1976 Legislative Session: ist Session, 3ist 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)

MONDAY, MARCH 29, 1976

Night Sitting

[ Page

309 ]

CONTENTS

Routine proceedings

Budget debate (continued)

Mr. Wallace — 309

British Columbia Deficit Repayment Act, 1975-76 (Bill 3) . Second reading.

Hon. Mr. Wolfe — 314

Mr. Stupich — 314

The House met at 8 p.m.

Orders of the day.

ON THE BUDGET

(continued debate)

MR. G.S. WALLACE (Oak Bay): It is now 8 o'clock and I didn't really want to go to the symphony early tonight. It's all just a dream.

When I closed my remarks at 6 o'clock, Mr. Speaker, I was talking

about the whole question of the accuracy of estimates and the fairness

of taxation. I was really quite impressed at the time by the statement

of the Premier when he addressed the people of British Columbia on

television. That actually happened on the evening when I was in Ottawa

at the national leadership convention for our party, but I subsequently

read the statement by the Premier which appeared before the financial

facts of the Clarkson, Gordon report.

On page 2 the Premier is quoted as saying: "The financial review

discloses an alarming trend. More and more government revenues are

coming from taxes collected from people." I notice the Minister of

Education (Hon. Mr. McGeer) nodding in agreement.

The clear conclusion one might draw from that, Mr. Speaker, at the

time, was that this first budget of the Social Credit government might

perhaps change the general direction in the collection of revenue by

perhaps having more from. our natural resources or from other

directions, but less directly out of the individual pocket of the

individual taxpayer.

But, Mr. Speaker, this budget makes the situation worse. If we look

at the way in which the tax dollar is collected in this budget we're

now studying, in 1975-76 out of every 100 cents collected, personal

income tax was accounted for by 20 cents; and in this new budget it

will be 23 cents, and sales tax in 1975-76 accounted for 15 cents out

of the dollar collected, and in this new budget the sales tax will

provide 20 cents out of each dollar collected.

That seems to be an unusual contradiction to the tone of the preface

to the Clarkson, Gordon report which the Premier discussed on his

television appearance some weeks ago.

Actually I would agree with the Premier's original statement, that

we should attempt to derive as much revenue surely from our resources

and from areas other than the individual person seeing part of their

income or part of their spending dollar taken up either by sales tax or

some other form of taxation.

I also made the point earlier on, and feel it worth repeating very quickly,

that the budget seems to lack any real definition of the initiatives to industry

and business to expand and, by expanding, to provide new jobs, and by providing

new jobs, increase the tax base.

One of the important elements which has been discussed in the throne

debate and again in this debate, of course, is inflation. When I talked

earlier on about 4.5 per cent in real growth in the economy, it's also

clear that perhaps we can expect a bogus 10 per cent increase which is

related purely to inflation.

On page 15 of the budget speech the Minister of Finance (Hon. Mr.

Wolfe) mentions that the government will seek "an agreement whereby the

federal Anti-Inflation Board will review pricing decisions for Crown

agencies." I just wonder once more if, in this debate, perhaps the

Minister of Education (Hon. Mr. McGeer) will report to the House as to

whether or not ICBC will be one of the Crown agencies subjected to that

review by the Anti-Inflation Board, and whether or not he or any of the

cabinet have had recent discussions with either Mr. Pepin or officials

of the federal government as to the exact situation regarding such

problems as ICBC.

Mr. Speaker, on that point of having the Anti-Inflation Board review

pricing decisions of Crown agencies, it seems to me that the throne

speech mentioned that our provincial government would also be setting

up an agency to which Crown corporations would have to attend prior to

an increase in prices.

While I'm totally behind this government in an attempt to reduce its

size and to reduce agencies, corporations and commissions of one kind

or another, I wonder if, in response to my comment, one of the

ministers could tell us if this provincial agency isn't just an

expansion of government, if in fact it is the government's intention to

submit all these proposed increases to the federal Anti-Inflation

Board. In other words, I am asking: are we doing something twice over

when, in point of fact, once would be quite adequate?

