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)

THURSDAY, MARCH 14, 1985

Afternoon Sitting

[ Page

5277 ]

CONTENTS

Tabling Documents –– 5277

Estimates of Sums Required For The Service Of The Province. Hon. Mr. Curtis.

Introduction and first reading –– 5277

Budget address

Hon. Mr. Curtis –– 5277

Mr. Stupich –– 5289

Social Service Tax Amendment Act, 1985 (Bill 11). Hon. Mr. Curtis.

Introduction and first reading –– 5289

British Columbia Transit Amendment Act, 1985 (Bill 17). Hon. Mr. Curtis.

Introduction and first reading –– 5289

Tobacco Tax Amendment Act, 1985 (Bill 12). Hon. Mr. Curtis.

Introduction and first reading –– 5289

Hotel Room Tax Amendment Act, 1985 (Bill 13). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Insurance Premium Tax Amendment Act, 1985 (Bill 14). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Gasoline Tax Amendment Act, 1985 (Bill 8). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Gasoline (Coloured) Tax Amendment Act, 1985 (Bill 9). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Motive Fuel Use Tax Amendment Act, 1985 (Bill 10). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Income Tax Amendment Act, 1985 (Bill 18). Hon. Mr. Curtis.

Introduction and first reading –– 5290

British Columbia Railway Amendment Act, 1985 (Bill 15). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Business Licence Repeal Act (Bill 16). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Income Tax (Small Business Employment Tax Credit) Amendment Act, 1985 (Bill 5). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Corporation Capital Tax Amendment Act, 1985 (Bill 7). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Assessment and Taxation (Miscellaneous Amendments) Act, 1985 (Bill 6). Hon. Mr. Curtis.

Introduction and first reading –– 5290

Ministry of International Trade And Investment Act (Bill 20). Hon. Mr. Phillips.

Introduction and first reading –– 5290

Industrial Development Incentive Act (Bill 23). Hon. Mr. McClelland.

Introduction and first reading –– 5291

Small Business Venture Capital Act (Bill 19). Hon. Mr. McClelland.

Introduction and first reading –– 5291

THURSDAY, MARCH 14, 1985

The House met at 2:06 p.m.

Prayers.

HON. MR. GARDOM: Mr. Speaker, I know that all members would like to bid a very special welcome to the many guests that we have here today.

Mr. Speaker, before calling the order of the day, I would like to

make an observation pursuant to standing order 45A,

schedule 2, of the

new rules. There is a time allotment prescribed for the Minister of

Finance (Hon. Mr. Curtis) during this debate. I understand he may have

the need to slightly extend that time. By agreement with my counterpart

the House Leader of the official opposition (Mr. Howard) has agreed he

may so continue.

MR. HOWARD: We have had prior discussions about that subject

matter. Both the government House Leader and I — neither of whom is

wearing flowers — would like to confirm that the minister can have that

extended time.

Orders of the Day

HON. MR. GARDOM: Mr. Speaker, I call the budget debate.

HON. MR. CURTIS: Mr. Speaker, I move that this House at its

next sitting resolve itself for this session into a committee to

consider supply to be granted to Her Majesty.

Motion approved.

Hon. Mr. Curtis tabled the interim financial statements of the

comptroller-general in accordance with

section 8(4) of the Financial

Administration Act.

ESTIMATES OF SUMS REQUIRED

FOR THE SERVICE OF THE PROVINCE

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

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

for the fiscal year ending March 31, 1986.

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

Motion approved.

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

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

chair for the House to go into Committee of Supply.

BUDGET ADDRESS

HON. MR. CURTIS: In speaking to the motion, Mr. Speaker, it is my privilege

to present the tenth budget of this Social Credit administration. It is perhaps

the most important budget of this decade, as I shall propose measures for economic

growth and renewal that will secure employment opportunities for British Columbians

for years to come.

No budget is easy to assemble, particularly in the difficult

economic environment we now face. But preparing this one has been very

rewarding, as it contains the positive measures made possible by the

efforts of the past three years. Because of the responsible decisions

taken by this government in previous budgets we are now able to build

on the strong foundation of our restraint program to create new

employment through the development and diversification of British

Columbia's economy, in partnership with the federal and municipal

governments.

This is not to suggest that our difficulties are over. We continue

to adapt to a very competitive and rapidly evolving world economy.

Financial constraints and common sense dictate that we continue to

exercise fiscal discipline. Restraint is now a permanent and a

continuing feature of public policy in British Columbia. However, we

have been through the hardest part of the adjustment, and we can look

to improvement in the months and years ahead.

In the last budget, I indicated my intention to conduct a thorough review of the impact of taxation upon economic development.

Following a detailed comparison of the taxation situation faced by

British Columbia firms, I undertook a series of 28 public meetings over

the period September 5 to November 6 of last year. In many communities

throughout our province I heard the comments and the suggestions of

almost 400 British Columbians as to how the taxation system could be

changed, focusing particularly on ways to foster economic development

and job creation. I was impressed, during those meetings, with the

realistic attitude and understanding of current economic circumstances

and also the cautious optimism shown by individuals, businesses, groups

and community leaders.

I want to express my gratitude to the panel members who accompanied

me on these travels and thank all of those who made the effort to

attend the meetings and to present their opinions. This budget is a

better document because of their thoughtful views.

Over the last year my cabinet colleagues and I have met with and

received representations from literally hundreds of British Columbians

on a wide range of matters including regulatory reform, social policy,

resource management and industrial development. This continuing process

of consultation has been of great assistance to me in developing this

budget.

[2:15]

As we look back on the last few years, British Columbians can be

satisfied that, faced with very difficult financial and economic

adjustments, we acted quickly and we acted decisively. This province

had to make a major adjustment when the world economy began to undergo

a significant transition in the first part of the 1980s. It was not

possible to make this an easy adjustment, but forthright and

well-conceived measures by the provincial government could and did

ensure a positive result from the process. Had we not introduced bold

and innovative policies of restraint, we would now, as in other parts

of Canada, be facing even more difficult decisions. Instead, British

Columbians have responded by moderating demands for wage increases and

by increasing productivity. We are now ready to undertake a program to

[ Page 5278 ]

develop and diversify our economy, enabling us to meet the challenges of the new international trading environment.

Building on the foundation of restraint, this budget charts a new

course for British Columbia, a course which I am confident will take us

into an era of growth as we approach the 1990s.

The experience of 1984 demonstrated once more, Mr. Speaker, and very

forcefully, that British Columbia is reliant on international markets

for our major resource products. Despite the booming conditions of the

United States economy, prices for forest and mineral products have been

scarcely above the recessionary lows of 1982. Clearly, there has been a

fundamental change from the time when strong growth in the United

States could be automatically relied upon to fuel rising prices for our

products and, in turn support rising incomes and employment in the

province There is now very tough competition for the markets we once

took for granted. Our challenge is to work harder, be more innovative

and become more efficient as we move into the second half of the 1980s.

The causes of this fundamental change in world commodity markets are many and complex, but several merit attention.

First, there's been a large increase in the supply of natural

resources to world markets as a result of the sharp increase in prices

for these products during the 1970s. In particular, many less developed

countries have elected to increase sales of natural resources in order

to earn the foreign exchange needed to meet payments on foreign debt.

This has caused special problems for metal mines, not just in our

province but throughout the developed world.

Secondly, among the changes taking place in the developed economies,

there is a shift away from the heavy industries which have consumed

large volumes of natural resources in the past. Although the growth of

the service sector and the trend toward high technology and

communications industries should not be overstated, there is no

question that changes are taking place, causing lower rates of growth

in markets for many natural resource products.

Thirdly, the high interest rates of the 1980s have had a profound

effect on world economic events. The 1970s were a time of high

inflation and low real interest rates, fuelled by expansionary monetary

policy and major increases in commodity prices. Resource-producing

regions enjoyed extraordinary and, in retrospect, unsustainable

economic growth. The last few years, by contrast, have seen extremely

high interest rates in relation to the level of inflation and a

consequent erosion in the prices of many basic resources.

Finally, there is an accelerating trend toward protectionist

policies among nations whose traditional industries are unable to

withstand the growing competition from foreign suppliers. These

barriers to trade, whether in the form of quotas, regulatory

restrictions or tariffs, represent a very serious threat to world trade

and, consequently, to our own British Columbia economy.

Mr. Speaker, I know that some will ask why we should continue to

rely on trade if we're faced with the effects of events beyond our

control. Why not simply look inward, reduce our dependence on trade and

concentrate our efforts on production for our own market? The fallacy

in that reasoning must be spelled out.

British Columbia — in fact, Canada — has a relatively small

population compared with major industrial countries. Producers in those

economies have comparatively free access to markets of 100 million or

more people, allowing significant cost reductions through specialized

production and competition. Producing only for a small and widely

dispersed market such as we have in Canada would mean much higher costs

and much lower living standards than international trade has made

possible. We've been able to achieve substantial production

efficiencies, higher incomes and greater employment by specializing and

selling into the markets of the world. British Columbia's history,

therefore, has been one of development based upon international trade.

Exports from B.C. currently represent about 60 percent of total

manufacturing shipments and provide, directly and indirectly, hundreds

of thousands of jobs for our people. Our relative prosperity has been

based largely on our ability to supply world markets with competitive

products. It is essential that we expand and diversify our markets and

our industries, never forgetting that British Columbia's future

prosperity will continue to be strongly dependent on our ability to

compete internationally.

