1980 Legislative Session: 2nd Session, 32nd

Parliament

HANSARD

The following electronic version is

for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, AUGUST 12, 1980

Afternoon Sitting

[ Page 3865

CONTENTS

Routine Proceedings

Pension (Municipal) Amendment Act, 1980 (Bill 27). Hon.

Mr. Wolfe.

Amendments –– 3865

Miscellaneous Statutes Amendment Act (No –– 2), 1980

(Bill 60). Hon. Mr. Williams.

Introduction and first reading –– 3865

Oral Questions

Eckardt commission report. Mr. Lauk –– 3865

Sierra-Yoho Road contract. Mr. Leggatt 3865

Advertising of brand names in government publications.

Mrs. Wallace –– 3866

Cablevision merger. Mr. Lauk –– 3866

Freight costs compensation for Vancouver Island

farmers. Mrs. Wallace –– 3867

Advertising of brand names in government publications.

Hon. Mr. Hewitt replies –– 3867

Committee of Supply; Ministry of Finance estimates.

(Hon. Mr. Curtis)

On vote 85: minister's office –– 3867

Mr. Stupich

Mr. Barber

Mr. Lockstead

Mr. Hall

Mrs. Wallace

On vote 92: government agencies –– 3888

Mr. Stupich

Mr. Lockstead

On vote 96: grants, contributions and subsidies –– 3889

Mr. Stupich

Votes 96 to 102 inclusive approved –– 3889

Pension (Public Service) Amendment Act, 1980 (Bill 43).

Second reading.

Hon. Mr. Wolfe –– 3889

Mr. Howard –– 3890

Matter of Privilege

Possible breach of privilege by Hansard editor.

Deputy Speaker rules –– 3891

TUESDAY, AUGUST 12, 1980

The House met at 2 p.m.

[Mr. Davidson in the chair.]

MR. SEGARTY: Mr. Speaker, in the gallery this afternoon is

Mr. Jim Ellingston, a teacher from the Mt. Baker Senior Secondary

School in Cranbrook. I would like everyone to welcome him.

MRS. WALLACE: Last week I had a young lady visiting from

Tamworth, Ontario. Today I'm very pleased to have her sister visiting

in the gallery. Her name is Tammy Dickeson, and she is from Tamworth,

Ontario, too. Would the House please join me in welcoming her.

HON. MR. HEWITT: Mr. Speaker, in the gallery today is the

Chairman of the B.C. Land Commission, Dr. Mills Clarke, and I'd ask the

House to welcome him.

MR. KING: In the Speaker's gallery today we have a delegation

from the city of Revelstoke: His Worship, Mayor Al McAskill; Alderman

Barry Grannary and Alderwoman Val Berry; the regional director, Dr.

Geoff Battersby; and Mrs. Barb Humphries, Terry Gowing, George Sawada

and another representative of the ratepayers' group whose last name

escapes me at the moment, but I will find it and correct it for the

sake of Hansard . I would ask the House to extend a warm welcome

to this group.

Introduction of Bills

PENSION (MUNICIPAL)

AMENDMENT ACT, 1980

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

Administrator: amendments to a bill intituled Pension (Municipal)

Amendment Act, 1980.

Amendments ordered to be referred to the committee of the House

having charge of Bill 27.

MISCELLANEOUS STATUTES

AMENDMENT ACT (NO. 2), 1980

Hon. Mr. Williams presented a message from His Honour the

Administrator: a bill intituled Miscellaneous Statutes Amendment

Act (No. 2), 1980.

Bill 60, 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.

Motion approved.

MR. HANSON: Mr. Speaker, I ask leave to make an introduction.

Leave granted.

MR. HANSON: In the gallery today, Mr. Speaker, is a

vice-president of the United Native Nations Indian organization, Mr.

Bob Warren, who is a constituent of mine. I'd like the House to join me

in welcoming him.

Oral Questions

ECKARDT COMMISSION REPORT

MR. LAUK: I have a question to the Attorney-General.

Yesterday Mr. Eckardt commented under questioning that "the worms are

coming out of the woodwork." Mr. Eckardt's comments raised the clear

indication that the House has not been told the whole story of the

Eckardt report; Mr. Eckardt's comments clearly suggest that he is

afraid of full disclosure.

On the basis of Mr. Eckardt's admissions yesterday, will the

Attorney-General now release the transcripts of interviews of witnesses

concerning this matter?

HON. MR. WILLIAMS: Mr. Speaker, the answer to the question is

no.

MR. LAUK: On the basis of Mr. Eckardt's admissions yesterday,

will the Attorney-General agree to call Mr. Eckardt before the bar of

the House for questioning by all MLAs?

HON. MR. WILLIAMS: Mr. Speaker, that's not my prerogative,

and I don't intend to make such a request.

SIERRA-YOYO ROAD CONTRACT

MR. LEGGATT: My question is directed to the Minister of

Energy, Mines and Petroleum Resources. Last night on the CBC, serious

allegations were made that the prime contract for Sierra-Yoyo Road was

awarded to a Social Credit supporter without benefit of tender. Could

the minister confirm that this contract was let without bids?

HON. MR. McCLELLAND: Mr. Speaker, the contract was awarded

after advertisements in papers with specifications, and that's been

normal practice in the past.

MR. LEGGATT: I take it the minister is admitting that the

contract was awarded without bids. Would the minister advise why a

contract last year involving contractors in that area and involving

exactly a similar kind of road was let with bids?

HON. MR. McCLELLAND: Mr. Speaker, there were bids taken.

There were advertisements put in the local newspapers and people

submitted their proposals on the basis of specifications.

Interjection.

HON. MR. McCLELLAND: Oh, there were 12 or 13, something like

that. That's been normal practice.

MR. LEGGATT: Mr. Speaker, I'd like the minister to clarify

his answer. Is he saying that the allegation by the CBC — that that

section of road they were investigating was issued without bids — is a

false allegation?

HON. MR. McCLELLAND: Mr. Speaker, the CBC didn't apply to the

advertisements.

[ Page 3866 ]

MR. LEGGATT: In view of the statement by the manager of the

successful contractor — and I quote from the program — "We all gave

money to Brummet," can the minister advise whether the funds allegedly

given to Brummet were used for Social Credit campaign purposes?

HON. MR. McCLELLAND: Mr. Speaker, I don't know whether that

question is in order or not; I would expect it probably isn't. But

first of all, I've no knowledge of what the CBC said or didn't say. I

do know that there is some concern within the constituency of North

Peace River about a contract which was let. It's being fully

investigated by the ministry, and the ministry has been in close

contact with the MLA for the area and the contractors in the area and

will continue to be in close contact with them. I'd be a bit surprised,

since the member for North Peace River got 76 percent of the vote in

the last election, that almost everybody in that constituency wasn't

one of his supporters.

MR. LEGGATT: Mr. Speaker, I'm sure the minister will be happy

to advise that neither he nor Mr. Brummet in any way made

representations on the awarding of that contract. Were any

representations made by the minister or the member for that riding?

HON. MR. McCLELLAND: I'd be happy to advise on that. The

answer is, absolutely not.

MR. LEGGATT: Mr. Speaker, I take it that the minister has

already investigated the total circumstances, although he's told us

that he did not see the program. So I take it he's investigated through

his department.

Last year Preston Contracting undertook to build a 34-foot-wide

road, which now appears to be 22 feet wide. Preston has also been

awarded 27½ miles this year, again without tender. Can the minister

advise what supervision his department is taking in regard to this

contract? How many supervisors has he got on the road to make sure this

contract is in accordance with specifications?

HON. MR. McCLELLAND: Mr. Speaker, just to clear up the one

matter about whether or not I saw the CBC program, I didn't see the

program. I don't care about it, but I can tell you that the concerns

were delivered to me before they were to the CBC, and we've been

looking into this matter. That's the way things work in my ministry. I

don't wait until I have to have the CBC tell me about problems in the

community.

There have been some allegations made in a letter to me and in a

letter to the Premier about the specifications of the road. Those

allegations are under full investigation, and if there's something

wrong it'll be fixed.

MR. LEGGATT: I take it, Mr. Speaker, from the answer that

that confirms there is something wrong in terms of the initial

investigation. I want to ask the minister this: has Preston Contracting

been asked to make good on last year's work?