I just want to mention very briefly our reaction to expenditure

proposals. The increased expenditure on Health, Education and Human

Resources is projected to be $339 million. I want to support and

approve of the fact that this government has allocated the major single

increase of expenditure to Health.

Now I know, Mr. Speaker, that I am often looked upon in this sorry

vale of tears that we call politics as being a one-issue man and all I

think about is health. I don't really feel that's a very fair appraisal

of my attempts in this House. Nevertheless, it seems to me that if you

look at the total community, if our individual citizens don't have

health, they have nothing. Many of the other goals we seek in this

House — to have better highways, better homes or better this or better

that — really amounts to very little if you don't have your health.

[ Deputy Speaker in the chair.]

[ Page 310 ]

I don't think that the point can be over-emphasized: not only from

the individual self-interest point of view of having your health, but

your employability, your productivity, your contribution to society as

a whole is proportionately diminished as your health is impaired.

I don't think that modern government should look upon health

expenditures as some unavoidable, terrible burden which somehow they

have to finance out of ever-increasing revenues. I think it has a

positive end in itself if we promote health; namely that we have more

individuals producing more and needing less help from the state and, in

fact, in a most productive and long-term way, perhaps making fewer

demands on the largesse of government which, as we all know, has to be

derived from taxation in the first place. So I think the government is

making a very wise move in allocating the major increase in expenditure

in the direction of health.

I would like to commend the government in the other direction in

trying to reduce its own size. The figures between 1972 and 1975 are

rather staggering — that the government payroll increased by 28 per

cent to almost 40,000 employees. This is one area where I think the

former government made serious misjudgments and should, indeed, bear

the blame for many of the financial consequences of these misjudgments.

Not only did we have a large increase in the size of the payroll,

but certainly there were, some very substantial fringe benefits and

salary increases, some of which may have been justified in this popular

phrase, "catch-up". But certainly, in the overall picture of the budget

in relation to the government payroll, I have to conclude that a very

rapid and sizeable increase in expenditure was incurred in that

direction.

For example, Mr. Speaker — and I am part of that group that benefits

through the optional health benefits plan — the government of the day

decided that government employees, MLAs and others should have access

to the optional health benefits plan without paying a premium. It just

seems to me, and I'll come to this in a moment when I talk a little bit

about hospitals, that while the basic insurance principle is sound and

none of us should be subjected to what used to be called catastrophic

hospital bills, nevertheless, the human nature being what it is, it is

always a sound principle that the individual, when he or she receives

some particular benefit, should be made aware of the cost of that

benefit and should be involved in paying at least a small part of the

total cost at the time the benefit is received.

If that sounds old-fashioned and Presbyterian, I have no apology to offer.

I happen to think that the pendulum on many of these programmes has swung much

too far. I've said many times in this House that when I came to Canada in

1957 this was the cry — that people were being financially ruined for the rest

of their lives because of hospital and health care bills, and that was wrong.

In 1958 the government introduced the first cost-sharing programme

to prevent individual citizens, through no fault of their own, being

ruined financially because of a long illness. All I am saying now is

that I think there is a very real risk in Canada, not just in British

Columbia, that the pendulum has swung too far and that the individual

citizen wants it both ways. They want the government to raise the

revenue to such a level that all these health and hospital costs will

be paid out of general revenue. I wasn't a bit amused by Mr.

Broadbent's interference in our affairs when he professed to be

flabbergasted. I gather from some of his comments that he really didn't

know very much about the local scene in British Columbia, any more than

I would if I went to Quebec or somewhere to comment about their

medicare.