The dramatic changes in the world economy have had, and continue to

have, significant implications for government policy. During the

commodity booms of the 1970s, rapidly rising resource prices caused

large increases in corporate profits and government revenues. These in

turn flowed through to increased employment, expanded public services,

higher wages and salaries and higher share prices and real estate

values. Buoyant economic conditions also attracted large numbers of

people into the province, with the net inflow reaching a record 59,000

in one year, in 1980.

Although the momentum of in-migration, investment and public

spending continued to sustain economic activity in B.C. through 1980

and early 1981, the fundamentals were undergoing change. Prices of key

British Columbia exports declined sharply from the peaks which were

reached in 1979 and 1980. For example, lumber, which sold for $322 per

1,000 board feet in August of 1979, had fallen to $166 by late 1981.

Similarly, copper declined from a peak of $1.50 per pound in February

of 1980 to 75 cents a pound in June of 1982.

As the worldwide recession continued into 1982, it became apparent

that this was not a normal cyclical downturn. The changes taking place

were much more fundamental than any since before World War II, and a

return to booming commodity markets could no longer be considered a

certainty.

Over this period there was a rapid and a sustained deterioration in

the provincial government's finances. Revenues generated by the

resource boom disappeared while the spending requirements of social

programs introduced during the boom grew rapidly in response to the

recession. From a surplus of $542 million in 1979-80 the government

experienced a deficit of $257 million in 1980-81 and, despite several

hundred million dollars in measures to broaden the revenue base, a

deficit of $184 million in 1981-82.

By early 1982, forecasts showed a pattern of rising deficits with no

prospect of returning to fiscal balance even with a normal cyclical

economic recovery. B.C., like other provinces and the federal

government, had developed what is commonly referred to as a structural

deficit. Because the deficit had reached the point where normal

economic recovery would not eliminate it, corrective action was

required. The alternative was simply a legacy of public debt, interest

payments and high taxes for future generations.

[ Page 5279 ]

At the same time, steps were needed to cushion the impact of the

recession on those least able to cope. Responding to this very serious

situation in February 1982, the Premier announced a policy of restraint

comprised of two major elements. The compensation stabilization program

introduced a system of guidelines to limit wages and salaries in the

public sector, while the restraint on government programs placed limits

on the expenditure of provincial and local governments.

CSP is unique among wage guideline programs in that it preserves the

collective bargaining process and ensures equity among different

employee groups in the public sector. The flexibility and productivity

incentives inherent in the program have ensured its success and allowed

it to develop into a permanent feature of public sector collective

bargaining in British Columbia.

In addition, the limit on spending initiated the process of

cancelling or modifying some less essential programs in order to reduce

the permanent expenditure base of the provincial government to a level

which could be reasonably afforded by taxpayers over the longer term.

This process has continued for the past three years. By controlling the

cost of government in the province, restraint has allowed essential

social programs to be preserved and continued.

The government has also acted to soften the impact of the recession

and of the economic readjustment through significant fiscal stimulus.

By March 31, 1985 some $2.3 billion will have been borrowed to finance

the maintenance of income assistance, health care and other crucial

social programs, as well as the acceleration of employment-creating

highway construction activity. Taken together with government-supported

projects such as northeast coal, B.C. Place, Expo 86 and ALRT, this

fiscal injection has directly or indirectly maintained thousands of

jobs since the recession began.

Building upon the foundation provided by the restraint program, we

must now move to the next phase — that of revitalizing the industrial

and economic base of the province of British Columbia.

First — and I said it earlier — we must recognize the necessity of

controlling our costs in a tough, competitive world economy. Steady

progress has been made in the past few years in raising productivity

and limiting wage increases in both the public and private sectors, but

British Columbia's cost structure remains high compared with that of

our competitors.

Secondly, we must recognize that our resource sectors, while

continuing to provide a solid base for our economy, cannot alone

generate the income and employment needed to meet the demands of a

growing population. For the balance of this century, prosperity in B.C.

will increasingly depend on our ability to expand the base by promoting

further processing of our resources and by attracting and developing

new industrial activities in which we can be competitive.

Third, we must be aware of the problems and opportunities associated

with the emergence of the newly industrialized countries as both strong

competitors and potential markets.

Finally, we have to be alert to the effects of rapidly changing

technology on both employment patterns and markets. Scientific advances

are changing our economy, just as they change our lives. To compete

successfully, our industries must be able to respond and adapt quickly.

Similarly, all who are consumers of government services must recognize

that these services have to be paid for through taxation, which, if it

becomes excessive, will erode incentives for productivity activity,

threaten our competitiveness and ultimately cause the loss of jobs and

a reduced standard of living.

I shall be announcing today an extensive series of initiatives aimed

at renewing and revitalizing our industrial base. Because steps have

been taken in the past three years toward restraining costs, this

province is now well placed to sell to expanding markets and to take

advantage of new opportunities. Creative incentives for investment,

combined with continued fiscal discipline, will support the

rejuvenation of our existing industries and make British Columbia a

prime location for the establishment and growth of new businesses, both

small and large.

Mr. Speaker, I turn now to the economic events of the past year and the current outlook for 1985.

[2:30]

Further evidence was provided in 1984 of the structural changes

occurring in our principal markets. Although the United States

experienced its highest rate of economic growth since 1951, markets for

our natural resource products continued to exhibit low prices, while

sales volumes of forest products were at or near record high level. In

contrast with previous periods of expansion, most commodity prices

declined in 1984, reflecting the abundant supply of natural resources

from both developed and developing countries. The average price

obtained by B.C. exporters for lumber declined by 13 percent in 1984,

despite housing starts in the United States reaching their highest

level since 1978. The price of copper, the most important metallic

mineral for B.C., declined by 9 percent in 1984. Similarly, export

prices of coal and natural gas were under some downward pressure during

the past year.

In common with most other resource-dependent regions of the world,

the provincial economy was weaker than expected and is estimated to

have shown little growth in 1984. Retail sales increased by about 4

percent and personal income by approximately 2 percent during the year.

The most positive economic indicator in 1984 was the inflation rate,

which, at 4 percent, reached the lowest level in the 14 years that the

Vancouver Consumer Price Index has been available.

The limited economic growth in 1984 was reflected in the higher

unemployment rate. Although B.C. recorded an increase of 20,000 jobs

between December 1983 and December 1984 — the highest number of new

jobs, by the way, recorded in any of the four western provinces — this

increase was less than the number of new entrants into the labour

force. Unemployment in B.C. is recognized as our major problem. Our

first and our most important priority is to accelerate growth in the

number of permanent jobs in the province.

The measures I shall announce today are designed to encourage new

investment, particularly by the private sector. Partly as a result of

these measures, we can expect a greater increase in employment this

year than last. Despite the improvement, the rate of unemployment is

likely to decline slowly as British Columbia continues to attract

people from other provinces in search of work. Over the last four

years, during which the provincial unemployment rate has exceeded the

national average, we've experienced a net inflow of approximately

38,000 persons from the rest of Canada. By contrast, our neighbouring

province of Alberta has experienced a net outflow of 28,000. The

movement of people to

[ Page 5280 ]

British Columbia, which does not appear likely to

be reversed in the near term, puts pressure on our labour market, our

public infrastructure and our social programs. Nevertheless, it is a

positive sign that despite the current economic situation many people

view our province as an attractive and promising place in which to make

a home.

There are several reasons, Mr. Speaker, for cautious optimism about

the provincial economic outlook for 1985. Internationally, the U.S.

economy has strengthened in the last few months and growth should

exceed 3 percent. Western Europe and Japan are also forecast to enjoy

moderate to strong growth. Inflation in B.C. is expected to remain low.

Export lumber prices have shown some improvement in recent months, and

should remain generally higher in 1985 than in 1984, unless interest

rates increase significantly from their current levels.

For 1985, I expect real growth in the British Columbia economy to be

approximately 2.5 percent. Consumer spending is expected to strengthen

slightly, and exports should increase in line with world economic

growth. Business investment should also increase this year, as

confidence grows in British Columbia's improving economic prospects.

But before leaving the subject of the economic outlook, I want to

note some sources of concern. First, there are major risks present in

international financial markets. Any significant increase in world

interest rates would have a major impact on British Columbia's exports

and on the ability of our businesses and individuals to cope with their

debt. Second, as I mentioned earlier, there is that potential upsurge

in protectionism. Third, there are dangers clearly associated with the

massive federal deficit. Action is required, I suggest, to limit

federal borrowing in order to reduce pressure on interest rates. But I

sincerely hope that federal deficit reduction will not be achieved

through tax increases which would place a burden on individuals and

harm the competitiveness of our industries. If we avoid these potential

negative influences, I'm confident, Mr. Speaker, that 1985 will be a

year of improved economic performance for British Columbia.

The government's current and projected fiscal situation reflects the

actions taken in the past three years to stabilize a deficit which

threatened to grow out of control. From its peak in 1983-84, the

deficit has been reduced in the current fiscal year and will be reduced

further in 1985-86. As we approach the end of fiscal year 1984-85, I am

now forecasting a deficit of $970 million, about $300 million higher

than originally estimated, but still $50 million below the previous

year's deficit. The increase from budget has been caused by additional

spending on income assistance and by expansion of the government's

highway construction program. Both allocations have helped sustain the

province during a period in which our export markets have been weaker

than anticipated.

