1985 Legislative Session: 3rd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 4, 1985

Afternoon Sitting

[ Page

6421 ]

CONTENTS

Lottery Corporation Act (Bill 43). Hon. Mr. Chabot

Introduction and first reading –– 6421

Oral Questions

Expo salaries and expense accounts. Mr. Macdonald –– 6421

Mr. Lauk

Expo 86. Mr. MacWilliam –– 6422

Sewage dumpage. Mr. Lauk –– 6422

School district takeovers. Mr. Rose –– 6423

Hazardous chemicals. Mr. Hanson –– 6423

Tabling Documents –– 6423

Resolution 58. Hon. Mr. Gardom –– 6423

Mr. Howard

Committee of Supply: Ministry of Finance estimates. (Hon. Mr. Curtis)

On vote 30: minister's office –– 6423

Ms. Sanford

Mr. Blencoe

Mr. Rose

Mr. Davis

Mr. Passarell

Mr. Nicolson

Mr. MacWilliam

Mr. Michael

Mr. D'Arcy

Mr. Cocke

Mr. Williams

Mr. Stupich

On vote 33: compensation stabilization program –– 6443

Mr. Cocke

Mr. Rose

Travel Agents Amendment Act, 1985 (Bill 36). Second reading

Hon. Mr. Hewitt –– 6444

Mr. Lauk –– 6444

Hon. Mr. Hewitt –– 6445

Forest Amendment Act, 1985 (Bill 3). Second reading

Hon. Mr. Waterland –– 6445

Mr. Howard –– 6446

The House met at 2:05 p.m.

HON. MR. NIELSEN: Mr. Speaker, I would ask the members of the

assembly to give a warm welcome today to some 50 odd doctors [laughter]

–– 50-odd; between 50 and 57, I'm not sure of the precise number — from

across the province. More particularly I would like to introduce three

of the executive: Dr. Gerry Karr of Penticton, president of the BCMA,

Dr. John O'Brien-Bell of Surrey, who is president elect, and Dr. Gerry

Stewart of Kelowna, the immediate past-president of the BCMA.

MR. COCKE: Mr. Speaker, on behalf of the opposition I would

like to first apologize to the doctors. We also welcome the doctors and

will be looking forward to meeting them this evening and enjoying

conversations that no doubt will ensue.

HON. A. FRASER: Mr. Speaker, I just want to single out one of

the doctors, and he's not the odd type. I would like to introduce Dr.

John Maile, my own personal doctor from my home town of Quesnel.

MR. VEITCH: Mr. Speaker, in your gallery is one doctor who

most assuredly is not odd, my very good friend, neighbour and personal

physician, Dr. Jim Grant.

Mr. Speaker, also somewhere in the galleries this afternoon is the

regional director for the British Columbia Social Credit Party for

region No. 3, Mr. George Little. I'd like this House to bid him

welcome.

Introduction of Bills

LOTTERY CORPORATION ACT

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

a bill intituled Lottery Corporation Act.

HON. MR. CHABOT: Speaking very briefly on the bill, Mr.

Speaker, I just want to say that the bill has become necessary since

the breakaway from the Western Canada Lottery Foundation and the

establishment of the B.C. Lottery Corporation in British Columbia. The

bill provides for the management of the Lottery Corporation in

Kamloops. I might say that it's exceedingly successful and operating

very well. The bill also makes provisions for a board of directors.

This legislation will ensure that we have an orderly, well managed,

successful lottery corporation in British Columbia.

Bill 43 introduced, read a first time and ordered to be placed on

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

after today.

Oral Questions

EXPO SALARIES AND EXPENSE ACCOUNTS

MR. MACDONALD: To the Minister of Tourism, about Expo, the chairman

of Expo has criticized the president of Expo in relation to the purchase of

the Mercedes car. Has the minister decided to review the spending policies and

the expense accounts of the Expo board?

HON. MR. RICHMOND: Mr. Speaker, I think the member erred

slightly in his question when he talked about the expense accounts and

the spending habits of the Expo board. I think what he really meant was

the spending habits of the president of the corporation. I make it

quite clear that that is a matter for the board and for the chairman to

deal with. I'm pleased to say that the chairman of the board dealt with

that particular matter something like a year and a half ago.

MR. MACDONALD: I take it from the minister's reply that,

notwithstanding that this case has come to light, he's not interested

in whether there may be other similar cases and is not prepared to

conduct a review.

Is he prepared to make public the salaries and the expense arrangements of the directors of Expo? That's public money.

HON. MR. RICHMOND: I can make them public to the member right

now, Mr. Speaker. The salary of the directors of Expo is nil, and the

salary of the chairman of the board is $1 per year.

MR. MACDONALD: I asked the minister for the salaries of the

senior officers and directors of Expo. That should be public

information. I didn't ask for two cases. Will the minister table that

information?

HON. MR. RICHMOND: Mr. Speaker, the salaries of the board of

any Crown corporation are, I think, privy to that corporation until

such time as the annual reports are published. At that time they will

be public information.

MR. MACDONALD: Again we strike out. The salaries are to be hidden from those who pay them — par for the course.

In view of the awarding of the guide-book contract — which ran into

about $5 million — can the minister assure the House that there have

been no other contracts or financial arrangements between the chairman

of Expo and Expo Corporation?

HON. MR. RICHMOND: The contract in question was carefully

reviewed, not only by the board of Expo but by retired Justice Fawcus

of the province of British Columbia, who has written some very detailed

conflict-of-interest guidelines for the members of the board of Expo.

All the parameters passed Justice Fawcus's close examination. On that

basis I can assure the member that there is no other financial

connection between the chairman of the board and Expo 86 Corporation.

MR. MACDONALD: Mr. Fawcus also rejected a consulting contract

because one member of the management of Expo had shares in the company.

He turned it down and said: "You can't do that." Is the minister saying

there are no other financial arrangements or contracts between the

chairman of Expo and Expo Corporation? Is that your assurance to this

House? I'm not talking about the guide-book. Is there anything else —

any other contracts?

HON. MR. RICHMOND: I thought I made it very clear that any matter that has to do with a contractual arrangement

[ Page 6422 ]

between any member of the board and the Expo 86

Corporation is closely scrutinized by Justice Fawcus. To the best of my

knowledge there is no other financial connection between the chairman

of the board and the Expo 86 Corporation.

MR. LAUK: Supplementary to the minister. Is Mr. Fawcus receiving a salary from Expo or from government for this service he's providing?

HON. MR. RICHMOND: To the best of my knowledge, Mr. Speaker,

ex-Justice Fawcus is retained by the corporation. As to any exact

stipend or amount, I would have to take that as notice and bring the

information back to the House.

EXPO 86

MR. MacWILLIAM: A question to the Minister of Tourism.

Recently the ministry sponsored a $500,000 Expo extravaganza where

media people from about the world were given an all-expenses-paid

invite to the international preview to the fair. In reviewing a dozen

national papers for the weeks following the media event, only two small

articles appeared, one in the New York Times buried on page six and another in the Globe and Mail .

Does the minister consider such poor coverage a justifiable expenditure

of $500,000 of taxpayers' funds for this international media event?

[2:15]

HON. MR. RICHMOND: Yes, Mr. Speaker, the amount referred to

by the member is a part of the Expo 86 Corporation's marketing budget,

and it was considered by the marketing people to be a wise investment.

The feedback that we are getting from the international press, both on

the travel side and the regular media, is great, including the

electronic media. We feet that the investment was well worth it. The

international press that were here were very impressed with the calibre

of what they saw.

MR. MacWILLIAM: As the minister well knows, the proof of the

pudding is in the eating, and two papers out of a dozen international

papers covering it is not what I would consider adequate.

In light of the media extravaganza, will the minister explain why

Expo has not provided adequate marketing information to critical market

areas, such as California?

HON. MR. RICHMOND: Mr. Speaker, we have people, both as

advisers and on staff, who are very much aware of where the crucial

markets for Expo are. They are very much aware that California is a key

market to Expo and have retained people who know that market very well.

The marketing plans are in place and are underway for marketing that

area. I should add that of the international media that came to the

opening of the Expo centre, we received extensive coverage on the

Seattle television networks, which is part of our core market for Expo

MR. MacWILLIAM: It was recently reported that when contacted, a dozen

travel agents in the Los Angeles area were unaware of Expo and had no information

available for their clientele. In view of the importance of the non-resident

visitors to the fair, and maximizing the non-resident tourist input, will the

minister explain why he has not provided this information to travel agents in

critical market areas such as California?

HON. MR. RICHMOND: I don't know who the member is talking to,

but we have a resident marketing director in Los Angeles who has been

in contact with the travel trade in that city for well over a year,

attending trade shows and travel shows, and spreading the news about

Expo. So I suggest that maybe the member is talking about the wrong 12

travel agents.

I would also like to report that I myself made a trip to San

Francisco and Los Angeles earlier this spring. We received extensive

coverage and will be receiving more in both the San Francisco and Los

Angeles newspapers travel supplements. I was very happy to speak with

the executive of the southern California automobile club, which has 3.5

million members; we are going to receive six articles in their monthly

publication between now and Expo 86 –– I provide this information just

by way of showing the member and this Legislature — and the public —

that we are very cognizant of the California market and its importance,

and are putting a specific advertising thrust and effort into that

state.

SEWAGE DUMPAGE

MR. LAUK: To the Minister of Environment. I'm sure the

minister has been advised that the Department of Highways intends to

sever a sewage main in the course of constructing the Annacis Island

Bridge, causing an estimated 40 million litres of sewage to be dumped

into the Fraser River, affecting the beaches in and around the city of

Vancouver and elsewhere. Has the minister been cognizant of this, and

has he or any member of his ministry investigated the danger to health

of people using beaches and other areas affected by such a sewage

dumpage?

HON. MR. PELTON: Thank you for the question. I am aware of

the situation, but have not got all the facts at my fingertips.

Therefore I will take this question as notice and report back in detail

to the member as soon as possible.

MR. LAUK: A question to the Minister of Transportation and

Highways. Can the minister inform the House as to what study, if any,

has been conducted by his department with respect to this dumpage of

sewage and whether an alternative procedure that would avoid such a

dumpage has been developed and could be adopted, instead of dumping the

sewage?

HON. A. FRASER: It's my information that our people have

dealt with all the environment agencies including Environment Canada,

and the decision was made to sever this pipe at this time. It would be

the best time to do it, if there is a best time. I can get more details

if you want. In other words, we're only doing what we're directed to do

from Environment Canada and British Columbia Environment to achieve

this.

MR. LAUK: I am instructed by health officials in the city of

Vancouver that they are gravely concerned about the negative aspects of

this dumpage and its effect on beaches, and that it is precisely the

timing of the dumping, plus the amount expected, that is causing them

some concern. Has the minister decided to intervene in this matter with

his colleagues

[ Page 6423 ]

and adopt some procedure that would protect our young people who are using the beaches during the summer?

HON. MR. NEILSEN: No, Mr. Speaker, we have not made a

decision to intervene with my colleagues, but the matter is being

discussed. Should suggestions come forward from health officials, they

will be transmitted to all other players.

MR. LAUK: As the time of such an event to occur is

approaching rapidly, and summer is upon us, can the minister indicate

if he has decided when his department will act, if at all?

HON. MR. NEILSEN: I haven't made that decision, Mr. Speaker, no.

SCHOOL DISTRICT TAKEOVERS

MR. ROSE: A question to the Minister of Education. Has the

minister decided to give his commitment that the takeover of the

Vancouver and Cowichan School Districts will be terminated, at least by

the time of the election of new school trustees in November?

HON. MR. HEINRICH: I don't recall any particular commitment

being given. If the member has any evidence, Mr. Speaker, of such a

commitment, I'd like him to pass it on to me. As far as the elections

are concerned, I believe in Cowichan elections would normally be held

in the fall of 1985, and in Vancouver, I believe, they're in the fall

of 1986, if I'm not mistaken.