But what I am saying, Mr. Speaker, is that there is a general

principle that I think must not be lost sight of. When human beings

receive any particular largesse or gifts or benefit to which they have

not visibly contributed, at least in part, there is a devaluation in

the mind of the individual as to what that service is worth and how

it's being financed. When we as MLAs derive the access to the optional

health benefits plan, and don't pay a nickel towards it in premiums, I

just happen to think that runs a real danger that each of us, first of

all, doesn't appreciate the cost of that plan and, secondly, perhaps,

takes it for granted — and perhaps even over-uses it. This is another

area in the whole question of the financing of health services which

has been debated in great detail in the federal House on the Bill C-68,

I think it is.

So I just say that the former government, I think, went overboard in

many of the benefits made available to the government employees, and

now, as the present budget shows, we are faced with certain financial

commitments which are high and out of proportion to the value if that

money was spent in other directions.

Again I raise the word priority. I think that the government's good

intention of removing property tax from homeowners over 65 is

essentially a sound idea, but again, Mr. Speaker, money doesn't grow on

trees. We have debated at some length some of the penalties that are

involved for low-income groups by the increase in sales tax — and I

said earlier this afternoon that I don't believe that increase in sales

tax was necessary. If we look at some of the compensating mechanisms, I

just do not believe in the blanket approach to some of these programmes

such as the removal of property tax on the basis of age, rather than on

the basis of the individual financial status of the homeowner.

I don't think we can run in opposite directions at

[ Page 311 ]

once. If we want to help certain people between the

ages of 55 and 59...and I agree that we should where there is need, and

that programme has been articulated very clearly as being related to

the demonstration of need. I think if you look at the proposals for

homeowners over 65, there are many homeowners who need that reduction

very little. Some need it very much. But I don't like this blanket

approach that, on the basis of age, everyone over 65 should have a

certain reduction of property tax.

I think if an assets test, as is the case in the GAIN programme...if

there's any validity and logic in that, then there is equal logic in

determining whether everybody over 65, regardless of wealth, should

also have a tax advantage.

On education, Mr. Speaker, I must confess that at this present time

I can't find enough specific information as to how local school

districts are to be affected by the proposed 9.4 per cent increase in

financing the public schools. I have sought advice from these most

intimately involved in school districts in this area, and School

District 61, and they are not prepared to...at least I don't think they

are in a position to analyse precisely what that 9.4 per cent increase

may or may not mean. But I think there is some real fear that we are

faced with a choice of raising another 10 per cent of the education

dollar through local municipal taxation, or reverting to more pupils

per class and perhaps a limited range of educational services from a

more restricted spectrum of teachers.

I am sorry that the Minister of Education (Hon. Mr. McGeer) is not

in the House, because there is one question, and it might have a simple

answer....

I just cannot find in the budget and in the estimates the $25

million for the expansion of UBC medical school. It was my

understanding that if we put up $25 million we would find matching

funds from the federal government as long as we carried this out before

1978. I just can't find the B.C. $25 million in the budget — it isn't

mentioned — and I can't find it in our book of estimates. It will be

interesting if later in the debate perhaps the Minister of Education

(Hon. Mr. McGeer) could expand on that.

The question of hospital costs and patient contribution is a very

important element in this budget. I hope I'll be pardoned, Mr. Speaker,

if I just reminisce for a moment as to the days when I was a member of

the Social Credit Party. I remember the numerous discussions I had with

the then Premier (Hon. W.A.C. Bennett) for whom I had, and still have a

great deal of respect and admiration. But whenever we talked about

patient contribution, he always came back right away condemning me

because I wanted to "tax the sick", and that was the phrase. I indulged

a little bit in smiling at the Premier on Friday last when he sat

across on the other side of the House and listened to the Minister of

Finance announcing the increase in the patient contribution for acute

care from $1 to $4. This isn't any kind of smart aleck, "I told you so"

position that I'm taking. I'm just simply saying that I think this is

an area where, regardless of the government in power, we have to look

squarely in the face of some financial facts in relation to

hospitalization costs.