HON. MR. McCLELLAND: We don't know if there's anything to

make good on, and that's the purpose of the investigation. Neither does

the member for Coquitlam-Moody (Mr. Leggatt) know if there's anything

wrong. He has seen a CBC television program; he has no other

information. I intend to get some more information, and until I have

that information it would be extremely presumptuous of me to accuse a

citizen of this province of wrongdoing without any evidence whatsoever.

I would have thought, Mr. Speaker, that that member of the Legislative

Assembly, as a member of the bar of this province, would be the first

member in this House to want to have evidence before accusing people of

wrongdoing.

MR. LEGGATT: I take it that the minister is going to use the

precedent of the Attorney-General (Hon. Mr. Williams): all the

investigation will be in-house, and we won't see any of the evidence

tabled in this House. How are we going to rely on the minister's

answers?

My question is directed to the Premier. Has the Premier decided to

call an inquiry into the awarding of this contract, as requested?

HON. MR. BENNETT: No, Mr. Speaker.

ADVERTISING OF BRAND NAMES

IN GOVERNMENT PUBLICATIONS

MRS. WALLACE: My question is for the Minister of Agriculture.

Can he tell me whether or not it is the policy of his ministry to

advertise brand names in government publications at taxpayers' expense?

HON. MR. HEWITT: I'm not sure what the next question will be,

so maybe I'll take that question on notice and see what happens from

there.

CABLEVISION MERGER

MR. LAUK: My question is to the Minister of Universities,

Science and Communications, with respect to the takeover of Premier

Cablevision. In view of the government's unprecedented duplicity by its

insidious support of the eastern takeover....

Interjections.

DEPUTY SPEAKER: Order, please. Hon. member, the, question is

out of order.

MR. LEA: Why?

DEPUTY SPEAKER: The question is clearly argumentative, hon.

member, and as such is out of order.

MR. LEA: Only if they deny it.

MR. LAUK: I thought it was a trite fact that everybody knew.

"In view of the government's duplicity...." Is that what you are

opposed to? I don't understand what is out of order.

DEPUTY SPEAKER: The question is out of order.

MR. LAUK: All right. In view of the government's

unprecedented insidious support of the eastern takeover of the

cablevision system, and in view of the fact that the CRTC

[ Page 3867 ]

has permitted the takeover as a result of the

support of the provincial government, has the government now decided to

abandon its claim for jurisdiction over cablevision?

HON. MR. McGEER: Mr. Speaker, that was an extremely

convoluted question with a series of false allegations. I would have to

say that the question, as such, is unanswerable. For the benefit of the

House I will give the clear policy of the provincial government, which

is that cablevision should be a provincial responsibility. It's my

understanding that all provincial governments in Canada share that

policy.

MR. LAUK: Now that all cablevision is going to be owned east

of Thunder Bay, what point is there in the provincial jurisdiction over

cablevision?

HON. MR. McGEER: Mr. Speaker, the purpose of provincial

jurisdiction over cablevision is that the services provided by

cablevision are not entirely broadcasting services; there are

non-broadcasting services, which include other things besides

entertainment. It has been the feeling of the provinces across Canada

that the services, both entertainment and non-entertainment, can be

better supervised, to the extent that supervision is necessary, by

local governments as opposed to the federal jurisdiction.

MR. LAUK: That's a convoluted answer, Mr. Speaker. I thank

the minister for it.

My point is simply this: how can the minister accord his views with

those of the Premier, who says that B.C. is not for sale? On one

occasion he skied off a hill in Kelowna with an open-necked shirt and

attacked the takeover of CPR by MacMillan Bloedel. He said: "B.C. is

not for sale." Now the provincial government supports this takeover by

eastern cablevision interests of a very productive industry that's

valuable to the people of this province. How does he accord his views

with that of the Premier?

HON. MR. McGEER: Mr. Speaker, the matter of Canadian

Cablesystems–Premier Cablevision financial arrangement is something

that was under the jurisdiction of the CRTC — not the provincial

government. It was not a move which was supported by the provincial

government.

MR. LAUK: The minister denies that the provincial government

intervened in support of the application for the takeover? You deny

that either publicly or privately you supported that takeover? Do you

deny that?

Interjection.

MR. LAUK: You deny it. Thank you.

FREIGHT COSTS COMPENSATION

FOR VANCOUVER ISLAND FARMERS

MRS. WALLACE: Mr. Speaker, inasmuch as the Minister of

Agriculture doesn't know whether or not he uses taxpayers' money to

advertise brand names, I'll try him with another question.

During the recent CPR work stoppage, the Vancouver Island farmers

were billed something like $42,000 in extra freight costs. I understand

that the minister has been unsuccessful in his negotiations with the

federal minister. Has he decided at this point in time to recompense

the Vancouver Island farmers from provincial funds?

HON. MR. HEWITT: No, Mr. Speaker. The matter involved

jurisdiction which related to the federal government, and we do not

have any intention, at this time, to assist in that regard.

ADVERTISING OF BRAND NAMES

IN GOVERNMENT PUBLICATIONS

In response to the first question that was asked of me by the member

for Cowichan-Malahat, I would say, Madam Member, that the answer is no.

We don't promote private brands in any of our advertisements. However,

periodically you may see brands related to B.C. agriculture illustrated

in some brochures or pictures, but that's only to illustrate the

product and not the brand.

DEPUTY SPEAKER: The bell terminates question period. Hon.

members, as it is just prior to further business, this would possibly

be an appropriate time to bring members' attention to the fifth edition

of Beauchesne. I quote from

section 359 regarding question period. The

question "must be a question, not an expression of an opinion,

representation, argumentation, nor debate."

Further,

section 362 says:

"Reading telegrams, letters or extracts from

newspapers as an opening to an oral question is an abuse of the rules

of the House. It is not good parliamentary practice to communicate

written allegations to the House and then to ask ministers either to

confirm or deny them. It is the member's duty to ascertain the truth of

any statement before he brings it to the attention of parliament."

Prior to recognizing the House Leader, I see that the second member

for Vancouver Centre seeks leave to make an introduction. Shall leave

be granted?

Leave granted.

MR. BARNES: Mr. Speaker, this is a rather delayed

introduction. Yesterday two friends of mine, Mr. John Millette and Dr.

James Millette, were visiting from Trinidad and Tobago. Dr. Millette is

a professor at the University of the West Indies. He is studying the

effects of having the capital on Vancouver Island rather than on the

mainland. I would like to ask the House to join me in welcoming them

for having been here yesterday.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

On vote 85: minister's office, $118,976.

HON. MR. CURTIS: Mr. Chairman, I have a few opening remarks.

I will make them as brief as possible. To open discussion on the

estimates of the Ministry of Finance I would like to review activities

which are now underway and will continue.

I think it would be inappropriate not to recognize once

[ Page 3868 ]

again the fact that Mr. Gerald Bryson retired

earlier this year as deputy minister. Both sides of this House paid

tribute to Mr. Bryson. His management of the provincial finances over

the years will be missed, but at the same time we are privileged to

have a valued replacement in Larry Bell, formerly Deputy Minister of

Lands, Parks and Housing. Mr. Bell is joining me in committee, as is

the practice.

The efforts of the Ministry of Finance over the past four years have

been directed towards strengthening the fiscal and economic position of

the province. In February I was in New York to meet with principals of

United States financial institutions and rating agencies, where,

frankly, as expected, I found great interest in British Columbia's

economy and particularly in the financial position of the provincial

government. This visit proved subsequently to be of great value to us —

meaning all British Columbians — because as the House recalls, shortly

afterward we received the news that the province has been awarded the

highest financial rating possible — that is, the triple-A rating — from

the two principal rating agencies, Moody's and Standard and Poor's.

I've commented widely on the triple-A rating, both in this House and

outside it. I think I need say no more at this time, but T-shirts are

available for any member of the committee who might wish to have one

and wear it with pride as a British Columbian. It is an achievement for

which all British Columbians can take pride.

Together with the reception we received in New York, it's excellent

evidence also that there is widely held optimism concerning the

economic prospects for British Columbia and that there is a general

confidence in the financial management of this government.

