1976 Legislative Session: 1st Session, 31st

Parliament

HANSARD

The following electronic version is

for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, APRIL 9, 1976

Morning Sitting

[ Page 765 ]

CONTENTS

Statement. British Columbia's position re

anti-inflation programme

Hon. Mr. Bennett — 765

Mr. Gardom — 766

Mr. King — 766

Mr. Gibson — 767

Mr. Wallace — 767

Routine proceedings

Anti-Inflation Measures Act (Bill 16) Hon. Mr. Wolfe.

Introduction and first reading — 768

Budget debate (continued)

Mr.Loewen — 768

Mr. Lockstead — 769

Social Services Tax Amendment Act, 1976 (Bill 11)

Second reading.

Mr. King — 774

Mr.Lca — 777

Mr. Gibson — 780

Amendment to delay second reading.

Mr. Gibson — 783

Mr. Lauk — 783

Mr. Wallace — 785

Mr. Nicolson — 787

Division on time of adjournment — 788

Statement. Correspondence concerning patriation of the

constitution.

Hon. Mr. Bennett — 788

Mr. Macdonald — 789

Mr. Gibson — 789

Mr. Wallace — 789

Privilege. Alleged improper passage of special warrant.

Mr. King — 789

Hon. Mrs. McCarthy — 790

Mr. King — 790

Mr. Speaker — 790

Mr. Lauk — 790

FRIDAY, APRIL 9, 1976

The House met at 10 a.m.

Prayers.

MR. SPEAKER: Hon. members, it is with regret that I have to

inform the House that the former executive assistant, Mark Holtby, who

worked from 1972 to 1974 in the NDP caucus, passed away yesterday. I am

sure that the members of the House would join with the Speaker in

expressing our concern to Mr. Holtby's family.

HON. W.R. BENNETT (Premier): Mr. Speaker, I ask leave to make

a statement.

Leave granted.

HON. MR. BENNETT: Mr. Speaker, you will recall that I have

made it clear on several different occasions that British Columbia

supports the spirit and intent of the national wage and price controls.

We intend to provide strong provincial leadership towards the same

goal. We intend to both preach and practise restraint, and have already

demonstrated this in many of the actions we have taken to date.

Controls and interference with our market economy are necessary in a

time of temporary crisis. We hold firmly to that view. We are also of

the opinion, however, that the national controls must be dismantled as

soon as inflationary pressures are reined in.

The economy should be allowed, as soon as is practicable, to find

its proper equilibrium undistorted by crisis controls that are

ill-suited to interfering with the market forces for anything but the

shortest time possible. For these reasons, we support the legality of

the national duty to act in emergency situations for the life of a

particular emergency.

The provinces have a duty and a responsibility to provide leadership

towards fighting inflation. We in British Columbia accept this

responsibility and this duty and intend to take all steps possible to

ensure that the purchasing power of British Columbians is protected. We

support rent controls under the present circumstances. Marketing

boards' prices and retail food prices must be monitored very closely.

We want the full legal capacity, should it prove necessary in the

future, to freeze prices for a limited period of time.

These are vital steps to attack runaway prices and government

spending. As I said in late February, my government is going to review

the whole process by which pricing decisions for public-sector

operations and services are made. In the long run, it will be a much

better system for everyone if price decisions involving Crown agencies

are subjected to systematic and independent review by a third party.

Our officials have been instructed to get to work on that project so

that appropriate changes can be made as soon as possible.

In the meantime, we want to have it firmly on the record that our

public-sector suppliers of commodities and services are being run on

sound management principles, are as efficient as possible and are

running their operations in a manner consistent with the spirit and

intent of the national attack on inflation. Any agreement that we sign

with Ottawa will make this clear, and when we bring in our own system

of reviewing public prices and rates, it will be clear that we want

nothing less than full acceptance of the principle of accountability to

the people of B.C.

It is my government's intention to present a bill before this

assembly today to give authority to the B.C. government to enter into

an agreement with Canada under the federal anti-inflation Act to carry

out anti-inflation programmes. This will allow, for example, Victoria

to agree with Ottawa to have the national guidelines apply to the

provincial public sector for a period of time, most likely to April

1977. Any agreement will make it clear that the arrangement is

temporary and is meant to give united support to the war on

inflationary pressures. Agreements between governments on complex

economic matters are not arrived at overnight.

I'm hopeful that we can conclude our discussions fairly quickly, but

judging by the experiences of the other provinces, we will have to

provide some reasonable time for these discussions. Let me make it

clear that we are with the rest of the country, that into next year the

national guidelines will apply to the provincial public sector, and

that for the life of the agreement we intend to refer all public-sector

compensation agreements arising since October 14, 1975, to review by

the Anti-inflation Board.

As soon as better provincial machinery is in place to give proper

leadership in public-sector bargaining and pricing, we will exercise

the option to withdraw such questions from the national authorities. We

want to emphasize that the B.C. Legislature must have a part to play in

giving direction to our own economy.

Mr. Speaker, I urge all hon. members to support our war against

inflation. With the support of all British Columbians, the war against

inflation will be won. Inflation plays no favorites; it hurts everyone.

It's the cruelest tax of all, Mr. Speaker. It cuts into everyone's

take-home pay. However, if we are not united, the price spiral will

continue. Government spending will again get out of hand. We cannot and

will not allow that to happen.

HON. G.B. GARDOM (Attorney-General): Mr. Speaker, I ask leave

of the House to make a companion statement on the same subject.

[ Page 766 ]

Leave granted.

HON. MR. GARDOM: Mr. Speaker, on March 10 the Minister of

Justice for Canada (Hon. Mr. Basford) announced that the federal

anti-inflation Act and its guidelines would be referred to the Supreme

Court of Canada for a ruling as to their constitutional validity.

As is the normal practice in constitutional cases before the Supreme

Court, all of the provinces have been afforded an opportunity to

intervene in these proceedings which, of course, will involve questions

of considerable constitutional significance.

In the last few weeks, Mr. Speaker, the Government of British

Columbia has given careful consideration to this reference, and

specifically as to whether it would intervene. I wish to announce this

morning that British Columbia will take

part in the reference because

of the very important constitutional issues to the country that will be

raised, such as the extent to which the federal government can

legislate over the private sector, which under the BNA Act is an area

normally subject to provincial control.

You will recall, Mr. Speaker, that on February 27 the hon. Premier

publicly stated that the government of this province is committed to

doing everything possible to help the national attack against

inflation. I wish to make it clear that our intervention in the

reference will not in any way modify that position. As the Premier said

this morning, this province is proceeding with its negotiations with

the federal government to conclude an agreement whereby national

anti-inflation guidelines would be made applicable to the provincial

public sector.

However, Mr. Speaker, British Columbia is mindful of the potential

long-term implications a decision of the Supreme Court of Canada, based

on certain principles, could have on the division of powers between the

federal government and the provincial governments. We consider that the

distribution of powers between the provinces and the federal

government, as set out in sections 91 and 92 of the BNA Act, must be

preserved in order not to curtail the constitutional autonomy of the

provinces.

It is therefore B.C.'s submission that exceptions to this general

rule of provincial autonomy whereby the Parliament of Canada can

intrude into the provincial domain are limited to where national

emergency conditions exist, for under such circumstances, according to

the provisions of the BNA Act, the federal Parliament can enact

legislation affecting what are normally provincial powers on the basis

in that statute.

In our view, Mr. Speaker, it is obvious that the federal

anti-inflation Act in ordinary circumstances would amount to a

considerable intrusion into established areas of provincial

jurisdiction, most notably that of the property and civil rights — for

example, powers to regulate increases in wages and prices. Hence,

British Columbia will advance arguments to the Supreme Court that such

intrusion is proper only if the court concludes that there is a

situation of emergency, in degree and reality sufficient to properly

commit Parliament to exercise the powers in questions.

In

summary, Mr. Speaker, we are entering the case on the basis of

support of the federal position, but on the clear understanding that

evidence must be led as to the exceptional conditions that prevail and

that which is historically a provincial constitutional jurisdiction.

Needless to say, Mr. Speaker, this will be one of the most important

constitutional cases of our time. British Columbia appreciates the need

for the federal legislation but at the same time clearly indicates that

in so doing British Columbia is in no way accepting any watering down

of its provincial rights.

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, I

thank both the Premier and the Attorney-General for their statements on

the position which British Columbia is taking with respect to the

anti-inflation programme. They have promised that the position would

become clear, and I'm pleased that they have now been able to take a

clear stand which will undoubtedly reveal itself when the legislation

is presented to the House.

I hope, Mr. Speaker, that in the Premier's concern and the reasons

he stated this morning in the House for reaching agreement and

participating in the federal programme he is not only mindful of the

ravages of inflation as it affects and erodes wages, but mindful too of

the need for equity in terms of a programme to fight inflation.

I noted, Mr. Speaker, that the Premier talked about rent controls as

they now exist. He talked about control of the public sector in the

bargaining relationship. He talked about acceptance of the four-three

principle, which means that the province will vest in the federal

government the authority to control the private and public sectors in

the Province of British Columbia. But I hope his omission of any

reference to the high cost of capital, to the high and often usurious

interest rates and to the need for housing programmes is not an

indication that these considerations will be absent from the

legislation which the government brings in, and indeed that they will

not be absent from this government's dialogue with the federal

government in terms of persuading the federal government to meet these

needs in providing an equitable and fair anti-inflation programme,

which not only rides in a major way on the backs of working people but

also recognizes the need for some concomitant programme to ensure that

[ Page 767 ]

the results of this inflation fight are not an

accelerating rate of unemployment, as we seem to see at the moment.

I would say, with respect to the Attorney General's (Hon. Mr.

Gardom'

s) presentation, that it is interesting to find the province's

approach to the court reference with respect to constitutional

authority — and I wonder, Mr. Speaker, whether or not British

Columbia's initial acceptance of federal regulation of not only the

private sector but the public sector, too, is not somewhat of a

precedent in terms of accepting and, indeed, inviting further

incursions into the constitutional realm of the Province of British

Columbia. I wonder whether or not there would be some conflict in terms

of the final positions stated by the Attorney-General and, indeed, the

apparent basis of the agreement which they have accepted. In any event,

we will be looking forward with great interest to the legislation when

it is presented, and I trust there will be adequate opportunity for

full analysis and dialogue at that time.

MR. G.F. GIBSON (North Vancouver-Capilano): Mr. Speaker, I

thank the Premier for a very helpful statement that I think had to be

made, and it was made in a timely fashion. The anti-inflation programme

got off to a shaky start in some areas. It was therefore under attack

in some respects, but it is more essential to British Columbia than to

any other part of this country that it succeed because of the

tremendous component of our economy which is export and therefore needs

to have prices that are competitive in this world. So I think the

government has done a good thing in giving not only their moral but

also their legal support to the anti-inflation programme.

Government prices, the prices of the agencies of the government of

the province of British Columbia, are a very important part of the cost

of living in this province, and I might say, Mr. Speaker, that some of

the prices have been raised very quickly in some areas by this

government in the first three or four months of their term. I hope that

this new body which is to be established will be able to restrain these

prices which bear heavily on the ordinary person.

On the other side of the coin is the acceptance of federal

guidelines for the provincial public service, which I think is a good

thing. But the two must balance. People must have control of prices, if

there is to be control of their incomes.

In respect of the remarks of the Attorney-General, I am glad that he

is intervening in this case. The balance between federal and provincial

powers is always a delicate question in our country. Provincial

legislatures must always maintain their position. It's up to the

federal government to argue for their powers; it's up to us to argue

for ours. If we do not argue forcefully they are always in danger of

being eroded. The balance, if anything, I suggest, Mr. Speaker, must in

these days shift further towards the provinces, and I hope and know

that the Attorney-General will proceed vigorously in that direction.