The public has to accept one of two things: we have to raise more

money for hospitals, or we have to accept the restriction of the

spectrum of care and service which we all have come to more or less

accept as our right. The daily cost of hospital care in the larger

metropolitan hospitals is now somewhere around $125 a day. The cost of

constructing acute hospitals in the metropolitan areas now comes close

to $100,000 per bed. So we needn't kid ourselves when we talk in this

House about hospital financing. The challenge is not to argue about the

inevitable costs, but to try and find in an intelligent way a just and

equitable distribution of how these costs should be met.

With regard to the acute-care bed per diem proposal by this

government, I feel that it makes sense either to increase it in

conjunction with rising costs or get rid of it altogether. The $1 a day

as such, when the total cost of the daily service is $125, is just a

bookkeeping nuisance which adds overhead and little else to the real

financing of hospital costs. So I feel that by and large the $4 per day

charge is riot unreasonable and, at the same time, I acknowledge the

comments made by the Liberal leader (Mr. Gibson) this afternoon that

there may be cases where some people are not in for the average of 8.5

days; certainly some individuals after motor vehicle accidents are in

hospital for months. If they've lost their job, or had a reduction of

income during the months they're in hospital, there should be some very

distinct considerations for that kind of case.

At the same time, in increasing the extended-care rates to $7 a day,

I agree again with the Liberal leader that there may be cases that

merit exemption — in the case of a spouse where the husband or wife is

in extended care and where perhaps the elderly husband has additional

expenses in trying to live in his own home with ancillary help to make

this possible. So I don't think, again, that we should look upon this

as any blanket $4 and $7 charge. I think that the regulations should be

tailored to take into account some of these exceptions to the general

rule.

I would like to raise one specific point with the Minister of Health

(Hon. Mr. McClelland), or perhaps he can at least take this matter as

notice, Mr. Speaker, that prior to this proposal in the budget it was

decided by the Department of Human Resources in May of last year — and

perhaps I should be directing this question to the Minister of Human

Resources (Hon. Mr. Vander Zalm) — but once again this is a matter for

both departments really. In May of last

[ Page 312 ]

year, because of the fact that the extended-care

charge was $1 a day, certain patients who qualified for Mincome were

not granted Mincome. Perhaps I should just quickly read parts of the

letter, which is very understandable and makes a lot of sense:

"It is our

understanding that you are now in an extended-care facility. As you

know, the cost of providing this care is borne by the provincial

government at a charge of only $1 per day to you.

"In the interest of being fair to all senior citizens

of British Columbia, I must inform you that the government cannot

continue your Mincome benefits since the government is already paying

for your care through direct payment of your hospital costs.

"The Mincome programme was introduced to ensure that

all senior citizens would be provided with an adequate income to meet

their daily living needs. Since the government pays for your basic

needs in the extended-care programme, it is felt that your need for

Mincome benefits is not as critical as for those senior citizens who

must meet the monthly costs of food and rent. The enclosed cheque...."

et cetera, cetera.

What it is saying, in effect, is that the patient in this case is

living at a total cost of $30 a month, and under Mincome would receive

perhaps $265 or thereabouts. I realize that that was a reasonable

approach back in May of last year, but I would want some very clear

assurance before I support the $7 proposal in the budget that, in

effect, if Mincome recipients will subsequently be paying $7 a day,

which is $210 a month, they will now receive the full Mincome benefit.

I have already had inquiries from constituents who point out that if

such patients, as the person to whom this letter was addressed, do not

receive Mincome, their $7 a day charge would use up their total monthly

revenue with no comfort money, or perhaps $2 or $3 at the most.

One of the reasons I feel that the $7 charge is reasonable, with the

exemptions I have suggested, is that if the Mincome patient is

receiving $265 a month, to pay $210 for the total care and have $55 a

month for the other bits and pieces of their support.... I don't think

that's unreasonable when you look at the elderly couple still trying to

live in their own home and pay taxes and food and all the other

expenses. But I do hope that the minister or someone in the debate will

make it very plain that the $7-a-day charge for extended care will mean

that all persons who qualify for Mincome will, in fact, receive Mincome.