In preparing this budget, my primary goal has been to provide scope

for the government's economic renewal initiatives. It's become clear,

both from the information I received during the public meetings on

taxation and economic development and from independent studies,

including those commissioned by the government, that our taxation

structure, as it affects business, is in need of reform. If our

industries are to compete nationally and internationally, and provide a

lasting base of employment, we must ensure that our tax burden is in

line with that of competing suppliers in other areas of North America.

During the 1970s, I suggest, we developed an excessive reliance on taxes, which

are inflexible with respect to profits.

In the current weak international market such taxes have become

unaffordable and a hindrance to job creation and economic expansion. I

shall announce today changes to ease tax burdens which, while

supportable during the resource boom years of the late seventies, have

become excessive in this newer, more competitive environment.

I shall also describe, as part of the partnership program for

economic renewal, a range of expenditure initiatives representing

investment in the future of British Columbia's economy. It should be

clearly recognized by all British Columbians that this new program has

been made possible by the measures taken in the past three years.

Before taxation adjustments, government revenue is estimated at

$8,214 million for 1985-86, an increase of 5.6 percent from the revised

forecast for 1984-85. Revenue measures are expected to reduce estimated

revenue by $48 million in 1985-86 to $8, 166 million. Certain other tax

reductions will have the effect of increasing expenditure by $88

million in 1985-86. Some of the tax reductions are phased in over a

period of three years, and the total impact by the third year will be

$480 million. The expenditure budget for 1985-86 provides stable

funding for the basic programs of the government and a major allocation

for economic renewal initiatives. In total, government expenditure is

budgeted at $9.056 billion for 1985-86, for an increase of 3.5 percent

over the revised forecast for 1984-85.

Even with major tax reductions and expenditure programs to spur

growth and development, the government's budgetary deficit is estimated

to decline further in 1985-86 to $890 million, from the level of $970

million now forecast for the current fiscal year. To achieve a further

decline in the deficit during a year in which the government is

undertaking fiscal initiatives for economic renewal, through both

revenue and expenditure measures, of some $694 million is an

accomplishment in which we can all take great pride.

I'll say again, Mr. Speaker, that we can afford to introduce these

measures now only because of the success of our restraint program in

bringing the deficit under control and because the permanence of

restraint allows us to plan tax reductions affecting future years.

We should not become complacent. While our fiscal situation is

improved, we must still borrow heavily to finance government programs.

I am convinced that the economic renewal program will pay dividends in

future years in the form of business activity, jobs and government

revenue. Nevertheless, we must continue to control the cost of our

programs. We must seek ways to increase productivity, eliminate waste

and reduce overhead costs in government.

Public sector compensation costs, in particular, must not again

become a source of fiscal instability. Except for increases already

established, the budget for 1985-86 contains no provision for salary

increases for direct government employees or for employees in the

agencies funded by government. If salary demands by government

employees reflect the taxpayers' ability to pay, further layoffs can be

averted. The same condition will apply to other public sector employee

groups when their employers have completed the process of adjustment.

This is a stringent requirement, I admit, but it is one which the

private sector has been forced to work with and to meet in order to

survive.

As the economy expands over the next few years, we have to continue

to work toward reducing and eventually eliminating the deficit.

Accumulated direct debt for government purposes will exceed $3 billion

by the end of next year, in

[ Page 5281 ]

spite of restraint. Interest payments alone are

estimated at $384 million next year, or more than $1 million each and

every day of the year. The government is committed to halting and

reversing the growth of this debt burden on our taxpayers.

Now let me describe a number of major initiatives in the

government's program of partnership for economic renewal. As I

suggested earlier, the changing world dictates the need for innovative

policies to encourage and assist the development and the

diversification of our economy. We've moved through the most difficult

part of the adjustment, and we are now ready to seize new opportunities.

The program will represent a comprehensive approach to strengthening

our industrial base and attracting new industries to the province. I am

today announcing four major elements: taxation measures to reduce the

cost burden on business and industry and to provide incentives for new

investment; industrial development programs to encourage and assist the

establishment and expansion of industries in the province; new programs

of investment in our natural resource base, providing jobs now and in

the future; investments in major public projects to provide employment

now and benefits for years to come. Further elements of the program

will be announced by my colleagues.

Achievement of our goals will require partnership and cooperation

with the private sector and among governments. Last fall British

Columbia signed an Economic and Regional Development Agreement with the

federal government to set the framework for delivery of joint economic

programs. The Minister of Industry and Small Business Development (Hon.

Mr. McClelland) is negotiating subsidiary agreements with the federal

government to provide a wide range of industrial and resource

development programs under the ERDA umbrella. Although specific terms

and funding levels for ERDA subsidiary agreements have not been finally

settled, this budget provides the provincial portion of a joint funding

allocation for British Columbia totalling $650 million over five years.

We are confident that British Columbia's representatives in the federal

house will ensure that we receive the fair treatment that this province

deserves.

[2:45]

The provincial government will also be inviting local participation

in the program through municipal partnership agreements. I have

authorized the Minister of Municipal Affairs (Hon. Mr. Ritchie) to

offer participating municipalities a 50 percent reduction in

non-residential school property taxes for all new industrial

improvements. My colleague will announce the full details of this new

program of partnership, which represents an exciting innovation in

public policy. It is my expectation that most municipalities in B.C.

will enter into this venture of cooperation with the provincial

government.

A further aspect of partnership involves working with business and

labour to find innovative solutions to the problems of adjustment faced

by our basic industries. I am prepared to work on this with others

through a commissioner of critical industries, who is to be appointed

shortly.

Now, Mr. Speaker, I have referred several times to the importance of

new taxation policies for encouraging further development in the

province. The results of our analysis and my public meetings have

indicated that certain British Columbia taxes on business are somewhat

higher than taxes in competing jurisdictions.

In the discussions over the past year on tax measures to encourage

development, I was presented with two alternative approaches. Some

participants argue that the government should provide targeted

incentives to certain favourite sectors or to industries which are

thought to have high growth potential or which are in need of

government support. Others proposed that the government should

implement general tax reductions and allow market forces to determine

which industries flourish in the province.

With these views in mind, I am today proposing a balanced package of

taxation measures with three major objectives: firstly, an attempt to

provide a significant degree of tax relief to a broad range of

businesses in the province; secondly, to reduce or remove elements of

the tax system which are out of line with competing jurisdictions,

creating a disadvantage for existing businesses and impeding new

investment; thirdly, a series of measures included to offer benefits

particularly to sectors of the economy with strong potential for growth.

In order to provide the maximum possible assistance within the

fiscal constraints, and reflecting my confidence in our ability as a

government to maintain fiscal discipline, the government will phase in

several major tax measures over the next three years. This will provide

a firm basis on which new and existing businesses can plan future

investments.

First, for taxation years commencing after March 31, 1985, and for a

period of two years, the provincial government will provide a small

business employment tax credit equivalent to approximately $300 for

each employee of a small business corporation.

Time and time again during the public meetings, I was told, as we

all know, that small business is the keystone of our economy and the

major creator of jobs. Fixed expenses such as unemployment insurance

contributions, Canada Pension Plan contributions and Workers'

Compensation Board assessments were identified in these meetings as

significant disincentives to hiring new employees. The government

believes that the encouragement of small business is essential to the

partnership for economic renewal. Most important, the growth of our

small businesses is essential for the achievement of our first

priority: jobs for the men and women who wish to gain employment in our

province.

Having examined the issue very carefully, I concluded that a

refundable tax credit based on wages and salaries is the most

appropriate means of encouraging small business activity and providing

an incentive to employ more people. This is not a minor program, Mr.

Speaker. It is expected to reduce the cost of employing some 250,000

persons in the small business sector, with the full tax reduction

estimated to be $75 million annually.

Over the two years this program will be in operation, $150 million

of stimulus will be given to small business. It is intended that this

program be provided through the income tax system which is administered

by the federal government. Federal agreement will therefore be

required. Based on discussions I have had with Mr. Wilson, the federal

Minister of Finance, I am confident that that approval will be

forthcoming.

Secondly, the imposition of property taxation on machinery and

equipment will be phased out over three years, starting this year. In

addition, property taxation will not be applied to new machinery and

equipment installed after September 30, 1984. The school property tax

rate applied to machinery and equipment will be reduced by one-third in

[ Page 5282 ]

1985, by two-thirds in 1986, and will be eliminated in 1987. This

tax reduction will cost an estimated $69 million in fiscal year 1985-86

and $358 million over the next three years. Machinery and equipment tax

rates for non-school purposes will be phased out over two years,

beginning in 1986. For the 1987 and subsequent assessment rolls,

machinery and equipment will not be assessed nor taxed.

During my consultations in the fall, the taxation of machinery and

equipment was widely criticized in this province as being burdensome,

unfair and counterproductive to investment. In the current economic

climate it represents a serious impediment to businesses considering

investment in the province, and it places our producers at a

disadvantage with respect to competitors in other provinces and in

other countries. The exemption of new machinery and equipment will

encourage immediate expansion and the establishment of new business,

while the phase-out of property taxes on existing equipment will

rapidly eliminate the burden on our existing industries, particularly

forestry and mining.