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, I also would like to

acknowledge, as I have already done, statements by the Minister of

Transport and Communications (Hon. Mr. Davis) about the new style we

seem to be developing where at least some reasoned and orderly

statements are given to the House, and the opposition is not left to

wonder what's going to happen next. I feel that the Premier's statement

is, as the Liberal leader said, very timely. We had already referred

from this side of the House in the budget speech debate to the frequent

public statements that the Premier had made that sooner or later he

would be signing an agreement with the federal government regarding

price and wage control in the public sector. I notice that Quebec is

reported as not being interested in signing such an agreement and is

thinking of setting up its own anti-inflation board.

I feel, in the light of statements by the Minister of Finance (Hon.

Mr. Wolfe) regarding recent federal unilateral actions on joint sharing

programmes, that we must tread very warily with the federal government,

despite the well-motivated reasons that the Premier outlined — in the

face of the severity of inflation and the fact that it is

unquestionably our No. 1 problem in Canada today, and certainly in

British Columbia. Nevertheless, I don't think the example of the

federal government in recent months would encourage me to think that we

can enter into such a crucial kind of agreement, in the light of the

Attorney-General's reservations, without some real concern.

Anyone who was fortunate enough to attend the University of Victoria

last weekend when Mr. Bora Laskin and others spoke.... We had a

Canadian scholar of some note from Queen's University in Kingston who

pointed out the very sensitive and highly inflammatory nature of the

constitution at the present time when there are so many areas in which

it is being questioned.

So I agree that inflation must be tackled on a united front. I'm not

convinced that signing an agreement with the federal government is the

answer. I very much welcome the stress which the Premier placed on the

temporary nature of the agreement — that the controls would last for

the shortest time possible, and that accountability would be the

mainstay of every action that this government will take. If that is the

path they will follow, they will certainly have my strongest support as

a member of the opposition.

[ Page 768 ]

1 am glad that this statement has been made to clarify the kind of

question I raised in the House yesterday about the B.C. Steamship Corp.

having its dispute with the unions, which had negotiated a wage

increase in excess of guidelines. We've heard conflicting statements,

and I've read conflicting reports in the newspapers as to whether or

not B.C. Steamship and the unions could take their own dispute to the

Anti-Inflation Board without interference from the provincial

government. Examples on our provincial doorstep and examples at the

national level have not always led to the equitability which every

speaker has stressed as being the only hope for wage-and-price control

programmes.

Our own former national leader, Robert Stanfield, when he fought an

election on this issue, mentioned that wage-and-price control is a

rough kind of justice. But it doesn't have to be as rough as it appears

to be developing in this country at the present time. I echo the strong

feelings of the other two leaders in the opposition side of the House

that if it turns out to be very much a wage-control programme but

without any real control over prices, the programme is doomed to create

only a very serious amount of labour unrest all across Canada.

I'm glad that the Minister of Labour (Hon. Mr. Williams) is showing

such earnest attention to my remarks.

Introduction of bills.

ANTI-INFLATION MEASURES ACT

Hon. Mr. Wolfe presents a message from His Honour the

Lieutenant-Governor: a bill intituled Anti-Inflation Measures 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.

Orders of the day.

ON THE BUDGET

(continued debate)

MR. R.L. LOEWEN (Burnaby-Edmonds): Mr. Speaker, I am pleased

to rise again this morning. I am particularly pleased about the

Premier's statement in respect to us in British Columbia signing the

federal anti-inflation programme and joining that programme. It is one

thing to sign and become part of this agreement; it's another thing to

put pressure on the federal government.

I can't help but think of the quote by Colbert when I think of the

federal policy on taxation: "The art of taxation consists in so

plucking the goose as to obtain the largest amount of feathers with the

least amount of hissing." I congratulate again — and I reiterate some

of the things I said yesterday — our cabinet for coming through with a

budget with only a 5.4 per cent increase from the previous year. But I

have to reiterate that the federal government increase is 16 per cent,

and as a province joining this anti-inflationary programme, it behooves

us to put pressure on the federal government, in every way possible,

and to join the geese in hissing as loudly as possible, and insisting

that they as well bring their expenditures of tax funds under control.

There was a question put to me yesterday during my speech, from the

hon. member for New Westminster (Mr. Cocke). He asked me the question,

and I'm not sure whether he wanted me to answer or not what I knew

about New Westminster. Well, I don't want to tell you all the things I

know about New Westminster. I wouldn't want to tell you about the taxes

I pay at present in New Westminster and the different organizations I'm

involved in and the businesses that I'm involved in in New Westminster.

However, if he is really interested in New Westminster I'd like to

offer him two books that the mayor of New Westminster gave to me

several days ago about New Westminster — that is, if he's really

interested in learning about New Westminster.

I also took a little time to try to explain what was happening in

both private and corporate taxation at this time, and particularly I

took a little time to explain what was happening on the corporate

level. I honestly have the feeling that if the well-meaning socialists

on this side of the House really understood corporate tax, there'd be

very few of them sitting on this side. In fact, they just might move

over to the heavies on this end of the House. (Laughter.)

Seriously, there is only so much that the province can produce for

public services, and when that amount, both privately and in

corporations, amounts to frequently an average of over 50 per cent, how

much more can be produced by the people and the corporations of this

province for social services?

I also spoke just a little about business, and I'd like to again

read a statement from Mr. Wadsworth, the chief executive officer of the

Canadian Imperial Bank:

"Today business is criticized and attacked from all

sides and has itself in a relatively weak position to offer an

effective defence. Business is at times attacked for poor products and

service, and when justified, such criticism is of a kind we should

encourage.

"Unfortunately, the major thrust of attack over the

last several years has shifted to profits. Many Canadians have become

emotional at the very mention of the word 'profit' and are quite

prepared to go along with any government policy which will lower the

level of business return.

[ Page 769 ]

"Also, to a surprising extent, many employees of

private enterprise fail to appreciate the role of profit in our society

and the importance to them personally. If employees whose jobs and

incomes depend on the profitable operation of their firms do not

appreciate the function of profits, how can we hope to persuade those

Canadians who are employed at various levels in the public sector?

"The misguided attacks on profits point to a serious

lack of understanding of the type of society in which we live. Much of

the blame for this situation has to fall on the shoulders of the

business community, which has failed to explain, or which has failed to

communicate, its role in an effective manner.

"Most young people who enter the work force during the

last decade have had little or no training in economics and business

subjects."

I'd like to include many politicians as well.

"We are now in a much more complicated society than

prevailed even a generation ago. We in business have a responsibility

to see that both directly, through formal education, and by our own

actions, those assuming their place in our society are better informed.

"While it is important to educate the general public,

it is, of course, equally vital to express to those in government the

role that business plays in our system."

"In closing I'd like to quote J.K:

"Oh that there might in B.C. be

"A duty on hypocrisy,

"A tax on humbug,

"An excise on solemn plausibility." (Laughter.)

MR. D.F. LOCKSTEAD (Mackenzie): Once again it is a pleasure

to take my place in this debate and discuss this budget which was

presented to this House a short time ago, and the budget that was

presented outside

of this House a short time ago, and several other budgets that have

been distributed around this province. However, I think I'll stick to

the budget that we had presented to this House about two weeks ago, for

local consumption.

It's nice to speak on a Friday morning, Mr. Speaker; everything is

quiet, everybody's relaxed, everybody goes up for coffee....

MR. WALLACE: Just don't get stirred up, Don.

MR. LOCKSTEAD: Oh, no. I'll be very mild, and short, Mr.

Speaker.

In my opinion, Mr. Speaker, and some of my colleagues have said this

but I would like to reiterate, this is a revenge budget. In my opinion,

it's an overly inflated budget for political reasons.

The government has, for example, increased the sales tax by 40 per

cent, from 5 to 7 cents on the dollar — a regressive tax, a tax that

hurts the low-income people much harder than the well-do-do and the

rich. On one hand this government gives the senior citizens a

$50-a-year increase in the homeowner's grant and then takes it away

from them with the other hand — a most regressive tax.

While discussing the proposed tax increase, Mr. Speaker, I don't

think that people living in unorganized rural areas are going to be

very pleased with their assessments from $1 to $50 when in some areas

no services exist whatsoever, particularly in areas, such as in my

riding, like Texada Island, Roberts Creek and Lund, where a large

proportion of people living in that area are senior citizens. Some of

these people, really, are just barely getting by now, Mr. Speaker. I

really think it's a very unfair type of tax, certainly for seniors.

It would appear that this government has passed special warrants to

unofficially inflate the expenditures of the fiscal year just ended,

and for political reasons. That includes a cheque for $181.51 million

that was written prior to the beginning of this fiscal year, and not

needed because ICBC has at its disposal the revenue from premiums that

were paid for this year's auto insurance. This government, Mr. Speaker,

is quickly losing its credibility.

We in British Columbia are at the mercy of external pressures in our

economic position. Very nearly every provincial government — certainly

our senior governments — in this time of economic recession is facing

grave financial problems. But I might suggest to this government that

we could create jobs for people in British Columbia by proceeding with

the economic development of secondary industry: copper smelters, a

steel mill, petroleum refining plants — all to help create jobs for our

people and to make this province more self-sufficient.

Just a word or two on health, Mr. Speaker, before I press on. A 50

per cent increase in Medicare and a $1- to a $4-a-day increase in acute

care, which is another regressive tax. This charge for general care, in

my opinion, should come out of general revenue, Mr. Minister of Health,

through you, Mr. Speaker. We would probably receive under the

federal-provincial agreement just as much funding if Medicare and acute

care were funded in this way.

In a constituency like mine, which has a particularly high

percentage of elderly people who require acute care, I know that this

extra cost will be unacceptable. A tax rate that applies regardless of

a person's income is the most vicious type of tax conceivable. How much

will we be losing of the federal government's share by virtue of what

this government is doing? This province may well lose a couple of

million dollars.

Mr. Speaker, one other topic on health. The

[ Page 770 ]

Minister of Health announced not too long ago the

cutback and

reduction in funding for ambulance service — emergency ambulance health

care. Certainly in a riding like mine this service is extremely

important. One small example: about three weeks ago the Department of

Health decided to move an ambulance from Halfmoon Bay down to Sechelt,

which means that if that ambulance is placed in Sechelt, and there are

no ambulances in Pender Harbour or Egmont, that ambulance must go 34

miles one way and 34 miles back in case of an emergency. A lot of

people can die in 70 miles, Mr. Speaker.

I will be continuing to press my efforts for the Minister of Health

to have an ambulance service placed either at Pender Harbour or in that

general area to serve the people in that particular area.

One short note on education as well, Mr. Speaker. I know that the

school boards in my riding are very concerned about this government's

intention regarding funding for school districts. School board budgets

for 1976 are up only 19.3 per cent. This represents the cost of

maintaining present programmes, including the 200 additional teachers

authorized to implement special programmes for children with learning

disabilities. If local school boards cut back on educational programmes

to avoid higher local taxes, the cuts can be accomplished only in the

period September to December 1976. This means that a 10 per cent cut in

the total budget requires a 25 per cent cut in school programmes in

September 1976. The teachers' salaried session represents about 68 per

cent of the total operating budget of the school board.

Approximately $10 million in costs is shifted from the province to

local taxpayers for each 1-mill increase in the tax rate levied by the

province and the district's share of education costs. Each $1 million

reduction in the teachers' salaried session of the budget will result

in 120 fewer teachers in September 1976.

A cut of $30 million in the school board budgets could mean a loss

of 3,600 teaching jobs by September 1976. A loss of 3,600 teachers

would raise the pupil-teacher ratio from the present 19.14 to 22.02 and

produce large increases in class sizes — and that's the thing, the

class size, Mr. Speaker — and the loss of many programmes for children

with learning disabilities. If 3,600 classroom teaching jobs were lost,

the average size of classes in B.C. would jump by more than five

students, from 25.9 to 31.1 per class.

In School District 46, Sechelt, where the mill rate is now 32.5

mills and the mill is worth in that area about $85,000, there could be,

in order to maintain the standard of education, a mill increase of 10.