MR. ROSE: Mr. Speaker, I'm aware that the minister hasn't

given any commitment; that's what we're asking him to do, to give a

commitment, so that local democracy can once more prevail in British

Columbia.

My supplementary, Mr. Speaker: local citizens in both those

communities are interested in the return of the democratic control of

their local school districts, so they would like to know from the

minister about a firm date for election this fall or earlier if

possible, so that those people who are interested in running for school

board can make their plans to do so.

HON. MR. HEINRICH: Mr. Speaker, I'm not in any position at

this time to give consideration for elections in either the Cowichan or

Vancouver School Districts. In the fullness of time this matter will be

addressed.

HAZARDOUS CHEMICALS

MR. HANSON: Mr. Speaker, a question to the Minister of

Environment. Public concern over the possible health effects of Killex

and other 2, 4-D based pesticides has caused the Vancouver Parks Board

to suspend spraying pending further investigation. In view of this

concern, has the minister decided to impose a temporary provincial ban

on the use of Killex until the studies are complete'?

HON. MR. PELTON: Mr. Speaker, not at this time.

Mr. Speaker tabled special report No. 10 of the ombudsman.

Orders of the Day

HON. MR. GARDOM: Mr. Speaker, I would call Resolution 58

standing in my name on the order paper, seconded by the hon. member for

Skeena (Mr. Howard), and I would like to read the resolution into the

record: "That this House hereby appoints Richard Allan Nicol as

Sergeant-at-Arms of the Legislative Assembly of British Columbia,

pursuant to

section 44 of the Constitution Act."

I would like to say a few words about the senior official of our

assembly and the keeper of the royal mace. Mr. Nicol was born in

Alberta in October 1924, which was a very good year. He came to B.C. in

1941 and enlisted in the Royal Canadian Air Force in 1942. He flew with

the RCAF bomber command as a bomb-aimer until the end of hostilities in

1945, and completed some 16 operations. He was discharged from the

force in 1945 and re-enlisted in 1949, again with the RCAF. He served

in air defence command in Canada and in the United States and retired

with the rank of major in 1974. It was then our good fortune, Mr.

Speaker, that he became a member of our Sergeant-at-Arms staff.

I'd like to say, Mr. Speaker, how pleased I am to move this

resolution, and how fortunate we all are in the Legislative Assembly of

this province to have a man of Mr. Nicol's stature and dedication to

perform the historic and day-by-day tasks attendant on his

responsibility. I move the resolution.

MR. HOWARD: The Sergeant-at-Arms is one of the most treasured

officers of the House. I think I would tend to say that that is so even

above the Clerks-at-the-Table — with due respect to them — because the

Sergeant-at-Arms is ever-present everywhere, and assists members in all

of their activities throughout the chamber. We're pleased to endorse

the motion.

I would say, just as an aside, that I would be very happy to second

a motion with respect to the ombudsman, when that event comes about.

HON. MR. GARDOM: Mr. Speaker, joining us today on this

historic occasion is Mr. Nicol's wife Jean. I'm sure all members would

like to pay her a very cordial and pleasant welcome to the assembly.

Motion approved.

HON. MR. GARDOM: Committee of Supply, Mr. Speaker.

The House in Committee of Supply; Mr. Strachan in the chair.

ESTIMATES: MINISTRY OF FINANCE

(continued)

On vote 30: minister's office, $189,239.

MS. SANFORD: I have just one brief question to the minister.

I certainly won't take much time under these estimates. I know the

minister is bombarded with questions about removal of sales tax from

various items, but I wanted to raise one particular issue, with the

request that the minister follow up on this, in view of the

particularly difficult time that the farmers of the province are having.

[ Page 6424 ]

I've been informed that because there is no updating done of the

various items that the sales tax applies to, if you, for instance,

purchase a mechanical feeder for feeding animals on the farm, it is not

subject to sales tax; but if you purchase one of the new computerized

feeders, that is subject to sales tax, simply because the updating

hasn't been done within the Ministry of Finance — as these exemptions

apply to various commodities and various products. Apparently there are

a number of new machinery items used on the farm being introduced on an

almost daily basis, and because the Ministry of Finance does not keep

up with them, they are not given the exemption. That's one particular

example. I would like the minister to give me an assurance that he will

investigate, that he will follow up and do an analysis of the types of

machinery made available, so that proper exemptions can be given to

farmers, who are already facing a very difficult financial time.

[2:30]

HON. MR. CURTIS: Mr. Chairman, as the member will know, the

list under agriculture alone is very extensive. It was extensive under

her government; it has been extensive since sales tax was introduced in

1948. We keep an up-to-date list, and each time a request comes in, or

a complaint or a concern.... As an example, one which was achieved in

the budget this year was glass milk bottles, although that's not

agriculture as such. It is such a very large list that inevitably we

are going to miss a few. We gather the list — as we did this year; we

do each year — and we try to decide if there's some theme or pattern. I

know there are some analogies, and there are some contradictions and

exceptions which make very little sense. I think one needs the patience

of Job — an old expression — to really try to get a list that is

complete and yet still ensures that certain items that are perhaps used

in an ancillary fashion by agriculture are taxable. That's the problem.

That may not be the precise answer the member seeks. Do we still have

turkey saddles on the list? I'm not sure. I had to see one one day,

because I didn't believe we still exempted turkey saddles.

It is a list of hundreds of items. Madam Member, if you wish to

speak to me about a specific one, two or three.... I think I've

demonstrated to the Legislature, Mr. Chairman.... We had people talk

about the glass milk bottles, and I guess there were some who thought

we would never respond. Well, we did. So I undertake to sit with the

member at any point and review the list with her.

MR. BLENCOE: Being the MLA for Victoria, Mr. Chairman, one

often gets many businesses in this community that do business with the

provincial government, and they're very pleased to do so. One thing

that constantly crops up or is mentioned to me in passing — hopefully

it's improved, and I want to ask the minister about this — is sometimes

the tardiness of government paying its bills. I don't want to get into

any controversy over this, but a number of times business people note

to me that they are expected to pay their bills, sales tax, Hydro bills

or whatever within 30 days or penalties are added, and they often note

that government sometimes goes beyond the 30 days in terms of paying

its bills. I don't want to get into particular businesses or names, but

I would like to hear the minister.... I think there have been some

improvements, but I still meet people on the street who say: "I wish

the government would pay my bill. I've got a cash-flow problem and I'm

still waiting." I'm wondering if the minister has a policy in place

that categorically states that the government, unless for exceptional

reasons, will pay accounts owing to the business community within 30

days.

HON. MR. CURTIS: For too many years in British Columbia, in

my view, interest was not paid on overdue accounts. We corrected that

three or four years ago. Now interest is paid 60 days after the invoice

is received. One can argue that it should be 30 days, but it is 60 days

after the invoice is actually received. In the event that any member or

any business concern finds that that is not occurring, then they need

simply write to the revenue division — the comptroller-general if they

prefer — or, if necessary, write to me or contact my office by a simple

phone call. There are some which aren't caught. I am aware that in a

province as large as British Columbia, with so much being acquired by

government, cash flow can be pretty severe and worrisome. That is why

we took that step. I might also say, I'm informed that most of our

bills are paid within the 60 days.

There were two reasons for introducing the interest applicable to

accounts payable, the first being that I felt it was appropriate that a

supplier of a good or service should receive interest on late payment

by government, and the second and perhaps more important reason being

that that would ensure timeliness on the part of those who process the

bills. I recall that a good number of years ago you could wait six or

eight months for a cheque from the government. You were assured that

some of the most stale accounts on your accounts-receivable list would

Alberta, or whatever province it might be. I hope we've moved along the

road to correcting that, but in the event that there is any glaring

example which any member of the House wishes to bring directly to my

attention, or to a senior official's attention, please do so, and we'll

get onto it right away.

MR. BLENCOE: As Chairman of Public Accounts I am aware of

some of the changes that have happened under these areas. I know the 60

days is in place, but I know that many times it's 30 days in the

private sector. It's a 30-day requirement, and they are having to pay

bills, particularly hydro bills. This morning I'm dealing with a number

of businesses in town who are just being pursued by Hydro. I won't go

into the details. They, of course, come back and say: "We do business

with British Columbia, and sometimes we wait 60 days, sometimes more."

I'm just thinking that maybe we have somewhat of a double standard. I

would like to see the government's policy towards paying bills follow

the same kinds of rules that apply in the private sector. I think it

would be a good one, particularly in these days of cash-flow problems.

I'll leave that. Maybe the minister will want to comment on that,

One more item, Mr. Chairman, that may have been raised before, but

it's something that came to my attention at Christmastime, and that is

sales tax. I know the government is strapped for revenue, but it came

to my attention that certain letters or edicts or whatever went out

broadly in British Columbia saying that sales tax was going to be due

on every single thing.

One of the things that came to my attention was that boy scouts and

girl guides were collecting money for charity by selling Christmas

trees, and they were told that they were going to be checked up on, and

all sales tax was going to be due. It created a bit of a furor,

particularly at Christmastime,

[ Page

6425 ]

that the government would be — how will I put it —

so harsh. I recognize that you have to have regulations, but I'm

wondering if the minister is reviewing that kind of edict in terms of

charities that are doing good work. When they're trying to sell

Christmas trees, they're being told that they have to account for every

single bit of sales tax. Again, I recognize the minister's in a bit of

a difficult position, but there has to be some flexibility there. I

know it did create consternation at the time, and I think it entrenched

comments.

HON. MR. CURTIS: My silence with respect to the 30 days on

overdue accounts should not indicate my indifference. We'll look at

that, but I'm inclined to the view that we will probably stick to 60

days but still seek timely payment under the 60 days. That, after all,

is more important. Getting the interest when the account is somewhat

overdue is not as good as having the cheque go out very quickly.

Christmas trees. I read my mail and spoke to people on the telephone

who were frustrated. It is correct that sales tax is charged. We heard

from some boy scouts organizations. So did a lot of people. I think it

was also in the press. First of all, it's seen as a hard-hearted,

callous, governmental taxman decision. It isn't that, in effect. We've

got two or three types of persons selling Christmas trees. As an

example, we've got a lot of retail, commercial, profit-making

organizations selling Christmas trees. The member nods his concurrence.

I'm not about to exempt Christmas trees sold by K-Mart or by XYZ

company, or whatever, from sales tax. How do we break that out? I might

also say, parenthetically, that it is not true that I'm contemplating

taxing items sold at garage sales or yard sales under any

circumstances. But that, Mr. Member, is one that we're going to have to

look at between now and the end of October, to try to rationalize it in

some way. I have discussed it within the ministry. I don't have the

answer at this particular point in the year, but we do have to work on

it. I'm not certain just how it will finally resolve itself.

MR. ROSE: I'm not extremely well prepared, but I know that

the minister is aware that I'm interested in the EPF and the fact that

somehow these block fundings, despite their increase, somehow don't end

up where they were originally intended. I made the point last year that

there was some $27 million extra that came out of the feds. Originally,

pre-1976, those funds would have been destined for and would have

arrived at the universities. Another $100 million extra came last year

for hospital funding. We have, at the same time, a diminution of

hospital budgets and university budgets by about $27 million,

concurrently with the increases from the feds, which seemed a bit

contradictory, especially when we added an 8 percent health tax at the

same time.

I know that the Minister of Finance, under the block funding agreement — I

believe it was 1976 — has a perfect right to do whatever he does with the funds

that come from the feds. It's no longer a dollar for a dollar or accountable.