Nevertheless, the ministry faces a number of important challenges and

plans major initiatives to maintain the high standard of financial

responsibility which the people of this province have grown to expect,

and indeed deserve.

First, the second report of the auditor-general for the year 1978-79

indicates that the government has made a positive response to

recommendations contained in the first report. However, there is still

considerable scope for new initiatives, and it is my intention to

accelerate the review and the implementation of suggestions made by the

auditor-general.

Secondly, a new financial administration act is in preparation to

consolidate the Revenue Act and the Financial Control Act. This major

bill has long-term significance for the financial administration of

this province and is being very carefully prepared. Therefore I do not

expect to introduce it to the Legislature until the 1981 session.

However, I shall shortly provide a draft of the legislation to all

members of this House and interested members of the public of British

Columbia, and I shall invite submissions on the content of the bill,

which will be considered before a final draft is prepared. It is not

only my hope but my commitment that we shall have that final draft

ready after the kind of participation which I have identified and which

I seek. That will appear in the very early part of the 1981 session.

Thirdly, in accordance with the government reorganization of

November 1979, the Ministry of Finance is accommodating the additional

responsibility of deregulation.

Fourth, this year's budget provided for the elimination of the fuel

oil tax probate fees and the tax on a number of items important to the

individual. In addition, taxes were removed from certain articles of

purchase, the taxation of which, frankly, was something of a nuisance.

The ministry continues to review all provincial taxes and fees to

establish their justification or their appropriate level. This will

include a very thorough look at provincial taxation of motor fuels,

including coloured or marked gasoline.

Finally, at budget time this year I referred to how the government

has used the revenue-surplus account to stabilize the growth of

provincial expenditures. During the balance of this fiscal year

consideration will be given to formalizing this practice, possibly

through the creation of a revenue stabilization fund. Provincial

government revenues from our natural resources, as we know on both

sides of the House, can be wildly erratic due to their extreme

sensitivity to international economic conditions.

Recently I tabled the quarterly report of the province's finances

for the first three months of this fiscal year, the tabling of which

carries on the tradition established by my predecessor, the now

Provincial Secretary and Minister of Government Services (Hon. Mr.

Wolfe). This report shows a decrease in certain areas of revenue and an

increase in the spending of several ministries — a slight departure

from forecast. Therefore the ministry has taken action to counteract

what I consider to be, very frankly, danger signals appearing in both

the revenue and expenditure columns. These actions included the

implementation of spending restraints, the consideration, at least, of

revenue measures, and a staff hiring freeze, which is being gradually

eased. As Minister of Finance I feel that it is important that all of

us, including my colleagues, recognize the vulnerability of our

provincial financial situation and direct our attention to the medium-

and long-term preservation of the provincial revenue base for the

support of expenditures.

Could I turn briefly to the various branches of the ministry over

the past year. The audit program of the consumer taxation branch again

resulted in substantial audit recovery amounting to $11.1 million in

1979 compared with $11 million in 1978 and $9.4 million in 1977. This

was accomplished even though fewer auditors were employed during 1979 —

that's due primarily to the inability to recruit qualified individuals.

Implementation of new procedures within the Insurance Corporation of

British Columbia for collection of the tax on private sales of motor

vehicles was principally responsible for an estimated $4.3 million in

additional social services tax revenue this past year. In June 1979 the

branch was able to implement phase one of a revised data processing

system, which is providing better control of delinquent accounts and

more accurate and faster processing of payments than was previously

possible.

The real property taxation branch collected $184 million last year

at an effective cost of 0.43 percent. Property tax reforms continued in

the preparation of the 1980 assessment roll. The changes of

significance included: firstly, the adoption of a common level of

assessment for farmland; secondly, a new system of farm classification

along with a 50 percent exemption under the Public Schools Act for farm

and agricultural reserve land; thirdly, a reduction in the level of

assessment of residential property from 15 percent to 14.5 percent to

maintain the same relative tax share with other classes of property;

fourthly, a reduction in the level of assessment on machinery and

equipment from 30 percent to 25 percent; and fifthly, a lower level of

assessment extended to meeting halls of non-profit fraternal

organizations in recognition of their community contribution.

The income taxation branch collected over $130 million in revenue

last year, at an effective cost of 0.58 percent, compared to a similar

volume of revenue for 1978 at a cost of

[ Page 3869 ]

0.60 percent. The improvement in percentage of cost

has principally resulted from continued improvement in the efficiency

of the audit staff. As a result of the elimination of probate fees and

the proposed ultimate repeal of the Probate Fees Act, the staff of the

income taxation branch will be reduced during the 1980-81 fiscal period

by eight employees, who will be relocated elsewhere in this ministry or

other ministries within government. The loss of revenue from probate

fees will be approximately $1.8 million for the fiscal year ending

March 31, 1981.

The short-term investment operation of the province has become the

second-largest in Canada outside of the banking sector. Interest income

yields on funds have improved, making substantial contributions to the

various funds under management. A total of $879 million in capital

funding for Crown corporations, including school and hospital financing

authorities, was accommodated without having to borrow on the public

markets. Work will be completed this fiscal year on a data system to

provide timely investment and account information to even further

improve that process.

The economic policy and planning research branch has been developing

an economic and fiscal framework for the province. The contribution of

this group can be seen in the medium-term economic outlook and fiscal

analysis appendix to the budget of March 11, 1980. As well, the branch

has been active in economic analysis and forecasting, in matters

relating to federal-provincial economic policy and general resource

project analysis and policy planning.

The finance analysis and research branch has continued its

monitoring of provincial budget performance along with the preparation

of ministry publications such as the Financial and Economic Review

and quarterly financial reports.

The government agency system was augmented during 1979 with the

opening of three offices at Bella Coola, Valemount and Mackenzie.

Approval has been given for a further seven offices, which I hope will

be opened by the end of the year, thus increasing the number of offices

throughout British Columbia to 62. Agencies have been opened this

summer in Fraser Lake and Nakusp. New agencies are planned for

Sparwood, Maple Ridge, Squamish, Sechelt and Cassiar. Government agency

offices provide valuable access to the government for our people.

I might digress for a moment, Mr. Chairman, to say that perhaps

there's even merit in giving consideration to the opening of a

government agent's office in greater Victoria some time soon.

Government in this city is so very large and spread over a number of

buildings that it is frequently difficult for the citizen to go to a

particular spot. That is further down the line, but I would like to

suggest that we are considering that possibility.

The Treasury Board staff, which has been in operation for three

years, continues to investigate expenditure requests from all

ministries. That staff is embarking on a selective application of

program evaluation in numerous ministries. Treasury Board staff again

coordinated preparation of budget estimates. This included an expansion

of the zero-base budgeting process to a total of six ministries for

this budget year. These are Health, Human Resources, Education,

Tourism, Transportation and Highways and Corporate Affairs. The process

is being extended to 11 additional ministries for the next budget year,

1981-82.

The total value of purchase orders processed by the Purchasing

Commission during 1979 increased by approximately 29 percent, while the

number of purchase orders increased by 5 percent. The government's

preferential purchasing policy, which allows a price preference of up

to 10 percent on the British Columbia value-added component of goods

purchased by the province, continues to be practised. Other Canadian

products purchased by the province receive up to a 5 percent preference

over non-Canadian products.

Mr. Chairman, this past year the office of the comptroller-general

finalized its organizational structure and made significant advances in

redefining and meeting personnel requirements. The four divisions of

the office of comptroller-general have responded to continuing

requirements under their mandate, and in addition have initiated major

projects within areas of primary interest.

The review and the redefinition of accounting policies have been

undertaken by the financial policy and reporting division, in

consultation with a firm of chartered accountants. The design and

approval stages of the financial systems network, a series of

interrelated projects that will result in the redesign of the

government's accounting system, have been completed on schedule. The

second part of this project will decentralize data entry and some

reporting to ministry headquarters. I'm very enthusiastic about this.

It's being undertaken in conjunction with estimates, charts of

accounts, budgets, accounts payable and reporting subsystems. So by the

time the project is completed, the province will have at its disposal a

system that is expected to be no more expensive to operate than the

current one. Yet it will provide more information much more quickly and

in a more usable form, and will allow for improved transaction

processing speed.