If the school board does not see fit to increase the mill rate to that

extent, there will have to be a decrease in services such as the laying

off of school aides — and, by the way, I might tell you now that they

have already notified the school aides that their services will not be

required next year — dropping the school programme for the mentally

retarded, which is being picked up by the local school board, and the

layoff of teachers, once again increasing the class size so that

teachers become little more than baby-sitters and not able to deliver

the type of education that the parents, teaching staff and school

board would like to see.

Much the same situation exists in School District 47, Powell

River, where one mill is worth $128,155. It appears that the mill rate

would have to be increased by 6.5 mills to retain the present level of

education.

Under this government's policy, if the mill rate is not increased,

the district can expect to have a shortfall of about $1 million. This

could lead to a dismissal of 40 to 50 teachers and once again increase

the class size to unlivable limits. I expect, Mr. Speaker, to be

discussing this matter further under the Minister's estimates.

My riding, as you know, Mr. Speaker, relies heavily on the B.C.

Ferries and the Department of Highways ferry services. I want to be

very straightforward, and I hope someone is taking notes for the

Minister of Transport and Communications (Hon. Mr. Davis), because I'd

like to notify this government now that I will be opposing the removal

of the commuter card system in my riding, and fares for the residents

of the Sunshine Coast and the Powell River regional areas should not be

increased.

I know that there have been some abuses, as pointed out in recent

newspaper articles, of the commuter card system, but I've pointed out

to the minister ways and means by which this could be corrected — not

just to the present minister but to the former minister as well. I know

that there are abuses in the commuter card system, and I think they

could be easily corrected.

One method that I suggested to the minister was that new commuter

cards be issued. Print 20,000 new tickets immediately of a contrasting

colour, then announce that the new tickets would be handed out in

return for the old tickets upon proof of residence on the Sunshine

Coast and the Powell River regional area. Set a deadline of say one

month, and by the end of one month the old commuter cards would not be

honoured and the new ones would have to be used. That would help solve

that problem, but I'm very much opposed to the removal of the commuter

card in that area.

Those ferries are our highways, and there are no tolls on highways,

Mr. Speaker. The B.C. ferry system in my opinion is another form of

public transit, and fare increases such as are being considered by the

present government hit the ordinary working people the hardest.

Not too long ago this government sold the Prince George .

[ Page 771 ]

I guess it's water under the bridge, but the sale

of this

vessel is extremely regrettable, bordering on irresponsible, in my

opinion. This vessel was 30 per cent booked a month ago. There was no

way that this vessel could have lost money for the British Columbia

Steamship Corp., in my opinion. This vessel was sold in spite of pleas

of literally thousands of people and communities from all of the B.C.

coast and Alaska, believe it or not. As a matter of fact, I understand

the mayor of Ketchikan made a special trip down here to discuss this

matter with the minister but didn't receive a very good reception. They

sold the boat.

The government has indicated that the Queen of Surrey may be

sold as well, or put in mothballs. I would suggest to this government,

Mr. Speaker, that we keep the Queen of Surrey in service and

put the minister in mothballs.

AN HON. MEMBER: Hear, hear! The Liberals did it.

MR. LOCKSTEAD: I think the Queen of Surrey should

replace the Queen of Prince Rupert on the Kelsey Bay-Prince

Rupert run. I further believe that the present Queen of Prince

Rupert

should perhaps be placed on the coast route from Vancouver to Alaska

and to coastal points in British Columbia, and serving all the coastal

points of British Columbia.

I would as well, Mr. Speaker, like to see a connecting ferry link

from Bella Coola to Ocean Falls to Bella Bella with a vessel similar to

the Comox Queen , which is a 26-car ferry and very seaworthy, so

that

that area may enjoy and participate in economic growth with the rest of

the province. For a family of four to leave Ocean Falls for a vacation

and return, or for any other reason, it costs about about $425 just for

the airfare. That's really unacceptable, Mr. Speaker. This proposed

ferry route could connect with the Queen of Surrey at either

Bella Bella or Ocean Falls and/or with the Queen of Prince Rupert

at the same communities.

Mr. Speaker, when the Sechelt Queen is in place and serves

on the

Powell River-Comox route, hopefully soon, as the overloads and waits

even now can be up to eight hours, Mr. Minister.... By the way, this is

a Highways ferry and they're doing as good a job as they can; it's just

totally inadequate at the moment. Men the Queen of Nanaimo or

the Queen

of Tsawwassen is placed on Route 3, Langdale to Horseshoe Bay,

there

will be tremendous pressures on the Powell River Queen , which

is only a

50-car vessel, because of anticipated increased ferry traffic.

In past summer seasons, the Powell River Queen has been

supplemented

by the Pender Queen , a vessel that should have been scrapped

years ago.

The Pender Queen was broken down very often last summer and, in

opinion, is totally inadequate for that route. I therefore suggest to

the government that the Queen of Sidney be placed on a direct

route

from Earls Cove at Powell River to Horseshoe Bay, a direct route that

would take three hours and twenty minutes each way, two return trips

each day. This route, coupled with the present route of the Powell

River Queen , would relieve traffic pressure on Highway 101 and the

long

lineups at Langdale. It would, as well, offer a better service to

commercial traffic going to Powell River and assist the small

businessmen there at the same time.

If for some reason the Queen of Sidney could not be placed

on that

direct route, I would ask this government to consider placing the Queen

of the Islands , when it is no longer needed on the Powell

River-Comox

route, on Route 7 — that is Saltery Bay to Earls Cove. I hope that the

government will take my suggestions seriously.

I expect as well, Mr. Speaker, to be discussing the consequences of

this government's position on the Darling report — I think all members

of this House are aware that the Darling report is similar to the Jones

Act, where Canadian merchandise is transported on Canadian bottoms —

under the estimates of the appropriate minister.

One other topic on transportation, Mr. Speaker: many of the small,

private companies, transport shipping companies in the coastal area,

are facing severe financial problems. I know that the Coast Ferry Co.,

for example, which serves the small communities and logging camps in my

riding, has had severe financial problems and, in fact, last year had

to withdraw service for a while because of these difficulties.

Furthermore, it has been brought to my attention that Nootka Sound

Services is also in trouble. The M.V. Uchuck , serving 14

logging camps

on the west coast of Vancouver Island, is in imminent danger of going

out of business. That vessel serves some 14 logging operations,

including a native Indian logging camp. Tahsis gets about 60 per cent

of its wood from these independents.

What I'm really suggesting to the minister, and to this government,

is that the provincial government proceed to look at ways and means of

ensuring that remote coastal communities will not be left stranded. To

date this government, as far as I am aware, has displayed no interest

in this matter.

There is a bit of a controversy going on at the moment surrounding

the Princess Marguerite and the labour dispute. I do recall,

Mr.

Speaker, I think a Social Credit campaign promise that there would be

no political interference in these Crown corporations, and yet I see an

article here in the Victoria Times dated April 7:

"Since coming to power, the Socreds have loaded the

board of the B.C. Steamship Co. with cabinet ministers — Transport

minister Jack Davis, Deputy Premier Grace McCarthy,

[ Page 772 ]

Attorney-General Garde Gardom and

Economic Development Minister Don Phillips."

Well, I'm very surprised. I'm very shocked. It smacks to me of

political interference, Mr. Speaker. I think it's entirely possible.

It's another matter that I hope to be discussing further in this House

at a future date. One of the major things our government did when we

were in power was, for social and economic reasons, to purchase the

town of Ocean Falls. To quote the British Columbia Lumberman of

April

1, 1975, they say: "Buy of the Century." I think I'll quote two or

three

short paragraphs from this article, Mr. Speaker, because I think it

pretty well sums up what we in this House should know about Ocean Falls:

"Skeptics who believe Ocean Falls should have been

turned into a penal institution will have to deal with Ted Vesak."

Ted Vesak, by the way, is the general manager of

the Ocean Falls Corp.

"And that may not be an easy matter. Vesak, now

manager, accountant, chairman of the Ocean Falls Corp. and former pulp

and paper planner for Crown Zellerbach, will tell you straight out. He

believes in the future of Ocean Falls. 'I've studied it inside and

out', he says. He will also tell you that Ocean Falls is sitting in the

middle of the largest untapped block of timberland left in the

province's west coast.

"Vesak, who came to Ocean Falls to work for Crown

Zellerbach in 1954 and later left the Vancouver head office job to go

back, is convinced that the provincial government got the buy of the

century. For the $1 million paid to Crown Zellerbach by the provincial

government, the government received a five-storey hotel, a wood mill, a

roundwood mill, a newsprint mill, schools, apartment buildings,

subdivisions, a hydro dam, commercial buildings, recreation facilities

and 45 acres of townsite valued at $50 million."

Now I know that this government is not going to let Ocean Falls go

down the tube because some of the members, just to quote from Hansard

when they spoke on Bill 164, page 2620, April 12, 1973.... For example,

the hon. Minister of Labour (Hon. Mr. Williams) said:

Thank you, Mr. Speaker. We will support this bill.

(Good.) As I listened to the Hon. Member for North Peace keep

talking...,

The member for North Peace at the time was talking

at some length, I believe, 14 hours as I recall — South Peace, sorry.

...I didn't know whether he was going to end

up supporting it or not

supporting it. But at least we have him fairly identified at the

beginning of this debate.

As I listened to the Member for North Peace — that's

what it says here, North Peace — I thought back over the months and the

years that Crown Zellerbach

was operating Ocean Falls and the difficulties that they had. I

recalled that some many, many months before this last (1972) election

the government of the day was made aware by Ocean Falls that they were

going to discontinue operations of that mill and of that whole town.

I am quoting from Hansard , the hon. Minister of Labour.

Nothing was done. No move was taken by the former

government

whatsoever to stop the destruction of that community. However, in the

few months before the election campaign, the then Minister of Lands,

Forests and Water Resources (Mr. Williston) recognized the political

implications of allowing that town to disappear and took some action —

or tried to take some action.

Then there was an interjection by an hon. member and a reply by the

hon. Minister of Labour.

That's right, Mr. Provincial Secretary (Hon. Mr.

Hall). They

weren't particularly concerned about saving the town, but with saving

the seat.

It's typical of the former (Social Credit government)

administration

that they would think of the community as a conglomeration of physical

assets that would appear on the balance sheet, and would fail to

recognize that a community and its strength consist of the people in

that community. They were prepared to stand by and see those people and

that community destroyed.

Well, that's exactly right. Had it not been for the good fortune

that the NDP was elected in 1972, Ocean Falls would not exist today,

Mr. Speaker.

AN HON. MEMBER: Hear, hear.

MR. LOCKSTEAD: Excuse me just a moment, Mr. Speaker. Someone

has made off with my notes. Here we are. Thank you. The former Minister

of Lands and Forests and a director of the Ocean Falls Corp., the Hon.

R. Williams, commissioned a study by Simons and Company to look into

the best way to upgrade and modernize that plant and how to best

utilize the timber and resources of the central coast area. This study,

I presume, included how best to include Bella Coola and Bella Bella in

the economic development of that area. The report was presented to the

minister's office sometime last December and has not yet been tabled in

the House, and I am asking the government to table that report now so

that the people in Ocean Falls may have some indication as to their

future under this government.

I stress as well, Mr. Speaker, that Ocean Falls should not be

allowed to deteriorate or to be sold to a private corporation. In my

opinion, the only way that a private corporation will purchase Ocean

Falls is if the government is prepared to once again give away the vast

timber resources of that central coast area,

[ Page 773 ]

and that must not happen.

Three or four days ago the member for Fort George (Mr. Lloyd)

discussed the former Minister of Lands and Forests — and that was Mr.

Williston under the previous Social Credit government — but I would

like to point out to that member....

He failed to mention that it was during Mr. Williston's term in

public office that large areas of this province were alienated from the

people of this province, and at little or no cost to foreign-controlled

companies, Mr. Member, and very often, in those days, without a real

regard for the environment.

Discussing the environment, I see the Minister of Environment (Hon.