Perhaps it should be. I think that there were motivating forces on both the

federal and the provincial governments to move from dollar-for-dollar funding

to block funding. The block funding, of course, was appealing to the provinces,

because they felt that they could take the money that was originally — if you

use the argument of the Minister of Universities, Science and Communications

— really only B.C. money coming home, and therefore the feds have no right to

dictate what we do with that money. That's a pretty substantial argument,

and that was the appeal of the provinces. They didn't have to spend it on

welfare or health care or education if they had other provincial priorities

such as megaprojects, Expo — whatever happens to be a provincial priority. On

the federal government side, they were alarmed at the increasing use of cheap

dollars, especially during the affluent years, by the provinces, because the

provinces had no obligation or were not really worried about spending what they

regarded as 50-cent dollars. So it was a mutually agreeable thing: on the feds'

part, capping the budgets; on the provinces' part, spending the money on

their own priorities.

[2:45]

That, to my knowledge, is the background of it. But we've seen now

that in the health field, the new Canada Health Act indicates that if

there is extra billing or user fees of any kind, all bets are off.

Those funds can be held back for at least three years to the extent

that the extra charges are levied provincially. In education we've seen

a similar thing happen, to the point where access to universities and,

for that matter, colleges.... Even half the grade 12 high school

classes are being paid for by these EPF funds, or at least in theory

they would have been pre-1976. The secretary of state who administers

EPF funds for university is becoming alarmed about this, and is seeking

to put on it the kind of tag or limitation that was implemented in the

Canada Health Act.

I have the auditor-general's report here, and he recommends that the

Secretary of State should consult with the provincial governments on

ways of achieving federal objectives in post-secondary education.

According to Johnson, a former president of the CBC commissioned to

make this study about post-secondary education, B.C. Is probably one of

the worst sinners in terms of taking that money and hiding it off in

other uses, to the point where the feds are probably paying 80 percent

of post-secondary educational costs in the province. Because of fee

hikes, because the money has been diverted and budgets have been cut.

the kids are paying about 16 to 17 percent. So the argument varies on

whether or not the province in the post-secondary educational field,

such as universities, is actually making a profit on B.C. EPF funding.

I know this sounds awfully dull and sometimes complicated, but I

would like to know whether or not, under the recommendations of the

auditor-general, the secretary of state did in fact consult with the

provincial governments on ways to achieve federal objectives in

post-secondary education. Has there been a meeting? Is there one

called? Is there one contemplated?

HON. MR. CURTIS: Mr. Chairman, I will try not to stray into

education funding and health funding, but to answer the question in

terms of a federal transfer to the provinces. The specific questions —

if I've missed a couple the member will, I am sure, restate them. I met

with Finance Minister Mike Wilson and my provincial counterparts in

Ottawa a week ago Sunday night, and then a bilateral meeting occurred

last Saturday afternoon, Mr. Wilson and myself in Edmonton. We

discussed EPF on both occasions, among other topics, but certainly it

occupied a good portion of the time at the meeting in Edmonton. The

member might ask why in Edmonton. Well, the federal minister's

schedule

and mine just couldn't put us together in Vancouver or Victoria, and

that was most convenient, therefore, to have a pretty important meeting.

[ Page 6426 ]

Our officials will start discussions on EPF transfers, the

renegotiation of the next five-year period. Those meetings are to

commence this month. That's at the officials level this week. The

federal minister has indicated that the first series of meetings of

ministers will occur in September. I'm sure he'll be offering those

dates pretty soon. The present five years does not expire until 1987,

and I'm relieved that we'll start talking about it just after the

middle of 1985. So we've got some good long time to work it out.

The member and the committee will know that this established

programs financing was negotiated between the federal government and

the provinces in 1976. Starting in fiscal 1977-78, the new arrangement

replaced cost-sharing. I must say again — I think I've said it in this

session — that some of the rhetoric and some of the smoke and mirrors

that are used, not in this chamber but by some people who play politics

with EPF is really shameful. I single out one individual who should

know better, and that's the leader of the Liberal party of Canada, who

keeps coming to British Columbia, as an example, and spouting pure

garbage — absolute garbage — with respect to EPF He singles out British

Columbia, but not exclusively. He doesn't have the decency to reply.

I've written to him three times giving him lengthy, detailed

information on EPF arrangements as we see them, and he doesn't even

bother to have his office acknowledge receipt of those letters. I'm

going to keep those letters up — just keep them going — until finally

he has the courtesy of admitting that he's got the letters and that

perhaps he's been misinformed.

One of the best summaries, Mr. Chairman, of the EPF problem....

MR. ROSE: I knew it was coming.

HON. MR. CURTIS: You raised it, Mr. Member; I didn't.

One of the best summaries of the EPF problem, and a fair

condemnation of the Al Johnson report, has been issued under date

of.... I'm sorry, it is an undated letter. My Xerox is undated, but I

think I've had it, shall we say, about four or five weeks. It's quite a

recent letter. If the committee wishes, I'll table it when the

committee rises. It is from the Minister of Finance for Manitoba,

addressed to Michael Wilson, the federal Minister of Finance. It is in

response to a letter dated April 4, 1985.

I'm not going to quote at length from the letter. I think the member

for Coquitlam-Moody (Mr. Rose) may have seen it. But he makes a couple

of points. I disagree with the Manitoba government on many issues, but

not on this one. In part, at the bottom of page 3, it says:

"EPF is a block fund. Federal input through EPF to post-secondary education

cannot be divorced from the share the federal government provides for the total

of health and post-secondary expenditure."

At the top of page 4:

"Phony arithmetic which artificially splits the payments

or redefines and limits the program costs which are being shared through EPF

will not be helpful for our review and discussions on EPF The broadest view

must be taken as we begin our dialogue."

Later on page 4:

"Stability and predictability of funding are major concerns."

Finally:

"We have the Johnson report. We will consider the

information presented. I would recommend that it not become a focal

point or agenda item for our future meetings on EPF arrangements.

Yours sincerely,

Vic Schroeder,

Minister of Finance"

The fact is that all of us at the provincial level in Canada, in my

view, Mr. Chairman, have a problem with smoke and mirrors being played

by some people in Ottawa with respect to EPF. I told this committee

that to the very best of my knowledge, and after exhaustive questioning

and review, no EPF money has been transferred for other than health and

post-secondary education to any other activity in the province of

British Columbia; none during my time holding this portfolio.

There is so much misinformation at large and abroad in this country

today, so much political gamesmanship being played with respect to EPF

money. If the NDP government in Manitoba is as upset as this letter

suggests — and it was practically smoking when it arrived.... My

response to Mr. Wilson, my response to the same letter, was

considerably milder. But we have that federal mind-set which doesn't

help provincial governments of any political stripe. It is a federal

mind-set that is deeply entrenched in the bureaucracy. I think it's

going to take the considered efforts of a lot of provincial politicians

across this country — continued concerted effort to break down the

myths and the misinformation which are being peddled.

Someone such as John Turner is not helping it. I don't blame him

exclusively, but he's been caught up in the same myths, in the same

misinformation, and it's not helping the dialogue between Canada and

her provinces.

MR. CHAIRMAN: Just before recognizing the member, the member

and the minister have shown caution with respect to this program as it

impacts on other ministries, and we will have to have this debate

remain within the responsibilities of the Minister of Finance.

MR. ROSE: Well, the minister said that not a penny — or words

to that effect — had been diverted. It's very difficult to explain.

When federal payments which were originally intended for universities,

or that equivalent percentage, have gone out and university budgets

have gone down and fees have gone up, then something has happened. The

minister suggests that those things shouldn't be split, but I have a

letter from the minister that indicates exactly the opposite of what he

told me. I don't happen to have it here because, as you know, I'm

flying this one by the seat of my pants, because I came in here and

didn't know that I was going to speak immediately. But I have that

letter, and I don't mind giving it to the minister. I'll table that one

in the House, if he likes.

The other thing is that if Mr. Schroeder.... An estimable fellow he

is. He's done very well; he's attracting a lot of people into Manitoba.

Their economy is on a roll, where people are leaving this province in

droves. So I've got a lot of respect for the policies of that

particular minister. I think he's shown the way. He's just done the

Bennett and turned Bennett on his head. In other words, he's done

exactly the opposite as we've done here, so I can approve of some of

his policies.

[ Page

6427 ]

However, it wasn't Mr. Schroeder or anybody else who split the EPF

for education from other parts of EPF. It was Monique Begin who put

accountability provisions into EPF when she was Minister of Health. The

same accountability provisions are being considered or in fact

recommended, not by some radical CCFer or NDPer who hasn't got any

marbles and couldn't run a pushcart, but by people like the

auditor-general of Canada, Ken Dye, who recommends: "The Secretary of

State has no means in place to assess the extent to which program

objectives are being achieved. Efforts are underway to establish a bank

of data on students, programs, educational institutions and courses of

study. This information is essential to the development and evaluation

of policies and programs." There are substantial amounts of federally

originating money going into these programs.

So have there been any meetings taking place between the province

and the feds, Mr. Minister, to establish such data on student programs

and courses of study in our various post-secondary institutions?

Secondly, here's another quote from the same auditor-general's

report: "The department is now considering the possibility of an

agreement with the provinces on a system of accountability for their

use of these funds" — through the Secretary of State. That is — I'm

sorry — a response by the Secretary.

So I want to know what's happening besides these meetings, because

there is obviously a need, a desire and I think almost a requirement

for some kind of accountability, so that people who are facing fee

hikes, terminations at colleges and programs being cut have a reason to

ask why, in view of the fact that increasing amounts of money for these

purposes are being received from the federal government.

[Mr. Ree in the chair.]

HON. MR. CURTIS: Mr. Chairman, the member got carried away

just a little because I read from a letter from Vic Schroeder. I just

want to assure him that people are not leaving British Columbia in

droves. We still have net immigration. That's off the point.

Interjection.

HON. MR. CURTIS: Well, no; not the way they're measured. Not

many of those are in receipt of family allowance, and that's one of the

parameters that we measure.

The member is right. I'm not going to speak in these estimates about

post-secondary education funding levels or health, because we

established that this morning in our discussion, but it was never

intended that these program dollars be split. That

part is for

post-secondary, and this

part is for health — that was never the

intention. I think there would be agreement on both sides of the House

with respect to that. It was a unilateral decision taken, partly by

Monique Begin, partly by Marc Lalonde and partly by others at that

time. It was unilateral, and the provinces howled and rightly so.

Manitoba howled, British Columbia howled; all the provinces were very

upset about that.

[3:00]

So I can't answer the member's questions about specific meetings that

may be occurring with other ministers charged with responsibility for post-secondary

education or for health. But the fact is that if the member makes the point

that post-secondary federal money is diminished somewhat by the time it reaches

the post-secondary education system in British Columbia, then it is because

of the demands made on the other side of the block of EPF, which is health.

That's it, simply, absolutely. It is not being diverted to all the other

things to which we are accused of diverting it.

So Ministries of Finance, with Michael Wilson in the chair — the

officials, as I indicate — will start this week. The Ministers of

Finance meet in September; we'll meet again in December. One

possibility, I think, is that we shall have observers from

post-secondary and health interests provincial — in those meetings.

Interjection.

HON. MR. CURTIS: Cash and tax points, yes.

HON. MR. WATERLAND: Mr. Chairman, might I have leave to make an introduction?

Leave granted.

HON. MR. WATERLAND: Mr. Chairman, joining us today in the

Legislature is a group of grade 7 students. I wonder if the House would

please welcome them and their teachers from Shalalth.

MR. DAVIS: The minister quite rightly has focused on

financial transfers from the federal government to the provinces, and

particularly on the next five-, six-year agreement, identifying the

funds, their amounts and so on. I personally think that the trend is in

the right direction. Increasingly these are — I'd call them block funds

— moneys without strings attached. I think, therefore, that as time

goes by, it will be increasingly difficult for anyone to construct

amounts for particular programs, whether it be post-secondary education

or health or whatever.

The history is interesting. The federal government moved

substantially into areas of provincial jurisdiction. It moved to fund

post-secondary education in a generous way. It moved into health care

to ensure a measure, at least, of universality in health care coverage.