The internal audit division has established a computer audit

capability and is now focusing on training in this area, as well as

providing training in a transactional audit process. The areas of audit

review have been identified and an operational audit plan has been

developed to provide audit coverage on a government-wide basis.

Major projects in the operations division include enhancements to

the payroll system and improvements to the central accounts and payment

system as well.

I spoke earlier, Mr. Chairman, about the deregulation

section of

this ministry. Deregulation as a ministry was absorbed into Finance in

November, 1979, and now operates in the

section of the ministry which

includes Treasury Board staff. There are at present two major

deregulation projects underway: a review of all existing regulations

and a forms simplification project. The process of deregulation within

the public service must extend beyond the two-year term identified when

the original ministry was established in December 1978. In fact, Mr.

Chairman, deregulation has to be an ongoing process, and I feel that it

should form part of management planning.

We see the need to put procedures into place which will ensure a

greater recognition and acceptance of principles of deregulation

throughout the public sector, and so a continuation of the process. To

this end, I propose'to undertake the implementation of awards to

members of the British Columbia public service for suggestions which

save our government and our citizens both time and money. I should say

that approaches have already been made to the executive of the B.C.

Government Employees Union for their ideas and for their cooperation.

Just a few days ago, I received an encouraging, if not somewhat

hesitant, response from the BCGEU. Awards programs have been in place

in some Crown corporations — that is, suggestion programs. I hope to

expand it through the entire public service.

[ Page 3870 ]

Mr. Chairman, the provincial government has a very valuable resource

in its employees. They have talent; they have resourcefulness. I

believe that a suggestion awards system would make it possible to

accelerate the identification of improved as well as unnecessary

procedures that will contribute to a more efficient and a more

effective public service.

An award scheme need not necessarily add to the cost of government,

and should, in fact, benefit not only government but the individual.

The ministry has participated in the BCRIC free shares distribution

process during 1979-80 in which more than two million British

Columbians made application for their shares, and I think it can be

classified as highly successful.

Earlier this year, the provincial government held approximately

315,000 shares for about 63,000 individuals in the province who made

application for their free shares but did not pick them up. In an

effort to distribute these shares, the ministry initiated a mail

procedure in an attempt to contact these individuals and arrange for

the delivery of those shares. I'm happy to report to the committee that

the program has met with success. More than half of the individuals

contacted in this mailing have returned their reply cards, and the

majority of those who have responded have had their shares mailed to

them.

MR. LEA: On a point of order, since the minister has taken

this portfolio — another portfolio.... I've been rather hesitant to

raise this point of order, understanding that the minister may have a

problem or two in the area, but it is against the rules of our House to

read speeches in their entirety. The minister does it all the time, and

today is another time. I'd ask that Mr. Chairman bring the minister to

task on this very important point.

MR. CHAIRMAN: The point it well taken by the hon. member, and

our standing orders....

Interjection.

HON. MR. CURTIS: Mr. Chairman, the point is well taken.

Interjection.

HON. MR. CURTIS: Well, Mr. Member, I leave it to the

committee to judge, when the estimates are concluded tomorrow or

Thursday or Friday, and see how it goes.

I was attempting to quote from copious notes, Mr. Chairman, and I

trust that virtually.... The member just needed another few moments of

patience. I'll tell him later on about the awards which he was asking

about across the floor. I'll answer the question about the awards.

Interjections.

MR. CHAIRMAN: The hon. Minister of Finance does have the

floor, and I would point out to all hon. members that it is contrary to

our standing orders to interrupt any member who has the floor during

the course of debate.

HON. MR. CURTIS: The next important development, I suggest,

with respect to the Ministry of Finance was the addition of the

responsibility for the Provincial Capital Commission. This also

occurred in November 1979, and the committee will know that the chief

executive officer of the commission is Mr. George Giles. At this

particular point I would like to say that as the commission changes in

its responsibilities, moving from being simply an approval agency on

behalf of municipalities in greater Victoria to a more operational

role, the challenge to Mr. Giles and to the relatively small staff of

the Capital Commission has clearly proven a very heavy responsibility.

The opening of the Crystal Garden earlier this year was a completely

new experience for the commission and for the minister responsible, and

the projections with regard to attendance at that particular time could

only be on a best-guess basis. However, I can tell you that the

attendance figures at that new facility, for visitors and greater

Victorians alike, have exceeded all expectations.

MR. LAUK: Would you go back to the text now?

HON. MR. CURTIS: That member, Mr. Chairman, was not in his

seat. If rules are going to be enforced, then they should be enforced

on both sides of the committee.

I look forward today, tomorrow and on following days to answering

questions — without reference to a complete text, Mr. Chairman — as we

debate the estimates of the Ministry of Finance. This is my first

opportunity, as a new minister, to speak on these particular matters,

and I now look forward to the questions as they come from members of

the committee on both sides of the House.

MR. STUPICH: Mr. Chairman, the minister's opening remarks

referred to the previous deputy, and certainly — as I did on a previous

occasion — I want to join with him in recognizing the contribution made

by Mr. Bryson to the affairs of this province. I've known him since I

first entered the Legislature as a result of the 1963 election. I have

always found him very good to work with — whether in opposition or in

government — and one who would certainly help the opposition right up

to the line where he thought it was proper. If he felt one was going a

centimetre or a millimetre over that line, he would not hesitate to say

so, and that would be the end of that conversation. I think he was,

from all points of view, a very excellent public servant.

As far as Mr. Bell, who has taken over from him, is concerned, I

have not had the same opportunity to get to know him. But I will say

that in a Public Accounts meeting one day — which is not really the

business of this House — he was subjected to some very searching

questions, particularly from members of the opposition — I think he was

on rather shaky ground, perhaps sometimes even quicksand, but that's a

matter of opinion — and I will say that I thought he handled himself

very capably. So I expect he will do a good job as Deputy Minister of

Finance in the province.

I'm rather surprised that the minister commented on the changes

within the office or branch or whatever of the comptroller-general.

When the minister was asked in question period one day whether or not

he had asked for the resignation of the comptroller-general, Mr.

Bonnell, he denied that he had asked for the resignation. I think the

same day we heard that Mr. Bonnell was suing the minister for — I'm not

sure whether it was wrongful dismissal or not. I just don't understand

the ways of lawyers and lawsuits and things like

[ Page 3871 ]

that. Perhaps I'll have an opportunity to become

more familiar with that in the near future. At this point, while I'm

wondering where to pick up after the minister's remarks, I'd like to

yield briefly to the hon. first member for Victoria.

MR. BARBER: According to the member for North

Vancouver–Seymour (Mr. Davis), because of a decision made by the

Minister of Finance and announced on January 31 of this year, the

tourist economy of Victoria will lose many millions of dollars. Because

of an inept decision taken by the Minister of Finance, it may well be

necessary to recover losses in the order of $5 million on the

Victoria-Seattle service this year. Because of a decision announced by

the minister on January 31 of this year, the Princess Marguerite ,

a perfectly safe and usable vessel, was mothballed under false

pretences, with no justification in fact, no documentation to

substantiate it and no significant claim to the contrary by a minister

who clearly didn't know what he was talking about when he announced the

scrapping of the vessel Marguerite .

The people of British Columbia are going to lose millions because of

the bungling of the Minister of Finance, who wrongly scrapped the Princess

Marguerite . Also, as chairman of the cabinet committee, he was

responsible for reconciling the differences, which were clear and many,

between the Minister of Transportation and Highways (Hon. Mr. Fraser)

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

Phillips).

The so-called reconciliation consisted of a ridiculous escapade,

which saw the conversion of the Surrey from its original

purpose to another, the conversion of the Rupert from its

original purpose to another, the deployment on the Victoria-Seattle run

of a vessel called the Rupert , which has been a totally

unpopular replacement for the Marguerite , and a jetfoil service

which is not in the least economical and will also require massive

subsidies from the taxpayer in order to make it appear economical. All

of this is the direct result of the incompetence of the Minister of

Finance and must be directly held and charged accountable to this

minister. On January 31 of this year he stood up and made a series of

ridiculous claims about the alleged unseaworthiness of the Princess

Marguerite .

