February, and I was generously supported in my arguments by the

other provincial ministers. The federal government subsequently

withdrew this export levy, in great part, I think, because of this

opposition. Mr. Speaker, if the remainder of the prices and incomes

control programme, with the help of federal fiscal and monetary

restraint, is successful in holding down costs and prices, British

Columbia's competitive position in world markets will improve, giving

further impetus to recovery in our export industries.

The province should experience an increase in the rate of real

economic growth from the fractional rate achieved in 1975. The recovery

momentum is expected to accelerate through the year. The real increase

in gross provincial product in 1976 is expected to equal or slightly

exceed the rate of 4.5 per cent forecast for Canada's gross national

product.

The year ahead is particularly important in our financial relations

with the federal government. A number of important financial

relationships, the post-secondary education financing arrangements,

general income tax-sharing matters, and the National Equalization

Programme, for example, formally end in one year's time. The

federal-provincial discussions on these issues, which are beginning

now, will result in the replacement of the existing arrangements. In

addition, the financing of many of the country's most important

shared-cost programmes involving health and welfare are also being

discussed with federal authorities. All these programmes taken together

have an important effect on the financial position of the province, and

on the manner in which the province is able to deliver the services the

Constitution places within provincial jurisdiction. Our policy is to

take an active and vigorous

part in these discussions to ensure that

the interests of our citizens are protected.

Let me deal with just two of the areas which will be the subject of upcoming discussions with the federal government.

For many years the federal government has contributed to the

financing of the provinces' responsibilities in the field of

post-secondary education. Prior to 1972 the federal government shared

equally with the province on post-secondary education operating costs.

Since that year, however, the federal contribution has been limited to

an annual escalation of 15 per cent, which for the last two years has

worked markedly to the disadvantage of British Columbia.

Recently there has been a substantial growth in the cost of

post-secondary education in British Columbia. This, together with the

limitations on the federal contributions, has meant an increasing share

of the costs of our universities, colleges and other post-secondary

institutions, has had to be borne by the provincial treasury. We have,

in effect, been penalized for the particular growth pattern that has

characterized this part of the British Columbia public sector.

[ Page 255 ]

The new arrangements which emerge in this area must correct the

inequities that have affected British Columbia's ability to finance its

colleges and universities.

A second issue, Mr. Speaker, which will attract a good deal of our

attention in discussions with the federal government relates to the

question of the sharing of the personal and corporate income taxes

between the two governments. It is now well established that the

federal changes in these taxes, starting with the fundamental change in

the income tax system in 1972, have had important effects on the

province's own revenue position. The federal government sought to

ensure that the adoption of the new income tax system in 1972 would not

reduce provincial revenue from these sources from what they would have

been in the absence of change. The provision entitled the "revenue

guarantee" was adopted to give effect to this provincial undertaking.

In every year since 1972 the province has received a revenue

guarantee payment clearly indicating our provincial income tax revenue

was decreased by the federal changes. This guarantee arrangement ends

in one year. What is clearly required is a full discussion of the whole

matter of revenue-sharing between the two governments.

Such a discussion is particularly important given the substantial

effect indexing of the personal income tax system, undertaken in 1974,

has had on provincial revenues. The federal government chose to exclude

this revenue-reducing federal measure from the revenue guarantee

provisions with the result that the loss of the province is not made up

by the federal government.

This has led to a serious and growing deterioration in the

province's revenue position. If the federal government is to continue

the collection of our income taxes by agreement, the province should

have a guarantee that the provincial tax base will not be debased

through federal action in respect of their own tax system.

Mr. Speaker, on taking office this government moved quickly to work

cooperatively with the federal government in the programme to combat

inflation. We will introduce legislation this session which will

protect the constitutional position of this province, and will serve to

establish British Columbia–made regulations over both prices and wages

in the public and private sectors of our economy.

In the meantime, to protect the public interest, we will seek as

part of our anti-inflation discussion with the federal government an

agreement whereby the federal Anti-Inflation Board will review pricing

decisions for Crown agencies.

To implement this, senior officials have been instructed to start formal discussions

with the federal government towards an agreement whereby the Anti-Inflation

Board will administer the national guidelines to our public sector. This is

presently the case with public-sector employees under the agreement signed thus

far by Alberta, Ontario, Prince Edward Island and Newfoundland.

Any agreement which we will negotiate with the federal government

will expire not later than April 1, 1977, by which time the provincial

changes will be in place so that we will have the machinery available

to give proper leadership in public sector bargaining as well as to

ensure a publicly accountable method of reviewing public sector pricing

decisions.

Mr. Speaker, given the financial realities confronting this new

government, realities which would have confronted the previous

government had it remained in power, and the performance of the

provincial economy this past year, the determination of the 1976-77

budget has not come easily.

It has already been indicated that the economics of our major

trading partners, particularly the United States, are recovering from

the recession that developed in late 1974. While it is unlikely we will

experience the excessive demands of 1973 and the major part of 1974,

there is a promising outlook for an increase in productive output which

should generate increased employment in the province. The inflationary

problem of the past three years was compounded by the excessive

competition for limited resources between the public and the private

sectors. It is not our wish to continue that competition. We prefer to

give the private sector first access to available resources when the

economic situation is positive for that sector. Production, employment

and resource prices are showing signs of improving and the outlook is

promising for their continued improvement throughout the next 12 months.

In our view, the private sector is capable of reducing the slack in

the provincial economy over the next year and it is appropriate,

therefore, for the provincial government to introduce a balanced budget

for the fiscal year 1976-77 in the restoration of the province's

finances to a sound base.

When speaking of a "recovery" budget, this does not imply

maintaining the levels of government expenditure the same as in the

fiscal year just closing. My job as Finance minister would be made

easier under such circumstances. Wage and working benefit agreements

were negotiated for public sector employees which, when applied to the

greatly enlarged number of public servants, represent a large increase

in non-discretionary expenditure.

Mr. Speaker, the budget I am introducing today on behalf of the

government calls for total expenditures of $3.6152 billion in the

fiscal year 1976-77. This is only a 5.4 per cent increase over the

current year's revised estimates.

Now, Mr. Speaker, I would refer you to a table on the following pages, a table of expenditures of

[ Page 256 ]

estimates by departments showing the previous budget estimate for

the current year and the revised estimate by departments and the new

budget for the coming year....

In keeping with our desire to provide a full measure of services to

people, we have substantially increased our spending for health care,

education and income support. These have been increased by $339 million

in total. By decreasing the cost of government in most other

departments, the overall increase has been kept to only $185 million.

We were required, of course, to trim substantially from the

departments' original submissions in our review process. Some

government programmes have been hit harder than others.

The tight fiscal position the province temporarily finds itself in,

and the programme constraints in the budget, present a challenge to the

public service and those local governments and groups in receipt of

operating funds from the provincial government to maximize programme

benefits from funds to be allocated next year.