It has moved substantially into the area of social assistance. In each

case it began the program by putting up 50 cents for every 50 cents

that the province put up. It was possible, because of the fifty-fifty

formula. to identify not only the federal contribution but also the

provincial contribution in that area. But as time has passed, the

provinces have — and, I think, quite rightly — insisted that these are

areas, largely if not exclusively, of provincial jurisdiction, and they

have preferred that the moneys be lumped without regard to particular

programs. Meanwhile the federal government, running an increasing

deficit, had financial problems. and endeavoured to cap the programs:

and, beginning in the late 1970s, entered into — I can't call it an

agreement, because most of the provinces really didn't agree — an

arrangement whereby it would make certain amounts available, regardless

of matching or non-matching provincial contributions. So I think the

provinces have had grounds for insisting that the total amount of the

transfer, regardless of whether it's for education or health or social

welfare, is the only sum that should be considered.

The poorer provinces weren't overly enthusiastic, especially in the

early years, with the fifty-fifty arrangement. They often complained

that the wealthy provinces could afford 50 cents, but they had trouble

raising the matching 50

[ Page 6428 ]

cents. So the poorer provinces weren't overjoyed

with the programs in the first instance; the wealthier provinces liked

the fifty-fifty arrangement. Latterly, it has really been the wealthier

provinces who have hankered after a continuation of fifty-fifty.

Essentially, I suppose, from my remarks, I'm siding with the

minister. But I would like him to comment — perhaps he may not wish to;

he mentioned smoke and mirrors and so on.... I well remember his last

budget, not this one, in which he identified what he called the

shortfall in federal moneys coming to health. We had a surtax imposed,

as if that program and the federal contributions could be readily

identified, and exclusively within the one area of health. I think that

was smoke and mirrors. I think we've had a tax change — a surtax

perhaps — in British Columbia which was necessary; but I think we

should have explained it as being the necessary provincial contribution

in an area of provincial responsibility.

I think that as time goes by, it will be healthy if the federal

government, which has the power to shift money from one province to

another and from one area to another, does so increasingly under some

heading — call it equalization; call it what you want — making those

payments to the provinces on a regular and predictable basis, and not

attempting on its own to identify particular end uses, particular

programs, to which these moneys allegedly flow. Those programs are

largely areas of provincial responsibility. It's none of the federal

government's business, in other words. Certainly those early

fifty-fifty agreements appeared to indicate a sharing of

responsibility. I'm glad to see we're moving away from that. And I hope

that when the province has to make financial arrangements to look after

expanding costs of any one of these programs, it does so on its own

initiative and takes on sole responsibility.

HON. MR. CURTIS: Mr. Chairman, a brief response to the member

for North Vancouver–Seymour. I'm sure he has read it, but I'll just

remind him of the material which commences on page 77 of the budget

document for this year. I'll happily send it to him if he doesn't have

it with him in the House. We deal with established programs financing.

On page 79 of the appendices, chart FI shows the federal EPF

contribution as a proportion of total B.C. expenditure on the two

program activities: post-secondary education and health care. It shows

a very significant drop in the period 1981-83, and some improvement to

the start of '85-86. But as I see it from the chart — and I would have

to double-check the numbers — it's less than 50 percent.

Interjection.

HON. MR. CURTIS: The total is less than 50 percent. I make that observation for you.

MR. PASSARELL: Five constituency questions to the minister.

We've talked about the first one for five or six years, and that's the

sales tax. Just to refresh the minister's mind, the sales tax hurts the

community of Atlin because of its proximity to Whitehorse. Individuals

can go across the border into Yukon and not pay a sales tax. The next

closest community to Atlin is 350 miles to the east. There is only one

road into Atlin, which stops in Atlin; it doesn't go any further south;

just where it comes in from the Yukon border. I don't understand why we

can't make an exception for Atlin. When we've talked about this over

the years, the minister has made reference to communities in the

Kootenays, the Columbia River and along the Alberta border: that if he

made an exception for Atlin then he would have to make exceptions for

the communities along the Alberta border. I understand that, but the

fact is that Atlin is so far away from another community in British

Columbia where you could shop that there should be some type of an

exception.

Interjection.

MR. PASSARELL: That's right, and if you could afford the gas to go that far.

There should be some kind of an exception; Atlin is such an isolated

area in the northwestern corner of this province. Local businesses are

hurt because of sales tax; you can drive up to the Yukon, find a larger

variety of items and not pay sales tax. I know the minister doesn't

have it in his hands right now, but I'd like to know how much sales tax

was collected in Atlin last year. Give it to me later. You don't have

to do it today. I'd appreciate that.

The second question: why is there sales tax on gasoline sold on a

reserve? The example I give is at New Aiyansh, where there is a gas

station on the Nishga reserve.

The third item I'd like to discuss is sales tax on building

supplies. It's a difficult situation. If you're improving your home,

going out and buying some kind of building material for your home,

you're paying sales tax on it. What happens is that you improve your

home and then your assessment goes up. You're paying a double tax. I

wonder if there could be some kind of exception on building supplies,

because if the government doesn't get you when you initially buy the

products to improve your home, they're going to get you once you've

finished the work and the improvement puts your assessment up. It's

almost a double tax on individuals forever for improving their home. I

wish the minister would look at that.

I know it's easy to say we should make exceptions for places like

Atlin, which will never happen; but the fact remains that it's in a

public forum and we have to discuss it. Maybe something to give some

money back to the government, and not necessarily from Atlin. A new

sales tax of 50 to 100 percent on pornographic material that's sold in

this province — for instance, on films from Red Hot Video or magazines

that you can buy. Why not put a 100 percent sales tax on pornographic

material? With the increase that you make off the new sales tax on

pornographic material you could take the sales tax off products up in

Atlin, or off building supplies across the province. That's something

that could be looked at. We use sin taxes constantly in this province

on alcohol and cigarettes. Why not look at some major sales tax

increases on pornographic material?

The last question I'd like to direct to the minister is on the

transfer payments which were discussed by the member for North

Vancouver–Seymour (Mr. Davis); the block funding that the federal

government gives to the province, specifically in regard to status

Indians. I hate using the word "status," but federal money comes in for

native children who fall into that category of status and who go to the

public schools. I know the minister won't have those figures at his

disposal at this time, but I would appreciate it if sometime in the

next few weeks, before we adjourn, he could give me how much money the

federal government gives to British Columbia for status children who go

to public schools in the province.

[ Page

6429 ]

Those are five specific questions. I hope the minister can give me answers to some of them.

HON. MR. CURTIS: On a couple of the items, I would commit to

meet with the member and with someone from the revenue division of the

ministry. We could do that before the end of June. I refer specifically

to the gasoline tax, the tax applied to gasoline sold on reserve. I

think I have an answer, but I would want to check that very carefully;

similarly the status Indian question, to use your phrase. So we could

sit down and speak about those. I don't know, and I doubt that we could

provide the answer today, how much sales tax is received from Atlin. We

can extract that information, but it would take a little while.

[3:15]

Sales tax on building supplies, whether in Atlin, in the north, in

the northwest or the northeast. In the course of the tax study last

year, Mr. Chairman, there were relatively few suggestions made in line

with that. There were some, but not a great many. We had more interest

in terms of taxes which were applied to people who were engaged in a

variety of activities to earn a living, whether single or a couple of

people — commercial fishermen, people in the farming and agricultural

communities, people in small business and so on.

Last year's review was by no means a straw vote, but obviously when

we started hearing themes repeated and repeated, we started paying

attention to those as being areas of major concern. I know the question

of sales tax on building supplies federally and provincially has been

around for a long time. It's been talked about a great deal. Unlike a

couple of other jurisdictions, I at least made the conscious decision

this year not to remove the exemption on energy-saving items, which

have been exempt for several years. I think someone in the course of

the study suggested that we should do away with that sort of exemption,

but we looked at it and made the decision that the exemptions were

important and would stay in place.

Pornographic material, I have no comment with respect to significantly higher increase on that.

Interjection.

HON. MR. CURTIS: I don't equate cigarettes, tobacco and

alcohol with some of the pornographic material which apparently is

available. I don't think of those as sin taxes. Whether one likes a

bottle of Scotch or whether one likes a good cigar or whether one is

addicted to cigarettes, I don't consider that to be a sin and therefore

here is government taxing it. But rather, it's pretty big money. The

argument has been made by a number of people in this House over time

that in both instances, of course, as a government you're not making

money. You're actually losing it because of the associated health

problems.

Mr. Member, I commit to a date before the end of June to discuss the other items.

MR. NICOLSON: Mr. Chairman, I'd like the minister to cast his

memory back to the February 20, 1984, budget. Under the budget

highlights it said that it was the first time in 31 years that the

provincial government had been reduced from the previous year. The

press release called this the "breakthrough budget." It said:

"Curtis told the Legislature it is the clearest

evidence to date that the government's restraint program is a success.

The growth in government spending, which many in Canada have considered

irreversible, has been stopped and reversed in British Columbia. He

said: 'In my pre-budget consultations I was advised by some groups not

to limit government spending but to raise taxes in order to finance

more expenditure. To repeat: this government was re-elected last year

on the basis of a pledge to reduce government spending. That pledge is

now being honoured.'"

I'd like to look at that breakthrough budget. What really happened to the breakthrough budget. Mr. Chairman?

MR. CHAIRMAN: Order. please. We are on the estimates of the minister for the year 1985. The budget of 1984 and....

MR. NICOLSON: That's right, and we ask about the actions of the minister over the past year, Mr. Chairman, and that has always been in order.

MR. CHAIRMAN: But we are in the estimates of the ministry for

the year 1985. Basically the budget of 1984 has been approved by this

Legislature.

MR. NICOLSON: But it wasn't spent as it was approved. That's

the point I'd like to make, thank you, Mr. Chairman. So what happened

was, yes, we did approve — as you said, Mr. Chairman — a budget of some

$8.39 billion, but did we actually reduce our expenditures over the

previous year? We actually spent $8.746 billion or 5.7 percent more

than we budgeted, and indeed over the previous year we actually spent

in the previous year $8.274 billion in the fiscal year ending '84. The

point I would like to make here is that the minister said that it was

clear evidence that the government's restraint program was a success.

I'd like to ask the minister this question: since spending did in fact

increase over the actual expenditures of the previous year to the tune

of almost $500 million, does it indicate that the restraint program was

a failure" And I would also like to draw to the House's attention that

since the Minister of Finance has taken over his portfolio, going back

to the point where he took it over, we had a balance — in terms of all

of the surpluses from previous budgets and such and invested in things

like special funds — of $1.961 billion. But the next year we spent

$256.7 million more than we collected in revenue. The year following

that — in '81-82 — we spent $184.0 million more than we collected in

revenue. The year following that almost a billion — $978.2 million —

more was spent than we collected in revenue. In '83-84 we went over $1

billion in terms of what we spent over what we collected in revenue.

This has put us into a negative position.

Back when the minister took over as Minister of Finance, we really

had a cash balance of $1.96 billion. Today, accepting the forecast

expenditures for this year and hoping that the estimates are not, like

last year, overspent by half a billion dollars, we see that we are now,

in terms of cash balance, about $2.32 billion in the red —

whereas we

were in the black. Or put more simply, since this minister has held

office, we have spent $4.287 billion more than we have collected in

revenue.

It's clear that Social Credit isn't working. It is clear that something else has to be done.

[ Page 6430 ]

The member for Atlin (Mr. Passarell) brought up some very reasonable

proposals. We pay a very heavy price for consistency in terms of

application of government policy to different areas of the province.

There's a clear anomaly just mentioned there in Atlin. I'd like to

bring up another fact. In the Kootenay area we are actually closer to

Calgary, and in terms of expenditures and being part of an economic

rather than a political region, we are extremely dependent on Calgary.

I'd like the minister to cast his mind to the marine sales — that is,

the sales of recreational boats in particular. I'm thinking about

Shuswap Lake, Windermere Lake and Jones Boys Marine on Kootenay Lake.