I would inform the committee that the vessel is still floating

perfectly soundly in Esquimalt harbour, where the taxpayers are

subsidizing its mothballing to the tune of $5,000 a month — another

loss as the direct result of the incompetence of the Minister of

Finance. I would point out as well that the government has admitted

that in the first few weeks of the operation of the vessel Rupert ,

now called the

Victoria Princess , the losses to the taxpayers directly were in

excess of $1 million. I would point out as well that we are reliably

informed that the jetfoil has also been a loser economically, and in

any case could only artificially be made to appear a valid proposition

when you scrap its only competition, the Marguerite , and you

replace that vessel with a totally unpopular substitute.

All of this is the direct result of a statement the minister made on

January 31 of this year, for which he must be held accountable by the

people of this province through this chamber.

MR. CHAIRMAN: Hon. member, I hope the member can relate the

debate at this point with respect to the administrative actions of the

department whose vote is before us, because we do appear to be

recanvassing the votes of the Minister of Transportation and Highways

(Hon. Mr. Fraser). Perhaps the member could relate that to the

committee.

MR. BARBER: It was one of the administrative responsibilities

of the Minister of Finance to sort out a fight in cabinet, chair a

committee to come up with a compromise solution and announce the

ridiculous solution which he did announce on January 31. At that time

he was proud of it. Since that time we've heard nothing about it from

him. He knows full well that it's a decision which has been repudiated

by every competent marine authority in the province. It has recently

been repudiated by the chamber of commerce in Victoria, which is now

asking the government to take one of the famous second looks. The

minister then was pleased to be responsible for the announcement to

scrap the Marguerite on the basis of absolutely no evidence

that it was a floating coffin or a danger to babies and tourists. At

that point in this year the minister was pleased to be responsible for

announcing this absurd decision to scrap the Marguerite . He

must be held accountable for it today. Secondly, it is also well within

order to ask the minister questions as to the losses which will be

suffered by the taxpayers of British Columbia and the tourist economy

of this city because of the foolishness and mindlessness of that

decision.

I don't ask the committee to take the word of a New Democrat

criticizing a Socred, who used to be a Conservative, who used to be a

Liberal and who at one time dallied with Action Canada. That wouldn't

be reasonable. Instead I ask the committee to take the word of the hon.

member for North Vancouver–Seymour (Mr. Davis), currently a Social

Crediter and formerly a Liberal. In an excellent letter published in

the Victoria Times on July 23, this is what the member had to

say, in effect, about his colleague the bungling Minister of Finance,

who announced the decision on January 31. May I quote briefly:

"The Princess Marguerite will be back on the

Seattle-Victoria run next year. That is the conclusion which anyone

interested in the profitability of our tourist business is bound to

reach after looking at B.C. Steamships' performance, so far, in 1980.

"To repeat this year's twinning of the ill-suited Princess

Victoria and the Boeing hydrofoil is unthinkable from a

dollars-and-cents point of view. They will cost the government a

minimum of $5 million this summer. The Princess Marguerite ,

even in its worst days, didn't exceed the $1 million level."

The letter continues, but I won't for a moment. It should be noted

parenthetically that the worst day of the Princess Marguerite

occurred, of course, under Social Credit's administration in 1976.

However, that's an aside.

The fact is that the member for Saanich and the Islands will, during

the forthcoming provincial election, most assuredly be reminded — as

will his voters, few as they may be — of his personal responsibility

for a $5 million loss to the taxpayers on the Victoria-Seattle run this

summer. He will also be reminded during that campaign of his personal

responsibility for scrapping the Princess Marguerite under

false pretences, when Lloyd's of London said it was safe, the Canadian

Coast Guard said it was safe, and everyone knew it was safe, including

the Edwardson and Co. report which at the bottom of page 4 said:

"Nothing in this report should be construed as to suggest that the

vessel is unfit to continue in her present service." That's what the

government's own

[ Page 3872 ]

report said, and that's what the minister refused

to believe when, for whatever hare-brained reasons, he announced the

scrapping of the Marguerite on January 31 of this year.

But again, I don't ask the committee to believe a New Democrat.

After all, we have certain biases. We believe in fiscal prudence, in

not wasting $5 million to subsidize a ridiculous service like this. We

believe in caution. We're biased. This government apparently is

prepared to believe in anything in order to attack the New Democrat

success called the Princess Marguerite . We're cautious and

prudent, and I admit it; we're biased. We're very conservative when it

comes to the spending of taxpayers' money, unlike this incompetent

Minister of Finance who, by the conclusion of his own Socred colleague,

estimates that the decision of this minister will cost $5 million this

summer alone.

Think what a good Minister of Finance could do with that $5 million.

He could award them to the Minister of Health (Hon. Mr. Mair) to build

more long-term care beds in Victoria. He could award them to the

Minister of Human Resources (Hon. Mrs. McCarthy) to give a more

reasonable, decent and civil pension to senior citizens. He could do

any number of good things with that money. Instead, according to his

own colleague's estimate he has personally wasted $5 million this

summer to subsidize and to try to paper over a ridiculous, unnecessary,

absolutely unjustifiable decision to scrap that vessel.

We have further proof, and it also comes from the mouths of Socreds.

It was only a few weeks ago that the Minister of Transportation and

Highways (Hon. Mr. Fraser), to his credit, started crawling back in

from the ridiculous position, way out on the limb, the Minister of

Finance had put him in. The Minister of Transportation and Highways,

for the first time, just a short while ago hinted that the government

was prepared to reconsider and replace the Marguerite where it

belongs — on the Victoria-Seattle run. One should point out that he's

not yet gone all the way and announced the recommissioning of the

vessel, but I expect he has taken the necessary first political step to

prepare the people of Victoria for a total about-face on the issue of

the Victoria-Seattle service.

The worth of that service to the capital city has been traditionally

estimated at anywhere between $12 million and $14 million a year,

in good times when the Marguerite itself was available. When

the vessel was properly run by people who knew what they were

doing, that vessel brought in tens of thousands of tourists and

automobiles. They even allowed bicycles, and we had a fight about that

one earlier this year. When the vessel was properly used and

deployed, as the Marguerite was, it was a tremendous

benefit to the economy of this city. It was also, according to

Mr. Elworthy — the now deposed chairman of B.C. Steamships — going to

turn a profit to the taxpayers, who are the owners of that

vessel, of half a million dollars this year. So not only should

we think about what the minister could have done with the $5

million that his colleague estimates will be wasted in a subsidy

of this ridiculous replacement service, but he could also have

done something else with the half-million dollars of profit which

his own appointee and former friend, Arthur Elworthy, announced

publicly would have been obtained by the Marguerite . I

suppose Mr. Elworthy isn't his friend any more, because he's

suing the government. Nonetheless, at the time, I'm sure Mr.

Elworthy's sources were reliable. He estimated that it would turn

a profit of half a million dollars this year, so we've lost not

just the $5 million as calculated by the hon. member for North

Vancouver–Seymour, not just the half-million dollars whose profit

would have been the result of the Marguerite 's service

this year; we've also lost untold millions because of the 25

percent to 35 percent decrease in tourist carrying capacity, in

the number of passengers and in the revenue those tourists would

have brought to the people of Victoria and Vancouver Island. How

much more evidence do we need of an incompetent hand muddling up

the works?

This minister is personally responsible for one of the biggest

financial disasters that his administration has ever suffered. There

has been more than $5 million in a direct loss, according to his own

colleague's calculation. On the government's own admission, it's well

over a million so far in just the first few weeks — the loss of a half

million profit that could have been obtained. The member for Saanich

and the Islands is also responsible for that. Mr. Elworthy, in his

better calculations, thought it might have been even more with a good

season.

As a result — and my colleague from Mackenzie will shortly be

describing it — of the simply lunatic chain of events that occurred

with the conversion at great expense of vessels for purposes to which

they were not intended, and in the case of the Rupert the

reconversion of that vessel in late September of this year to its

original purpose at further great expense. It is possible to calculate

that the direct and indirect losses are in excess of $20 million this

year. Again the basis for that is the $5 million lost on the service —

the half-million-plus lost on profit; the cost of converting the Rupert

and the Surrey — which my colleague will deal with — and the

reconversion of one of those ships, which won't be used any more on the

Victoria-Seattle run, we trust; the losses in tourist revenue; the

losses in taxes which would have been generated; and losses to the

economy in general. Because of the incompetence of the Minister of

Finance, more than $20 million, we predict, will have been lost by the

end of this fiscal year.