A big disappointment of the budget, Mr. Speaker, in the area of

hospitals must, of course, be the lack of mention regarding

intermediate care. Here again it isn't just a question of some very

abstruse or poorly publicized element in the total spectrum of care. We

have been talking about intermediate care for years and years and

years. It makes no sense, regardless of the human element, in trying to

help the patient, which is important enough. But even if we just

overlook that for the moment, it makes no economic sense to ignore the

whole issue of intermediate care.

I don't wish to go into great detail at this time, Mr. Speaker,

because we'll be dealing with it in the estimates of the Minister of

Health. But the problem we have right now is that we have very

expensive acute-care hospitals at, as I say, a daily cost of perhaps

$125. Many of these expensive services are occupied by persons who need

a lesser level of care but who literally have nowhere else to go. This

doesn't just apply....

The member for Skeena (Mr. Shelford) is looking across. I know that

this issue I am discussing doesn't just apply to the metropolitan area;

it applies to every part of this province. It just makes sound

financial sense that we should provide the care that a patient needs,

but it should be no more and no less than the patient needs. We should

not be looking after elderly citizens who really need a fair amount of

nursing care, and trying to cope with it in a rest home. Nor should we

have persons in the Royal Jubilee or Victoria General Hospitals at $125

a day when what they really need is something costing perhaps $30 a day.

I know and the Minister of Health knows, and I guess just about

everybody in this House knows, that one of the big obstacles has been

federal cost-sharing, that acute- and extended-care hospitals are

covered, at least approximately 50 per cent, by federal funding, and

that intermediate care has been left out of all federal planning.

Nevertheless, Mr. Speaker, the province has that obligation to the

persons and the patients who need that kind of care. I submit that it

still makes a lot of economic sense, regardless of Ottawa's

intransigent or stubborn attitude. It still makes a great deal of sense

that we should provide the total spectrum of care for our elderly

citizens and make sure that they receive what they need, but certainly

that we spend neither any great deal more or great deal less in

providing the service they need.

I notice the estimates provide for an increase in funding for home

care, from $5,290,000 to $6,714,000, and that increase of 26 per cent,

I think, is evidence of a very good step in the right direction in

trying to de-emphasize the importance of the acute-care hospital in a

modern society. The old-fashioned idea that a person is either well

enough to be at home or sick enough to be in the hospital is just as

out of date as many of the other old myths that we hear in the field of

medicine. Between the home and the acute hospital are two or three

other levels of care which

[ Page 313 ]

will well meet, in a very adequate way, the needs of the patient and

yet result in a much more judicious and economic use of the health

dollar in the Ottawa health-care field.

I just want quickly, Mr. Speaker, to quote an example that the

second member for Victoria (Mr. Barber) made me aware of: a lady wanted

to have her baby at home; she didn't want to go into the hospital. So

she got in touch with her physician who agreed to deliver the baby at

home, thinking, of course, that the home-care programme would be

available. But the incredible bureaucracy of the situation is that you

only qualify for home-care nursing if you've come out of the hospital.

There's no provision for you being treated at home until you've been in

and out of the hospital.

Now that's not the minister's fault; it's nobody's fault. It was a

step in the slow, tedious direction of de-emphasizing hospital care

when there are alternatives. At any rate, it points up the real need

for this government to provide financial incentives, and various other

initiatives, to de-emphasize the acute-care hospital in the total

spectrum of services. There are many other ways in which the patient

can receive perfectly adequate care and attention but need not

necessarily be admitted to one of these very expensive institutions.