Mr. Nielsen) is in the House, and I hope that that Minister of

Environment will not let himself be bulldozed by other ministers, but

make a sincere effort to co-ordinate the activities of the Department

of Lands and Mines and all the other resource industries in this

province.

The resources at Rivers Inlet, on the Kimsquit and on Chilco Plateau

must remain in the hands of the people.

HON. A.V. FRASER (Minister of Highways): Stay out of my

riding! (Laughter.)

MR. LOCKSTEAD: It's just a few trees. While we're on the

subject of timber resources, Mr. Speaker, I would like to remind this

government and the people of this province that a large number of tree

farm licences will be coming up for renewal in the next three or four

years. Tree farm licences, as you are aware, are 21-year leases on

Crown timber issued with some abandon by the previous Social Credit

government. I suggest to the government, through you, Mr. Speaker, that

this government not even consider renewing a tree farm licence until

the Pearse royal commission report has been received and tabled and all

members of this House, and the people of this province, have had the

opportunity to study and make recommendations on that report.

About 10 per cent of the people of my riding are native Indians and

are located in four major communities and some smaller reserves along

the coast. The NDP, while we were the government, were able to start to

do some of the things that these people had requested over many years,

For example: home acquisition grants; community recreation funds; the

right to vote in local and school board municipal elections — that type

of thing.

But more importantly, our government helped these people, at their

request, on economic development, primarily by guaranteeing or

underwriting loans for individual projects such as the purchase of the

Artic Harvester , the hotel and co-op at Bella Bella and many

other

projects.

In regard to the Artic Harvester , Mr. Speaker, I know this

matter

was raised, I think, two days ago by the hon. Minister of Finance in

regard to another question. He expressed concern over the urgency of

the order-in-council that was passed December 3 of last year. Well, I

would like this House to know that it was not only a matter of some

urgency, but of extreme urgency. If that order-in-council guaranteeing

a loan to SIB International, which is a company of the Sechelt Indian

Band, had not been passed at that time, they, of course, would have

lost the vessel. In order to borrow the money from the B.C. Credit

Union, they simply had to have a government guarantee in order to

obtain

that loan.

I should point out to you that it's not a bad deal. The federal

government has a five-year lease that runs six months of the year, so

the work for the vessel is guaranteed. The other six months of the year

the band hopes to use that vessel for fishing off the west coast.

I know that we did not accomplish all that we would have wished in

the three years that we were the government, but we did make progress

when you consider that, prior to our government, the native Indian

people had never been able to meet with the cabinet of W.A.C. Bennett.

I hope that this government will continue to follow the pattern and

example that was set by the NDP government.

Interjection.

MR. LOCKSTEAD: Well, it was a good example, Mr. Member.

HON. K.R. MAIR (Minister of Consumer Services): How about the

Indian band in Kamloops?

MR. LOCKSTEAD: Well, you'll have your kick at the cat. You

can talk about the Indian bands.

Mr. Speaker, one other topic I would like to canvass very briefly is

the MLA salary. You know, one of the most important, if not well-known,

aspects of governing a Canadian province lies in providing the

opposition with resources necessary to do its very important job. In a

parliamentary democracy government members can very rarely criticize,

even slightly, anything the government says or does. Thus the whole

burden of providing alternatives, of expressing contrary public

opinion, lies with the opposition.

In constituencies like Mackenzie, like mine, this task is added to

the greater one of maintaining contact with thousands of citizens,

dealing with their problems, conveying their thoughts on legislation

and so on. Democracy cannot survive unless both these functions are

carried out fully and energetically. That is why in the NDP, when we

formed a government in 1972, ample provision was made for secretarial

and research assistants to opposition members. In the face of

considerable criticism we also increased the

[ Page 774 ]

incomes of MLAs so they would not have to spend

time earning extra money to support their families.

I myself did not realize how important that matter was until, like

all MLAs, I had to face the very heavy expenses associated with being a

member, and constituents who visited me in Victoria will agree that I

do not entertain them royally.

Interjection.

MR. LOCKSTEAD: Well, I could float a loan.

I was happy to be able to devote my whole time to being a member,

and I was especially happy that the income, while not great, made it

possible for an ordinary person like me to run successfully. Nobody

wants a system, Mr. Speaker, in which only the rich can seek public

office.

All of this is a lengthy explanation for why those of us in the

opposition are so disturbed at the signs of the new Social Credit

government, like the old one, which has no idea of the importance of

providing opposition members with the resources that are necessary to

do our job for you and the citizens of this province.

I believe, Mr. Speaker, that once again this job of representing the

people will become the preserve of the rich, and ordinary working

people will not be able to afford to seek office. You should remember

that the majority of people in British Columbia are working people, Mr.

Speaker. Reducing the salary of MLAs, particularly members in ridings

like mine — large rural ridings — smacks to me as another means being

used by the present government to throttle the opposition, along with

reducing secretarial staff, cutting off mailing privileges and research

assistants.

Mr. Speaker, before I conclude, I can see that this budget is going

to greatly affect the people in my riding. For example, I understand

that the anticipated highway projects such as the Langdale-Gibsons

bypass is not to proceed this year. It has been postponed. Continued

reconstruction of 101 and a number of other major projects will not be

proceeding this year. I do hope that the Minister of Highways (Hon. Mr.

Fraser) will stand up in cabinet and fight for a bigger budget. I think

you deserve it, Alex — oh, Mr. Member. I know, Mr. Minister of

Highways, that it is a tough situation in regard to you having your

budget reduced like that. It makes it difficult for all of our ridings,

but I believe there are some priority items in ridings like mine, which

I hope to be discussing with you later, that really have to be done

this year.

To conclude, Mr. Speaker, this government's budget is regressive,

inflationary and will create unemployment. I cannot support it. Thank

you.

Hon. Mr. Fraser moves adjournment of the debate.

Motion approved.

HON. MRS. McCARTHY: Mr. Speaker, I would appreciate having

leave to file a report, if I may.

Leave granted.

Hon. Mrs. McCarthy presents the report of the Pacific National

Exhibition financial statement for the year ended November 30, 1975.

HON. MRS. McCARTHY: Public bills and orders. Second reading

of Bill 11, Mr. Speaker.

SOCIAL SERVICES TAX

AMENDMENT ACT, 1976

(continued)

MR. KING: To capsulize and recapitulate what I had to say

last night, if I may, with respect to second reading of this bill, I

had noted, Mr. Speaker, that the bill is a regressive measure. I

believe the Minister of Finance (Hon. Mr. Wolfe) has at least tacitly

agreed this to be the case, with respect to the increase in sales tax

as a method of generating additional revenue in the amount of $200

million to the provincial treasury over the next year.

I pointed out, Mr. Speaker, that there are other avenues available

to the government to raise this kind of capital. It seems to me that

consideration should have been given to an increase in the royalties on

export coal. I pointed out that those royalties had risen from a mere

10 cents a ton in 1972 to $1.50 per ton royalty payment in 1975.

Despite that, Kaiser Resources realized a higher profit than at any

time in their history. So they are obviously able to afford that kind

of increased return to the province on a non-renewable resource.

I pointed out also, Mr. Speaker, that we can expect increasing

volumes of export coal from British Columbia. There are contracts

coming due which provide for ever-increasing volume shipments to mainly

our customers in Japan to support their steel industry. Surely British

Columbians deserve something more out of their resource development

than simply the jobs that accrue from mining development. That can only

come by way of royalty payments.

I think it's clear, Mr. Speaker, that when we have a situation as we

do in the mining industry, particularly coal mining, where a new

technology and a new method and approach to mining allows for the

stripping of mountains rather than the old underground mining methods

that used to be used. We've watched a major erosion of jobs through

coal development, particularly. Due to the large shovels that they are

able to utilize in bringing the coal to the market the jobs have

drastically shrunk, and that's

[ Page 775 ]

true generally in the mining industry.

I recall a survey that was done on employment in the mining industry

generally in British Columbia, I believe in 1969. It was a 10-year

review of what had happened to jobs in the mining industry. While

production had increased in significant volume, there had been a major

erosion of the number of jobs necessary to produce and dig out the

minerals and the subsurface wealth of this province. So it is clear

that the jobs alone are not adequate recompense to this province in

terms of the exploitation of our resources.

The only way, then, that we can ensure that a fair return is granted

to our people is that not only taxation on the backs of people, through

regressive sales taxes and so on, but also the natural resources of the

province can help to pay for the social programmes which the people of

this province deserve.

I pointed out, Mr. Speaker, that if in fact the government insisted

on going the way of an increased sales tax, which this party certainly

disagrees with, it would have been more equitable to use resource

royalty payments or indeed increases in the income tax, because the

income tax recognizes the low-income earner. It's a progressive tax

which places the heaviest burden on those who are most able to pay,

rather than on the backs of those who can ill afford it,

whereas the

bill we have before us under consideration today, Mr. Speaker, has

exactly the opposite effect. Indeed, it bears more heavily on those who

can ill afford a higher cost for the basic commodities which they

require to sustain themselves.

I pointed out, Mr. Speaker, that in at least six states in the

U.S.A., the first sales tax application — I believe to the first $500 —

was allowed applicable to income tax returns, that way providing some

exemption, some relief for those on low income.

It is interesting to note what the effect of a personal income tax

would have been in this province, and I refer to the book entitled Provincial

and Municipal Finances, 1975 , published by the Canadian

Tax Foundation in Toronto. In it they have some interesting tables, Mr.

Speaker, dealing with levels of personal income tax.

The minister indicated that it would have been necessary to go from

a level of about 30 per cent to about 38.5 per cent in income tax

increase to achieve the same revenue that is being realized through the

sales tax increase — $200 million. I point out that other provinces

have relatively higher ratios of personal income tax than British

Columbia. British Columbia, I think, is rated at just over 30 points,

They're presently charging just over 30 points of the income tax, and

other provinces are at a much higher level than that. The province of

Quebec, for instance, is at 35.72 at the moment. Alberta, I believe, is

the only one lower than British Columbia in terms of the provincial

marginal rate for income tax. Alberta is at 12.22, British Columbia at

14.34, Prince Edward Island claims 16.92, Nova Scotia 18.10,

Saskatchewan 18.80, Newfoundland 18.80 and New Brunswick 19.51.

It is clear that British Columbia requires a particularly and

relatively low portion of income tax in this province, and it might

well have been increased as the most equitable way of generating the

revenue which the minister has indicated he needs.

There is another matter, Mr. Speaker, that I should mention, and

that is the vendor's commission which is allowed on the sales tax

collection programme.

It is my understanding that the vendor is allowed 3 per cent on the

first $2,500 and 1 per cent on the balance over $2,500, in terms of his

fee for collecting and the administrative work involved in transmitting

the tax to the Crown. While I haven't been able to calculate the

increase in the vendor's commission — and I understand the Finance

department has not been able to do so either — it's obviously going to

be a major increase in the revenue generated through the vendor's fee

in collection of the increased sales tax because it means $2 million,

and we're dealing with the percentage of that.

Now we don't object to sensible measures to support small business,

Mr. Speaker, but I suggest that small businesses are not going to

receive any major benefit from this. Their volume is so low that the

cost of administration and collection of the sales tax would, in all

probability, be a liability rather than any benefit.

On the other hand, it seems to me that the major beneficiaries of

the vendor's collection would be those very large corporations and

companies that do a large volume of business. Certainly I'm not

persuaded that this province in any way should take from the poor, as

it were, through a higher sales tax to assist large corporations such

as Eaton's, Simpsons Sears, Wolfe Motors and perhaps some others. This

seems to be a negative way of raising the kind of revenue and paying

increased commissions to those who don't need it, really, at the

expense of those who can ill afford it.

Interjections.

MR. KING: I'm sure that's not the Minister of Finance's

objective, too. But I believe the effect is as I have stated it.

Mr. Speaker, there are many things wrong with the approach, as I

stated at the outset. We certainly think a variety of alternatives and

options offered themselves to the government, and which were riot only

more equitable but perhaps just as simple and easy to collect, which

seems to be one of the government's motives for introducing the

increased sales tax — simply that it was a simple and easy way

[ Page 776 ]

of generating revenue.