On January 31 of this year he was so ill advised as to expect anyone

to take him seriously when he announced that the Marguerite was

unseaworthy. If it were so unseaworthy, Mr. Chairman, surely the

Canadian Coast Guard would have told us so; but they told us it was

perfectly seaworthy, and they said so publicly, much to the

embarrassment of the minister. If it were unseaworthy, Lloyd's of

London would never have insured it, but they said publicly that they

had insured it and had given it an A1 classification, which is the

highest possible rating in its order. If it were so unseaworthy,

presumably the Premier would have advised his own mother not to travel

on the darned thing; but she travelled on it on October 5 of last year

with her friends the Skillings — and had a good time, and had champagne

courtesy of the crew. If it were so unseaworthy, why was the Premier's

own mother aboard on October 5? Wasn't it in danger of turning into a

floating coffin at that time? Why, only two or three months later, did

the Minister of Finance announce that it had suddenly become

unseaworthy?

This minister is accountable for these losses. This minister's

decision is directly responsible for the failure of the

Victoria-Seattle service this summer. He may tell us that there have

been losses elsewhere because of the volcano. You may have heard that

excuse before. I'm anticipating apologies for transgressing the rule of

anticipation in the committee. We've also heard that completely foolish

excuse from the members opposite, who blame the volcano for the whole

failure of the run. They neglect to mention — as I trust the Minister

of Finance in his excuse-making will also neglect to mention — the fact

that all other border crossing

[ Page 3873 ]

numbers are up, the tourist revenues are up, the

passenger capacities and passenger carrying are up, except on one run —

Victoria-Seattle.

Just a few days ago I received a press release from the Minister of

Tourism (Hon. Mrs. Jordan), boasting about the fact that tourist

revenues and tourist entries at border crossings were up here and

there and everywhere; she did not mention that they were down on

the Victoria-Seattle run by anywhere from 25 percent to 35

percent. Apparently the volcano had no impact on the lower

mainland. One wonders why that would be. After all, the lower mainland

is where the volcano is located, not 40 miles or 50 miles or 60

miles out in the Pacific. However, every single other border

crossing is up. According to the Minister of Tourism, tourism is

proudly improving everywhere except one place, and that's

Victoria-Seattle. Why is that? It's because of the Minister of Finance.

No one else is personally responsible but he. There were other

meddlers, but in fact it is the Minister of Finance who

personally must be held accountable for all these losses — the

losses in profit, the losses to the tourist economy, and the

losses that will have to be made up when the subsidy cheques are issued.

I want to predict that the government will try one sleight-of-hand.

The committee will know, as the minister knows, that among the other

foolish things that he ordered, as the minister responsible, was the

decision to go ahead and obtain the Rupert without a lease. The

Minister of Finance, on behalf of his government, ordered B.C. Ferries

to make the Rupert available without a lease price being agreed

upon in advance. To this date, according to our most recent information

— but I stand to be corrected — there has yet to be a lease signed

between B.C. Steamships and the B.C. Ferry Corporation. That is totally

imprudent. That is a ridiculous way to do business. That is a stupid

way to enter into a business arrangement with any corporation. But it

is the Socred way.

Now why is that? Well, it's our guess that the Minister of Finance

suspected that something might go wrong, and therefore the attempt of

the government was this: they would reduce the apparent losses on the

Victoria-Seattle run by reducing the real cost of the vessel lease. In

fact, they would artificially lower the cost of that lease and charge

the difference to B.C. Ferries. For instance, if the vessel is worth

$300,000 a month in lease — which it might be; that's a very

conservative estimate judging by the European figures for comparable

vessels that we've been able to obtain — then instead of B.C.

Steamships paying the $300,000 a month lease they should, they might

end up paying only, shall we say, $80,000 a month. Why is that? Well,

so that they don't have to suffer the burden of the additional cost of

220 grand a month for a vessel that is not in the least appropriate for

the Victoria-Seattle run. In fact, the hidden loss will be the $220,000

or whatever it is a month that B.C. Ferries should receive as a proper

lease payment but will not receive because of the financial

manipulations of this government, which will deliberately and

artificially lower the real value of that lease to B.C. Ferries in

order to diminish the charge-back against B.C. Steamships.

We know that Socreds are capable of these tricks. We know that they

are capable of that sleight-of-hand because they've been doing it for

20 years. They always do it. They always overestimate expenditures and

underestimate revenues. However, that's another debate.

So there are additional costs that we will also be examining, and

those are the costs involved, we suspect, when finally the lease

figures are announced and when we expect to be able to demonstrate that

they artificially lower the value, the real value of that leased vessel

from B.C. Ferries' point of view, and make B.C. Ferries, where they can

cover the loss better, bear the burden of this minister's mistakes.

There are other losses as well because of the bungling of this

minister. These are the losses suffered on the jetfoil. It is a matter

of record that the jetfoil is an American vessel with an American crew

putting Canadians out of work. What additional losses are also being

suffered by our economy because this government chose to go the

American way and provide American jobs aboard an American vessel when

they could have retained Canadian jobs aboard a Canadian vessel called

the Marguerite?

It's also a matter of record that this government has evidently

entered into an agreement with Boeing Computer Systems to provide

computer services to B.C. Steamship. Apparently the Boeing service now

includes all of the reservations for B.C. Steamships and the jetfoil.

Once again, we have to ask what losses have been suffered by Canadian

industry that could have provided those computer services and that

could have filled those computer jobs. We also therefore must take into

account the losses to Canadian enterprise, to Canadian workers and to

the Canadian economy because this government decided to go American,

when they could have and should have stayed Canadian.

The losses for which this minister is personally responsible are

becoming astronomical when you add up all of the direct and indirect

charges which result from the completely insupportable decision to get

rid of the Princess Marguerite long before her time.

But I don't ask the committee to take my word for it. Instead, ask

the Premier, who consented to his mother's riding on this floating

coffin on October 5, 1979. Ask him what he thought of the seaworthiness

of the vessel. Ask the Minister of Transportation and Highways, who a

couple of weeks ago hinted that they would now reconsider and

contemplate putting the Marguerite back on the run where it

belongs. Ask the Greater Victoria Chamber of Commerce, which to its

credit has reversed its position and has now advised the government to

take a second look at the Marguerite . Ask Lloyd's of London,

which found and finds that the vessel is perfectly safe. Ask the

Canadian Coast Guard, which found and finds that the vessel is

perfectly safe. Ask the American Coast Guard, which found the same

thing. Ask the tourist economy of Vancouver Island and Victoria, which

has suffered totally unnecessary losses because of the bungling of the

Minister of Finance. Ask the former chairman of B.C. Steamships, who

said it could have made a major profit this year had the Marguerite

stayed on. Ask the Socred MLA for North Vancouver–Seymour (Mr. Davis)

about the $5 million he calculates — in public, in writing — will be

lost on the Victoria-Seattle run this year. When you ask all of those

people, not one of them a New Democrat, you come up with the same

conclusion.

This minister was wrong, dead wrong, to scrap the Marguerite;

he was wrong, dead wrong, to replace it with — in the words of his

colleague — the "twinning" of the ill-suited Princess Victoria

and Boeing hydrofoil, which his colleague also called "unthinkable." If

you ask any of those people, you come up with the same answer: the

Minister of Finance botched it. It is one of the worst mistakes of his

career, it is one of the worst errors this government has made in the

last few weeks, and it is an error for which he will and must be

[ Page 3874 ]

held personally accountable by the people of this

province and, I promise, by the electors of Saanich.

There are remedies. The first would be for the government and the

minister to candidly, honestly and frankly admit they made a mistake.

The first remedy is for the government to come clean. The first remedy

is for the government to be honest and open and agree with all of those

other non-New Democratic authorities, including the Socred MLA for

North Vancouver–Seymour, that they botched it, and promise, on scout's

honour, never to do it again. That would be a good thing for the public

interest.

MR. COCKE: It would be a bad thing for the Scouts.

MR. BARBER: Well, maybe, but I'm sure they'll survive.