Third, the school property tax rates applied to industrial and

commercial property will be reduced over the next three years from a

level more than three times as high as residential tax rates to a level

of approximately twice residential tax rates. This process will begin

in 1985, with the rate applied to industrial properties reduced from a

ratio of 3.4:1 to a ratio of 3:1, compared to residential rates. This

will reduce taxes on the industrial property class by an estimated

$15.5 million in 1985-86 and by an estimated $144 million over the next

three years. Residential taxes will not be affected by this change.

Along with the machinery and equipment tax, the high property tax

rate on industrial and commercial classes was identified in our

comparative tax analysis, and in my public meetings, as a major source

of disparity between the tax burden on businesses in B.C. and that in

competing jurisdictions. The gradual reduction in these rates will

bring British Columbia's property taxation to a level which will allow

us to compete on an even basis.

Fourth, effective midnight tonight tax rates applied to off-road use

of motor fuel and aviation fuel will be reduced to 7 percent of the

pre-tax selling price of gasoline. In the case of marine bunker fuel,

where price changes can be substantially different from those for

gasoline, the tax will be 7 percent of the pre-tax selling price of

that fuel. This change will lower the tax rate on aviation fuel, marine

bunker fuel, coloured gasoline, coloured diesel fuel and fuel used by

farmers and commercial fishermen. All of these fuels are presently

taxed at a variety of higher rates in the range of 10 percent to 20

percent of the selling price. This measure will reduce revenue by an

estimated $55 million in 1985-86 and an estimated $172 million over the

next three years. The new 7 percent rate represents a significant

reduction, and it makes these fuels taxable at a rate equivalent to

that for goods subject to the social service tax. Clear fuels used on

public roads will remain taxable at present rates, in order to provide

a contribution towards the cost of constructing and maintaining our

extensive network of public highways.

Fifth, the corporation capital tax will be phased out over the next

three years, except as it applies to major banks with head offices

outside the province of British Columbia. The phase-out will be

accomplished by replacing the present $1 million exemption with a

deduction of $5 million, effective for years ending on or after April

1, 1985; $10 million, effective for years ending on or after April 1,

1986; and for years ending on or after April 1, 1987, the tax will be

eliminated — except, as I indicated, for certain large banks. The

gradual elimination of this tax will reduce revenue by $3 million in

1985-86 and by $96 million over the next three years.

Again, throughout my meetings last fall — indeed, ever since I

became Minister of Finance — I've received almost unanimous

recommendations to repeal this tax — and that's putting it kindly. It

is a capricious and ill-conceived tax, which this government has

previously committed itself to eliminate. I'm therefore very pleased to

be able to announce its termination today. The tax will be retained

only for large externally based banks to ensure that these corporations

make a reasonable contribution to provincial tax revenues.

Sixth, Mr. Speaker, effective midnight tonight a series of items

purchased for use in the aquaculture industry will become exempt from

social service tax, placing this industry on a similar basis to

agriculture and fishing. We believe that aquaculture has the clear

potential to be a growth industry in British Columbia for the rest of

this century. We're well behind such competing nations as Norway and

Japan in farming the seas, but our natural advantages give us the

chance to develop this sector very quickly. British Columbia is ready

to move into aquaculture in a serious way. The new exemptions will

assist the industry and demonstrate that we mean business.

Seventh, effective midnight tonight a number of items used by

British Columbia firms in the manufacture or servicing of goods will be

exempted from social service tax. Exemptions will now apply to jigs,

dies, moulds and patterns, abrasives such as sandpaper and grinding

wheels, and certain items used by photographic, printing and publishing

industries. Representations made during those public meetings last fall

argued very convincingly that materials which are consumed or used

during the production process should not be taxed, because the final

product is subject to tax. Today I've taken a step toward achieving

that goal in its entirety.

[3:00]

Eighth, effective for the 1985 taxation year the government will

provide a provincial income tax credit to purchasers of newly issued

common shares in small business venture capital corporations. The

credit will equal 30 percent of the amounts received by the venture

capital corporations for their shares, and a grant mechanism will be

established to provide for payment of an equivalent incentive to

non-taxable entities such as pension funds. The venture capital

corporations will in turn provide equity capital to small businesses

engaged in manufacturing and processing, research and development,

tourism and aquaculture.

The provision of risk capital to finance new ventures is an

important ingredient in a dynamic and growing economy. This aspect of

financing has not been adequate in Canada, and accordingly this

government is encouraging equity investment through this new mechanism.

As a result of this measure, there will be a new source of investment

capital for innovative small businesses and an incentive for

individuals to realize tax savings by increasing their investment in

the province. Legislation governing small business venture capital

corporations will be presented by my colleague the Minister of Industry

and Small Business Development (Hon. Mr. McClelland).

[Mr. Strachan in the chair.]

[ Page

5283 ]

Ninth, effective for the 1986 property taxation year the provincial

government will forgive 50 percent of the school property tax on new

industrial investment in non-municipal areas. This incentive, which

parallels and complements the provincial initiatives forthcoming in the

municipal partnership agreements, will continue to the end of the 1990

taxation year. Property taxes are often cited as a barrier by

prospective investors in industrial facilities, because full taxes must

be paid before a new plant is fully operational and profitable. This

tax measure for non-municipal areas, so-called rural areas, and the

equivalent measures to be provided in participating municipalities will

create an incentive for industries to accelerate their investment plans

in order to take maximum advantage of the tax reduction. As a result,

it will create construction jobs now and more permanent jobs in the

next few years.

Tenth, water rental fees for the generation of hydroelectric power

will be frozen for five years beginning in 1985. The government

previously announced the deferral of the 6.1 percent indexing

adjustment for 1985. There will be no further indexing of water rental

rates until 1990.

These ten major revenue measures comprise the taxation portion of

the program of partnership for economic renewal. Over the next three

years these and other tax changes in this budget will cost the

government an estimated $955 million. I can say without hesitation, Mr.

Speaker, that this represents the most significant reform in provincial

tax policy in at least 40 years, and probably in the history of our

province.

I want to thank the many people who contributed in a variety of ways

to the assembling of these measures. Their comments, criticisms,

submissions, suggestions and hard work resulted in a set of tax changes

for economic development which I'm honoured to be able to introduce

today.

Before leaving the subject of taxation measures for economic

renewal, I'd like to describe three further initiatives that we plan to

implement in the coming months.

The importance of increased business investment to future economic

well-being is not confined to our province; it is also vital to the

national economy. But business can only invest in modernization and

expansion if funds are made available for this purpose. It is our view

that the recovery will be greatly assisted if individual Canadians are

encouraged to invest in Canadian businesses. The savings of individual

Canadians are at a high level, and channelling these savings into

equity investments in Canadian industry would finance modernization and

expansion without imposing on industry the risks associated with a

heavy burden of fixed debt. The benefits to Canada from increased

equity participation by individuals would include a better

understanding among the public of the function of profits in the

economy, an increased awareness of the effects of business cycles, and

an enhancement of the entrepreneurial spirit of Canadians.

Although income from equity investments already receives certain

advantages under the Canadian tax system, the government believes that

a new instrument could create a direct incentive for individuals to

become equity participants and provide some risk protection for new

investors.

To meet these goals, our government has designed a national plan, the Canada

equity plan, to encourage investors to purchase new equity shares in Canadian

public corporations. The plan was presented by the Premier at the first ministers'

conference on the economy in Regina a few weeks ago. It's our hope that

the federal government will introduce a national initiative in which all provinces

can participate. If the federal government is unable to proceed, we are prepared

to develop a provincial plan to be administered through the income tax system.

The proposed Canada equity plan would provide a 20 percent income

tax credit to investors in newly issued common shares of Canadian

public corporations. The maximum credit available to an individual

would be restricted on an annual basis and as a percentage of taxable

income. The cost of the plan, estimated to be $100 to $200 million

annually, could be shared by the federal and provincial governments on

a two-thirds/one-third basis. Details of this proposal are provided for

all hon. members in an appendix to this document.

A second measure on which we are working, of course, is the

establishment of special enterprise zones. The government has proposed

the creation of zones in order to attract industries which, given

present costs, tax and regulatory considerations, would not otherwise

locate in Canada. Special enterprise zones could allow British Columbia

to take advantage of its Pacific Rim location, access to tidewater,

existing transportation networks and a skilled workforce to bring to

the province new types of industry with a potential to employ growing

numbers of British Columbians in quality jobs.

A firm locating in a zone would be eligible for a series of

financial and taxation incentives. The federal government has agreed to

administer certain provincial measures and has been approached to offer

corresponding incentives. The tax incentives will result in little or

no revenue lost to government, since the objective of the zones is to

attract firms that would not otherwise locate in our country. A tight

screening mechanism is proposed to ensure that the production will not

cause injury to other domestic or established producers.

It's the government's intention to proceed with creation of the

first zone once Ottawa has indicated whether or not federal initiatives

will be provided. I emphasize today that we are ready to proceed as

soon as possible.