Speaking specifically now on elements of next year's budget, I would

like to address my opening remarks to the public servants who have

responsibility for delivering many of the government services provided

and who receive their compensation under the budget. In view of the

essential financial constraints, the budget will not be as easy to

administer as the "free-wheeling" spending budgets of the short-lived

previous administration. The budget constraints are sudden but

immediately required.

If the previous government had responded in a responsible way to the

excesses in their final budget — and the early evidence was before them

— the severity of budget limits in this, our first budget, would have

been lessened. But apparently they were not prepared, or perhaps able,

to practise restraint even though the former Premier and Minister of

Finance (Mr. Barrett) warned his own House members in his 1975 budget

address by stating: "While we have the fiscal resources to meet these

commitments, I must make clear to the hon. members that this volume of

expenditure increases cannot be anticipated into the future." I might

remind the members that this statement was in response to a budget 28.2

per cent higher than the previous year.

And, despite this warning, that same Premier and Minister of Finance

came back the following year with a dandy — with a budget of 48.3 per

cent higher again.

AN HON. MEMBER: Hear, hear!

HON. MR. WOLFE: As a consequence, this government is

challenged with making effective and efficient use of each budget

dollar this next fiscal year.

It is important also that we do not lose sight of the source of

those budget dollars — the taxpayer — and see to it the taxpayers

receive good value for their tax dollars.

The salary and fringe benefits enacted under the previous

administration for public servants were excessive in relation to

increases obtained by most other labour groups in the productive

sector. In addition to the significant increase in salary and fringe

benefits bill over the past three years, the public service experienced

a growth not seen since the immediate post–World War II expansion in

the provincial service. Between the end of 1972 and 1975 the public

service grew by 28 per cent to almost 40,000.

Mr. Speaker, I wish to draw to the attention of hon. members that in

the Estimates of Revenue and Expenditure, which I will table in the

House at the close of my speech, there is a deduction from the amount

to be voted shown in each department Entitled "Staff reduction salary

saving," this results from government policy initiated in 1975 to

effect an almost general 15 per cent reduction in the permanently

established public service during this period of necessary restraint.

This policy is modified in areas of essential government services such

as staffing for the institutions. The hiring level of temporary staff

is being constrained also. The total of this salary saving, to be

accomplished by attrition, is $52 million.

A pioneer programme in Canada for reducing the burden of property

taxes upon homeowners was the British Columbia Homeowner Grant. This

programme was initiated by the first British Columbia Social Credit

administration in 1957. Introduced at $27, the grant has been increased

in progressive stages until today it stands at a maximum of $200 for

homeowners under 65 and $250 for those age 65 and over. A major step in

this direction is planned this year through integration of the School

Tax Removal Grant with the Homeowner Grant and a $50 increase in the

additional Homeowner Grant to the 65's and over. This means an increase

in the maximum property tax credit for this group from $330 to $380,

effective the 1976 property tax year.

The Homeowner Grant should be considered a basic exemption on

property tax bills, just as the basic exemption exists for personal

income tax, Transfer of the School Tax Removal Grant to the Homeowner

Grant increases the benefits to the advantage of the homeowner,

particularly those of modest income. One further feature of the grant

programme which is to be altered — in response to a recommendation from

the municipalities — is to increase the minimum tax payable by persons

under age 65 from $1 to $50. The overall cost of this enlarged

programme is $6 million to the province.

[ Page 257 ]

In this period of restraint, it is important that restraining

measures be widely employed and accepted. As an example, in the public

sector, the present salaries and allowances of all provincial ministers

and members of the Legislative Assembly will be reduced by 10 per cent.

In addition, similar cuts are being extended to some members of the

Premier's office staff and some ministerial assistants.

Total Legislation expenditure for 1976-77 will be held to $3.3

million, only slightly more than the revised 1975-76 expenditure figure.

Expenditures under the executive council are estimated at $637,000

in the coming year, up from the revised estimate of $445,000 for the

current year. This results from transfer of staff at the office of the

Planning Adviser to Cabinet and Executive Council Administration to the

Premier's Office and Intergovernmental Relations.

The government recognizes the importance to British Columbia of a

strong agriculture and food industry. In the next year's budget for the

Department of Agriculture, increased emphasis will be placed on the

marketing of agricultural products. Implementation of effective

shared-cost merchandising practices will receive high priority so that

the department will be in a position to offer its assistance in

creating new markets for the British Columbia agricultural industry.

Agricultural and Rural Development Act funds for projects have been

increased to accommodate more activity in developing community

pastures, irrigation and drainage projects and resource processing. The

department will emphasize the development of Crown range resources

under this federal-provincial programme.

To provide these services, $57.6 million is allocated to the Agriculture department.

Now to the Attorney-General. Large yearly expenditure increases

under the former administration have been experienced as well in the

Department of the Attorney-General. In 1972-73, $42.4 million was

expended by the department and in 1975-76 the comparable figure had

risen to $107 million, an increase of 152 per cent. Estimated 1976-77

expenditures are $112 million, a 4.7 per cent increase over 1975-76

revised expenditures.

Police costs are up $6 million next year to $27.3 million as a

result of an increase in the cost of RCMP services rendered under

contract with the federal government.

The budget of the Department of Consumer Services for the coming

year is $2.5 million, up from the revised comparative estimate of $1.7

million for 1975-76. In the government's overall fight against

inflation, the department is monitoring consumer prices closely. It

will also continue to promote fairness and responsibility in the

marketplace.

The government has provided the Department of Economic Development an increased

budget to develop employment opportunities and to restore investor and customer

confidence in British Columbia. The department's budget will go to $5.8

million from the revised estimate of $4 million in 1975-76, an increase of 44

per cent. While expenditures are to be increased, considerable economies will

be effected in department overhead and administration. The major portion of

the increase is for expanded technical assistance to encourage secondary industry

in the province and for stepped up trade mission activities designed to create

new jobs and income through expanding export sales.

The department will also co-ordinate large-scale resource

development to diversify economic activity on a regional basis. An

example is the planning and co-ordination that will go into development

of the province's northeast coal resources.

The second largest single budgetary commitment for the coming year is for education.

SOME HON. MEMBERS: Hear, hear!

HON. MR. WOLFE: Expenditures for the Department of Education

are estimated at $846.3 million, representing an increase of 10.9 per

cent over the 1975-76 revised estimate.

By far the largest expense will be incurred in the public school

system. For the year 1975-76, $478.4 million was voted. This has been

increased to $523.5 million for the coming year, representing a 9.4 per

cent increase in basic education costs. It accounts mainly for the

inflationary aspect in the provision of educational services as the

school-age population has recently become stabilized.