It would be a good thing for any government to admit that they made

an error, and in the long run, I predict, they will get credit for the

honesty of their admission. That's the first thing we need — an open

admission from the Minister of Finance that he was wrong, that his

scheme has been a flop, that the vessel is losing money hand over fist,

and that the error will not be repeated.

The second thing that the government should do, and I charge the

minister to do, is to stop advertising an unpopular service and instead

redirect all of the advertising and all of the marketing to the

destination. The Minister of Finance can do this in cabinet. Because

they cannot successfully market the jetfoil and Rupert service,

they should instead market the destination, Victoria and Vancouver

Island. Such a new advertising campaign, even introduced in mid-August,

would help for the remaining month and a half of the run to reduce some

of the otherwise unavoidable and irretrievable losses. They can't

market the service, because the service is a flop; instead they should

market the destination. If they do so, they will do this with the

blessing and the support of the official opposition.

The third thing they should do is immediately commission a

full-scale examination of the electrical, mechanical, plating and

propulsion requirements of the vessel Marguerite , and they

should do so with an eye to restoring that vessel to service next year.

I urge the Minister of Finance, for the sake of his own revenues, to

commission that study as soon as possible, preferably tomorrow. Having

commissioned it tomorrow, we might get it in four or six weeks; and in

four or six weeks we will know what it will cost to refit the vessel to

meet all of the standards and tests that will be applied against her in

1981. The government and the minister should announce this as soon as

possible for three very good reasons — and I'll conclude with them, Mr.

Chairman.

First, the tour operators who run charters — or used to run

charters, I should say — from Victoria to Seattle need the longest

possible advance warning in order to get back into gear for next year

and recover that part of the business. Secondly, the administration of

B.C. Steamships needs the longest possible warning in order to hire or

rehire the necessary crew to bring the vessel back into service.

Thirdly, such an announcement from the Minister of Finance would be the

first piece of good news he's had to offer about the Victoria-Seattle

run since he first started talking about it on January 31 of this year.

I commend to him those three things: admit the mistake; market the

destination and not the service; and announce the recommissioning of

the Princess Marguerite at the earliest possible opportunity.

If he does all those things, he may make some small amends for his

incompetent decision to get rid of the vessel when he did.

HON. MR. CURTIS: Mr. Chairman, I note the hon. member for

Mackenzie (Mr. Lockstead) seeks the floor, and I will be very brief.

I would simply look for guidance from the Chair after the withering,

scathing attack from the member who has just taken his place. The

responsibility which I carry as Minister of Finance with respect to the

British Columbia Steamship Company is that of fiscal agent. The same

can be said of the British Columbia Railway, British Columbia Hydro and

Power Authority, British Columbia Buildings Corporation, British

Columbia Systems Corporation and the Urban Transit Authority — to

mention just a few. In other words, it is traditional. It was the case

when that party opposite was in power, and it is the case now, that the

Minister of Finance acts as the fiscal agent. Therefore, Mr. Chairman,

I think that if I did not want to rise on a point of order it was

because I wanted the member to vent his rage again on this particular

issue. Someday in this chamber I will read back to him his maiden

speech of 1976, when he first spoke and talked about hyperbole, rancour

and bitterness in this chamber. That will be for another day, and we'll

enjoy it then. But, within the perimeters of the responsibility of the

Minister of Finance, I point out that the responsibility is that of

fiscal agent, and therefore it would be possible — I'm not on a point

of order; I'm simply speaking — to deal in great detail with all other

Crown corporations that I've identified and others.

MR. LEA: On a point of order, before going too far, because I

think once the minister understands that he is required to answer for

this area of the responsibility....

He was designated this area by the Premier — to be responsible for a

certain area and chair a group of individuals to come to a decision. He

announced it on the Premier's orders, and therefore he is responsible

for the work that he did as a member of the executive council on orders

and requests from the Premier.

Further, as to reading this member's speech back from 1976, if we

want to get into that I'd like to read to the House the speeches made

by the minister against Social Credit when he was a member of the

Conservative Party down here. We can all play that game. Or was it when

he was in the Liberal Party?

MR. CHAIRMAN: Your point is becoming argumentative, hon.

member. Make the point of order, please.

MR. LEA: The point is that the Premier charged him with a

responsibility, which he carried out. He then comes in here and says:

"I can't be questioned. I'm not accountable for it, because after all

I'm just the little Minister of Finance." I'd ask that the Chairman

take into consideration when thinking about this the fact that there

are many ministers who are not appointed by the Lieutenant-Governor to

accept a responsibility; that's done by the Premier, and that's done to

make a minister responsible for Hydro, a minister responsible for the

BCR, and a minister responsible for various things, which he did with

this minister. All those other ministers answer in a responsible and

accountable way in the House; this minister should also.

MR. CHAIRMAN: Just briefly I'll point out that the

[ Page 3875 ]

administrative action of a department is open to

debate during Committee of Supply.

MR. LOCKSTEAD: I would point out further that during the

debate of the Ministry of Transportation and Highways it was pointed

out by the Chair — by yourself, I believe — that certain topics

relating to this particular item, the Victoria-Seattle service, would

more properly be discussed under this minister. This is exactly what my

colleague the first member for Victoria (Mr. Barber) was attempting to

do. Furthermore, I find that in listening to the full speech of the

first member for Victoria, he left very little for me to say on this

topic, so I'll be very brief. In my view, he covered it very, very well.

The horrendous decision made by that government over there on this

issue did not only affect the economy of Victoria and Vancouver Island;

it directly interfered with the rational economic development of the

central and north coast of this province because of the transfer and

mistransfer and misuse of vessels then available to the government of

British Columbia through the B.C. Ferry Corporation and other agencies.

The charge I'm making at this point is that because of these horrendous

decisions, the economy.... Can you imagine this, Mr. Chairman? I've

mentioned this in this House before. The government announced the

closure of a community on the central coast of this province,

arbitrarily left 1,100 people stranded in that community, shut the

plant down, took the vessel off and put it on a route down here at a

cost — in the government's figures — of $7.4 million for that

particular refit — actually the final cost will be more in the nature

of $10.2 million — and caused all the horrendous problems to people and

the economy of the area. Never mind the $21 million-plus which the

whole package is going to cost the people of the province, when that

total operation could have shown a very nice profit this year,

according to Mr. Elworthy and other people involved in the industry. I

thought it was well to bring this to the government's and the

minister's attention.

You know, Mr. Chairman, the Princess Patricia is....

MR. CHAIRMAN: Hon. member, at this point the Chair has

allowed tremendous latitude. I did bring this point of order to the

committee earlier, and I will now cite from May, seventeenth edition,

page 739, that during Committee of Supply the administrative action of

a department is open to debate. Really, we must contain our remarks and

our debate when discussing the estimates of the Ministry of Finance to

the actions of that department.

MR. LOCKSTEAD: Thank you, Mr. Chairman, I understand

perfectly. This is exactly what was pointed out before when I was

informed during the debate of the Ministry of Transportation and

Highways that this particular item would be more properly discussed at

this particular time. I've been waiting patiently for weeks to get at

it.

MR. CHAIRMAN: Hon. member, I cannot accept that statement.

This topic was canvassed extremely well during the estimates of the

Minister of Transportation and Highways (Hon. Mr. Fraser). Perhaps the

member could continue and relate it to the Chair with relevancy to vote

MR. LOCKSTEAD: I will be brief. As I pointed out before, my

colleague, the first member for Victoria (Mr. Barber), expressed the

problem to the government very clearly, concisely and forcefully; he

did cover most of the items. But there are smaller related items: for

example, the $5,000-a-month storage fees for the Princess Marguerite

that are being paid to Yarrows. That certainly comes under the Minister

of Finance's purview. The Minister of Finance is the fiscal agent for

these agencies and must pay out the people's money for these horrendous

costs. I suspect that the Minister of Finance is going to get up and

say, in answer to the first member for Victoria, that the lease charges

will not be charged to anybody. The only lease charge — as the Minister

of Transportation and Highways said earlier in this House — was that

they would refit the Queen of Prince Rupert to put it back on its

normal run or on a new route between Prince Rupert and the Queen

Charlotte Islands. But that total package is still going to cost —

because of this original horrendous decision to remove the Marguerite ,

which was perfectly capable of sailing between Victoria and Seattle —

in the final analysis not counting lost business, economic development

and jobs, in the neighbourhood of at least $21.5 million according to

our calculations, including refits, transfer of vessels and this kind

of thing.