The third initiative concerns the development of the financial

sector in British Columbia, and particularly in our largest city of

Vancouver. Growth in international trade is crucially dependent on a

world-class financial services industry. The government is committed to

encouraging the establishment, in Vancouver, of an international

financial centre which, by attracting financial transactions involving

non-residents, would be complementary to the development of our

domestic financial services sector. It is my hope that a joint

federal-provincial review of the taxation and regulatory measures

necessary to attract international financial business to Canada, and in

particular to Vancouver, will be undertaken in the coming year.

Before turning to a number of other elements of our program, Mr.

Speaker, I want to advise the House that I shall announce later today a

number of additional tax measures designed mainly to improve the fair

application and administration of the tax system.

The second set of initiatives about which I wish to speak is

comprised of industrial development programs which, by encouraging and

assisting private sector activity, will generate new investment in

British Columbia and will create jobs. The programs are directed toward

industries and sectors of the economy with the greatest potential to

contribute to economic growth and diversification. These include the

industrial incentive fund to encourage strategically important

[ Page 5284 ]

investment opportunities, the industrial development assistance

program for small- and medium-sized secondary manufacturing and

processing firms, the small manufacturing incentive program for small

businesses and the tourism infrastructure incentive program to

establish and improve tourist attractions.

The Minister of Industry and Small Business Development (Hon. Mr.

McClelland) will provide details on the operation of these new

assistance programs and will present enabling legislation to this

Legislature.

The new Minister of International Trade and Investment (Hon. Mr.

Phillips) will be instrumental in stimulating industrial development

and job creation. New and broader markets for British Columbia exports

will be sought to encourage the expansion of wealth-creating activity.

In addition, by attracting capital and investment to B.C., the ministry

will make a major contribution to our economic renewal. As well as

increasing British Columbia's profile abroad through additional

representation and marketing programs, the ministry will undertake a

series of high quality investment seminars for potential investors

abroad, involving professionals, business people, government members

and officials from B.C. Other initiatives include a program of

agricultural market development, measures to encourage expansion of the

food processing industry, a program of assistance for science and

technology projects and an enhancement of the successful discovery

enterprise program for advanced technological industries.

We shall also introduce a new and comprehensive public sector

purchasing policy which has been developed in the Ministry of Finance.

The massive purchasing power of the provincial public sector will be

harnessed to create opportunities for expansion of our industries.

Significant provincial assistance will be provided to those industries

which form the traditional basis of our economy — forestry and mining.

Many of the taxation measures which I have outlined will help these

industries regain their competitive position in world markets.

In addition, we shall be undertaking a major program of investment

in our resource industries to create jobs now and preserve jobs in the

future. The forest resource development program, for which we hope to

obtain federal participation under ERDA, is expected to provide $300

million over the next five years for reforestation, intensive

silviculture and related research. Jobs will be created and future

timber supplies will be assured through this investment.

Another program for which federal participation under ERDA has been

sought is an initiative to help the mining industry identify new

resource development opportunities. An accelerated program of mapping

and exploration will provide valuable information upon which the

renewal of the mining industry will be based.

A third natural resource program to be undertaken with the national

government is the agricultural and rural development program. This will

provide assistance for applied research and technology transfer,

resource development and the provision of production and marketing

facilities and support services.

Our resource industries have clearly undergone a difficult period of

adjustment, and they've emerged more productive and competitive than

ever before. The provincial government's role in resource management

must also be changed to ensure that industries have incentives to

remain productive and efficient. The small business enterprise program

in the Ministry of Forests is one example of the way that resource

management is gradually being adjusted. A new system will be introduced

for financing forest access roads for timber harvested under this

program. Bonus bids paid on timber sold through auctions will be made

available through a special account to finance access roads, ensuring

that new roads are justified by the value of the timber being

harvested. Over the long term this and other adjustments will help to

achieve a balance in restoring resource-management expenditures and

revenues.

[3:15]

A number of major capital projects are underway or are being

introduced to provide both immediate jobs and lasting legacies in the

form of lower transportation costs and worldwide exposure.

The Coquihalla Highway will shorten the driving time between

Vancouver and various interior communities by up to two hours and will

provide a scenic route to and from the lower mainland time for Expo 86.

It is intended that a portion of the saving to users will be levied as

a toll which will contribute significantly toward meeting the cost of

accelerating this project.

Funds will also be provided for the construction of the Annacis

Bridge. This additional crossing of the Fraser River, providing

improved access to Vancouver from the south, will also be constructed

in time for Expo 86.

Another major project which will provide thousands of construction

jobs in the coming year is ALRT. This project will be operational in

January 1986, providing significantly improved transit services for

people in Vancouver and a fast and efficient transportation system for

commuters in the lower mainland. The government is able to take

advantage of competitive construction costs at this time and provide

economic stimulus through these expansions to our provincial

transportation network.

Other capital projects to be undertaken in the coming year include

the development and maintenance of facilities in our provincial parks

and acceleration of diking construction.

Finally, Mr. Speaker, and most important, our world exposition, Expo

86, will generate jobs and economic activity across the province and

will bring the world to British Columbia. New markets and investors

will be introduced to our province through Expo. We must all work

together to ensure that British Columbia is prepared to take the best

advantage of this truly unique opportunity.

The broad set of economic measures that I have described today will

launch British Columbia on a new path of growth and development. Its

success will depend on the response to this invitation. Through

partnership and cooperation, we shall be able to build on the strengths

of our economy, to generate the jobs and the incomes needed to meet the

aspirations of all British Columbians.

Let me turn now to a brief review of the expenditure budget for

1985-86. As I said, the government expects to spend $9.056 billion in

1985-86, including $558 million associated with the economic renewal

program. Despite this major fiscal injection to bolster our economic

base, total expenditure is estimated to increase only 3.5 percent from

the latest forecast for the current year.

The efforts of the last three years to improve the efficiency of

government, to control costs while maintaining essential services and,

where necessary, to redirect taxpayers' funds to meet public goals more

effectively, have proved successful. We can now see the benefits from

the

[ Page

5285 ]

restraint program and experience the dividends through reduced taxes and economic renewal initiatives.

Clearly, a major factor in the success of restraint has been the

equitable functioning of the compensation stabilization program. The

flexibility built into the program has enabled more than 2,000

compensation plans to be settled in the public sector under the

voluntary guidelines, not under the compulsory regulations. The

commissioner of CSP has never found it necessary to impose a settlement

under the compulsory regulations. For all of 1984, public sector plans

approved under the program showed average increases of 2.1 percent

compared to average settlements of 2.5 percent in the private sector. A

continuation of this trend in settlements is required if the government

is to maintain control over expenditure growth and provide scope for

future reductions in taxes.

Although the emphasis in this budget is on job creation, the

government is maintaining a very strong commitment to essential social

programs. Expenditure on health, education and social services in the

coming year will exceed $6.3 billion. That's an increase of 6.9 percent

from the estimates of 1984-85. Over 70 percent of total expenditure is

allocated to these programs, compared to 65 percent just five years ago.

Health care continues to be of major importance to the government.

The health budget will rise by 5 percent to $2.677 billion. New

acute-care, extended and intermediate beds will be opened in several

communities throughout the province. The government assigns a high

priority to preventive health programs which can reduce further

pressure — future pressure as well — on other parts of the health care

system. These alone will receive a 6.5 percent increase to accommodate

higher utilization. Emergency health services will also be improved

through the replacement of an additional 50 ambulances, at a cost of

$1.8 million.

There has recently been considerable public comment reflecting the

fact that the government is increasing its spending on health care at a

faster rate than on education. There's one very important reason for

this difference in growth rates, and it's often overlooked by our

critics: it's the aging of the province's population. Since 1980 the

total increase in the province's population has been 9 percent, while

the number of people aged 65 or over has increased by 19 percent. On

average, people in that age group require health care expenditure that

is more than five times that of younger people. This clearly represents

a major source of pressure on health services. Over the same period

there has been a decrease of 2 percent in the population between the

ages of 6 and 24 years. This changing age composition has certainly

affected relative requirements for the different program areas in

government. If our funding allocation failed to reflect the reality of

these changes in our population, our programs would inevitably become

less responsive to the needs of the people we serve.

It's important to make clear today that in the coming year we shall continue

to fulfil our commitments under the federal-provincial established programs

financing arrangements for the provision of health care and post-secondary education

to our citizens. It is sometimes incorrectly suggested that the EPF arrangements

require the provinces to allocate expenditure on these programs in fixed proportions.

The proportions usually referred to represent an arbitrary and unilateral division

of federal contributions, unchanged since 1975-76 when these programs were funded

on a cost-shared basis. The federal legislation imposes no such allocation on

the provinces, and if the provinces were required to maintain such an outdated

allocation, provincial programs would become increasingly less relevant to the

needs of provincial residents. In 1985-86, as in each and every year since the

EPF program was introduced, federal contributions to British Columbia under

this program will represent less than 50 percent of our expenditure on health

care and post-secondary education.

The government has maintained over the last ten years a strong

commitment to funding education in the province. Compared to the level

of spending ten years ago, expenditure on education in 1985-86 will

show an increase of 125 percent. Education funding to the province's

school districts next year will be provided in accordance with the

fiscal framework system, with two important additions. As a result of

adjustments, school districts have been notified that they will be

provided with $25.6 million more in 1985-86 than was contemplated when

the framework was introduced. This ensures that sufficient funding is

provided for essential service levels for a quality education. However,

school boards now have the opportunity to increase their annual

operating budgets above the fiscal framework level, provided that the

increase is approved by a majority of the local electorate voting in a

special referendum. In common with other programs of the government,

the schools fiscal framework funding provides no funding for negotiated

salary increases in 1985.