The newly created Department of Environment brings together the

basic life-sustaining resources of land, air and water, and provides a

central focus for environmental concerns. We are committed to a policy

of economic growth with high environmental quality. Mr. Speaker, this

is best achieved through co-ordination and cooperation between

departments of government, Crown agencies and the private sector to

ensure full consideration is given to environmental concerns in any

major development within the province.

Expenditures under the new department are estimated at $43.3 million

in 1976-77 compared with $37.3 million spent in the current year by

other departments that have now been consolidated into Environment. Of

the expenditure increase, $1.5 million results from the provision in

the department's budget for provincial major disaster expenditure

previously provided through a special fund. An equivalent amount of the

increase is devoted to the resource inventory programme.

Now to the Finance department. Total moneys to be voted under the Department of Finance for

[ Page 258 ]

1976-77 have risen to $164.8 million from a comparative $115 million

this current fiscal year. Several reasons account for this large upward

adjustment. An anticipated $40 million annual interest payment,

representing 1.1 per cent of the total budget, must be provided on the

borrowed money necessary to cover the deficit incurred in the 1975-76

budget year.

SOME HON. MEMBERS: Shame! Shame!

HON. MR. WOLFE: A bill is being introduced to provide for

this borrowing. An increase from $9.4 million to $55 million in the

"grants, contributions and subsidies" vote flows from the inclusion in

the budget for the first time of the provincial government's federal

income tax liability on behalf of natural gas producers, and $1.5

million required for the underground utility service programme

previously provided from a special fund.

Salary contingencies which were included within the amounts to be

voted for individual departments in the current year have been

consolidated into the Department of Finance. An amount of $53.3 million

is necessary for pay increases already committed under existing

contracts for all British Columbia public service employees.

Previous provisions for forest protection and maintenance programmes

were made under the now phased-out Department of Lands, Forests and

Water Resources. Departmental restructuring has resulted in the newly

created Department of Forests.

Forest-related expenditures for 1975-76 are estimated to be $79.1

million, while next year $98.6 million is required. Over $11 million of

the increase results in a change from net to gross budgeting for both

coastal scaling and the reservoir waterways improvement programme. The

revenue from these activities now will be taken into provincial

revenue. The effective increase in the department, therefore, is only

$8 million.

It is not possible to reduce the reforestation programme with its

current level of nursery stock of 100 million trees, and planting stock

of 75 million, without a net reduction in British Columbia's most

important renewable resource.

The programme suffered this past year because the previous

administration used $840,000 of its reforestation funds to provide

decorative trees for Habitat, trees which Habitat did not require and

which this government is forced to give away to B.C. municipalities.

Fire-suppression estimates have been increased $4.2 million, or 84

per cent, to reflect a more realistic level of annual expenditures.

The largest single expenditure is for health care. The province's comprehensive

health-care programme will require an estimated expenditure next year of $871.4

million. This is an increase of $148.1 million, or 20.5 per cent, over the revised

current-year estimates. This budget amount represents almost one-quarter of

the total budget for next year.

Comparable expenditure figures for 1970 and 1965 were $198 million

and $65 million, respectively, demonstrating that British Columbia

health-care costs have risen tremendously during the past 10 years.

The continued pressure of providing hospital facilities for a

rapidly growing provincial population, combined with increased

utilization, has caused a rapid upsurge in the cost of providing

hospital care and the Medicare programme. Total outlay for next year's

hospital-care programme is estimated at $553 million. This amount is

over three times the $177 million paid to hospitals in 1970 and

represents an expenditure of $225 on behalf of each British Columbia

resident.

Virtually all British Columbia residents are included under the

Medical Services Plan. This plan, administered by the Medical Services

Commission, is expected to require a contribution from the province of

$192.5 million next fiscal year, representing a cost increase of 43 per

cent.

The revised cost estimate of operating the emergency health services

programme in the current fiscal year is $15.6 million, up from the $11

million originally budgeted. This programme consists of province-wide

ground ambulance service and is estimated to cost $17.8 million in

1976-77.

Provision for the construction of special-care homes has been transferred from the Department of Housing.

In periods of restraint, essential health-care services are an area

where cost-cutting is of limited result, by the very nature of the

service. However, due to current revenue constraint, it is hoped that

not only the user but the also the provider of hospital and medical

services employ a degree of financial awareness regarding the use of

existing health-related facilities.

The government has reviewed the historically low user charges for

hospital and medical care and decided that under the current financial

circumstances for the province it was appropriate to make some upward

adjustments.

An area of continuing concern is the hospital co-insurance charge of

$1, particularly as it relates to senior citizens in receipt of

provincial income assistance while under long-term care in

extended-care hospitals. On the basis of the existing $1-a-day charge

for care, an anomaly exists where such persons are accumulating estates

for their heirs from public-income assistance payments. In view of

these circumstances, Mr. Speaker, the government considers it

appropriate to raise the $1-per-day co-insurance charge to $7-per-day

to persons in

[ Page 259 ]

extended-care facilities, effective June 1, 1976. For patients in

general- or acute-care hospitals, the co-insurance charge is to be

increased from $1 to $4 per day, also effective from June 1, 1976. The

increased acute-care per diem charge should not bear heavily upon the

individual.

The estimated $14 million in increased revenue in the fiscal year

1976-77 from this charge will remain with the hospitals and will have

the effect of reducing the amount of each hospital budget to be covered

by payments from the province.

Another service which was turned from a profitable to a deficit

operation during the short term of the New Democratic Party

administration is the British Columbia Medical Plan. Established by the

first Social Credit government in this province in 1965, the plan

maintained a strong financial position while providing comprehensive

medical coverage at low premium rates which are subsidized for

low-income residents.

At March 31, 1973, six months after the former government assumed

power, the medical plan had cash and investments of $64.9 million,

which by March 31, 1976, will have completely disappeared. With this

cash all gone and costs up, the government has no option but to restore

the medical plan to a sound financial footing.

The premium rates, which have remained unchanged since introduction

of the plan, will be increased, effective July 1, 1976. The effect of

the premium increases is as follows — and, Mr. Speaker, I show three

categories here: the present category where there's no taxable income,

the rate is increased for one person from 50 cents to 75 cents per

month; for a family of two, from $1 to $1.50; for a family of three or

more, from $1.25 to $1.87.

In the middle category with taxable income of $1 to $1,000 in the

previous year the premiums are increased from $2.50 to $3.75, from $5

to $7.50, from $6.25 to $9.37.

In the largest category represented by taxable income above $1,000

in the previous year the rates are increased from $5 to $7.50 for one

person; from $10 to $15 for a family of two; and from $12.50 to $18.75

for a family of three or more. This is a premium increase of 50 per

cent.

Estimated income for the plan from subscribers as a result of the

premium rate changes is $40 million for the nine months of the fiscal

year 1976-77. This still leaves an estimated operating deficit of $42.2

million to be financed from general provincial revenues after the

payment of an additional $8 million for premium subsidies for

low-income persons. If rates were not increased, the province would

have to pay the medical plan $90.2 million in the next fiscal year.