Now these establishments depend on the Calgary market. It doesn't take

very much observation to realize that even though we're almost

equidistant from Calgary and Vancouver, Vancouver is a marine city.

Vancouver has a whole boating industry, but Calgarians have to travel

to find a considerable body of water. They have to go to places like

Shuswap Lake, Kootenay Lake or Lake Windermere. There is a tremendous

potential industry and the potential to do something about our revenue

and expenditure imbalance to add incrementally in a positive way rather

than continuing to have an unneeded loss, I would say, in the economic

activity that could go on in our area.

As the minister knows, if automobiles over a certain price are

purchased by an Alberta resident, there is a rather simple, practical,

sensible process by which the sales tax can be waived. Yet recreational

boats, which could be purchased and assembled in British Columbia,

providing jobs in British Columbia, cannot be sold in the same manner.

I don't understand why. I'm certain that somebody in Salmon Arm,

somebody in Windermere, somebody in Kootenay Lake, somebody must have

appeared before the minister during his hearings and brought up this

question. All right, I'll await the minister's response.

HON. MR. CURTIS: No, I didn't want to interrupt the member,

but if he wants the answer with respect to boats, I'll explain it. We

really tried, and we'll try again. The problem is that with an

automobile, if it's purchased by an Albertan or someone from

Saskatchewan or wherever, the registration is a very much

straightforward, established practice. We had that cumbersome and

unnecessarily complicated procedure previously where you would come

from Calgary to somewhere in your constituency, purchase an automobile

— you live in Alberta, you'd have no intention of living in B.C.; you

like to vacation here or whatever or you have interests, but your home

base is in Calgary — and you'd go back and you'd have to apply for a

refund for the sales tax. Well, we fixed that in this budget, as the

member would know. So we've put the onus and the honour system in place

at the dealership level to say you are a resident of Alberta or

Manitoba or Ontario or whatever, and therefore there is no sales tax.

But recreational boats are not registered, and so I recall very

clearly that there were a number of presentations made in the course of

the tax tour. As I recall, however, the representative of the Jones

Boys marina was a little late getting to one meeting and missed me at

another one, but that was not conscious on his part or on mine; it just

didn't work out. It was one of the few we missed, in terms of

appointments. Bearing in mind that the Minister of Finance is

responsible for the integrity of the tax collection system, you want to

try and make things as easy as you can for people. But if you're

selling a boat on the Shuswap Lake, and you have no registration

system, how do you ensure that indeed the person who has purchased the

boat and is going to become sales tax exempt, or declares for sales tax

exemption, doesn't just live three miles away?

[Mr. Veitch in the chair.]

The alternative — and if you can help us with some further

suggestions, I would welcome them — is abhorrent, and that is to

introduce, for tax purposes, a provincial registry for small boats. I

just don't want to do that. I don't want to be part of more paper, and

so on. So we've got the worst of both worlds. I'm not through with it

yet, but it is not easily resolved. I'd like to respond further to your

more general questions later. But that's the problem with recreational

boats.

[3:30]

MR. NICOLSON: Well, it's my understanding that all boats over

10 horsepower in power — and that's why 9.6 horsepower engines, or

something, are so popular — have to be registered or licensed under a

federal system.

Even failing that, would it not be possible to require the signing

of an affidavit and to fix penalties for signing a false affidavit? Put

the onus, I think, on the purchaser, not on the dealer. Surely, if very

strong penalties are there, and if they are attached to the

affidavit.... Because we're talking about, actually, a

multimillion-dollar industry, when everything is looked at.

As an example of the kind of economic activity that we get from

Alberta as opposed to the United States, on the Memorial Day weekend we

had more visitors from the United States, but they spent less money.

They brought everything with them. On the May weekend, we had fewer

Canadian visitors but they left a lot more money behind. So it really

is that that Alberta market is the one. They don't have many lakes of

size or substance out in Alberta. They have to come into the Kootenays

or into the Shuswap area, and it is an economic opportunity that we're

missing.

So I would suggest that either we do something based on the federal

licensing scheme or we put the onus on the purchaser. Not that we

should make this on small boats; you know, I'm not suggesting that this

be on car-toppers or on boats under 10 horsepower. It could even be,

well, like the automobiles; I think there's some limit of some several

thousands of dollars, and these boats easily run $10,000. On larger

transactions I think it would be possible to do it under an affidavit

system.

[Mr. Strachan in the chair.]

HON. MR. CURTIS: Mr. Chairman, I thank the member for his

comments. As I indicated just before I took my place, we're not

finished on this topic in terms of review within the ministry. We

wrestled with it. We cleared up a lot of anomalies in the course of

that tour, a lot of things. In fact, we asked each other why we were

doing this. Why has this been done? The answer was: because it's always

been done. So we've changed it. But I didn't expect that we would be

able to clear up all of them.

I have a little bit of problem with your comment regarding the cars.

A car is a car is a car in terms of what we now permit the dealer to do

once he identifies the out-of-B.C. residents. The federal registry —

I'm not sure that it's working all that

[ Page 6431 ]

well, and I have a little bit of trouble in terms of the transfer of information of that kind from....

Interjection.

HON. MR. CURTIS: The Alberta registry. Yes, we've heard about that. But I will review it on the basis of your comments this afternoon.

This morning the member for Skeena (Mr. Howard) reviewed some

expenditure and revenue figures earlier in the eighties; the decline in

expenditures for '84-85.... Actually, the member quoted from the 1984

budget, and the Chairman wondered if that was appropriate. Expenditure

in '83-84 was $8,363.9 million; '84-85 was $8,746 million. But that

included the one-time payment to BCR, which has been debated repeatedly

in this chamber. Netting that out, there was a decline year over year

of $47.9 million in expenditure.

You asked if we met the objective of reducing expenditures, and the

answer would be yes. Since you asked me to cast my mind back to the '84

budget, I would just ask the member, Mr. Chairman, to cast his mind

back to the '85 budget presented on March 14. Clearly, if we hadn't

taken the measures in the previous years, we would not have been in a

position to cut taxes in this budget year. That is clearly what was

required as we move into the stages of economic recovery in the

province. If we had maintained the same expenditure level, or increased

it, then we wouldn't have been able to undertake those significant cuts

that are now coming into play, and which will continue for the next two

fiscal years after this one.

MR. MacWILLIAM: Some specific areas of concern with regard to

the area of tourism and stimulating tourist travel throughout the

province. There are some areas that I think the minister has not

necessarily neglected, but maybe hasn't turned his full attention to.

They basically revolve around consumer taxation.

One of the areas of concern — a number of individuals have contacted

me in this regard — is the gasoline tax, particularly since the recent

federal budget has put an inevitable price boost upon our already

inflated costs of gasoline. I refer to the 1984 tourism indicators just

released from the Ministry of Tourism, which show that gasoline sales

for last year have in fact dropped somewhat. It's my fear that with the

federal budget, these gasoline sales will experience a further drop as

a result of the increased costs. If we look at ferry passenger traffic

in the province, we see it's also down significantly in the past year.

What it indicates to me is that domestic travel is tapering off

somewhat as a result of the economic condition, possibly also as a

result of the constantly escalating cost of gasoline. Although there

does seem to be a slight increase in U.S. resident traffic coming in,

one has to remember that the very strong U.S. dollar is perhaps one

reason it has not had the impact on U.S. traffic that it has had on

domestic sales.

In light of Expo 86 coming up, and the amount of travel that will be

necessary throughout the province in order to get people to Expo, both

domestic travel and cross-border traffic, by reducing our consumer

taxes on gasoline I think we would be in a position to encourage even

more tourist travel into the province in that time. I wonder if the

minister will have a look at this and perhaps answer as to why we

haven't taken a look at reducing the taxation on gasoline for the

consumer in the province.

HON. MR. CURTIS: It's up to the committee. I could answer

this one now or, if you want to give me a series, as your colleague

from Atlin did, I can pick them off and respond.

MR. MacWILLIAM: If that is your wish, that's fine with me.

The second one in terms of consumer taxation is regarding the hotel

industry. I might point out to the minister that the B.C. occupancy

rate for 1984, again taking Ministry of Tourism figures for last year

that have just been compiled.... The occupancy rate for hotels

throughout the province is an average of 57 percent. In some areas,

such as the interior, Island areas and the Kootenays, it can be

considerably lower, but on the average there's a 57 percent occupancy

rate. The break-even point is apparently 60 percent; that means that we

are in a pretty tight financial position in terms of our hotel

industry. Many of them are facing imminent bankruptcy. It has increased

slightly since 1983, but the occupancy rate shows that still being

below the break-even point, the industry is facing some pretty tough

times.

One of the ways of alleviating, perhaps, some of the structural

burdens in terms of the hotel accommodation industry may be a review of

the hotel accommodation tax. Once again, this is a consumer tax. I know

there's a lot of discussion in terms of whether tax reductions really

do have that much of an economic impact. But I think that these taxes,

being consumer taxes. would certainly stimulate demand if they were

reduced or possibly eliminated. The reduction or elimination of this

tax, I think. would tend to increase the use of the hotels and motels

throughout the province, and perhaps even increase the stay of the

average non-resident tourist in British Columbia when he does come here.

An alternative to a complete tax exemption of the hotel

accommodation tax, and one that the minister may wish to discuss, is to

provide a tax exemption for all but the more expensive types of

accommodation; in other words — let's take a figure out of the air — a

tax exemption for all rooms under $50, for example. The second

alternative is the wholesale reduction or elimination of hotel

accommodation taxes.

A third area in terms of a focus on the tourism industry is, of

course, the restaurant meal tax. Again it's a consumer-based tax, one

that directly affects the purchasing power of the consumer. I guess

some consider it a regressive form of taxation, in that as soon as the

tax is applied it dampens the demand for that particular service.

Presently the restaurant industry, although it's not in quite the

financial position of the hotel accommodation industry, I think, is

experiencing some difficulty in terms of the reduced demand, in light

of the economic situation. I had earlier suggested two alternatives:

one is the complete elimination of or the wholesale reduction in the

level of tax; secondly, a tax exemption for meals — again taking an

arbitrary figure — under $10, that tax to be apportioned to that part

of the meal exceeding $10. Those are alternative proposals. I think any

movement in that direction would certainly stimulate demand in terms of

that sector of the tourism industry. Perhaps the minister can reflect

on those possibilities.

The last one I wanted to bring up is not in terms of the tourism

industry but in terms of a social service tax for charitable

organizations. I was made aware of this problem

[ Page 6432 ]

from a charitable organization in my community — a

Lions Club that does a lot of fund-raising for a number of worthwhile

community causes. They have a great deal of concern with regard to the

imposition of taxes on some of the fundraising activities they do.

There are some activities that are exempt from taxation, but some of

them they have to pay the full social services tax on, for example, the

sale of Christmas trees and light bulbs. If they put on a meal, they

have to pay the full tax on that.

I don't think I need to reiterate, but we have a very tough economic

situation in the province, and as a result of that we have a critical

demand on the charitable dollar in our communities. I think this is

made even more critical in terms of the proliferation of commercial

bingo halls that have come into the province. Although these commercial

halls are generating a lot of profits for some organizations, they have

excluded many of the local charities from the bingo dollar. As a result

of this, some of them are in real tough shape in terms of trying to

continue to provide the charitable service they do for the community.

I wonder if the minister has any thoughts in terms of the wholesale

elimination of the social services tax for the charity fund-raising

functions that many of these community groups put on. Again, some of

the activities are exempt; some of them are not exempt. With those that

are not exempt the ministry is demanding a full payment of the taxes.

Some of these organizations are finding it very difficult to service

the community, when the charity dollar is stretched to such a critical

limit, and at the same time to continue to pay the necessary social

services tax. I think, again, reduction or elimination of tax in this

area may have a very stimulative effect to the services these

organizations provide to the communities.