For post-secondary colleges and institutes, there will be no

reduction in total funding from 1984-85. A special allocation of $12.7

million is included in their funding to support high-priority

employment training programs in cooperation with the federal

government, and to allow the institutions to make program adjustments.

The university system in our province, and throughout Canada, is

faced with difficult issues as it seeks to carry out its function more

effectively. At the request of my colleague the Minister of

Universities, Science and Communications (Hon. Mr. McGeer), the

Universities Council of B.C. and the three universities are reviewing

all university programs and developing a five-year academic plan. This

plan will emphasize the strengthening of the institutions through

building on areas of excellence. As in the case of colleges, there will

be no reduction in total university funding in 1985-86. Included is a

special allocation of $14.9 million to assist our universities in

becoming more responsive and effective institutions. This allocation

will be used for initiatives to strengthen priority programs and to

meet phase-out costs associated with reductions in less essential,

low-demand programs. Details of this arrangement, Mr. Speaker, will be

announced by my colleague.

The encouragement of academic excellence is an important aim of the

provincial government and the university community. To provide

additional support to graduating university students showing high

academic achievement and demonstrated financial need, the government

has allocated $1 million for an expanded provincial scholarship program

in the coming year. This will take the form of a provincial loan

remission program which will reward performance. The Minister of

Education and the Minister of Universities, Science and Communications

will administer this program for university students, including those

who transfer from the college system. In the coming year, the

government will examine the possibility of extending scholarships to

other post-secondary graduates.

[ Page 5286 ]

Social services will receive increased funding for 1985-86, as the

government maintains its commitment to provide income assistance. The

amount to be paid in GAIN benefits is expected to increase by

approximately 2 percent.

Costs under the Pharmacare program continue to increase rapidly. An

increase in the annual deductible amount under the universal component

of the program from $175 to $200 will provide some saving, but I note

that the costs next year will be more than twice the level of just five

years ago.

[3:30]

This budget also includes additional funds for a worthwhile program

providing services primarily to recipients of income assistance. A

major problem for many single parents is that they do not receive

regular and adequate maintenance payments from their spouses for the

support of their children. The Ministries of Human Resources and

Attorney-General have introduced a family support program to help

income assistance recipients to obtain those maintenance program

payments. This program will be extended from Richmond, where it was

first introduced as a pilot, to the city of Vancouver. Actions in

family court may be required to ensure that maintenance payments are

received. The Ministry of the Attorney-General will receive $700,000 in

the coming year to provide support for the costs relative to this

program.

As a result of decisions taken by the federal government there will

be an increase in funding allocations for programs required to meet the

provisions of the federal Young Offenders Act. Operating costs for new

facilities, additional staff and contracting of community-based

services are expected to cost over $30 million in the coming year,

The government wishes to improve the stability of revenues available

to municipalities under the Revenue Sharing Act. Fluctuations in

provincial revenue are reflected in the transfers to municipalities

under the current revenue-sharing formula. Although this has enabled

municipalities to share in revenue upswings in the past, the experience

of recent years has been difficult. After discussions among the Union

of B.C. Municipalities, the Ministry of Municipal Affairs and my

ministry, the government has decided to propose a stabilization

mechanism to retain a portion of the revenue for distribution in future

years. The Minister of Municipal Affairs (Hon. Mr. Ritchie) will

introduce the necessary legislative measure.

There will be a small increase in the funds available under the

revenue-sharing program for distribution in the coming year. A total of

$204 million will be allocated to municipalities, and a further $31

million will be retained in the fund for future stabilization purposes.

The Ministry of Lands, Parks and Housing will be examining its Crown

land use policies in the year ahead to ensure that they are relevant to

current conditions and that the process for review of applications is

minimized. The pricing policy for Crown land is also being reviewed,

including lease rates for marina operators and agricultural land.

Additional measures are being taken to reduce the costs and

administrative burden of government. The Ministry of Consumer and

Corporate Affairs has now completed arrangements for the partial

self-regulation and licensing of the brokerage, insurance and real

estate industries. The government will continue to receive a portion of

the licensing fees, but will be relieved of some of the administrative

costs.

The reorganization of the central government personnel function in the Ministry

of Provincial Secretary and Government Services will save over $2 million in

the coming year.

Legislation, members will recall, to establish the new personnel division was passed just a short while ago.

In its search for ways to improve services to the public, the

government of British Columbia is continuing to extend the

computerization of records.

Administrative controls over the GAIN program will be strengthened

through the use of computer terminals for immediate updating of client

records. Savings are estimated in 1985-86 alone at some $2.7 million.

Access to information in the central registry of the Ministry of

Consumer and Corporate Affairs will be improved through the development

of an on-line system which will permit more efficient use of existing

staff.

Mineral and petroleum records in the Ministry of Energy, Mines and

Petroleum Resources are being computerized, with savings both in staff

and in other costs for the government and, most importantly, with

improved service to industry.

The land titles branch of the Ministry of Attorney-General will be

provided with an additional $2.8 million to accelerate the

computerization of its records. Annual net savings of approximately

$1.6 million are expected, on full completion throughout the province

in about two years' time.

These initiatives, Mr. Speaker, demonstrate that governments can

improve their services and efficiency while still reducing program

costs. Duplication of services between the Ministry of Labour and the

Workers' Compensation Board will be eliminated by the transfer of the

occupational environmental branch to the Board. WCB has made excellent

progress in improving efficiency and in controlling costs over the last

two years, permitting a reduction in the unfunded liability and a

freeze in assessment rates for 1985.

The government will provide $1.4 million in the coming year, through

the Ministry of Energy, Mines and Petroleum Resources, for the natural

gas extension assistance program. Provincial grants, together with

federal contributions, will enable line extensions to be constructed in

the Shuswap area.

The Ministry of Agriculture and Food will provide special financial

assistance, estimated at $2.8 million, to farmers in the Peace River

region, who suffered severe crop losses in 1984.

During the past year, the government made the decision to establish

the British Columbia Lottery Corporation in Kamloops. An estimated $4

million will be injected into the province as a result of this move.

More than 100 jobs will be created in that region once the Lottery

Corporation is fully staffed. Additional benefits will be provided

through the purchase of computer hardware from B.C. manufacturers and

suppliers.

The government's contribution to public transit in the province, for

1985-86, will be $74.3 million. No provision is made for the operating

costs of the ALRT system in this coming fiscal year, as it is planned

to capitalize net costs for the startup period, January 1 to March 31,

1986. Beginning in 1986-87, the operating costs of ALRT will be shared

among riders, local government and the provincial government.

Mr. Speaker, I've already outlined a significant number of taxation

and revenue policy measures in describing the economic renewal program.

I now propose to present a series of additional measures to simplify

and to improve the tax system, and to generate some additional revenue.

Central to this package of measures is a new consumer taxation amnesty

program.

[ Page

5287 ]

Over the past few years a disturbing trend has been observed in

British Columbia and elsewhere. A growing number of businesses have

been failing to remit to the government the taxes collected from their

customers. These public moneys, collected in trust for the government,

have instead been retained for use by the businesses. Another problem

is the growing frequency of situations where businesses or individuals

who purchase taxable items such as cars or boats are not paying the tax

owing on these purchases.

I emphasize today that the businesses or individuals who consciously

withhold taxes collected, or fail to pay taxes due, represent a very

small proportion of the total; nonetheless, the practice has been

increasing. It cannot be allowed to continue if the integrity of our

tax system is to be maintained. Clearly we have a duty to the vast

majority of businesses and individuals who are complying fully with the

legislation. We have to ensure that the non-complying minority are not

able to abuse their position of trust.

The consumer taxation amnesty program, which commences at midnight

tonight and ends on June 30, 1985, is designed to encourage businesses

and persons who have not paid or remitted taxes to voluntarily disclose

and pay these amounts. During the amnesty period, any taxes which were

due prior to today and have not been reported to the consumer taxation

branch can be paid with only interest added to the amount of tax owed.

No penalties will be applied, nor prosecution undertaken, if such taxes

are voluntarily disclosed and paid under the amnesty. All voluntary

disclosures will be treated in strictest confidence.

At the end of the amnesty, new penalty and fine provisions will

become effective. In cases where a vendor has collected tax from

consumers but wilfully withheld it from the government, the penalty

will increase from 10 percent to 100 percent of the tax which has not

been remitted. This is a significant increase — I admit that — but

these taxes represent funds collected from consumers and held in trust

for the people of the province.

Where a taxable purchase has been made by a business or individual,

and the purchaser has consciously made a false statement or wilfully

avoided paying the tax, the penalty is increased from 10 percent to 25

percent of the tax which has not been remitted — again, at the end of

the amnesty program. In other circumstances, such as late tax returns,

where the business has already received one warning notice within a

12-month period, the penalty will remain at the current 10 percent

rate. In addition to these changes in penalties, I shall be introducing

legislation which will make provision for the courts to impose

significant fines for fraudulent evasion of tax.