The Department of Highways and Public Works results from the recent amalgamation

of the former Department of Highways and the Department of Public Works. This

amalgamation has served to reduce the necessary expenditure in the minister's

office by 28 per cent for 1976-77. Substantial cuts have been made in both highway

and public works capital projects during this period of budget restraint. Accordingly,

total expenditures of this department decline to $321 million next year from

the revised level of $336 million in the year just ending.

Compounding the call for restraint is the cost-inflation factor

involved in capital projects. Cost increases within the framework of

the budgeted figure serve to diminish the amount of work produced.

In 1972-73, expenses under the rental vote in the Department of

Public Works were estimated at $3 million. In the current fiscal year,

the revised rental total is $15 million, a three-year increase of 400

per cent. Next year, projected rental will be $17.1 million,

substantially curbing the growth rate in Public Works rentals.

This government is locked into many long-term leases negotiated by

the previous government on building space which wasn't needed, and, as

a result, has remained empty and unused since the leases were signed.

It is more than likely much of this space will continue to remain empty

unless the government is able to negotiate out of some leases or rent

the accommodation during the remainder of the lease period.

In gross terms, expenditures by the Housing Department are budgeted

to reach $113.4 million in the next budget year compared with the

revised 1975-6 expenditures of $81.2 million. While expenditures for

housing will be higher, offsetting federal payments and the provincial

personal income tax rent credit programme result in a reduction of $7.8

million in the estimates.

The Elderly Citizens Renters Grant will now be provided through the

provincial personal income tax in the form of a rent credit and the

$3.5 million shown for the last year is no longer part of the

department's estimates. Renters under age 65 also receive their rent

credit through reduced income tax payments. The cost of the renters

credit programme is $15 million.

A total of $16 million is earmarked in the next fiscal year to supplement the Home Acquisition Grant Fund.

The federal Minister of Housing has recently announced new housing

initiatives on behalf of the federal government and has invited the

provinces to join with the federal government in these programmes. We

have decided to accept the invitation of the federal Minister of

Housing to join with him through an integration of the programmes of

our respective governments.

It is our intention to provide up to a maximum of $750 of additional assistance to purchasers of homes

[ Page 260 ]

under the Assisted Home Ownership Programme.

We intend to integrate the provisions of the Home Acquisition Grants

and second mortgages with this new programme. In this way, we will

avoid double benefits and ensure assistance is in relationship to need.

Further, with respect to the purchases of used homes, it is our

intention, while eliminating the $500 Homeowner Grant, to increase

the second mortgage available from a maximum of $2,500 to $5,000.

The creation of an adequate supply of rental accommodation is a priority of this government.

AN HON. MEMBER: Hear, hear!

HON. MR. WOLFE: We are prepared to provide up to a maximum of

$600 in the form of a conditional grant and a further $1,200

interest-free loan per unit to builders wishing to create rental

accommodation under the assisted rental programme. It is our view that

with this inducement to the private sector, we will be able to create a

healthy vacancy rate where it does not exist today.

A number of communities, because of their location and supply of

developed land, disproportionately shoulder the burden of growth. In

order to assist these municipalities, we will make available an

additional $500 grant per new unit, making a total available to

municipalities of $1,500 per unit under the municipal incentive grant

programme.

Expenditures under the Department of Human Resources will increase

from the revised estimate of $481.9 million in the current year to

$589.6 million in 1976-77, an increase of 22.3 per cent. This increase

reflects the government's commitment to the comprehensive social

services programmes provided to protect the basic human requirements of

the citizens of this province.

The Income Assistance Programme, designed to provide for special

needs — education upgrading, vocational training and work incentives —

is allocated $218.8 million next year.

Services for senior citizens and handicapped persons will cost

$187.4 million, of which $128.7 million represents the British Columbia

Guaranteed Available Income for Need Act (GAIN). Mr. Speaker, this

programme is $23.8 million more than last year and extends benefits to

qualifying persons in the 55-59 age group as well as to single-parent

families. These extended benefits will provide $17 million more in

payments, taken at very little extra cost to the province because the

bulk of the funds will be provided through federal sharing The previous

government, in our opinion, was remiss in not taking advantage of the

federal money that was available in previous years to provide this

increased benefit.

The adult-care programme accounts for another $48.4 million of the

total. This programme provides care in boarding houses and rest homes

for the elderly. Rising numbers of patients and increasing per-patient

costs account for the large expenditure increase.

Family and Children's Service expenditures are estimated at $65.8 million in 1976-77.

The Pharmacare programme provides prescription drugs free of charge

for those age 65 and over, and subsidized drug costs for those in need

under the age of 65. This is estimated to cost $24.6 million. Special

programmes for the retarded will have an expenditure of $33.6 million

in 1976-77.

Expenditures under the Department of Human Resources in next year's

budget are one of the three largest allocations in the budget.

The budget for the Department of Labour totals $19 million, an

increase of 34.8 per cent over the comparative revised estimate for the

current year. This increase is attributable in part to the activities

of the department respecting labour-management relations, and is

intended to enhance the ability of the department to deliver the

extensive services offered by the government to employers, employees

and their accredited representatives in the orderly adjustment of their

interrelated affairs.

It should be noted that the Department of Labour has other

significant areas of responsibility which, while they receive less

prominence, are of no less importance to the province. Therefore the

increase also reflects the intention of the government to strengthen

services in the fields of apprenticeship, manpower training,

occupational health, labour standards and human rights.

Mr. Speaker, attention is also drawn to the inclusion in the

department's budget of funds for the administration of those matters

which directly affect the native Indian citizens of British Columbia,

and which may fall outside of the responsibilities of the other

departments of government.

The Department of Mines and Petroleum Resources will receive $7.9

million, which is $2.1 million more above the revised 1975-76

estimates. The new energy resources evaluation programme receives $500,000 for coal research and $100,000 for uranium.

The Department of Municipal Affairs will spend an estimated $145.4

million next year, principally in the area of grants to municipalities

and other local governments and for transit. The transit supply

programme escalates to $15.1 million next year from $106,000 this year,

primarily to meet commitments the former administration made for new

buses and construction of new terminals for the commuter ferries

planned for Vancouver harbour.

The reduction in the per capita grants under the Municipalities Aid

Act results from the fact that 80 per cent of the population catch-up

grants were paid in 1975 with only 20 per cent remaining payable in

[ Page 261 ]

1976-77. The provincial commitment under the Sewerage Facilities

Assistance Act is increased $5 million in 1976-77 to a total of $11

million. A total of $30 million is provided for the province's

revenue-sharing programme with municipalities, $10 million more than

provided under the Natural Gas Revenue Sharing Act in 1975-76.