I don't see any major complication in increasing the royalty

payments on export coal. I see no great problem or complexity in

continuing to push the federal energy commission for permission to

increase the price of our export natural gas. Our government was able

to attain these methods, and to very significantly increase revenue to

the province over the past couple of years. Surely, if the new

government's relationship with the federal government is as healthy and

friendly as they have indicated to us, I see no reason why they should

be confronted with a major obstacle either.

So there are a number of other alternatives that would be as simple

in terms of application and collection, and that are unquestionably

more equitable in terms of ability to pay. Therefore, I certainly

oppose the direction taken by this bill.

I would note, too, in terms of the approach that there are other

ways in which the sales tax militates against particular groups in

society — groups, for instance, that are obliged to take meals on a

regular basis in restaurants, groups that find themselves in this

position as the result of the kind of work they do. I think of railroad

people who, as a matter of course in their employment, are obliged to

lay over in other towns, and as a consequence eat many meals in

restaurants.

MR. J.J. KEMPF (Omineca): When did you pay sales tax on meals?

MR. KING: I believe there is a tax on meals above a certain

level.

MR. KEMPF: No, there's not.

MR. KING: Well, that'll be very interesting to hear from the

Minister of Finance. It was certainly my understanding that there is a

tax on meals above $2.50.

Interjections.

MR. KING: That's off, is it?

That's fine. I hope you're correct. I was under the impression it

was still on meals. I may well be wrong, but I'll certainly check into

that further. That's one example; I cite a variety of them.

I cite the example of the young family — perhaps unorganized; they

do not have the benefit of trade union representation and a union rate

of pay — perhaps at the minimum wage, facing the great dilemma of

trying to provide shelter for a family of perhaps four or five children.

Certainly the exemptions that are offered in terms of schoolbooks

and clothing for people under 15 do little to recognize the higher

household costs of maintaining a family of that size. Again, I think

the approach just has to be wrong. I think the exemptions are a pale

and inadequate way of attempting to militate against the hardship that

accrues to the family in those kinds of circumstances.

I certainly hope the government will reconsider this bill. I hope

they will look to their other options, which are manifold. If they are

reluctant to increase royalty payments to an extent that would generate

the kind of revenue required this year, certainly they could make a

move which would provide part of that revenue and go the income tax

route in terms of raising the portion of the revenue which is necessary

to the provincial budget this year. It seems to me that's the most

equitable and fair way, particularly, Mr. Speaker, in light of an

announcement this morning by the Premier that an accord has been

reached with the federal government on the application of further

restraint against working people.

I find it extremely difficult on the one hand to ask for restraint

in terms of wage demands — in terms, indeed, of prices by small

businesses — when at one and the same time the government is increasing

the cost of commodities which they must buy to exist and live on. This

is a double standard for the government, Mr. Speaker, and I think it's

an important one because surely, if the government expects cooperation

in terms of the fight on inflation, they must demonstrate a fair and

even-handed approach on all parties in combating inflation.

I suggest that the cooperation of our citizens, whether they be

trade unionists or whether they be the business community, is

predicated largely on their concept of fairness. The government has to

be above reproach in demonstrating fair play and equity in appealing

for restraint. Certainly they're in a very difficult position to

convince anyone when they are introducing legislation presumably to

impose restraint on people and at one and the same time a companion

bill to significantly and almost brutally increase the costs to the

lower-income groups and load additional hardship on them.

This, in my view, Mr. Speaker, will create a massive resentment and

a massive resistance to the government's stated intention of mounting a

fair programme to combat inflation. I regret that, because I believe

everyone in this nation — not only in the province — is genuinely

concerned about inflation and would be prepared to do something about

it if a programme is demonstrably fair and cuts equally against all

sectors of society. That appears not to be the case.

In considering the bill before us it appears that the large

corporations, the large wage-earners of $100,000 and $300,000 a year —

I understand there are a few of them in British Columbia working for

[ Page 777 ]

certain forest companies and so on — are required

to contribute no

more under the provisions of this bill than the family of five who are

struggling to get a start in life, who are struggling to provide for

their family shelter and health and dental care, and to live in some

kind of semblance of self-respect and decency.

I think it's extremely regrettable, Mr. Speaker, that the government

has taken this approach. I can assure you that our group in the House

will be opposing this unless the government reconsiders and offers some

practical suggestions for a more even-handed and a more equitable

approach to those who can afford to pay in this province.

MR. G.R. LEA (Prince Rupert): Mr. Speaker, we were on the

third reading of Bill 3 for so long — as someone else said, it's

always a surprise to see the Finance minister (Hon. Mr. Wolfe) take his

place — that it throws one off.

We on this side of the House, through our leader, have put our case

that we will not support this legislation, Bill 11, to allow an

increase in sales tax — or the "social services tax," as it is called

— of two points, taking it from 5 per cent of every dollar to 7.

MR. LOEWEN: It's not 5 per cent to 7 per cent of every

dollar. Not all dollars are involved in that.

Interjections.

MR. LEA: Mr. Speaker, when the member for Burnaby-Edmonds

takes his place again, maybe he can make all the points that he would

be able to make, which are probably not that many, but he'll have that

opportunity as this debate continues.

I am against this bill for two reasons. No. 1: the reason that's

been pointed out many times against this kind of tax — that it does

hurt the lower-income and the middle-income people much more than it

hurts people in a higher income bracket. There's no doubt about that,

You know, one of the things which surprises me, Mr. Speaker, is that

the government and people who ran for the Social Credit Party said that

they were going to put this province back on a businesslike basis.

AN HON. MEMBER: We will.

MR. LEA: Now I cannot understand, Mr. Speaker, how you can

take that approach and then bring in tax measures that during a

recessionary period are going to hurt every small business in this

province. You cannot through taxes take money out of the hands of the

consumer during a recessionary period and hope that the comer hardware

store, or the comer clothing store, is going to come through that in a

way that will allow him to carry on his business or her business. It

just cannot happen. When you take $200 million out of the economy....

AN HON. MEMBER: What do you know about it?

MR. LEA: I deal with live business, Mr. Speaker. Now it's

impossible to take millions of dollars out of the economy through

taxation and hope to get this province moving again, as was the slogan

of the Social Credit Party during the last campaign. You can't have it

both ways.

HON. MR. MAIR: It wasn't on a businesslike basis before. You

do admit that?

MR. LEA: Yes, it was. You see, the real difference, Mr.

Speaker, is that some of the people on the other side who have been

small shopkeepers think that you run the economy of a province and the

government of a province the same way that you run a small business.

That is not the case at all. If you were to bring the same kind of

approach and rules to running a small business into government, it

would be a sad day for the people of British Columbia because, in

effect, businesses do not owe any social obligation to anyone.

MR. LOEWEN: What?

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. LEA: Now that is not to say, Mr. Speaker, that some

people in small business do not recognize that there is a moral

obligation, but there is no rule of business that says you owe a social

obligation to anyone.

HON. MR. MAIR: No one says a person does either.

MR. SPEAKER: Order, please. The member for Prince Rupert has

the floor.

MR. LEA: Mr. Speaker, I can see I've touched a nerve. Even

the Minister of Municipal Affairs (Mr. Curtis) lost his voice and went

back to the voice that he was born with for just a second. That's your

normal voice, right?

Interjections.

MR. LEA: Now let's examine what I'm saying.

MR. LOEWEN: Absolutely insulting!

[ Page 778 ]

MR. LEA: How much money taken out of the economy with the new

ICBC rates — out of consumer spending? How much money taken out of the

economy if Bill 11 passes this House?

AN HON. MEMBER: What do you mean, "out of"?

MR. LEA: Out of the economy. Consumer spending, Mr. Member.

If you don't understand that, then you don't understand anything. In a

time of recession if you take money out of the economy and you lengthen

that loop of circulation in the economy, then you are asking for

trouble. Now if the money isn't out there in that economy to be spent

in short-loop circuits during the recessionary period, then you're

going to find that the small store owner, the small shopkeeper, will

not be able to sell the produce because the money won't be in the

pocket of the spender. Now if you can't understand that, then I don't

know what you do understand. There's a rule of economics that during a

recessionary period you hold back on taxation, even lower taxation, and

during good economic times you raise taxes. You can afford to raise

taxes and take some money out of that economy.

HON. MR. MAIR: ICBC isn't a tax.

MR. LEA: Every other jurisdiction in the whole western world

does exactly what I'm suggesting you should be doing, but when we

mention that that should be done in this House, all you get is a

harangue from the other side that they're businesslike in their

approach. They don't understand, Mr. Speaker, that they are responsible

for the entire economy of this province and that they have social

obligations. They have another obligation that other businesses do not

have. In times of company recessions they can afford to lay people off.

That is their duty to the shareholders — to make a profit at any cost

and to lay people off if they need to be.

But there is another responsibility that government has, and that is

to keep the economy going but at the same time try and maintain jobs in

the economy and try to keep people in a standard that they can get

along with without suffering the ravages of being poor. Now that's

quite understandable, and I think that that government should recognize

they do have a responsibility in government that they do not have in

their own business, and that is a social responsibility to this

province.

HON. MR. MAIR: Explain how ICBC is a tax.

Interjections.

MR. LEA: Oh, I wish he'd be quiet, Mr. Speaker, because if he

didn't open his mouth we'd never suspect how stupid he really is.

(Laughter.)

SOME HON. MEMBERS: Order, order!

AN HON. MEMBER: That one was on the list.

MR. SPEAKER: Order!

AN HON. MEMBER: He didn't say "arrogant, " Mr. Speaker —

that's on the list.

MR. LOEWEN: You said that business people were stupid.

MR. LEA: I said you were, not business people.

MR. SPEAKER: Hon. member, I would ask you to withdraw the

word "stupid" in respect to an hon. member of this House, as it was

used just a moment ago.

MR. LEA: I withdraw, Mr. Speaker.

MR. SPEAKER: Thank you.

MR. LEA: But it is not on the list, is it, Mr. Speaker?

MR' SPEAKER: As a matter of fact it is.

MR. LEA: I couldn't even say "less than bright"? Am I allowed

to say that?

MR. SPEAKER: Unfortunately not now, hon. member. You know

that by the rules of the House, you cannot say it by another device or

another means.

MR. J.R. CHABOT (Columbia River): Be a statesman, not an

orang-outang!

MR. LEA: I'm not here to be a statesman, Mr. Member; I'm here

to fight for the people of this province. You cannot be a statesman

against a government that doesn't take a statesmanlike approach. You

cannot do that. You have to fight fire with fire, and when they bring

in legislation that hurts working people in this province to a greater

degree than it hurts anyone else, then we have a right, on this side of

the House, to stand up and try to fight for the rights of people in

this province.

Now what do they mean by restraint, Mr. Speaker? Let's take a table

from 1 to 10, and say that some people are living at 1 level and some

people are living at the 10 level, in terms of the standard of living.

[ Page 779 ]

[Deputy Speaker in the chair.]

Interjection.

MR. LEA: Well, after this legislation I'll be down around the

3 level.

It's impossible, Mr. Speaker, to say to the people of this province:

"Okay, some of you are living at the 9 level right now, and we are

going to ask you to use restraint. Some are living at, say, the 4

level, and we are going to ask you to remain at 4, but we are going to

allow the person at 9 to come down to 8½."

That's ridiculous, Mr. Speaker. It's just absolutely ridiculous to

tax working people to the point where in some cases they cannot even

afford proper clothing for themselves, when at the same time the kind

of restraint that the government is putting in will only stop the rich

from taking one less trip to Hawaii. They may have to buy a Chevrolet

instead of a Cadillac, or they may have to buy a Volkswagen instead of

a Chev. Now what kind of restraint is that, Mr. Speaker, when you're

asking working people to suffer and asking the rich to go one less time

this year to Hawaii? Is there any equity, Mr. Speaker, in that kind of

programme? I suggest that there is none at all.