I just wanted to leave one further question, which the minister

might answer. Again from the Clarkson, Gordon report, on page

17: joint-service programmes costs shared by the federal government. I

notice that hospital insurance payments, as of March 31, 1976, were $55

million less than was anticipated. I would be interested to know

whether this was bad arithmetic or whether the federal government has

already changed the ground rules unilaterally, as they're trying to do,

in regard to pre-agreed cost-sharing formulae. I just can't understand

how, in a situation where our hospital costs have continued to

escalate, that the federal share of the joint-service programme could

be $55 million less than anticipated. That's about 20 per cent of the

sum projected.

To the Minister of Human Resources (Hon. Mr. Vander Zalm) I would

like to quote also page 17 of the Clarkson, Gordon report where Canada

Assistance Plan money was expected to be $207 million, and it now

appears as though it will only be $180 million. I think it would be

very useful, again, to help us understand this budget if we knew the

answer to these two questions, because right there, Mr. Speaker, is

$84.6 million less than was expected from just two ingredients in

cost-sharing programmes.

We've already talked about $100 million that we're not getting from

our forest revenue. Here's $84.6 million that we're not getting from

the federal government. I think that when we're dealing with sums of

money of this size we should all try and have as much understanding and

accurate information as to why this big gap.

Finally, Mr. Speaker, I just want to go back to the general theme of

the budget and ask about a particular quotation from the budget, on

page 29, where there has been great reference to the importance of

balancing the budget. It says as follows:

"Without this sound financial position" — that's relating to the previous statements that we must have a balanced

budget — "the ability of the provincial guarantee to provide the

lowest cost, long-term financing for these essential public requirements is

in jeopardy."

Now that's quite a serious statement. It implies that the credit

rating of British Columbia is in jeopardy, that if we go to borrow

money, the absence of a balanced budget — or, alternatively, the

presence of some kind of deficit — places our borrowing capacity in

jeopardy. And as far as I can determine from my research, Mr.

Speaker...and I'm quoting Moody's Municipal Government Manual, Vol. II,

1976 : "The credit rating in British Columbia is unchanged at double A."

[Mr. Speaker in the chair.]

I hope the Minister of Finance (Hon. Mr. Wolfe) is listening to this

because it's a very serious point I'm raising, that a claim is made in

the budget as part of the argument to justify a balanced budget, that

if in fact we don't balance the budget our capacity or our potential to

get into long-term borrowing, presumably for Hydro and other

expenditures, is in jeopardy. That is the phrase the Minister of

Finance uses: "...is in jeopardy."

Now the information I've got from Moody's is that British Columbia

still has a double A rating, which hasn't changed for several years,

and that, in fact, if you look at the rest of Canada the only province

that is rated higher than British Columbia is Ontario with a triple A.

British Columbia is a double A, Alberta is a double A, Manitoba and New

Brunswick, Quebec and Saskatchewan are A, and one or two of the other

provinces in the Maritimes have a lower rating.

Mr. Speaker, I don't want to belabour the issue, but I just think

that we should have response from the government later in this debate

as to what exactly was meant by that rather serious statement in the

budget that our long-term credit rating is in jeopardy.

If I may, just in a few moments, Mr. Speaker, sum up my feelings

about the budget. I think there are many good things in the budget, I

like the government's attempt to reduce its own size. I like the

housing initiatives. I like the GAIN programme, which is the Guaranteed

Available Income for Need. I like the idea of quarterly financial

statements. I like the safe driver incentive programme, and I like the

[ Page 314 ]

elective priority that, if expenditures are to increase, one of the

best ways to allocate that expenditure in the widest way is in the

field of health.

The parts of the budget which I regret are those which, in my

opinion, as I pointed out this afternoon, seem to underestimate

revenue, particularly in the area of personal income tax, given a real

increase in economic growth of around 4 to 4.5 per cent. I think that

it would have been quite reasonable to assume that the income tax

revenue would be higher, and that we might have avoided the 2 per cent

increase in sales tax, which is not only inflationary but is certainly

unfairly harsh on low- and middle-income groups.