The provincial government realizes the increasing demand upon

municipal and local governments for services coupled with the cost

inflation element in providing these services. These are trying times

for all levels of government, Mr. Speaker. The provincial government

recognizes a responsibility to share partly in meeting these fiscal

demands.

The Department of the Provincial Secretary is estimated to spend

$100.8 million in 1976-77, a one-year increase of $20.3 million or 25.3

per cent, principally in the form of increased public service benefits.

Expenditures under the Public Inquiries Act are increased $1 million

next year. While originally budgeted for $150,000, the current year

outcome is expected to be $1.2 million due to inquiries initiated by

the previous government. The bill for Unemployment Insurance Commission

payments representing the employer's contribution covering provincial

public servants is increased from the revised estimate of $6.1 million

in 1975-76 to $7.9 million.

The appropriation for the development and operation of the museum for the next year is increased to $3.5 million.

In 1976-77, expenditures under the Public Service Commission will

rise to $27.4 million from the current year's level of $9.3 million — a

tripling of costs in one year. Public service employee benefit costs

are expected to escalate to more than $24 million next year from the

$6.3 million revised estimate for the current year, an increase, Mr.

Speaker, of 281 per cent. The recent rapid increase in employer-paid

benefits to public servants, combined with high wage increases gained

by public servants under the former government, account for this

tremendous cost increase.

The public service extended health care and dental plan, for

example, will almost double this year's cost to $7.2 million next year.

British Columbia public servants are not required to pay any premiums

under this plan.

The public service group insurance plan expenditures for 1976-77

will be $1.9 million compared with a revised cost of $732,000 for the

current year, representing an increase of 160 per cent.

The cost of the provincial contribution on behalf of public

servants' medicare premiums increases from $1.8 million to $2.2

million, and the optional selection of benefits plan, not in the

current year's budget, will cost $8.4 million next year.

The Superannuation Branch, administering numerous pension plans, is

estimated to incur expenditures next year totalling $41.3 million, up

from the revised estimate of $38.4 million this year.

Mr. Speaker, these, coupled with the implementation of the 35-hour

week and the new COLA clause, have a devastating effect upon the coming

year's budget.

The new Department of Recreation and Travel Industry receives an

appropriation of $42.9 million. This department has been created by

uniting elements of the Department of Recreation and Conservation and

the Department of Travel Industry. Following a four-year programme of

parks development initiated by the former Social Credit governments

through special funding of $25 million in 1971 and 1972, the budget for

this activity has been reduced by $6.2 million and priority placed on

maintaining existing facilities and services.

The appropriation for the Department of Transport and Communications

is reduced $6 million to $109.1 million, a decrease of 5.2 per cent.

Expenditure for British Columbia Ferries is reduced $39 million to

$59 million, of which $34 million will provide for the operating and

capital expenditures until such time as the ferry system will become a

Crown corporation. A total of $25 million is provided to cover the

expected operating deficit of the new corporation for the remainder of

the fiscal year.

A new appropriation in the amount of $12 million is provided in the

estimates for this department to cover the 25 per cent rebate on

automobile insurance for under-age drivers with safe driving records in

the 1976 insurance year. Under the safe-driver incentive plan, the

government is concerned not only over the financial costs of accidents

and injuries, but also the tremendous social costs involved.

Now the financing of Crown corporations. The Minister of Finance is

the fiscal agent for provincial Crown corporations and agencies, and as

such is required to provide capital construction funds and

working-capital advances. Capital construction funds are provided from

provincial trusteed accounts, the Canada Pension Plan Fund, and market

borrowings. Certain statutory loans and advances are provided from the

provincial consolidated revenue fund.

For the current fiscal year, the province has made available $881

million of investment funds to the Crown corporations for capital

purposes. This amount was provided by provincial trusteed accounts

($367 million), Canada Pension Fund ($214 million), together with $300

million from market placements.

The British Columbia Hydro and Power Authority will receive $541.5

million in capital funds during the current year, comprising $26.5

million in Canada Pension Fund proceeds, $215 million of provincial

trusteed funds, and $300 million from market

[ Page 262 ]

borrowings.

On June 1, 1975, a United States issue of $150 million 30-year

sinking fund bonds, with a coupon of 9.625 per cent, was sold at $99.75

for an effective rate of 9.651 per cent. A $50 million 25-year issue

was placed in the Canadian market on October 15, 1975. These 10 per

cent

bonds were priced at $99.50 to yield 10.09 per cent. In addition, $100

million was raised on December 16, 1975, by an offshore issue in

Canadian funds at 9.75 per cent, with an average term of five and a

half years.

The $29 million British Columbia Hydro Canadian issue, series T,

maturing in 1995, but retractable to December 29, 1975, was renewed for

20 years at a rate of 10.75 per cent. On September 1, 1975, $25 million

of 8.5 per cent parity development bonds were marketed to replace the

$25 million of similar rate bonds which matured on that date.

Legislation will be presented to the House in this session to

increase the borrowing power of the Hydro Authority from $3 billion to

$3.5 billion.

The British Columbia Railway Company will have received $185.5

million in capital investment funds during the fiscal year 1975-76.

This comprises $150 million from provincial trusteed funds and $35.5

million from the Canada Pension Fund. The railway currently holds $40

million of these funds in short-term investments against future

commitments. Series R parity development bonds amounting to $16.5

million were retired in October, 1975, to reduce the amount of the

issue in the hands of the public to $24 million. Series RR parity bonds

outstanding total $1 million.

During this fiscal year the railway also received a $20 million

grant from the province. Mr. Speaker, I want to emphasize that this

grant was approved by order-in-council in early 1975, and was

specifically at that time defined as a grant, and not as an advance to

be returned.

Approval for an increase in the borrowing authority of the railway

from $650 million to $900 million will be sought from the Legislature

during this session.

In the fiscal year 1975-76 the British Columbia School Districts

Capital Financing Authority will have made available $103.1 million to

school districts throughout the province for the construction of

schools. Since 1963 an aggregate sum of $662 million has been provided

to school districts by the authority.

During the same period the British Columbia Regional Hospital

Districts Financing Authority will have provided $50.7 million to

regional hospital districts for hospital construction. A total of

$199.6 million has been supplied to hospital districts by the Authority

since 1967.

Total capital requirement of the government Crown corporations for

the fiscal year 1976-77 are estimated at $950 million. This comprises

$530 million for Hydro; $152 million for the railway; $143 million for

school construction; $85 million for the hospital districts; and

miscellaneous other requirements of $45 million.

With $40 million already provided the railway for next year's

requirements, the net required is $875 million. Government-administered

pension and sinking funds and the Canada Pension Fund could yield

approximately $500 million next fiscal year toward these requirements.

Legislation will be introduced at this session extending the

provincial guarantee of principal and interest repayments to borrowings

of the British Columbia Harbours Board.

Just this month the province provided another $5 million to the

British Columbia Development Corp. to provide loans to stimulate

additional job creation. The entire issued stock of 250,000 shares of

the corporation is held by the province for a total investment of $25

million.