I'm going to say another thing on this sales tax. I know, and I

think everybody in this room knows, that it's wrong to put it up.

Furthermore, the tax is wrong in the first place, and I, as part of the

last government, will take some degree of blame for not starting

point-by-point to get rid of that tax altogether, instead of

increasing that tax. I still believe that we should have begun to lower

that tax, point-by-point, and keep with the graduated income tax scale.

Even it has some inequities in it, because as we know, if you're in

business in this province, there are certain expenditures that you can

make that are income-tax deductible that everyone knows aren't probably

spent on that business. So anybody who makes money on a T4 slip is in

much worse shape than a person who can file his tax returns under a

business. Everyone knows that.

HON. MR, MAIR: Just like an MLA.

MR. LEA: I know that because I've been in business. It was

lawful and I took advantages, Mr. Speaker, of those areas in the

transit situation....

DEPUTY SPEAKER: Mr. Member, may I interrupt you just long

enough to remind hon. members of the House of standing order 36: "Every

member desiring to speak is to rise in his place uncovered and address

himself to Mr. Speaker." If members wish to make some statement

regarding....

Interjections.

DEPUTY SPEAKER: Order, please! I address myself to the

Minister of Consumer Services (Hon. Mr. Mair). If the minister wishes

to speak, the standing orders require that he shall stand and address

himself to the Speaker; other than that, he is not to interrupt the

one who is on his feet. Just a reminder for those who are new to the

House.

MR. LEA: Mr. Speaker, I appreciate that. Although I know it

offends the Chair to break one of the rules, at this point it doesn't

offend me, because I doubt very much whether any of those members will

have the guts to stand up and defend this increase on this tax.

AN HON. MEMBER: Hear, hear!

MR. LEA: I doubt it. But if they do, Mr. Speaker, it's only

between us in this House — we will not tell anybody in their

constituencies what they've done. We won't tell anybody.

MR. G.H. KERSTER (Coquitlam): Don't bet on it!

MR. LEA: I'd be very interested if the Minister of Finance,

when he sums up, could point out any economist who says that a sales

tax on retail goods is a fair and equitable tax. I would like the House

to assign the Minister of Finance to try and bring back an authority

from any economist who says that this tax is fair and equitable. I

doubt very much whether the minister can bring back that kind of

reference, except from Major Douglas.

Interjection.

MR. LEA: I doubt it. Okay, I'd appreciate it. Bring it back;

I'd like to see where any economist says that the tax that is in

effect, and the one that you are proposing, is a fair and equitable tax

to working people. I'd like to see it.

Interjection.

MR. LEA: The hon. Liberal leader (Mr. Gibson) says that he

couldn't find it. I've looked; I couldn't find it.

HON. E.M. WOLFE (Minister of Finance): He hasn't read very

much!

MR. LEA: He's read a great deal more than some members in

this House, I suspect.

Now as I said, there are two reasons. First, it isn't an equitable

tax, because it affects people at the lower end of the scale more than

it affects those at the top; affects people in the middle income more

[ Page 780 ]

than it affects those people at the top.

When you are asking for restraint, if you do not put into effect a

taxation system which is fair to everyone, then people will not respect

the government that places that tax on the books. Regardless of the

party that is in power, I believe it is incumbent upon government to

try and bring in legislation that will have the respect of people in

the province, no matter what that legislation deals with. Because if

they do not, as a government, take that approach, then every bit of

legislation brought in after that by that government or following

governments will be much easier criticized by people in general.

They'll have less respect for the law when they know that governments

are bringing in laws that are basically unfair to working people,

low-income and middle-income people. I think every government should

take that into consideration when bringing in any law.

I suggest that the people of this province will consider this not a

fair taxation or a fair bit of legislation, and this will therefore

hurt the credibility of not only this government but the governments

that follow, and other pieces of legislation to follow.

The second point I brought up is that you can't through government

continually take money out of the consumer spenders in this province

during a time of recession and hope.... And the backbone of this

province, Mr. Speaker, are the working people and the small businessmen

in this province. That's the economic and social background of this

province — the small business people and the working people of this

province, not the multinationals, not the multinational corporations

that come in and rape our province, take the money out, plunder and

rape it, sometimes with the help of the provincial governments and

national government.

As legislators our obligation is to the backbone, the small

businessmen and the working people of this province. I suggest to you

this tax, as I mentioned, will hurt the working people directly and

hurt the businessmen in this province indirectly by taking money out of

consumer spending. It seems to me that this government is hell-bent on

taking every dollar it can out of the working man's pocket, and that

has to affect the sales of small business people in this province.

What happens then, Mr. Speaker? Corporation taxes will go down. I'd

be very careful, Mr. Minister, through you, Mr. Speaker, when trying to

come up with what kind of sales tax you are going to get back this

year, because if they don't have the money to spend, that tax revenue

will probably drop to the province too. Income tax will drop because

the shop owner, if he isn't having the sales, will have to lay off —

the last person hired is the first person fired. And it's going to be a

cumulative effect.

What you're doing to this economy is going to put a strain on the

purse of the Minister of Human Resources (Hon. Mr. Vander Zalm) like

you have never seen before, because you are going to have to put more

money out; you are going to take less money in. That is, in effect,

what you are doing with the kind of taxation measures you are putting

into effect during a recessionary period.

I submit that it's absolutely wrong! It's the wrong way to go. You

hurt working people directly, hurt the business community indirectly,

and the revenues of this province indirectly. You will pay more money

out of spending for social services from government because of what the

taxation policy you are bringing in does to the economy of this

province.

I really think that you should withdraw this bill. Withdraw it, and

do as other members have suggested: get your revenue from other sources

— coal, natural gas. Take a look at the income tax scale and see if you

can't work something out that will tax the rich a little more than it

taxes the average person in this province. Take a look at it. Don't be

ashamed to do it.

You know, the former Premier of the Social Credit Party (Hon. W.A.C.

Bennett) often took a second look. He didn't suffer for it. As a matter

of fact, he gained some stature for doing just that. I suggest, Mr.

Speaker, that the hon. Minister of Finance could gain some stature in

this province now by saying: "I've listened to reasonable argument.

I've changed my mind. I'm convinced now that it is unfair, not only to

the people, but to the economy of this province, and I'm going to

change it." The stature he would gain from that would far overshadow

what has happened in the House thus far in this session.

AN HON. MEMBER: The minister is up — he's a regular

Jack-in-the-box.

MR. GIBSON: I don't know why the minister is so anxious here;

there's a lot of good advice yet to be given to him.

Speaking earlier on this morning in another debate....

Interjections.

DEPUTY SPEAKER: Order!

MR. GIBSON: In another debate the hon. member for

Burnaby-Edmonds (Mr. Loewen) had something of great interest to say.

Sorry he's not here right now, but I would like to quote his remarks

because I'm like the previous speaker. I consider him to be the leader

of the intellectual caucus of the Social Credit Party, and he stated

that the art of taxation, Mr. Speaker, is to pluck the goose in such a

way as to get the largest amount of feathers for the least amount of

hissing. Mr. Speaker, the people of B.C. are certainly being

[ Page 781 ]

plucked by this sales tax.

We heard, on the moving of second reading, a pathetic defence by the

Minister, lasting not longer than five minutes...

AN HON. MEMBER: Shocking!

MR. GIBSON: ...of this new imposition of $200 million of the

most regressive possible tax on the backs of British Columbians.

AN HON. MEMBER: Hear, hear!

MR. GIBSON: A completely inadequate justification...

AN HON. MEMBER: No justification.

MR. GIBSON: ...of the government's moves, because I believe

there is no justification for this tax at this time.

HON. MR. WOLFE: Are you going to vote against it?

MR. GIBSON: Yes, I'm going to vote against it, Mr. Minister,

but wait until the end of the story.

Interjections.

MR. GIBSON: Wait until the end of the story. Don't ask to

ruin the suspense.

MR. G.V. LAUK (Vancouver Centre): He's trying to muzzle the

opposition.

Interjection.

MR. GIBSON: Will you model one for me?

DEPUTY SPEAKER: Please address the Chair, Mr. Member,

MR. GIBSON: Thank you. During the speech of the hon. second

member for Vancouver-Burrard (Mr. Levi) a minister opposite — I think

it was the Minister of Consumer Services — called out: "Find a better

way." They've already been told a better way, Mr. Speaker. They appear

to have no memories, but we'll go through it again briefly.

The minister in his opening remarks said that this decision was

made, and I think I quote these words properly, "with great

reluctance,"

and he said the reason was, and I think again I quote properly:

"because of a substantial shortfall in revenue." I say, Mr. Speaker,

that neither of these reasons is correct; neither is valid.

The decision was made for two reasons — first of all, to rejigger

and raise the tax structure in British Columbia, for reasons of the

government's which I will get into later, and secondly, to raise that

tax structure in such a way and in such a time as to put the blame on

the former government.

Now, Mr. Speaker, maybe they can put the blame for the deficit on

the former government...

Interjections.

MR. GIBSON: ...but they can't put the blame for the new tax

structure on the former government. This has to rest squarely on their

shoulders, and this 2 per cent sales tax is wrong.

Was it done with great reluctance? I suggest it was not done with

great reluctance, Mr. Speaker.

Interjections

MR. GIBSON: I suggest it was a political delight to the

government to raise this particular tax at this particular time...

AN HON. MEMBER: Watch the goose.

MR. GIBSON: ...because they thought they could escape the

opprobrium that normally attaches to such a move by blaming it on the

former government.

AN HON. MEMBER: Kill the goose....

MR. GIBSON: But they won't be able to.

Is there a substantial shortfall in the budget as contemplated that

needs to be looked after by this additional $200 million? I say there

is not, Mr. Speaker, and I use the Minister's own figures to arrive at

that conclusion. The question is: is an extra $200 million required?

The Minister suggested that the existing tax system of the province,

before amendment, by virtue of the 2 per cent sales tax and other minor

amendments, would generate....

AN HON. MEMBER: Other minor amendments?

MR. GIBSON: Other minor amendments in dollar terms, Mr.

Minister. I'm glad the minister across the floor pointed that out. This

sales tax is by far the largest revenue increase in this budget, just

as the regressive ICBC rates were much the largest increases in user

charges which don't appear in this budget. But the Minister gave us

some citations as to how the automatic progression of the provincial

tax system yields extra revenue in a time of growth.

He noted that in 1975 the gross provincial product increased 10 per

cent and revenues went up 11.2 per cent. In other words, at the 10 per

cent level of

[ Page 782 ]

provincial growth, revenues rose more than 10 per

cent. He then

cited in 1973 and 1974 another benchmark on the graph, and I would

invite you, Mr. Speaker, to draw a mental graph and connect these

points, when the gross provincial product was growing at an annual rate

of around 18 per cent and the tax system was throwing off an increased

yield of 23.9 per cent, again significantly above the growth rate.

If you put those two things on a chart and then have a look at what

the minister suggests will be the growth figure in the economy for the

next year, which is 14 per cent, what number do you arrive at as the

probable growth in the yield of the tax system? You do not arrive at

the minister's predicted figure of 13.7 per cent. This figure is

ridiculous on the face of it because it is less than the growth in the

gross provincial product, when none of the other figures he gave us

were — a very, I would suggest, distorted figure, Mr. Speaker.

Rather, you arrive at a growth in the provincial economy — or rather

in the provincial tax yield — of 16.7 per cent, a very significant

difference, Mr. Speaker, a difference which, if you calculate out, you

will find that the revenue increase one would contemplate by the

automatic operation of the existing tax system will be in the coming

year $104 million more than the minister has predicted in his budget. I

suggest that there has been a clear underestimation of revenue here. I

suggest that there is $100 million there in that budget that is going

to be produced, which thereby obviates the need in revenue terms for 1

percentage point of the sales tax.