On that basis I think that the budget lacks a sense of balance and

moderation, and that there is an over-reaction to the undesirable

aspects of a deficit. No one, by choice, would ever want to budget for

a deficit, but I am trying to look at all the different facets of the

budget and how it's put together. I feel that the 2 per cent increase

in sales tax was unnecessary, that income tax revenue will be much

higher than projected, by perhaps $100 million, and that the other $100

million that will be derived from sales tax could have been, in

terms of a $3.6 billion budget, a moderate deficit to be worked out of

the budget in the succeeding year.

I don't really believe that it is either fair to the low-income

earner or in the long run in the interest of the economy to try to

straighten out this whole situation in one single budget.

The last point I would make is that the real hope for the economic

future for British Columbia is not to find the least painful way of

taking more money from the taxpayers. The real challenge to politicians

in this province, and in any modern province, is to find the

appropriate incentives and stimulus to industry and to our resource

economy, to try to derive, as the Premier himself had said on

television, a greater fraction of the required revenue from resources

and a smaller corresponding fraction from the individual.

On behalf of Hon. Mr. Davis, Hon. Mr. McClelland moves adjournment of the debate.

HON. G.M. McCARTHY (Provincial Secretary): I move we proceed to public bills and orders.

Motion approved.

HON. MRS. McCARTHY: Second reading of Bill 3, Mr. Speaker.

BRITISH COLUMBIA DEFICIT

REPAYMENT ACT, 1975-1976

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, Bill 3, British Columbia Deficit Repayment Act, 1975-1976,

is now fairly well known to the members of this House, and I think it

is fair to say that you could classify this as a non-controversial

bill, one which will, I suspect, reach unanimous approval.

MR. A.B. MACDONALD (Vancouver East): It's a political bill.

HON. MR. WOLFE: Well, aren't they all, Mr. Member?

Now to reiterate, the purpose of this bill is to authorize the

Minister of Finance to borrow up to $400 million to make good the

anticipated deficit for the 1975-76 fiscal year.

Mr. Speaker, hon. members are by now well aware of the financial

problems we have been discussing in recent days and which face our new

government as a result of the operations which preceded us.

Considerable publicity has been given to the findings of the Clarkson,

Gordon report, a report by an independent firm of chartered

accountants. The item of the report which concerns us in this bill is

the projected deficit to the province of $541 million for the fiscal

year now drawing to a close.

With cash reserves at April 1, 1975, of $143.7 million, the cash

shortfall for the province for the current year is estimated to be

about $400 million. This is the basis for the amount of authorization

required in the bill.

The previous Social Credit government brought the province to a

position where sinking funds' provision fully covered the debt

outstanding. It then, by Act of the Legislature at the 1960 session,

cancelled all borrowing authority of the province. The only exception

to this was a borrowing for expenditures within the fiscal year, and

such borrowing had to be repaid by the end of that fiscal year. Thus,

Mr. Speaker and hon. members, you can readily see the dilemma of the

Minister of Finance: on the one hand he is faced with a $400 million

deficit or cash shortfall, and on the other hand he was faced with

having no borrowing authority.

Obviously, this situation must be quickly corrected. So the purpose

of this bill, therefore, is to provide the government with authority to

borrow funds to cover the 1975-76 deficit. The authority for this

purpose is limited to $400 million, and it is intended to borrow only

funds as are absolutely necessary and to use the internal funds

available to the province wherever possible rather than utilize the

world capital markets.

Mr. Speaker, with those few remarks related to the British Columbia

Deficit Repayment Act, 1975-1976, I am happy to move second reading.

Thank you.

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, now that we have the explanation of the Minister of

[ Page 315 ]

Finance, is the government prepared to accept an adjournment?

Mr. Stupich moves adjournment of the debate.

Motion approved.

Hon. Mrs. McCarthy moves adjournment of the House.

Motion approved.

The House adjourned at 8:53 p.m.

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