In July, 1975, the province loaned $1 million to the Pacific North

Coast Native cooperative to supplement earlier loans totalling $2

million to assist in the development of an integrated fish industry

operation at Port Simpson. This is in addition to $6.3 million in

grants and $860,000 in provincial guarantees given. The government has

taken over direct management and supplied an additional $2.5 million to

restructure the operation and place it on an efficient basis.

Last December the previous government advanced $2.5 million to the

British Columbia Central Credit Union to enable a loan to S.I.B.

International Industries Ltd. of Sechelt for the purchase and refit of

the motor vessel "Arctic Harvester". The loan is repayable over a

period of 10 years at 8 per cent.

The Burns Lake Native Development Corporation is another native

enterprise receiving financial assistance from the province. During the

current fiscal year $70,000 has been advanced to this corporation,

bringing total advances to $825,000. In addition, a bank loan of

$690,000 has been guaranteed by the province to assist the corporation

in the acquisition and operation of Babine Forest Products Ltd.

Under the authority of the Farm Products Industry Improvement Act

and through the fund established under the Act, the province invested

$425,500 in the purchase of a 40 per cent equity interest in Swan

Valley Foods Ltd. in this fiscal year. In addition, $2 million was

loaned to this company in 1975-76 for a three-year term at 8.5 per cent

interest. A further $2.5 million borrowed by this company from a

financial institution was guaranteed by the province, increasing the

total amount of the provincial guarantee to this firm to $7.5 million.

Since 1952 the provincial government credit rating has been reserved exclusively for the benefit of

[ Page 263 ]

provincial Crown corporations and important local projects such as

schools and hospitals. The strength of this rating was developed

through the sound provincial financial position established under the

former Social Credit administration, established by adhering strictly

to a pay-as-you-go policy for both operating and capital expenditures

of government. Without this sound financial position the ability of the

provincial guarantee to provide the lowest cost long-term financing for

these essential public requirements is in jeopardy. This is one more

cogent reason for bringing the 1976-77 budget into balance.

Now, Mr. Speaker, to the revenue measures for the next fiscal year.

The previous administration left the provincial financial cupboard

bare. While extolling the principles of a balanced budget and no direct

borrowing by government, that administration allowed public service

employment to rise to excessive levels, introduced new programmes and

expanded existing programmes beyond the ability of prevailing tax rates

to finance.

Mr. Speaker, that administration did the voters and citizens of

British Columbia a disservice by espousing a principle but not

supporting it in practice. (Mr. Speaker, someone's been adding

grapefruit juice to my grapefruit juice.) Their legacy to this new

administration is the job of restoring the credibility of the

province's finances. In terms of the revenue shortfall in the current

budget and the increased level of expenditure necessary in next year's

budget, this challenge is no small undertaking.

Even though measures have been taken to decrease government spending

at all levels, the minimum increase required in next year's revenue to

balance expenditures is $696 million or 23.9 per cent. This rate of

revenue increase is equivalent to the increased yield in 1973 and 1974

when the provincial economy, strongly supported by international

markets, was growing at an annual rate in excess of 18 per cent. In

1975, the gross provincial product only increased 10 per cent and

provincial government revenues 11.2 per cent. Obviously, in the absence

of an 18 per cent growth in the B.C. economy next year, revenue

adjustments are necessary.

Based on existing tax rates, licence and fees and the expectation of

a 14 per cent growth in the economy, provincial government revenues are

forecast to be $3.319 billion in the next fiscal year, an increase of

13.7 per cent. However, this level of revenues falls short of balancing

the budget by $295.5 million.

Several alternatives to overcoming the budgetary deficit were

available to the government, including further reduction in the level

of government expenditures, debt financing of capital expenditures,

direct provincial borrowing and increases in revenues.

There has been some comment recently in the news media over the

sustained policy of the Province of British Columbia in financing all

operating and capital expenditure from income. The suggestion is made,

Mr. Speaker, that this fiscal philosophy is outmoded because all other

borrow for capital projects. The implied rationale here appears to be

that whatever everyone else is doing must be right.

Mr. Speaker, under a pay-as-you-go financial policy, the first

Social Credit administration in British Columbia established the

province on a sound financial footing that was the envy of many other

jurisdictions. Tax rates were among the lowest in Canada and, along

with that administration's economic development policies, the province

experienced a rate of growth exceeding that of every other province.

The cost of borrowing is generally well recognized. Most home owners

know that a 20-year mortgage at 10 per cent interest costs over double

the original amount, and on a 30-year mortgage the amount repaid is

three times what is borrowed. These facts offer sound support to the

financing of all expenditures from current income if the economy has

matured to the degree to support such a policy.

At issue here is the philosophy of deferring today's costs to a

future date. Failure of the tax base to grow for the support of an

increasing debt has a greater potential for endangering the provision

of essential government services than a pay-as-you-go finance policy.

AN HON. MEMBER: Hear, hear!

HON. MR. WOLFE: It is far better that the money that has to service dead-weight debt go to provide extra services for people.

A sound budget policy demands better planning, but it offers a

greater guarantee of more efficient and effective use of the tax

dollar. To borrow is the easy way out, but against that is the burden

it creates for future generations. We will leave our children and their

children a large enough legacy of problems, without this additional one

of paying for government deficits when, with determination and minimum

sacrifice, we can overcome our problem now.

This government believes the economy is capable of supporting a

pay-as-you-go policy for provincial government financing. Therefore it

has rejected borrowing either for budgetary deficits or government

capital expenditures, except for those capital projects I have already

referred to as being removed from the province's budget.

The government has decided to balance the next year's budget by

taking two courses of action — one, increasing tax and other revenues

and, two, recapturing certain of the special purpose funds.

In the area of tax and other revenue adjustments the government proposes the following:

[ Page 264 ]

(1) An increase of 2 percentage points in the corporation

income tax rate to 15 per cent, except for small businesses where the rate becomes

12 per cent. These rates are effective from January 1, 1976, and are estimated

to yield an additional $31 million. For a business fully qualifying for the

small business tax rate and with taxable profits of $100,000, the provincial

corporation income tax payable will be increased from $10,000 to $12,000. For

a large business with taxable profits of $1 million, for example, the provincial

tax payment is increased to $150,000 from $130,000.

(2) The personal income tax rate is to be increased 2 percentage

points to 32.5 per cent, effective July 1, 1976. The effect of this, Mr. Speaker,

is to establish a rate of 31.5 per cent for the 1976 taxation year. This amounts

to an additional 1 cent of provincial tax payable on every $1 of basic federal

tax. Translating this rate increase to the amount of provincial tax payable,

the increase for a single wage-earner with 1976 income of $10,000 is $1.23 per

month for the year. For a married person earning $15,000 in 1976 and with two

dependents under 16 years of age, the increase in tax is $1.92 per month. The

yield in 1976 of this tax increase is estimated to be $23.5 million.