Now the new tax is to raise $200 million. Where is the other $100

million to be found? The other $100 million is to be found in this

coming year by borrowing against capital projects, not against current

account, not against operating account, but recognizing that all the

problems of the past can't be picked up in one year. It's just too much

of a shock to the provincial system.

Interjection.

MR. GIBSON: Rough economic moves, Mr. Speaker, always bring

in their train waste, because the adjustments that people are asked to

make are too much for them to make without altering their patterns

tremendously. Therefore the right thing to do was to admit that the

growth of the economy next year will bring $100 million more than the

minister has predicted and find the other $100 million by borrowing

against capital projects, against new highways to be built, against new

public buildings to be built and so on. The authority, I might add, is

now there as a result of the passage the other day of Bill 3 and other

borrowing authorities of the government. Bill 3, of course, provided

only for matters lost in the deficit of last year, but other sections

of the Revenue Act and access to certain...

MR. D.G. COCKE (New Westminster): They've got draft

legislation over there that would permit them to do that.

DEPUTY SPEAKER: Order, please.

MR. GIBSON: ...of the ICBC accounts and certain of the

housing

funds, as the hon. member for New Westminster (Mr. Cocke) says, and so

on would make this possible.

Their alternative of going ahead with the sales tax has an impact

which is extraordinarily severe. As many speakers have said, and I will

not repeat their arguments, it is regressive. It bears much more

heavily on the low income person than the high-income person. Beyond

that, Mr. Speaker, there was an attempt in the introduction of this

sales tax increase to suggest that, of the $200 million, $90 million,

almost half of it, would be paid for by corporations.

AN HON. MEMBER: Nonsense!

MR. GIBSON: Mr. Speaker, that is absolutely nonsense.

Corporations do not pay taxes of this kind. They pass them on to their

customers, or they pass them on to their shareholders, or they pass

them

on to their employees in the form of lower wages. Corporations are not

charitable institutions. They do not absorb taxes. They pass them on in

every case.

AN HON. MEMBER: Every schoolboy knows that.

MR. GIBSON: And every schoolboy knows that. The Minister of

Finance (Hon. Mr. Wolfe) ought to know that. He ought not to import

such blatant horse feathers into the budget debate.

AN HON. MEMBER: Hear, hear!

AN HON. MEMBER: Goose feathers.

DEPUTY SPEAKER: Please proceed.

MR. GIBSON: So let's take that as established, Mr. Speaker.

Corporations do not pay that $90 million tax. It is going to be paid by

the ordinary person of British Columbia in the form of higher prices

for the services they receive from the corporations or in the form of

lower dividends to the shareholders of the corporation or in the form

of lower wages to the people working for that corporation. That's

clear. There is no question about it.

Once we admit that, what is the impact of this new tax on the cost

of living in the province of

[ Page 783 ]

British Columbia? The hon. member for

Burnaby-Willingdon (Mr.

Veitch) suggested the other day that his calculator gave a little bit

different results as to the incidence of this sales tax on income than

did mine. Mr. Speaker, you have to start from this understanding. The

sales tax is going to take $200 million out of the income stream of the

province of British Columbia. The personal income for 1975 as reported

in the budget is $14.9 billion. I don't have a figure for British

Columbia, but on a national basis personal disposable income, which is

what the ordinary person has left after taxes, runs about 80 per cent

of the total personal income. If personal disposable income is what you

have to spend, it's what the retail sales tax is levied on. Personal

disposable income in British Columbia, therefore, is in the

neighbourhood of $12 billion. From that, of course, should be deducted

a certain amount of funds which are saved rather than spent, and the

national average is around 7 or 8 per cent.

So we are looking at a round $11 billion of personal, disposable,

expended income in the coming year that this tax will be operating

against. The incidence of that tax, Mr. Speaker, is therefore clearly

in excess of 1 per cent overall and, I would submit, closer to 1.3 per

cent. Mr. Member for Burnaby-Willingdon (Mr. Veitch), run that one

through your calculator and see what happens.

The increase, Mr. Member — 1.3 per cent. I don't think he has his

calculator with him, Mr. Speaker; neither do I. But one can do simple

sums in their head. If you divide $200 million by $11 billion, that's

about what you get.

As a matter of fact, you get more than that, don't you? Let's look:

200 by 1,100 — that's very high. It's a very high figure.

Mr. Speaker, the next point I would suggest to you is that this tax

is never going to come off. The history of sales taxes in this country,

and around the world, has been that they never come off. So we are

being asked to make what is an irreversible step here on a figure that,

as I am doing the calculations in my head now, is much closer to a full

2 per cent increase than I had thought. It's a very serious increase,

and it is unnecessary, as I have suggested, Mr. Speaker, and it is

wrong.

But I don't necessarily expect the government to buy that argument.

I can appreciate that the government might say: "Well, the tax system

might not generate the yield you say it will, and we can't take that

chance." But I have a solution for them, Mr. Speaker, which will get

them off that hook without the necessity of the House, at this time,

taking the irreversible step of increasing that sales tax by 2 per cent

that I believe to be wrong. We all know, Mr. Speaker, that cash

reserves of the province are certainly adequate for the next six

months. Given the ordinary operation of the tax system, given the $400

million authority just issued to the government pursuant to the

passage of Bill 3, given the $170 million plus currently lying in the

ICBC coffers, we know that cash is adequate for the next six months. We

know that a sales tax put on now will not be removed.

Therefore I submit to this House, Mr. Speaker, that there is only

one proper procedure, given these facts, given that the government

has not made a case for the urgent need for these funds and given that

a strong case has been made that they will never be needed at all: that

logical move is to defer for a period of six months the decision —

which the government says must be taken and I say does not have to be

taken — to increase by a full 2 percentage points, which is to say 40

per cent of the existing tax rate, the social services tax on the

people of British Columbia.

I would therefore move, Mr. Speaker, that in the standard motion

that the bill be read a second time now, the word "now" be deleted and

the words "six months hence" be substituted.

DEPUTY SPEAKER: The proposed amendment to the bill in the

name of the member for North Vancouver-Capilano says that the final

word in the motion shall be deleted and that "six months hence" shall

be substituted. The amendment appears to be in order.

MR. GIBSON: Thank you, Mr. Speaker. I will just say one

further thing before sitting down. I have done my long division while

Your Honour was considering the question of whether or not the

amendment was in order. The impact on the disposable income of British

Columbians is closer to, and indeed slightly in excess of, 1.8 percent.

MR. LAUK: Mr. Speaker, I support this amendment, and I am

pleased to do so. The hon. Minister of Finance and his government have

brought forward an increase to the sales tax which logically but

unhappily affects large families and those with lesser income than the

average, and indeed cuts drastically, as the Liberal leader pointed

out, into the income of the average family. I cannot understand why

this bill should be read now. When the government says, "Find a better

way," it is obvious to this side of the House, Mr. Speaker, that they

have not done the research or the investigation necessary to find a

more equitable taxation structure in this province. It is for that

reason that this amendment is a good amendment and that we urge that

the Minister of Finance hoist this amendment and not read it a second

time but wait for six months. In that six months he and his department

and colleagues should be constructively working to find a better way.

Perhaps while they are considering it, Mr.

[ Page 784 ]

Speaker, they should consider the arguments that

have been made by

the members of the opposition for alternative taxation systems to

increase the revenues to the province.

It is clear from the remarks made by the Minister of Finance that he

did not have the time to bring down what he described as an earlier

budget. He says: "We only had three months in office, and we had to

rush

this budget, and we brought it down late." That's why we passed the

interim supply bill, Mr. Speaker.

I fear, Mr. Speaker, that this government is moving in haste in too

many directions. They raised the ICBC rates with little thought, I say

with respect, Mr. Speaker. They have brought down the budget — granted

late, but obviously ill-considered, to the minister through you, Mr.

Speaker.

I urge the minister to accept this motion to not read this bill a

second time for six months. I urge the minister to consider the

alternative taxation structures that have been suggested by the members

of the opposition. Indeed, I plead with him: let's take a step in a

more positive direction in terms of taxation. Certainly we as the NDP

are open to some criticism in this regard. We accept that criticism,

and

we say to you that if you will hoist this bill for six months, we will

work and support you in finding alternative tax structures in this

province. We are willing to do that; we are willing to become as

constructive as we can in supporting that approach.

We agree with you that you didn't have time to bring down a proper

budget. We agree that you didn't think out properly what you were doing

when you raised the sales tax. For that reason, we urge the government

to accept the Liberal leader's amendment.

Do you know that Britain, Mr. Speaker, is reducing taxes under a

social democratic government? Why are they reducing taxes? Why are they

reducing the sales tax? I wonder why the Minister of Finance hasn't

asked that question of himself and his colleagues, because the answer

is there. The answer is: to increase and strengthen the consumer

purchasing power and thereby increase the activity in the economy and

get us rolling again. We would support that. We would do so

constructively as Her Majesty's Loyal Opposition.

The government has done the opposite. I think although we have been

very critical of this government for the increases they have made in

ICBC, for lifting the food price freeze, for allowing gas prices,

propane and fuel to go up, for allowing Hydro increases, we even will

turn our head for the moment on the betrayal of an election promise to

freeze taxes. If this government will lift this bill we will work

positively to determine a better tax structure for our people — the

people we all represent in the province of British Columbia.

We look sadly at the budget, Mr. Speaker, in relation to Bill 11.

The sales tax is perhaps the worst or the best example, depending on

how you view it, of what's wrong with the budget. What's wrong with it

is that rather than determining creative approaches to taxing ordinary

people in this province, they have turned to traditional approaches.

If I may paraphrase the Rev. Archer's prayer this morning, Mr. Speaker,

he said: "Save us all from being afraid of a new idea or unreceptive to

a new thought, lest we pull down the shades of our minds and exclude

the

light."

Mr. Speaker, I think it's appropriate that we do work together as

responsible legislators in this province and relieve the ordinary

consumer — the ordinary person. I'm disappointed that the Minister of

Finance is distracted at this point, because I make these remarks very

sincerely to him. On this side of the House, Mr. Speaker, we have seen

this government act in a retrograde fashion using old ideas, uncreative

ideas. Who suffers? The low-income family, the low wage-earner suffers.

We have had ICBC increases beyond anybody's expectation. They lifted

the price freeze on government rates, Hydro and transit. Food prices

were allowed to move upward, and at the same time they have been a

partner of the federal government, it seems, in freezing wages.

Well, how can they freeze wages on the one hand and raise these

rates of taxes on the other, and call themselves an equitable

government? I don't think it was a malicious act. I think it was a

hasty, poorly researched, not-well-thought-out act on their part.

I charge them with the responsibility to work cooperatively and

positively with opposition. Let's stop the mud-slinging, let's stop the

name-calling, and let's get down to work like responsible legislators.

The sales tax is considered, Mr. Speaker, by even the most

right-wing governments across the western world as a regressive and

unduly punishing tax on the lower-income families.

The economic impact is obvious. Consumer strength is lowered. We

don't have the capacity to create the activity. This tax, together with

increases in rates in other areas, deals death blows to the economy.

Now if they could take their blinkers off, if they could draw up their

shades, which the Rev. Archer referred to so eloquently this morning,

they can see the alternative suggested by the Liberal leader (Mr.

Gibson) and by members of the opposition.

I could think of no other person more prominent in the field of

knowledge of taxation, Mr. Speaker, than a man who has been awarded the

highest honour Canada can bestow on one of its citizens — the Order of

Canada. He is a distinguished citizen who we all, on all sides of the

House, believe contributed a great deal to the British Columbia

economy, to its government and to its society. I consider him to be one

of the experts in British Columbia with respect to taxation. Let me

quote you some of the things that

[ Page 785 ]

he said about the sales tax.

He said, Mr. Speaker, when the sales tax was first proposed many

years ago: "The sales tax is an easy way to get revenue, but a

dangerous way for a government do do business, since it did not call

for careful budgeting. It will add fuel to the fire with new demands

for increased wages and industrial strife." The more things change, Mr.

Speaker, the more they stay the same.