The amnesty and increased penalties and fines at the end of the

amnesty period will apply to the Social Service Tax Act, the Hotel Room

Tax Act, the Tobacco Tax Act, the Gasoline (Coloured) Tax Act, the

Gasoline Tax Act and the Motive Fuel Use Tax Act.

In this budget, we have adopted many measures to assist the business

community in British Columbia. Business must also be responsible, and

ensure full compliance with the tax legislation, which applies to all

residents of British Columbia. The amnesty will provide a period of

grace for individuals and businesses to get their affairs in order, and

the increased penalties will ensure that this very important component

of the province's revenue base is protected.

Other administrative measures to be introduced for this budget include the following:

Effective midnight tonight the maximum period subject to audit under

the Social Service Tax Act and the Gasoline (Coloured) Tax Act is

reduced from ten years to six years, except for wilful evasion of tax.

In my view, it is unreasonable for vendors or taxpayers to be expected

to retain the detailed business records required for sales tax audits

for more than six years.

Effective midnight tonight purchases by non-residents of vehicles

and aircraft which are registrable will be given point-of-sale

exemption from social service tax. To ensure that British Columbia

businesses are able to compete with other jurisdictions for sales of

these items to non-residents, this exemption at the time of purchase

will replace the current and very complex provisions for a rebate of

tax.

Effective for the 1986 revised assessment roll, the impact on a

property's actual value of the restrictions contained in some Crown

leases will be incorporated into the calculation of the assessed value.

Since restrictions on use contained in some Crown leases in

non-municipal areas are analogous to municipal zoning, the impact on

property values of these restrictions should be and now is recognized.

During this session it is my intention to introduce legislation to

consolidate the three existing fuel tax statutes. One of the

oft-repeated requests from persons presenting views during the public

meetings was that all levels of government simplify tax legislation.

The consolidation of these statutes is a step in the right direction.

Over the coming year the government will investigate the feasibility

of instituting an identification card system for bona fide farmers, to

ensure that the farm purchase exemption under the social service tax is

restricted to those whom the exemption is intended to benefit and to

eliminate unnecessary paperwork for businesses and government.

Over the next few months I intend to review the application of the

social service tax to sales and leases of assets between individuals

and companies which have a close relationship. This area of taxation

is, as I have learned, complex, and all points must be considered most

carefully. Until this review is completed, the current regulations will

apply.

I am also proposing to introduce a series of minor administrative measures which are described in appendices to this document.

[3:45]

In addition to these administrative changes, a number of tax changes are required

to achieve equity and revenue objectives. The following sales tax changes will

be introduced:

Effective midnight tonight a new temporary use provision will be

introduced under the Social Service Tax Act for specified equipment

used for seismic studies for petroleum and natural gas exploration and

development. This change in the method of collecting that tax will

address a specific problem in the northeastern region of the province

and encourage more efficient use of drilling equipment in our oil and

gas exploration industry.

Mr. Speaker, effective midnight tonight returnable milk bottles will be exempt from social service tax.

Effective midnight tonight propane and natural gas used by farmers for grain-drying will be exempt from social service tax.

Effective midnight tonight portable buildings will be taxed on the

cost of the component materials rather than on the sale or lease price

of the building.

Effective with the first monthly billing period commencing on or after April 1, 1985, charges for pay television will

[ Page 5288 ]

be subject to social service tax. Basic cablevision charges remain exempt from tax.

Effective April 1, 1985, British Columbia Railway Company and its

subsidiaries will be subject to fuel, social service and hotel room

taxes. Exemption from taxation was initially provided in 1912, and with

last year's financial restructuring of this important Crown corporation

the railway is now able to pay these taxes, as does any other efficient

business.

Effective April 1, 1985, the tax rate on cigarettes, cigars and

packaged tobacco will increase by 10 percent. This measure will

increase revenue from this tax by $15 million in 1985-86, and the

existing ad valorem adjustments on March 1 and September 1 of each year

will continue.

In the area of assessments and property taxation, the following changes are proposed.

Mr. Speaker, a small item, but one of considerable nuisance — departing from

my text for just a moment: legislative provision will be made for municipalities

to exempt non-profit occupiers of school buildings from property tax.

Provisions permitting long-time owners of non-conforming residential property

to enjoy the benefits of assessment at residential values will be broadened

to provide this benefit to all persons who have owned and occupied non-conforming

property for ten years or more. This is an adjustment to the so-called 1959

rule.

As was previously announced, legislation will be introduced in the

next weeks exempting ALRT from property tax for 1985 and subsequent

taxation years.

Since the nations, corporations and companies who will come to Expo

86 will be our guests for only a few months, the Expo 86 site will be

exempt from property taxation effective the 1985 taxation year.

Effective the 1986 taxation year holders of grazing licenses and

other short-term tenures will be exempt from property tax on that land.

Effective the 1986 taxation year manure storage facilities will be

exempt from property tax in order to provide an incentive to improve

environmental management in the agricultural industry. Mr. Speaker, I

said I would travel the province and listen to concerns. That was a

concern. It's changed.

Effective the 1986 taxation year certain recreational land will be

taxed under a class 8 designation rather than a class 6 designation.

The name of class 8 is changed to "Recreation Property/Non-profit

Organization." This change will substantially reduce the level of tax

on recreational land by taxing it at the same rate as residential land.

[Mr. Speaker in the chair.]

For the 1986 taxation year the minimum property tax payment will be

raised from $175 to $200 per year for those property-owners who do

not qualify for the supplementary homeowner grant. For those who do

qualify for the supplementary grant, including the elderly, the minimum

tax will remain at $1 per year.

For the 1986 taxation year rural property taxes will increase from

$1.30 per thousand dollars of value to $1.40 per thousand dollars of

value.

Under the Income Tax Act provisions will be introduced to ensure that provincial

personal income tax payable does not exceed federal tax payable for low-income

taxpayers for the 1985 taxation year.

With respect to the Corporation Capital Tax Act, effective April 1,

1985, bankers' acceptances will be included in the tax base. These

instruments, Mr. Speaker, are being increasingly used to avoid payment

of the tax. During the period this tax is being phased out, it is

appropriate to include them in the tax base.

Under the Insurance Premium Tax Act, the following changes will be proposed.

Effective January 1, 1986, the general insurance tax rate will

increase from 2 percent to 3 percent. Premiums for life, accident and

sickness insurance will continue to be taxed at the existing 2 percent

rate.

Effective January 1, 1986, insurance premium tax will be phased in

for marine insurance policies for pleasure boats at the rate of 1

percent, increasing to 2 percent effective January 1, 1987, and to 3

percent effective January 1, 1988.

Effective for 1985, provincial business license fees levied in

non-municipal areas are abolished. These fees are not required for any

provincial administrative purpose, and therefore their abolition will

reduce the regulatory burden of government on the private sector.

Mr. Speaker, this rather long list of administrative and taxation

changes reflects those from among the many suggestions that I received

during my public meetings which I identified as beneficial for the

equity and fairness of our provincial tax system.

At this point I want to reflect briefly on the path which has

brought us to this day. We in British Columbia have been tested and

have been found equal to a difficult challenge. We've made the

sacrifices and shared the burden, and in so doing we've made possible

the new measures for job creation that I have announced today.

Some three years into a very difficult adjustment period, we are all

aware that we had to face fundamental changes. Because British Columbia

is reliant on international resource markets which are particularly

affected by the adjustment, economic conditions have been worse in our

province than for many other regions of the world. But we are not

alone. One can look to Alberta, to Texas, to Washington state and

Oregon, or to virtually any regional economy dependent upon natural

resources, and see shades of the same adjustment problems.

We should, however — we can — have confidence that our economic

difficulties will not prevail indefinitely. The past few years have

taught us to respect the unpredictability of human events. Problems

which seem insurmountable can quickly fade into obscurity.

Opportunities which seem limitless can evaporate as events pass them

by. I am not suggesting that we ignore our problems, but if we look

beyond them, we shall see that British Columbia remains one of the

truly favoured regions of the world. Despite slow growth and high

unemployment, people continue to move to our province.

The most fundamental source of optimism for British Columbia lies in

what we have achieved together in these three short years, and in the

very substantial steps that we're taking now toward economic renewal.

We have restored the cost of government to a level which is affordable

in a more competitive world economy, and we have done it in a manner

which has preserved our most vital social programs. We've made an

adjustment which many others have yet to face, reacting to the

recession firmly, but fairly and quickly. We're now able to undertake

economic programs and initiatives which otherwise would not have been

possible. We are able to recognize in a substantial and tangible way

the critical

[ Page 5289 ]

priority which now must be attached to the enhancement of our economic base.

Economic renewal means jobs. It means a more stable and growing

economy, and it means financial security for British Columbians.

Through major taxation reforms, programs to develop new industry, and

investments in our resource base and our public capital facilities, the

provincial government is providing leadership for the tasks ahead. For

this program of economic renewal to succeed and get British Columbians

back to work, there must be an effective partnership. Cooperation from

the national government is essential. Local governments will also play

a key partnership role at the community level.

While concerted action by the three levels of government is

necessary, it is not enough. Business and labour must complete the

alliance. New investment is essential to expand production capacity,

enhance competitiveness, and diversify into new product and service

lines. Industrial relations must achieve new levels of cooperation and

stability. Compensation demands must reflect a recognition that now is

not a time to pursue catch-up or to seek enrichment. Until employment

stability and renewed economic strength is achieved, all partners must

endorse the principle of equal commitment. Competition for larger

shares will destroy the basis for recovery that is so essential to the

entire province.