Next, the cigarette and tobacco tax is to be increased, effective

midnight tonight. The effect is to add 4 cents to the price of a

package of 25 cigarettes and yield an estimated $10 million.

AN HON. MEMBER: I hope everyone quits.

AN HON. MEMBER: Put that in your pipe.

HON. MR. WOLFE: Next, a rather insignificant item: the social services tax, or sales tax, is to be increased 2 percentage points to 7 per cent.

SOME HON. MEMBERS: Oh, oh!

HON. MR. WOLFE: This rate is equal to....

SOME HON. MEMBERS: Oh, oh!

HON. MR. WOLFE: Don't miss anything now, Mr. Member.

This rate is equal to or lower than the rate in six other Canadian

provinces. The estimated yield from this tax increase is $200 million,

of which approximately $110 million will likely be paid by individual

consumers and $90 million by the business sector. Generous exemptions

will continue on most basic family consumables, for example, food,

children's clothing and footwear, drugs, school supplies and reading

materials, so, Mr. Speaker, the tax increase will not bear heavily on

low- and medium-income families.

SOME HON. MEMBERS: Oh, oh!

HON. MR. WOLFE: Lastly, liquor licence fees are to be

increased to yield $3 million more in this next fiscal year. The

additional $267.5 million yield in the fiscal year from these increases

provides total revenues of $3.587 billion, which is still $28 million

short for a balanced budget.

The government reviewed the special purpose funds which have been

established from time to time since 1967 and now finds it appropriate

to recapture certain of the funds for general government purposes.

The Power and Telephone Line Beautification Fund was established at

$10 million in 1972. Over the past four years only $2.2 million has

been expended as the province's one-third share of the cost of placing

utility lines underground. At this level of annual expenditure the

government considers it more appropriate to include the expenditure as

an item in the annual provincial budget.

The Agricultural Aid to Developing Countries and World Disaster

Areas Fund was provided $5 million in 1969, with the interest earnings

dedicated to foreign aid. While the fund is being recaptured, an

appropriation for $350,000, the annual interest earnings of the fund,

is provided in the Department of Agriculture to carry on the province's

commitment under this programme.

Since the Provincial Major Disaster Fund was established at $25

million in 1969, an annual average of $2.5 million has been paid from

the fund. We have been fortunate — any disasters have been localized

and relatively light in property loss. The government proposes to

recapture the estimated $7.3 million fund balance at March 31, 1976, and

has provided a contingent amount in the estimates of the Department of

the Environment for the coming fiscal year.

The Green Belt Protection Fund was established in 1972 at $25

million. Over the past four years a total of about $22.2 million has

been dedicated toward the preservation of green belt areas throughout

the province in perpetuity. The province proposes to recapture the $2.8

million balance.

The government intends to abolish the Economic Policy Analysis

Institute Fund, which was initially established in 1973 at $5 million.

The small unexpended balance of $94,792, remaining in the 1974

School Tax Removal and Resource Grant Fund will also be retained to

general revenue.

So, Mr. Speaker, the $28 million total of recaptured special purpose

funds is as follows: Power and Telephone Line Beautification Fund —

$7.8 million; Agricultural Aid to Developing Countries and World

Disaster Areas Fund — $5 million; Provincial Major Disaster Fund — $7.3

million; Green Belt Protection Fund — $2.8 million; Economic Policy

[ Page 265 ]

Analysis Institute Fund — $5 million ; School Tax Removal and Resource Grant Fund — $94,792. A total of $27,994,792.

This provides the necessary amount to balance our fiscal year 1976-77 budget.

Mr. Speaker, in

summary, the balancing of the province's 1976-77

budget is achieved as follows: net departmental expenditures after

deduction of departmental staff reduction salary savings — $3.615

billion; estimated revenues at existing rates — $3.3 19 billion;

leaving an estimated revenue shortfall of $295.494 million, which is

then made up of estimated revenue from increased taxes and fees of

$267.5 million, and recaptured special purpose funds of $27.994

million, arriving at a budget balance.

Mr. Speaker, this government was elected to restore responsible,

sensible administration to the province of British Columbia. Clearly

the facts have revealed the shocking need for such action. To this our

Social Credit government has responded positively in the short time

available to us in preparing next year's budget. I have characterized

the budget as a "recovery budget." But this budget isn't an end to our

search to save money. All ministers are continuing their evaluation of

programmes to establish their effectiveness and worth.

The former government, now in opposition, has left the citizens of

British Columbia a bitter pill to swallow. The sharp reversal in the

province's finances in a short period of three years is an indication

of how fragile a province's finances are. Mr. Speaker, the very nature

of our first budget is a measure of this government's commitment to a

quick restoration of the province to a sound financial base.

But along with restoring balance to the government accounts, we must

offer incentive to the private sector in British Columbia which has

been discouraged over the last three years by the policies of the

previous government. We believe it is possible for government and

business to work cooperatively to each other's mutual advantages and

those of the individual citizen. During this session amendments will be

introduced to existing legislation to restore confidence to the private

sector.

Certainly our two basic industries, forestry and mining, must be

encouraged to provide the jobs we need for a more stable economy.

Through proper development the economy will grow, incomes will be

augmented and sufficient government revenues will be generated to

ensure continued support of a high standard of government services.

Mr. Speaker, as I stand here contemplating once again the sad and

wretched state into which our province has fallen in three short years,

I say, never again! Never again must the people's money be wasted so

carelessly. Never again must political expediency replace sound

management. Furthermore, never again must government be allowed to

engage in such a disgraceful financial cover-up. Never again must a

government be allowed to cripple our productive effort. Never again

should the people of this province put their trust into the hands of

people to whom money is "something other people earn by hard work" and

spend so easily.

Mr. Speaker, as I look at the last, sad remarks of the former

government sitting across from me, I believe that when the people read

this tragic story of how their money went down the drain, they will

never again return that party to power.

SOME HON. MEMBERS: Never, never!

HON. MR. WOLFE: Mr. Speaker, the parties that expound this

irresponsible use of public funds are on the skids everywhere in the

world. The people have thrown the socialists out in Australian. They

have been thrown out in New Zealand. They are hanging on the ropes in

Britain, and their leader has quit. And they have been thrown out here.

Now the chief architect of this financial disaster in British Columbia

is trying to slide back in. How can the former Premier and Finance

Minister (Mr. Barrett) of this province have the gall to ask people

anywhere to vote for him after the way he has blown their money on one

of the fanciest spending sprees this country has ever seen?

Mr. Speaker, I would remind the House what that former Premier said

a year ago when he presented what turned out to be a demolition budget.

"We are not here to play games in the old style," he said. "We're here

to serve the people and we're doing it very well." Do the hon. members

call what he did serving the people? He served them all right — a

serving of bitter, bitter medicine that we're all choking on today.