HON. MR. CURTIS: When was that?

MR. LAUK: "It should have imposed" — meaning the government —

"an unearned increment tax," not taking money from the poor man, but

from inflationary dollars. He says: "This is an unfair tax, the sales

tax. It falls heaviest on large families least able to bear it. It is

hard on farmers, whose taxes should be at the lowest possible minimum

but who will have to pay this tax on all their tools, tractors and

machinery."

W.A.C. Bennett said that, Mr. Speaker, and he said that on March

20, 1948, when he was a member of the Progressive Conservative

right-wing coalition.

In the same debate, Mr. Speaker, he said eloquently and

knowledgeably....

MR. WALLACE: Come on back, fellows, come on back.

MR. LAUK: Mr. Bennett urged the government to withdraw its

budget for the next fiscal year, an unprecedented action to bring in a

new budget without the ill-considered, unfair, retrograde sales tax —

which is exactly what the Liberal leader is proposing, Mr. Speaker.

What is the alternative that W.A.C. Bennett offered to that

Legislature in this very room more than 20 years ago? He said there

were many other ways the government could raise money, and he suggested

increased taxes on mining and forest operations.

Mr. Speaker, I think that a man who has distinguished himself in

this Legislature and in the history of British Columbia should not be

dismissed as an old-timer. We shouldn't consider that his advice is no

longer valuable to the citizens of the province of British Columbia. I

think that we should accept his advice today because, as I have

indicated, it is even truer today than it was in 1948. It is truer

today with the pressures on the lower-income families. With these

increases in rates plunged on the ordinary family all together in a few

months, this becomes not only a wounding blow to those families but a

death blow to those families.

I would urge every member of this House to consider the remarks of

Mr. W.A.C. Bennett and consider this amendment as being a useful,

constructive one giving this Legislature pause for a period of time for

six months to get to what Mr. W.A.C. Bennett described in 1948 as a

call for careful budgeting. We expected the government to live up to

its election promise and not increase taxes. We knew, at the same time,

that it wouldn't be easy in these times, that it would call for careful

budgeting, for creative thought and for careful consideration of how we

can tax the people in the most equitable fashion possible.

It is clear from the remarks from the Minister of Finance, and he

has admitted it, that they didn't have time and that they were doing

the best they could. All right; we accept that. But we say this: in six

months, and within that six months, your Department of Finance and all

of the experts available can be brought together to set up a tax

structure that would be second to none in this country — second to none

in its fairness and equity to ordinary people.

I submit, therefore, Mr. Speaker, that all the members of this House

should support this very considered and reasonable amendment by the

hon. Liberal leader (Mr. Gibson). Remember, don't be afraid, Mr.

Minister of Finance, through you, Mr. Speaker, of a new idea, nor be

unreceptive to a new thought, lest you pull down the shades of your

mind and exclude the light.

DEPUTY SPEAKER: Just before the Chair recognizes the hon.

member for Oak Bay, may I alert the members of the House as to the

procedures in which we are now involved. We are now on the proposed

amendment to the bill and, as such, we must more properly limit the

scope of our debate to the wording of the amendment. We must be

discussing the reasons why this bill should be considered six months

hence. I didn't wish to interrupt the previous speaker because he was

doing so well.

MR. WALLACE: Might I ask, Mr. Speaker, if you are

anticipating that I might not do quite as well? (Laughter.)

I'll address my remarks very clearly to the amendment because I want

to have the opportunity to speak on the principle of the bill in second

reading. So I shall speak on the amendment. This is the advantage that

a member has, Mr. Speaker, over the Liberal leader who has given up an

opportunity to speak twice by introducing an amendment.

I strongly support the amendment for the following reasons. There

has been debate in the House as to exactly what the deficit facing the

government is but, even more importantly, debate about what revenue

might be expected out of the economy in the coming fiscal year. I

already raised the point in the budget debate that between 1974

[ Page 786 ]

and 1975 the growth in revenue from provincial

personal income tax,

at a time when the economy grew by less than 1 per cent, was something

of the order of $155 million. Between the 1975-76 fiscal year and the

projected 1976-77 fiscal year, the growth in provincial income tax

revenue is projected to go from $658 million to $815 million, which is

almost the same increase despite the fact that the budget, on page 13,

expects a possible growth in the economy — a real growth in the economy

— of 4.5 per cent, four and a half times what it was between 1974 and

1975 and what it was between 1975 and 1976.

I won't repeat all the arguments you have already heard about the

unfair nature of the sales tax. I think it's very obvious that people

in lower income groups have less flexibility with their personal

budgets. They are in a position to buy a much higher percentage of

essential commodities and fewer luxuries, and if you increase their

contributions to sales tax by 40 per cent, it is a very serious

financial penalty to these lower-income groups. But that really isn't

the essence of the amendment.

The essence of the amendment is to suggest that since there are

various unknown factors of considerable dimension in the coming fiscal

year in regard to government revenue, if this bill were delayed for six

months and if the economy in that six months continues to pick up at

something of the rate of 4.5 per cent, and since personal income tax

revenue is one of the first and earliest ways in which the provincial

government gets possession of the tax revenue, as contrasted to money

from cost-sharing programmes with Ottawa and many other forms of

revenue, it would seem to me that six months from now the government

would know one thing: they would know whether the economy is picking up

at approximately 4.5 per cent.

If that were happening, as I am sure the Minister of Finance would

agree, he would know from month to month just what increase in personal

income tax revenue was accruing to the government.

If it looked as though the revenue might exceed the projected $815

million, which is your projected figure for income tax revenue, and I

can refer you to the page....

It's on page 31 at the bottom of the page. Budget estimate for

1976-77 is $815.9 million from personal income tax. I'm just

suggesting, Mr. Minister of Finance, through you, Mr. Speaker, that six

months from now you will have a much better idea as to whether the

projected pick-up in the economy with diminution of unemployment and

more people working, and more people earning money and more people

paying income tax...and that $815.9 million is probably underestimated.

Let us assume, for the sake of argument, that the economy does

improve and that is underestimated by $100 million; you immediately

know that the $200 million that you thought you required from increased

sales tax could at least be cut in half.

If — let us hope — the economy does pick up by 4.5 per cent, you

might not need the $200 million from sales tax at all. I'm not trying

to be smart-alecky and say that we know that the economy will pick up

by x, but the Minister of Finance has already predicated some of his

tax proposals on the fact that lumber markets are picking up in the

United States. We just heard a statement in the newspaper the other day

that housing starts in Canada in the month of March are up by 63 per

cent, and there are indications that the mining industry is looking

forward to renewed investment and expansion.

So there are reasonable grounds to assume that the minister's

figure, projected for personal income tax revenue, is too low. So, Mr.

Speaker, I can't think of a better way of a government exercising

prudent options than by looking at the prospect six months from now,

re-evaluating its projected figures for income tax revenue, and if

they're much higher than are presently projected in this budget, there

might not be the need to impose sales tax as a means of getting another

$200 million out of the economy.

Another factor which is perhaps less important, but I think should

be considered, is that if the people of British Columbia knew that six

months from now the sales tax might go up by 2 per cent there would be

much increase in consumer spending and buying in the next six months,

which in turn, in itself, would be a boost to the economy and stimulate

employment as people start to buy goods and services in the awareness

that six months from now they are going to be more expensive.

I heard some interjections in the debate which suggested or implied

that, of course, this is something of the order of a temporary measure

to get us out of our present financial mess. I think it's very

important that we get one thing very clearly on the record. The

examples of tax increases of this nature ever being reversed are very

unusual. I'm not even sure that there are any examples where a tax in

the nature of a sales tax, which is so easy to impose, the money is so

easy to collect.... You have a cheap tax collector in the form of the

retail merchants of a province, who get paid a very minimal commission

for collecting the money on behalf of the government. So it's easy to

apply, easy to collect and relatively easy to calculate the increased

revenue from x per cent increase.

I think the best example of a tax that's never been repealed, as I

recall — and I may be wrong on the date.... But it seems to me that

income tax in Britain was introduced during the First World War as a

temporary measure — or was it Canada? But I do remember reading

somewhere that the first introduction of income tax was described as

being a temporary emergency measure during the First World War.

[ Page 787 ]

Well, that temporary measure, Mr. Speaker, seems to

have

endured, and I have the horrible feeling that it's about to endure for

another 50 years or more.

So it would be misleading to imply that we have a temporary problem

in raising money, and that once the deficit of the present situation is

corrected we can perhaps look forward to the day when the 7 per cent

will again be 5 per cent.

But as far as the amendment is concerned, Mr. Speaker, I do believe,

I really do feel sincerely, that there is a lot of merit in remembering

and comparing the projected figures on personal income tax in a year

when we expect a 4.5 per cent growth in the economy with the increase

of the previous year, when there was less than 1 per cent. There is a

real possibility.... I'm not saying that it will come to pass. I hope

it will, because it means that the economy is on the move. But if

indeed unemployment is reduced and that figure of $815 million is

proving to be underestimated, six months from now the Minister of

Finance might well feel confident that in the course of the full 12

months of the fiscal year, that $815 million might well be $100

million higher or even $200 million higher, which would make it no

longer necessary to have a sales tax increase.

But at the same time I agree that today it's extremely difficult, if

not impossible, to know how accurate that projected figure of $815

million is. But it seems to me that an increase in sales tax is

imposing hardships at a time of restraint, particularly on people

earning minimum wage and people on Mincome. I worked out the figures

approximately in the budget speech. It was almost, I think, 250,000 or

200,000 people who were either on Mincome, social assistance or minimum

wage, and then, of course, people just above minimum wage, who are

maybe

earning $3 or $3.25 or $3.50 an hour, must constitute a very sizable

number of the population also.

So it would seem that if six months is all we need to try and avoid

a real hardship to hundreds of thousands of citizens in the province,

when, as I feel, there is the real opportunity or a real chance that

revenue from other sources will be higher than you've estimated, would

it not seem reasonable — what harm or what loss could there be — at

least to postpone this for six months? If at the end of six months you

can turn to the opposition and say, "Well, look, these other sources of

revenue are not any higher than we estimate, and we still need the $200

million," then it would seem that you could impose the tax at that

time and be sure at least of collecting $100 million in the remaining

six months of the fiscal year.

I'd like to talk on the principle of the sales tax as such, Mr.

Speaker, but these are my comments as far as the amendment goes.

MR. L. NICOLSON (Nelson-Creston): I think this is an

excellent amendment. I was sitting here thinking of the tremendous

impact that such a measure was going to have on the everyday lives of

British Columbians. I was searching for some solution, for some

constructive suggestion, when the member for North Vancouver-Capilano

(Mr. Gibson) suddenly delivered this amendment from out of the blue to

hoist this for six months. I think that it's justified on the basis

which has been outlined and emphasized by both that member and the

member for Oak Bay (Mr. Wallace) in terms of what the effects might be

on personal income tax revenue, but I think we should even look at the

sales tax itself. There's almost a tacit implication that sales tax

hasn't been increased for some number of years, and yet sales tax is

increased every year because the base is increased.

Interjection.

[Mr. Speaker in the chair.]

MR. NICOLSON: In fact, estimates of what the effect of

revenue of sales tax would be changed between February 20 and the

tabling of the departmental estimates by $44 million. Now that's in

about one month. Now, just imagine if we were to look at this for six

months. What if this same trend were to continue — $44 million a month

for six months? Mr. Speaker, we would more than make up the amount of

money that we are proposing to raise by this 40 per cent increase in

the rate of social service tax.

The Minister got up in second reading, and he talked about other

jurisdictions, as if that was a defence for raising this most

regressive

form of taxation. The Minister did not give any evidence of an impact

study that was made of the harmful effects that this increase would

have on retail trade or consumer spending. I think that six months

would give the opportunity for a complete survey to be taken, for

people to perhaps appear before a standing committee of the Legislature

or a task force that might be assigned by that minister.

You know, Mr. Speaker, that minister is getting a reputat