New measures to create employment for our citizens have been made

possible today through a realistic program of restraint. Our business

taxes are today being brought into line through reductions targeted

toward encouraging the private sector to perform its vital role of

creating jobs and economic activity.

This budget provides key elements in the framework for economic

renewal. The challenge is to use them to create a better future for all

British Columbians.

MR. SPEAKER: In order that certain documents referred to can

be circulated to the members, we will take a very short recess — it

shouldn't be more than just a few moments. We will reconvene at the

sound of the bells.

The House took recess at 4 p.m.

The House resumed at 4:12 p.m.

MR. STUPICH: Mr. Speaker, very briefly at this time, may I

congratulate the Minister of Finance. He read well; he kept himself

within the self-imposed time limit of two hours, and that is something

to be congratulated on.

Interjection.

MR. STUPICH: No, I'm serious about that. I don't recall ever

sitting through a budget speech that was completed in less than two

hours. So certainly I do congratulate the minister on that.

I congratulate him, and we will support him on some of the tax

expenditures proposed today. On one of them, of course, they'll throw

it at me that we started it — the corporation capital tax. Yes, we did.

We imposed it when we were in government, and for some years now we

have been saying it's time to get rid of it. It never should have been

there. We will support the move by government to remove that tax, and

there are others that we will support.

Unfortunately, we can't support the whole budget, Mr. Speaker. To us

it doesn't read as a self-congratulatory message of pride about a

restraint program, which has culminated in six years of deficits by

this administration, as the minister told us today. The budget is the

first time it's been spelled out so clearly. And although this year's

deficit is presented to us as being some $90 million less than last

year's, it's some $200 to $300 million higher than the original

estimate for last year. So we're mixing apples and oranges.

The budget proposes only a nominal increase in forest expenditures,

when there's widespread recognition of the need to do very much more.

It proposes an increase of only 2.3 percent, much less than the

inflation rate will be.

We're told that the government has always supported education. The

increase there is just equal to what the inflation rate will be — 5

percent. In health, an increase of only 4 percent. So there isn't any

increase in human services.

I will have a lot to say about the budget tomorrow, but at this

point I would simply like to move adjournment of this debate until the

next sitting.

Motion approved.

[4:15]

Introduction of Bills

SOCIAL SERVICE TAX AMENDMENT ACT, 1985

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

a bill intituled Social Service Tax Amendment Act, 1985.

HON. MR. CURTIS: Mr. Speaker, I note that under our new

practice it would be possible to make brief remarks, but may I simply

indicate that a number of the bills being introduced today from His

Honour relate to matters that were dealt with in the budget address.

Bill 11 introduced, read a first time and ordered to be placed on

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

after today.

BRITISH COLUMBIA

TRANSIT AMENDMENT ACT, 1985

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

a bill intituled British Columbia Transit Amendment Act, 1985.

Bill 17 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.

TOBACCO TAX AMENDMENT ACT, 1985

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

a bill intituled Tobacco Tax Amendment Act, 1985.

Bill 12 introduced, read a first time and ordered to be placed on

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

after today.

[ Page 5290 ]

HOTEL ROOM TAX AMENDMENT ACT, 1985

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

a bill intituled Hotel Room Tax Amendment Act, 1985.

Bill 13 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.

INSURANCE PREMIUM

TAX AMENDMENT ACT, 1985

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

a bill intituled Insurance Premium Tax Amendment Act, 1985.

Bill 14 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.

GASOLINE TAX AMENDMENT ACT, 1985

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

a bill intituled Gasoline Tax Amendment Act, 1985.

Bill 8 introduced, read a first time and ordered to be placed on

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

after today.

GASOLINE (COLOURED)

TAX AMENDMENT ACT, 1985

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

a bill intituled Gasoline (Coloured) Tax Amendment Act, 1985.

Bill 9 introduced, read a first time and ordered to be placed on orders of

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

MOTIVE FUEL USE TAX

AMENDMENT ACT, 1985

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

a bill intituled Motive Fuel Use Tax Amendment Act, 1985.

Bill 10 introduced, read a first time and ordered to be placed on

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

after today.

INCOME TAX AMENDMENT ACT, 1985

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

a bill intituled Income Tax Amendment Act, 1985.

Bill 18 introduced, read a first time and ordered to be placed on orders of

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

BRITISH COLUMBIA RAILWAY

AMENDMENT ACT, 1985

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

a bill intituled British Columbia Railway Amendment Act, 1985.

Bill 15 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.

BUSINESS LICENCE REPEAL ACT

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

a bill intituled Business Licence Repeal Act.

Bill 16 introduced, read a first time and ordered to be placed on

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

after today.

INCOME TAX (SMALL BUSINESS EMPLOYMENT

TAX CREDIT) AMENDMENT ACT, 1985

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

a bill intituled Income Tax (Small Business Employment Tax Credit) Amendment

Act, 1985.

Bill 5 introduced, read a first time and ordered to be placed on

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

after today.

CORPORATION CAPITAL TAX

AMENDMENT ACT, 1985

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

a bill intituled Corporation Capital Tax Amendment Act, 1985.

Bill 7 introduced, read a first time and ordered to be placed on

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

after today.

ASSESSMENT AND TAXATION

(MISCELLANEOUS AMENDMENTS) ACT, 1985

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

a bill intituled Assessment and Taxation (Miscellaneous Amendments) Act, 1985.

Bill 6 introduced, read a first time and ordered to be placed on

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

after today.

MINISTRY OF INTERNATIONAL

TRADE AND INVESTMENT ACT

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

a bill intituled Ministry of International Trade and Investment Act.

HON. MR. PHILLIPS: Mr. Speaker, I move that the bill be introduced and read a first time now.

[ Page 5291 ]

Mr. Speaker, this government is committed to renewal of the British

Columbia economy, as witnessed by the budget that we just heard. If we

are to be successful in meeting this challenge, we must increase the

export of goods and services, and we must create a receptive

environment to attract invest ment. That, Mr. Speaker, is the key to

job creation in this province, now and in the future.

Mr. Speaker, I take considerable pride in introducing the Ministry of International

Trade and Investment Act. It is further evidence of this government's leadership

and indeed this government's boldness in furthering the economic interests

of British Columbia around the world.

There are three aspects to the mandate of this new ministry: international marketing, investment promotion and trade policy.

The vitality of British Columbia's economy is directly linked to our

ability to export goods and services. One-fourth of world production is

now exported, double the proportion of a decade ago. Over the past 20

years exports increased from less than one-fifth of Canada's output to

almost one-third. British Columbia is one of the leading trading

provinces, with export reliance being double that of Canada as a whole.

The nature of British Columbia, and aspirations for economic

diversification, demand enormous amounts of investment capital. Much

of this must come from outside of Canada. With an improved business

environment as a result of this budget today, my new ministry will

bring to the attention of the world business and investment

communities....

MR. HOWARD: Mr. Speaker, I have a point of order relating to

the practice recommendation, one aspect of which is two minutes'

limitation. The purpose of this procedure is so that the person

introducing the bill can explain its purpose, not to embark upon a

mini-debate about some other subject matter.

MR. SPEAKER: Hon. members, the two-minute allocation for explanation

purposes is.... It is difficult for the Chair to interpret just what the

minister would say until he's had an opportunity to say it. In any case,

with 17 seconds remaining, the minister will conclude.

HON. MR. PHILLIPS: Yes, Mr. Speaker. Did you take out the time for the applause?

MR. SPEAKER: Yes, hon. member.

HON. MR. PHILLIPS: Mr. Speaker, British Columbia wants to be an active

partner with Ottawa and with the other provinces in ensuring that the trade

policy environment in Canada reflects aims, aspirations and interests of all

regions.

But I will close, Mr. Speaker, by saying that the British Columbia government

cannot do the job alone. My new ministry will intensify its interaction with

the private sector and ensure that all of our programs and activities reflect

their interests and are geared to the opportunities that they can address.

MR. SPEAKER: Hon. members, I would commend to all,

particularly ministers of the Crown, an opportunity to read page 37 of

the standing orders. It will be to the benefit of the proceedings of

the House.

Bill 20 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.

INDUSTRIAL DEVELOPMENT INCENTIVE ACT

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

a bill intituled Industrial Development Incentive Act.

HON. MR. McCLELLAND: For the benefit of the member for

Coquitlam-Moody (Mr. Rose), this bill provides for a special-service

account for $50 million to establish a flexible and very responsive

mechanism that will provide tailored incentive packages to stimulate

private sector investments in key sectors and projects in our province.

Bill 23 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.

SMALL BUSINESS VENTURE CAPITAL ACT

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

a bill intituled Small Business Venture Capital Act.

HON. MR. McCLELLAND: Mr. Speaker, as outlined in the budget

speech by the Minister of Finance, this bill will allow tax credits

and/or cash rebates in the amount of some $40 million over the next

five years to, again, encourage new private sector equity investment in

smaller British Columbia firms in a number of selected industries and

sectors, so that permanent job creation can be facilitated.

[4:30]

Bill 19 read a first time and ordered to be placed on orders of the

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

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 4:31 p.m.

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