We have met our responsibilities in government. We have not shirked

from our duty. We have met the needs of people by starting to rebuild

their shattered economy. And I repeat, once that rebuilding is

accomplished, never again must it be handed over to such a wrecking

crew.

Mr. Speaker, these times challenge the individual, the government

and business. We can overcome our problems by dedication to the

solutions and by fostering a spirit of cooperation among all. We can

come through this experience in a much stronger position with a

commitment from this government to achieve the goals for which it was

elected.

Mr. Speaker, I move that Mr. Speaker do now leave the chair for the House to go into Committee of Supply.

MR. SPEAKER: Hon. members, earlier this afternoon the hon.

Minister of Finance moved a motion that Mr. Speaker do now leave the

chair for the House to go into committee of supply. I prematurely put

the question on the motion and I am

[ Page 266 ]

sure the House would not wish to deprive itself of an opportunity to

debate the budget and, accordingly, I will accept a motion that the

motion previously passed be rescinded.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, I ask

leave to rescind the earlier motion referred to by Mr. Speaker so that

we can have a full and complete debate in this House on the budget.

Motion approved.

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, on a

point of privilege, I would like to draw the House's attention to a

headline in the Victoria Times of this date, Friday, March 26. This

paper, I understand, was on the news-stands about 3 p.m. this afternoon

and it carries a headline which is of grave concern to me and I believe

to all members of the House.

That headline reads, and I quote: "Budget Data Leaked More Than Week

Ago." It continues with a story relative to the budget being left in a

hotel safe where its contents were available to a certain individual

who released them to some of his confreres.

I have no knowledge of the validity, the veracity of this statement

but it is an extremely alarming and grave proposition that is put

forward in this newspaper. It's a matter that, I think the whole House

can appreciate, would allow for certain people to take advantage in

terms of advance knowledge of taxation and certain financial policies

contained in that budget.

I would ask the Premier, Mr. Speaker, whether or not he is in a

position to assure the House that this story is false in fact. If he is

not in a position to do that I think the House has no alternative but

under your auspices to call for a full investigation of this matter.

HON. W.R. BENNETT (Premier): Yes, Mr. Speaker, I can assure

the House that none of the relevant figures contained in this budget

have been made available or placed in a position of coming under the

scrutiny of anyone but the Minister of Finance (Hon. Mr. Wolfe) and his

department and, at times, the Premier, working on the budget.

MR. KING: Well, Mr. Speaker, I think we need more assurance

than that. This

article — and I don't know whether the Premier has yet

seen it....

MR. SPEAKER: Hon. member, you are quoting apparently from a

newspaper story and I would suggest to you that in itself is out of

order in the House. It is not necessarily a statement of fact.

MR. KING: I would agree, Mr. Speaker, entirely. It's not

necessarily a statement of fact, but due to the gravity of this

suggestion, I would suggest that under the circumstances, since the

Premier is not aware of it, that the Speaker call a brief recess so

that the government might study the allegations and give some assurance

that it was not, in fact, the budget that was released for public

scrutiny — which is the assertion contained in the newspaper.

HON. MR. BENNETT: Mr. Speaker, it is unfortunate that the

Leader of the Opposition is not prepared to accept the word of a member

of this House. So I'll tell him again, because they seem to have some

trouble with their understanding of the niceties of the House.

The figures contained in this budget — any of the confidential

information in this budget — was not in any safe, available for anyone

to see in British Columbia in advance of this budget being presented in

this House.

Now it seems, Mr. Speaker, that the Leader of the Opposition

suggested in his statement that he was worried about information

concerning tax changes being available to people so they could use the

information.

I have given my assurance to this House that such material and such

figures were never in a position to be scrutinized by anyone but the

proper authorities.

MR. SPEAKER: Hon. members, the Premier of the province has

given his assurances to the floor of the House.... Order, please! The

hon. Premier has given his assurances to the members of this House. I

think that concludes the matter.

MR. KING: The Premier not only gave his assurance, which I

accept; he answered the initial question that I asked, finally. He also

offered some gratuitous remarks which were a misinterpretation of what

I had said, Mr. Speaker.

Interjections.

MR. SPEAKER: Order, please!

MR. KING: And I have, I believe, the privilege of correcting an untrue statement.

MR. SPEAKER: Order, please. Hon. member, if any member of the

House wishes to pursue the matter further...since you have made a

statement. The hon. Premier has made his statement. You can do so by

matter of a substantive motion placed on the order paper.

MR. KING: Mr. Speaker, I believe you have already ruled that members do have a right to correct

[ Page 267 ]

improper statements or improper remarks that are attributed to them,

and that's what I propose to do. I accept the Premier's comment. I

accept his guarantee to the House that it was not the budget referred

to in this newspaper article. I certainly accept that, but I did want

to correct that I had suggested improper handling. I simply asked the

question whether or not he could guarantee us it was not the budget,

MR. D.D. STUPICH (Nanaimo): Do we actually have a motion before us now? One was moved. Was a second one already passed?

MR. SPEAKER: It is in order to move a motion of adjournment of this debate until the next sitting of the House.

Mr. Stupich moves adjournment of the debate.

Motion approved.

MR. SPEAKER: Hon. members, in order that copies of the

Estimates may be presented to the members of the House, I declare a

short recess. But I would ask you all to remain in your places so that

the attendants can deliver the Estimates to your desks. It will only

take a few minutes.

The House took recess at 4:16 p.m.

The House resumed at 4:20 p.m.

Introduction of bills.

BRITISH COLUMBIA RAILWAY COMPANY

CONSTRUCTION LOAN AMENDMENT ACT, 1976

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

a bill intituled British Columbia Railway Company Construction Loan Amendment

Act, 1976.

Bill 5 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

BRITISH COLUMBIA HYDRO AND POWER

AUTHORITY

(1964) AMENDMENT ACT, 1976

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

a bill intituled British Columbia Hydro and Power Authority

(1964) Amendment

Act, 1976.

Bill 6 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

SPECIAL FUNDS REVENUE

RECOVERY ACT, 1976

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

a bill intituled Special Funds Revenue Recovery Act, 1976.

Bill 7 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

REVENUE AMENDMENT ACT, 1976

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

a bill intituled Revenue Amendment Act, 1976.

Bill 8 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

INCOME TAX AMENDMENT ACT, 1976

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

a bill intituled Income Tax Amendment Act, 1976.

Bill 9 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

CIGARETTE AND TOBACCO TAX

AMENDMENT ACT, 1976

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

a bill intituled Cigarette and Tobacco Tax Amendment Act, 1976.

Bill 12 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

SOCIAL SERVICES TAX AMENDMENT ACT, 1976

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

a bill intituled Social Services Tax Amendment Act, 1976.

Bill 11 introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House

after today.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 4:27 p.m.

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