[3:45]

HON. MR. CURTIS: The first question the member for Okanagan

North touched on was the whole question of tourism; really, a number of

these are tourist-related.

The level of gasoline tax. I'll continue to monitor that, looking at

what's happening in other parts of Canada as well as in the

neighbouring states to the south. The point has been made previously

that gasoline — motive fuel — is expensive in Canada. The province is,

in part, responsible, but then it has been historically. Looking across

the board, though, in Ontario their tax rate as a percent of retail

price is similar to ours. They are 8 percent; they'll probably be

increasing. We are 8.03 percent. Quebec is much higher — 30 percent of

the retail price, 12.9 cents per litre; New Brunswick is higher, 9.4

cents per litre; Nova Scotia, 9.8 cents per litre; P.E.I., 9.8 cents

per litre; Newfoundland, 10.8 cents per litre. The comparison is

difficult for B.C. because of our proximity to Alberta, and the member

will know that. Manitoba is the same as Ontario, 8 cents per litre,

which is just fractionally below ours.

We've also taken steps to reduce it for off-road use and so on,

which will assist there. Clearly it's an important revenue source, but

on the other side it's something which will or will not assist visitor

activity in the province. I monitor it very carefully and am quite

prepared to consider some of the points you've made.

I thought I might have had a chance this morning to mention the

hotel/motel room tax. There's some interesting and very recent

information available with respect to just what's happening out in the

hotel and motel area. The Minister of Tourism (Hon. Mr. Richmond) may

be in a position to expand on it, but our revenues are up quite

significantly. That suggests increased occupancy, and it suggests the

kind of turnaround about which I spoke this morning, which didn't

entirely satisfy the second member for Vancouver East (Mr. Williams).

But if you'd like to make just a note of this — these numbers have not

been published before; they've just come to me, Mr. Member — for the

three months February 1 to April 30, 1984, versus the three months

February to April 1985, hotel room tax receipts are up 14.6 percent.

That's a pretty big jump in anyone's language, I would think, which

suggests that occupancy of our hotel and motel rooms around the

province is increasing. Obviously, we want to see that trend continue.

I know that occupancy levels are of concern, but this February 1 is

certainly not into the visitor period of the year. That's still winter,

and the off-season, as it were. But it's been trending that way, and

I'm very hopeful we shall continue to see it.

Restaurant meals. Mr. Member, we had a lot of suggestions in the

course of the tax tour last fall, including a sort of little travelling

band which followed me around and read the same presentation from the

restaurant association. But when I stepped back there were just a

variety of suggestions that we go right down to a flat tax of say 3

percent on everything to increasing the exemption from $7 to $10, as

you commented just a few moments ago, to leaving it the same, to

dropping it down perhaps to a threshold level of $2 or $3. I decided to

leave it where it was.

Again, looking in our market area, if you will, that's not out of

line, with the exception of Alberta and Saskatchewan. We have 7 percent

on $7, nothing underneath. It's 6 percent in Manitoba. It's 7 percent

in Ontario, and I think, subject to correction, that that is down to

zero; that's even including a cup of coffee or a soft drink or whatever

— 7 percent on anything consumed, even on packaged foods served by

vending machines. I don't want to get into that kind of craziness in

B.C. New Brunswick is 10 percent, just gone to 11 percent, and with the

threshold lowered dramatically to where I understand it's going to

involve a cup of coffee or perhaps something just above that. So you

pay 60 cents for a cup of coffee, and have a doughnut and have 11

percent sales tax added on top of that. In Nova Scotia, 10 percent; 10

percent in Prince Edward Island; and 12 percent in Newfoundland.

So there are as many opinions on restaurant meal tax as there are

persons in this building today. I don't say adamantly that the position

I took initially and confirmed this year is the only right one. But I

don't want to see that threshold lowered below $7. I think that really

interferes with a lot of people who of necessity, at the workplace or

in carrying on their daily business, have to eat something out. There

is an element of choice in terms of when you hit that $7 and up. It's

not going to hit many breakfasts or lunches. It's going to make itself

felt more at the evening meal. That's what I was striving for, and that

really is the way I would hope that we can keep it.

I frankly think that a number of people who visit this beautiful

province are used to paying it in their home jurisdiction, again with

the exceptions, as I say, of Alberta and Saskatchewan.

The sales tax on fund-raising activities. Your colleague the second

member for Victoria (Mr. Blencoe) touched on that earlier this

afternoon. He specifically mentioned Christmas trees. I responded to

him, and I indicated that it's something that I don't like. I don't

have the answer today, but we

[ Page 6433 ]

will be addressing it through the fall, We have to have something in place by the end of October.

That, I trust, addresses most of the concerns raised by that member.

MR. MacWILLIAM: I'm encouraged to hear those recent figures

on the accommodation industry. However, I might point out that those

figures are only a portion of the picture, and that really the figures

for all last year are still under the break-even point. I really do

hope that the trend does continue. I think that is showing an

increasing strength in the market.

However, going back to your comments on the restaurant meal tax, the

$7 limitation and then the taxation on meals above $7, I think probably

the minister has heard a lot of very good arguments in terms of how

awkward that present system is. I'll cite just a random example. If a

couple of people wander in and one person has a meal of $6.40 and

coffee of 60 cents and then orders a piece of pie, that brings it up

slightly over $7. So rather than paying tax for the meal, what often

happens is that the person says: "Oh, well, they had the pie. I had

this and this and this." It's a real hassle for the business itself, in

order to accommodate the manoeuvering that is going on with regard to

this.

I think it probably increases the workload on the staff, and it

certainly will increase the operational costs of the business in terms

of just how that tax is levied. The suggestion I made is having a basic

tax exemption for all meals, say, under $10 and then tax only that

portion above that. Perhaps it would make it a little bit simpler to

accommodate what in reality is a very awkward situation for the people

on the front lines. That is perhaps something that you could consider.

To the social service area — I'm glad to see that you are looking at

some aspects of the area. Above and beyond Christmas trees, there are

many other fund-raising aspects that you didn't address — as to whether

you're considering the elimination of taxes from these activities also.

I think there's confusion within the organizations themselves. For

example, the Lions club approached me in terms of many of their

activities that are exempt and many of them that aren't exempt. They're

confused, but more than the simple confusion is the fact that they feel

it's very unfair. They're trying to provide a service to the community,

and the money they raise goes directly back into such a large variety

of community functions.

Their position is that the 7 percent cut that the government is

taking is really 7 cents on the dollar that isn't going directly back

into the community that that organization services. I guess it's a

philosophical position or question that they're asking. Should that

money be going directly back into the community to service the

programs, or should it be going into provincial revenue? Right now,

it's being tunnelled off and out of the communities. They feel it

should be allowed to go directly back into it.

HON. MR. CURTIS: In terms of the non-profit societies, we're

striving for simplicity and fairness and equity. I have made notes and

the deputy minister has also made notes with respect to this. It isn't

just Christmas trees, you're quite right, but twice today Christmas

trees have been mentioned, and then last December I had quite a few

letters dealing with nothing else but Christmas trees. I undertake to

review it to try to achieve further equity and fairness in the process,

Mr. Member.

MR. MICHAEL: Just a few words on the estimates, Mr. Chairman.

I have some concerns about some of the small nuisance taxes. I think of

forest products companies paying hundreds of thousands of dollars in

taxes in a year in the form of stumpage and property taxes and things

like that. I'm getting complaints that some of the things they get from

government in the way of taxes and assessments are just bare nuisances

— the $10 fees for this, and $15 fees for that, and $25 fees for this.

It costs about $17 or $18, I am told by a controller of a forest

products company, to issue a cheque nowadays. So if he's writing a $10

cheque, it's costing him $17 to send away $10. I would think that when

the ministry receives that $10 cheque, by the time they cash it and

process it and put it through the system, it's probably going to cost

another S15 or $20.

So I would ask the minister to have a look at some of the small

miscellaneous types of taxes to see whether they can't be built into

the overall cost of operations in some other manner, to ease the cost

of processing non-productive work, certainly in the forest industry.

The wealth is made by the workers, by the productivity, by the

ingenuity; it is not made by spending money on nuisance items such as

that.

[4:00]

Another complaint that I'm receiving concerns the tax notices that

people receive for their payment of taxes in July. They're wondering if

there can't be more advance notice given to the recipient of these tax

notices. They receive them 30 days in advance now; they receive them in

early June and they are expected to pay their taxes in early July. If

we just think about that, a lot of people are on holidays, particularly

some of the seniors, at this time of year — they're gone for a period

of time. I'm just wondering if the minister would have a look at the

complexities of either setting the July tax payment back into August or

perhaps getting the tax notices out late May, the early part of May or

even late April.

HON. MR. CURTIS: Mr. Chairman, I appreciate the courtesy of

the member for Shuswap-Revelstoke in letting me just step out for a

moment. As well, I hear what he was saying. The whole process, as I

understand it historically, of collecting property taxes.... It is

really not that many years ago that they were collected by a number of

local governments in September, I think — it was after the harvest.

That was the whole process. You had your revenue from your harvest —

bearing in mind our largely agricultural roots — and then you could pay

your taxes. Gradually it was moved forward. I think you've given me an

option, Mr. Member, to either delay the collection date — the due date

— or advance the date on which the notices are sent out. I must confess

that over time I've felt some frustration with the relatively short

space of time between the receipt of the property tax notice and the

due date. There are a number of weeks, but a number of people do in

fact go away for several weeks. So we can strive, more likely, for the

earlier delivery of the notice, rather than a delay in the due date. I

can't make any commitment, but I know that the property tax people will

be instructed, as a result of these comments, to look at it and to

raise it with me.

MR. D'ARCY: Mr. Chairman, before I get into my remarks, I

just have to say, commenting on the remarks of the member for

Shuswap-Revelstoke (Mr. Michael), that if there are companies out there

in which it costs $17 or $18 to write a cheque, it's not just the

government that has a top-heavy

[ Page 6434 ]

bureaucracy in this province. I never realized when

I was paying my West Kootenay Power and Light bill or B.C. Tel bill

that I was performing a service that costs some people $17 or $18 just

in the process of writing a cheque. I also have to comment that

everybody knows the due date of taxes, and you don't have to have the

notice to pay them to find out how much you owe. I've simply had to

phone up city hall to find out how much I owed, and sent them a cheque.

You don't have to have the notice.

In any event, Mr. Chairman, what I wanted to talk about with the

minister — and these are some of the things which I spoke to the

minister and other members of the commission about when it was

travelling throughout the province.... There is at least one major new

twist to one of the things I want to talk about, and that's the water

tax and its impact on the smelting and refining industry in the West

Kootenays. I'm sure the minister knows this, but for those who are not

aware of it.... Many British Columbians and many people in Canada

believe that there is a smelting and refining interest in the West

Kootenays because of the proximity of various ores. That is simply not

the case. There is a smelting and refining industry there because of

the availability of low-cost hydroelectric power. It's exactly the same

reason that Alcan is in Kitimat. It's not because there's any aluminium

ore there; it's because of low-cost hydro power. When the provincial

government raised water taxes over the last five or six years by,

depending on who you talk to, a factor of 18-22 to 1, it removed most

of the the reason there was for having a nonferrous smelting and

refining industry in southeastern British Columbia.

As I mentioned before, Mr. Chairman, during the estimates of the

Minister of Industry and Small Business Development (Hon. Mr.

McClelland), when we speak of that smelting and refining industry in

southeastern B.C., we're not just talking about the Trail area but also

about the longevity of the Sullivan mine in Kimberley, as well as the

viability of numerous other small mines in British Columbia and the

Northwest Territories. The fact is that for the most

part in our part

of the world, when you find non-ferrous ores, those ores have lead in

them; and lead modernization in Trail is a key to the continuation of

this industry — not just the smelting industry but also the mining

industry, and, quite frankly, a good part of the railroad industry in

the southeastern part of the province.

[Mr. Ree in the chair.]

Sinclair Stevens recently announced that the federal government was

not going to provide a grant to Cominco unless there was a significant

provincial component. He also announced that they wanted a review of

the provincial water tax and its effect on that particular industry.

That's a new twist, Mr. Chairman, and I would hope that the minister

and his Treasury Board colleagues would have a significant look at that

most regressive of all taxes and its effect on industry in British

Columbia. It's a regressive tax not just on consumers in British

Columbia in the sense of the retail sector, but it's a regressive tax

because of its effect on industrial and commercial operations in the

province of B.C. And now it would appear to have a significant effect

on the longevity of lead smelting and refining in the Trail area.

I want to reiterate to this committee, as I did during the previous

estimates, that there is now a new large deposit being developed in

Alaska which is significant in that because of the nature of the ore

and the nature of modern technology the lead can be gotten out at the

mine site and becomes only so much more waste rock. Once again this

significantly hastens the non-viability of lead smelting and refining

not just in the Trail area; it shortens the expected life span of the

Sullivan mine in Kimberley. I hope the minister is going to have a very

good review of that.

[Mr. Veitch in the chair.]

Another point I want to raise with the minister is the issue of fair

taxation of B.C. Hydro and Power Authority generating and storage

facilities. In the late 1970s the government the minister represents

began to pay fair taxes on all government properties throughout the

province, but for some reason Hydro was left alone. I would point out

that B.C. Hydro on Vancouver Island, by and large, and in all the

hydroelectric plants surrounding the lower mainland — in the Fraser

Valley — and those, for the most part, in the Bridge River-Lillooet

area, as well as in all office buildings, installations and

substations, pays full municipal taxes, or grants in lieu thereof but

equivalent to the amount. I'm sure it's not lost on the minister that

where these facilities are located in nonmunicipal areas, the

significant revenue is directly to the provincial government and not to

local government. However, in the West Kootenay — and, significantly,

two major projects in my own riding — B.C. Hydro either pays no taxes

whatsoever or pays only school taxes.

This is true not only in my riding; it's true on hydroelectric

projects in Shuswap- Revelstoke, in Okanagan North, in Nelson-Creston

and on the projects in the Peace River. This is simply not fair. It is

not fair that the Crown corporation should pay full taxes in some areas

of the province, partial taxes in others and none at all in other

areas. It's totally inconsistent. I would hope the minister, who has

authority in this regard to send Hydro taxation bills, will take steps

to do this. We are not talking about a large amount of B.C. Hydro's

costs of operation — less than 1 percent, in fact — to erase this

anomaly; we are talking about a significant source of revenue to

regional district government in my area as well as a significant source

of revenue to the city of Castlegar. Every dollar Hydro does not pay is

a dollar that must be raised from other sources, and I'm sure that's

not lost on the minister either.

I want to quickly go over my earlier request that improvements on

recreational land be exempted from taxation assessment for the first

$10,000 of value. I want to emphasize that I'm not talking about land

values here — only the improvements. This would not be a significant

change for the person who owns a $150,000 condominium at Whistler,

because they'd still be paying taxes on $140,000 of the improvements

and full taxes on the land, but it would be a significant improvement

for those people all around the province who have very minor, very

rustic improvements on recreational land — perhaps an old camper

trailer permanently moored in one spot, not to be moved. In many cases

these very minor improvements are owned by senior citizens and people

who have very low personal income. We're not talking about a

significant change for people who have well-to-do summer homes. We're

talking about something that must cost the government a whole lot of

money to collect and produces very little revenue.

[ Page 6435 ]

1 make a strong plea that the first $10,000 of improvements — only

improvements — on recreational lands should be exempt; that would apply

whether the land was leased or owned fee-simple or whatever. As I've

told the minister before, the definition would be one which would be

made under guidelines laid down by his ministry. enforced, as with

other assessment regulations, through the assessment authority, and

subject to appeal to courts of revision, as with other assessment

regulations.

I want to talk, briefly, about gasoline taxes and taxes on

restaurant meals and hotels. I've long felt that the most significant

source of tourist revenue to British Columbia is keeping British

Columbians at home. One of the reasons British Columbians leave is that

very often rates are lower in other jurisdictions. In any event, I'm

more concerned about the costs of being in British Columbia to British

Columbians than I am about the costs to tourists who might come here.

I'm not opposed to tourism at all. We hear a great deal about what we

should be doing for tourists and very little about what we should be

doing for British Columbians, who are paying the bills year-round.

The minister mentioned that in terms of gasoline taxes, our

proximity to Alberta.... I would suggest to the minister that it's not

the length of the border with Alberta that's significant in terms of an

obvious difference in gasoline costs or motive fuel costs. Most British

Columbians are not in a position to make a quickie trip to Coleman or

Calgary or Peace River or Fairview, Alberta, or wherever. But there are

an awful lot of British Columbians that are in a position to make a

quickie trip to Washington state, northern Idaho or northwestern

Montana; that's where the significant difference is. That significant

difference is not because base petroleum prices are different in those

jurisdictions to the south of us, but rather simply because both

provincial and federal taxes in British Columbia are higher than

federal and state taxes in those three jurisdictions to the south of us.

Yes, I would agree with the minister that there is a significant

increase in the occupancy rate in the hotel and motel industry

throughout the province. That's not going to continue throughout the

summer, however, simply because the room rates are basically 100

percent occupancy anyway. Let's hope it does continue in the fall,

though, when we do get into those shoulder months.

I want to make a further plea, that when considering exemptions from

the provincial sales tax, one thing that should be seriously considered

is an exemption involving necessities of household hard goods. I'm not

talking about optional things. Surely, Mr. Chairman, we have to

consider the fact that basic household supplies such as detergents,

personal hygiene equipment and paper goods are essential. These are

items which the poor with large families must buy in fairly large

quantities, and the sales tax applying to these things is clearly

regressive. I think those items should be made exempt.

The minister, with his list of exemptions from the sales tax — and

with previous ministers — in many respects made the sales tax a good

deal less regressive that it otherwise originally was. In spite of what

the minister says in terms of some submissions, I don't think there are

too many people who would argue with that: that the sales tax is by

nature officially regressive but can be made different by a sympathetic

and understanding list of exemptions. I think that basic household hard

goods should be added to that list.

[4:15]

Those are all my remarks right now, Mr. Chairman. The most important

thing, though, just before I sit down, is that I think it's very

important that the water tax in British Columbia, particularly as it

applies to mining and smelting in southeastern B.C. be reduced. Ottawa

has made this a condition of assistance. I don't believe there is any

way that the existing operation will be modernized. I don't believe

there is any way that the existing operation will continue to run for

very much longer unless it is modernized. Ottawa has made it quite

clear that they are not going to participate without a provincial

component, and part of that provincial component, they are saying at

this point, must be a water-tax reduction. I would like to hear what

the minister has to say on that.

HON. MR. CURTIS: The member for Rossland-Trail has covered a

number of items, but he restated his major concern. I don't want to

appear to be engaging in semantics here: it is not a water tax. That,

Mr. Member, is currently something being considered elsewhere. It is a

water rental; it is a fee for using water for a particular purpose;

it's a rental fee for usage.

The information that I've received from Cominco, with the freezing

of the water rental fee for five years, is a little more optimistic

than the member has suggested. Of course, as the member knows, the

assistance provided for lead modernization in Trail is being analyzed

by Cominco. Also, they seem to be particularly pleased with the

machinery and equipment moves, to get down to zero on new M&D. The

city of Trail has agreed to the partnership proposals advanced by my

colleague the Minister of Municipal Affairs (Hon. Mr. Ritchie). Then we

also have reduced the property tax rate for industrial/commercial,

getting down to the 2 to I ratio from the 3 to 4 that exists now.

I will continue to review this summer and fall not just the case of

something such as Cominco but the total tax burden on business and

industry in B.C. I may not do it quite as extensively as last year, but

clearly we have to continue to watch that whole area very carefully and

to determine if we are inhibiting or impeding the economic renewal that

is underway; that was the whole reason for last year's discussion paper

and then the tax tour.

I note, Mr. Chairman, that the member for Rossland-Trail was one of

two members of the other side, the opposition, who took the time to

come to the meetings and make their presentations and offer views. A

number did from this side of the chamber, but it was good to see that

member in Castlegar in a very crowded room, as I recall, making his

observations and his suggestions.

We're continuing to press on the question of Hydro paying taxes on

its generating facilities and ancillary installations. I have no

information for the committee today, but it's very much a current

topic, no pun intended — a topic still before us in terms of our review.

I have to confess that the improvements on recreational land with a

$10,000 level.... I think that one may have been dropped in the course

of reviewing so many suggestions. I don't have that information today,

Mr. Member, but I will look at that. I can't honestly tell the

committee what happened to that. We had it as a reviewable item, but

there were so many by the time we had all the briefs. If I can possibly

check back in my notes and seek the recollection of others, it's

something that you may find in next year's budget, if it is found to be

appropriate.

[ Page 6436 ]

You, along with two or three other members today, have spoken about

gasoline tax and restaurant meal tax, and I hear what you say with

respect to B.C. residents.

The sales tax exemptions, Mr. Chairman, I spoke earlier about the

number of exemptions. There are literally hundreds of them. I think

hundreds is perhaps a little light; there might be a couple of thousand

of them when you consider all industries. There are several hundred in

agriculture alone when you start looking at individual items. But I

note what you've said about things such as personal hygiene and paper

products. We did earlier in this decade deal with so-called patent

medicines, and I had no problem in reaching that decision. I will

review these.

MR. D'ARCY: Mr. Chairman, I appreciate the minister's

comments. Very quickly, though, I just want to note that it's

technically correct to say it is a water-rental fee, but the fact is

that it's not for use of water on any sort of permanent or diversionary

basis. The amount of water that Cominco and most industry uses out of

the Columbia River is insignificant. In any event, they return it in

basically a fairly purified form. The water fee that they pay is simply

because water coming down the Kootenay and Pend d'Oreille Rivers

happens to pass through generators and produce hydroelectric power. It

doesn't get diverted or contaminated in any way. In fact, in the case

of the Corra Linn Dam on the Kootenay River, its existence improves the

recreational and sport-fishing values on Kootenay Lake, which is

something there is no refund for. So there's no water being diverted,

and there's little or no environmental effect. These are

run-of-the-river dams; they're not storage dams. They haven't flooded

vast areas of property; in fact, they have protected areas from

flooding, particularly in the Creston Flats area. Yet there is this

constant water tax being put on these five projects, four of West

Kootenay and one of Cominco's on the Kootenay River and Cominco's

project on the Pend d'Oreille River.

Those are basically the remarks I want to make. I would point out to

the minister that he says that British Columbia Hydro fair taxation is

something that he is working on. I'm very glad to hear that. The last

time I heard a minister say that was when the member for North

Vancouver–Seymour (Mr. Davis) was the Minister of Energy back in 1976

or 1977. So at least we have a minister say that he's looking at it

again, and I want to thank him for that.

It is my understanding, though, Mr. Chairman, that legally the only

reason Hydro does not receive tax notices on certain of its properties,

where it receives on most of its properties tax notices from the

appropriate taxation authority.... The only reason for that is an

order-in-council passed by the Minister of Finance back in the early

1960s. As with any order-in-council passed by a Minister of Finance, it

can be altered, rescinded, changed or cancelled by the present Minister

of Finance. So I may be oversimplifying things, Mr. Chairman, but I

believe that in consultation with his colleagues the minister can

change that situation literally by the stroke of a pen.

MR. COCKE: Mr. Chairman, I'm sort of motivated to say that my

colleague almost had me in tears over Cominco. But I don't think I'm

going to argue that one very much. I do feel that they have had a very

nice ride for quite a few generations.

1 want to talk a few minutes about the minister and his travels. You

know, this elitist government has absolute contempt for this chamber

and the members in it — absolute contempt. This is the second time that

that minister has gone on a major event like this — once when he was

Minister of Housing, and now this time. May I remind you all that if

you look in your desk you might possibly have a little book called Standing Orders , and that Standing Orders outlines the committees of this House, and there is one committee that is called Public Accounts and Economic Affairs.

That committee, or another committee, could be structured by the

Legislature, as the feds do and as most other jurisdictions do, so that

when people go out eliciting information, they may then feed into the

assembly as opposed to into a ministry.

MR. CHAIRMAN: Hon. member, I'm having a little problem relating this to the duties of the Minister of Finance.

MR. COCKE: Oh, well, if you're having problems, don't bring it to my attention. There's no problem here.

MR. CHAIRMAN: Order!

MR. COCKE: The minister went on this trip, and the trip was

charged to the people of British Columbia. I'm telling you that there

should be an alternative to that system. As far as I'm concerned, a

special committee could be struck. Look, we've been in deep trouble in

this province for a number of years — three or four years particularly.

So the minister decides to go out to investigate how we should get out

of this by having discussions with the public.

What better approach could there be than the kind of approach that

you get when an interparty — that is, a representative group — goes out

from this Legislature eliciting that information. The minister, I am

sure, has been around here long enough to know that all he has to do is

put forward a resolution instructing a committee to do whatever he

would like it to do, including eliciting the kinds of information with

respect to better economic development, and so on and so forth —

taxation, or whatever. He could travel with that committee.

Instead of that.... Then he gratuitously gets up in here, trying to

make the rest of the NDP feel ashamed for not having attended and given

briefs to his committee, when our job is here in the House or with the

committee of this House. Congratulations to you and my colleague for

doing that, but that's not the whole idea, in my view, of a way of

eliciting information from the public. The minister may get up and say:

"Oh, well, it would be a little bit costly, you know, if we sent more

than three or four people around."

I suggest very strongly that when you send a committee of this House

— and particularly a committee of that stature — you could have Hansard ,

you could have a record of everything that occurred, you could have

that digested thoroughly, you could have it discussed within the

committee and you could come up with some major recommendations that

this province needs. There are a number of other committees — and I

can't go into them, unfortunately, at the moment — of this Legislature

that should be put to work. That particular committee, whether it be

Public Accounts and Economic Affairs or a committee struck by this

Legislature, should be the vehicle to provide this assembly with the

information that can bring about a far better and more constructive

debate.

[ Page 6437 ]

No, no. You go out there all by yourself and listen to the folks,

and come back and be the hero. "I have gone out; I have been instructed

by the great populace of B.C., and I'm coming back to tell you that I'm

going to do a good job about this whole thing." Well, as far as I'm

concerned, you started off on the wrong foot. Mr. Chairman, he did, and

I'm sad about it. Somehow or another — it's probably going to take an

election — this assembly is going to have to become accessible again to

the public of this province. It isn't now and won't be as long as we

have this kind of arbitrary movement of ministers — little cliques of

government or government supporters moving around getting information

and sifting it through their particular bias. It's not good enough. Mr.

Chairman, I think I have said my piece on that particular area.

[4:30]

I know that part of the responsibility of the Minister of Finance is

to see to it that his colleagues have as lean a budget as is possible

to create in B.C. It has been outlined that these lean budgets have

done nothing to correct our deficit situation. You see, Mr. Chairman,

what this government thinks is that the way you eliminate deficits is

by making everything much leaner — that deficits cause recession. Mr.

Chairman, recessions cause deficits. If you look at it from the exactly

opposite viewpoint, then I think maybe you have an opportunity to see

the harm that has been done to our provincial economy by this attitude

of "deficits cause recession." The government wasn't able to bail

itself out of a deficit position by using all those hard methods. They

didn't do a bit of good. All they did was sink us deeper in the mire of

recession. They put 5,000 people out of work with that kind of

philosophy, and they were proud of it: "My, what great people we are.

Now we will depend on the private sector to come in and look after jobs

for the folks."

MR. WILLIAMS: That doesn't include B.C. Hydro.

MR. COCKE: That's right. Look at Hydro.

AN HON. MEMBER: School boards.

MR. COCKE: That's right. I'm not talking about Hydro and

school boards and all the rest of it. I'm just talking about direct

government jobs.

Do you know what I've heard ever since I began listening to this

Fraser Institute philosophy? It's being parroted by business: "We don't

want any more employees. We want to cut ours."

AN HON. MEMBER: Who's the parrot?

MR. COCKE: I don't know which is the parrot.

They are parroting the Fraser Institute. When that Fraser Institute

met with the cabinet and instructed this kind of economic direction,

they hurt this province immeasurably. All you have to do is compare our

activity and our response to this economic direction with the rest of

the provinces in the country, and you will see that we chose the wrong

road. All government does when it takes that hard-line position is

provide that kind of leadership for the whole province. That's the kind

of leadership we've been getting here. I'm sorry to say it hasn't

worked. Now we have a little deathbed repentance: there are some bills

coming in that are going to be helpful to this and helpful to that.

It's a little late.

[Mr. Strachan in the chair.]

We got ourselves into this tight spot, and it's unfortunate. I've

not only seen this minister's direction in the public service, but I've

also seen that tightwad situation hurt our forests immeasurably.

Suddenly we're hearing about a little bit of silviculture that's going

to happen. But it hasn't been happening. We've cut everything from

energy resources.

People. Mr. Chairman. until recently, and really until now, we've

been cancelling all provincial direct lending programs to small

business. We have taken an incredible direction that has carried us a

long way beyond where that recession should have taken us. It has put

us in a position such as we haven't been in in this province since the

thirties — breadlines, food banks and the like.

It's just a shame that this beautiful province should have been

impaired to the extent that it has by some very bad recommendations

from a group who really don't understand what it's all about. They only

have an equivalent at the University of Chicago, as I recall. That's

where Mr. Friedman hangs his hat quite often.

AN HON. MEMBER: He's a progressive compared to the Fraser Institute.

MR. COCKE: Well, I don't know. I'm not going to get into a

debate with my colleague. Let's say they're on a par, and we can leave

it at that.

It's been horrendous. I wanted to say those few words about the

philosophical direction, which I think has been dead wrong. I also want

to comment on one other thing that I think is equally stupid: vote 33

under the minister's votes, the compensation stabilization program. I

can't believe some of the utterances of that government. At once you

hear a Minister of Labour or Minister of Education suggest that they

believe in bargaining and so on and so forth. So people go out and

bargain in good faith, and old Ed Peck takes care of all of that. I'll

tell you, Mr. Chairman, it's not easy to be part of an assembly that's

become a laughing-stock of this country. In this once proud British

Columbia I hate to see it happen, even though I am totally opposed to

this government, and I'm sure that it's going to get this government

out of power much sooner than we think.

One more word, Mr. Chairman. If I could leave just this much with

the minister, if he's interested in eliciting information: think about

the standing committees of this House.

MR. WILLIAMS: When the member for Prince Rupert (Mr. Lea) got

up this morning, he reflected on the fact that everybody listens with

great anticipation to the federal budget, because it has some meaning

in terms of its impact on the national economy, and that that is less

so in British Columbia when our budget comes down. He argued, in

effect, that there isn't a great deal of economic planning behind the

budget. The minister responded by saying: "Good lord, I...." To

paraphrase the minister: "Why, we actually submitted this document with

the budget this time around, and it's called "The Economy in a Changing

World, March 1985, Province of British Columbia, The Hon. Hugh Curtis,

M.L.A., Minister of Finance." But if you read it, it's like most of

these documents. It's an analysis of the past. It's essentially

hindsight.

There are three major sections. The third

section grapples with the tools available to the province in directing the

[ Page 6438 ]

provincial economy. It starts with a whole range of

excuses to explain away what is perceived as the province's lack of

power and authority.

One must concede, yes: as was mentioned, we're part of a

nation-state. But I know of hardly any other country in the world that

extends power and authority and decision-making to its regions,

provinces or states like the nation of Canada. We are a highly

decentralized nation. The only one that I could think of that would be

more decentralized would be Switzerland. Switzerland's is a very

successful economy indeed.

After all that, what do we say? We finally get down on page 12 of a

15-page report, after essentially dealing with background. Provincial

government economic policy,

part 3, comes on page 12. What do they say?

"In general, stabilization policies are more effective at the national

level.... Further, provincial industries relying heavily on external

markets do not benefit materially from policies designed to stimulate

demand...." Okay, one concedes some aspects of these points that are

made. Fair enough. It continues: "At the national level, international

trade policy, taxation policy..." are major factors. "Provincial

governments are again constrained constitutionally from legislating in

certain areas."

There's a kind of a mindset there in a way, it seems to me. When you

put on all these kinds of things, it's kind of an excuse. In a way it's

a self-fulfilling prophecy. It's a way of saying: "Well, Ottawa really

is in control." But that's not true — not in Canada. The post-war

history of Canada has been an extraordinary one of power developed

within the regions and the provinces. The history of western Canada in

the last couple of decades has been an extraordinary success story in

terms of the regions understanding the resources that are totally

within their control. The land base of every province is within the

control of the province.

Think about that, fellow legislators, then look at the budget. What

does it tell us? Imagine if you or I owned all the forests of British

Columbia. My Lord, you'd think it would be the equivalent of the Shah,

wouldn't you? But under this administration, it's a negative cash flow.

Imagine! If one owned all the trees in British Columbia and was selling

them, as this administration does, one would expect to make a few

dollars in the process. We don't make a cent. But worse than that, we

lose $100 million, $200 million. Isn't that what it is in this budget,

Mr. Minister? A negative cash flow of $200 million, when we own all the

trees of British Columbia. What kind of financial management is that? I

know you shouldn't carry the can for all of it, because there's a guy

much more incompetent than you down the aisle and hiding in the comer

at the moment.

MR. CHAIRMAN: Order! The remark in reference to another hon. member will be withdrawn.

[4:45]

MR. WILLIAMS: Everything is relative, and I will withdraw. I would like to say that this minister is far more competent than other ministers.

MR. CHAIRMAN: No personal references, please. To the vote.

MR. WILLIAMS: I'm willing to give the minister credit. I

think he's one of the most competent ministers in the administration.

Must I withdraw that, Mr. Chairman?

MR. CHAIRMAN: To the vote. Please proceed.

MR. WILLIAMS: And I say that in a genuine way as well. That is my view in terms of this administration.

Imagine a negative cash flow out of all the trees in the province.

It takes a lot of skill to set up a system where we lose money on all

the trees we own, but that's what we've got. That's counter to the

pattern in this nation over the last few decades in western Canada.

There haven't been negative cash flows out of the resources that we own.

So that's one part of it. You carry on and say that the government

of British Columbia undertook restructuring of economic policy, etc.,

and then you go into the restraint program. That's still looking

backward, in a sense. Most of the document is looking backward. The

last page of the document says: "Significant government borrowings were

undertaken...." Indeed. As the member for Nanaimo (Mr. Stupich) said,

we've gone up $12 billion-plus in borrowings since this administration

took over. We needed it for income assistance programs and other social

programs, and then for major capital projects — northeast coal, B.C.

Place, Expo, etc. Fair enough. But then there's the interesting

statement: "In the past three fiscal years, the government has directly

and indirectly provided fiscal stimulus of several billion dollars,

which must be repaid through the returns earned on the projects...."

Now we get down to the nub of the kind of economic planning under the

hands of this minister.

What are the returns on the projects you have pursued? If you start

going through the trail of projects, what you find more often than not

is a negative rate of return. This morning you went over the

indebtedness per capita. You talked about direct indebtedness, about

the kind of social capital indebtedness, and then about a kind of

commercial capital indebtedness, for want of better terms. The

commercial side is the intriguing one. Okay, we'll buy that stuff in

terms of the social side of things. That's our tendency on this side of

the House. But what about