MR. STUPICH: 1'd like to deal first with the overall

expenditures of government. Referring to the budget, page 34, we note

that the expenditures projected for the 1980-81 fiscal period — I

suppose this is the case every year, but it's a new all-time high — are

in the amount of $5,549,600,000. One is tempted to ask what happened

to the goal of government to limit increases in government spending to

5 percent per year, but I think at this point I won't. However, I will

say that in addition to that figure in excess of five and a half

billion dollars there were special appropriations approved by this

Legislature — and I make no comment on this other than to say that in

total they add up to $356,650,000, which means that in fact we're

dealing with a total, at this point, of $5,906,250,000. And that's

really not the end of it, Mr. Chairman, because looking at the record

of this particular administration.... Now we have to indulge in

forecasts. May I say that one of the elements in this budget, and in

papers along with it, is the idea of forecasting over a midterm period

which is some five years, but at this point I'm not getting into that.

What I will say is that in the fiscal period 1976-77 the overruns

totalled $84 million; in the fiscal period 1977-78 they totalled $215

million — an increase in that one year of 156 percent in over-runs; in

1978-79 the overruns increased to $221 million; in 1979-80 the overruns

increased again to $283 million. The average increase per year over

that four year period is 62 percent. On that basis if the increase in

overrun in the fiscal period 1980-81 is 62 percent we'll be dealing

with overruns in the fiscal period we're now in of some $458 million.

However, to recalculate it: the overruns for 1978-79 were $221 million,

and in 1979-80 they had increased to $282.7 million, which is an

increase in that one year of $61.6 million, or only 28 percent. Even if

we apply that 28 percent increase to the overruns of 1979-80 we come up

with overruns of $361.8 million.

By adding that to the figure that I gave you previously, Mr.

Chairman, we're talking about a total expenditure in this period of

some $6.36 billion, which is certainly far away from the plans

announced by the government to limit its

[ Page 3876 ]

expenditures. Mr. Chairman, that's not the end of it, because if

we're now going to look at the mid-term outlook — and I welcome the

idea of a mid-term outlook and will have some more to say about that —

it seems to me that one of the things left out of the mid-term outlook

is certain government plans for spending that are detailed in the

budget. The amount to be spent in the current fiscal period is noted,

but there is really no reference to the total amount that will be

expended over the mid-term outlook. I wonder whether the minister, at

this point — this is one question I'd like to put to him, and I'd

welcome the answer now rather than having those long speeches; if we

can have that kind of an afternoon, it might be more informative for

both of us.

There are several items mentioned on pages 60 and 61 of the budget.

There is the B.C. Place Fund. It's expected that none of this will be

spent in the current fiscal period — a total amount of $15 million is

set aside for it, but apparently none is going to be spent. What I'm

wondering is: how much does the government have in mind spending in the

mid-term outlook on B.C. Place?

The other one I'd like to mention is the Downtown Revitalization

Fund. Once again we are setting aside $25 million for that out of

current surplus and/or revenue. Only $5 million will be spent. I'm

wondering: does the government have any plans in the mid-term outlook

for adding to that fund?

The Fraser River Crossing Fund. It was said at the time this was

announced that it was going to cost $130 million. I think our

experience in matters such as that, when we're talking about a project

that is going to last for several years, is that in all likelihood

we're at least 50 percent short of what the actual cost will be. I

wonder, again speaking in terms of the mid-term outlook: does the

minister have any figure in mind in the mid-term outlook as to what

that is actually going to cost the taxpayers of the province?

The Lower Mainland Stadium Fund. Once again, we're setting aside $25

million for the construction of a lower mainland stadium. That's been

discussed in legislation, but at this time my point is that we're

spending $5 million of that in the current fiscal period and we'll have

$20 million left over. How much are public accounts going to be

responsible for in the mid-term outlook for this Lower Mainland Stadium

Fund?

The Urban Transit Fund. We're setting aside $55 million for that. It

would appear as though we intend to spend none of it in the current

fixed period and we'll still have the $55 million there at the end of

the year. It would appear as though the interest earned on that fund

will not go to this fund, and I just don't recall from the legislation

whether that was specifically mentioned. Once again, does the

government have any target as to what will be spent on that item in the

mid-term outlook?

The Vancouver trade and convention centre fund: $10 million put into

it this year — $5 million to be spent, $5 million left over at the end

of the year. How much more is to be added, or will that be it? The same

with respect to the Victoria trade and convention centre fund, where we

are putting in $2.5 million and spending $1.5 million. We will have $1

million left over. Will that be the end of it, or will the government,

in the mid-term outlook, be expected to add to that?

There are a couple of others that are not mentioned. One of them is

the dental program, and to the best of my knowledge, although the

program has been announced, there has been no legislation introduced to

provide for any funds for that — nothing in estimates anywhere that I'm

aware of; I might have missed it.

HON. MR. CURTIS: There is now. Miscellaneous statutes.

MR. STUPICH: There is reference there to the amount of money

that is going to be spent in the current fiscal period?

HON. MR. CURTIS: No, but the authority is there.

MR. STUPICH: The authority to spend it.

Well then, Mr. Chairman, my questions would be two with respect to

the dental program. One is: how much is intended to be spent in the

current fiscal period of 1980-81? The other one is: is there any

forecast, with respect to the mid-term outlook, as to what will be

spent on that program?

I have one remaining, perhaps relatively small item. There has been

talk — and I may come back to this later, I don't know; I'll see how

the afternoon goes — of the province going it alone on northeast coal,

and I'm wondering whether that will involve any spending beyond the $20

million that's mentioned in the Special Funds Act. What will be the

mid-term commitments on the part of the government in the event that

the government is determined to go it alone or in the event that

anything else happened? If the government is determined to go it alone

in the absence of any federal participation beyond what the federal

government has already promised, what are we looking toward in the way

of mid-term commitments for northeast coal development? I wonder if the

minister would care to comment on those questions.

HON. MR. CURTIS: Mr. Chairman, the hon. member for Nanaimo

has dealt with a number of things. If I miss one or two, I know he will

correct me.

Incidentally, before I respond in any specifics, the mid-term outlook

paper was produced by the ministry and accompanied the budget for the

first time this year. As I recall, it is correct to say we are the only

province in Canada now producing a mid-term paper for the information,

guidance and use of all our citizens, not only members of this House.

This is part of my philosophy with respect to the Ministry of Finance.

It is the public's money. It is not mine; it is not the government's

money as such. My senior staff agree with me in this — that I want to

see us share as much information as we possibly can with the people of

British Columbia in the short term, which is the budget for the fiscal

year, and in the mid-term. We must bear in mind, however, that a

mid-term projection or a five-year projection will alter from time to

time. Circumstances will change, programs will be added, and other

programs will be deleted. So that's a rolling outlook. It's going to be

revised on a fairly regular basis. The member will know, of course,

that that is the same in terms of any capital forecasting. Capital

requirements which are now seen for 1985-86 will have altered. They'll

alter a little in 1981. They'll alter in 1982, in 1983, and so on.

Therefore that is the best possible information available at the time

that the mid-term outlook is put into place. I think the member knows,

and other members would accept the fact, that that is going to change

on a fairly constant basis.

B.C. Place is an expenditure item. I think I understand what the

member was asking with respect to that.

Downtown revitalization. Any additional money would be a matter for

the budget speech in 1981 for 1981-82, rather

[ Page 3877 ]

than today. I don't know, frankly, if there'll be additional money

for downtown revitalization. It's not a question of withholding the

information from the committee; I simply don't know. That would depend

on a variety of circumstances.

The Fraser River Crossing Fund. The mid-term outlook does

contemplate the ongoing expenditure beyond that which was placed in the

budget for this year. So that would not form a surprise in the mid-term

and the paper to which the hon. member has referred.

The same would apply for the lower mainland stadium. The lower

mainland stadium is foreseen in the mid-term outlook.

I have dealt with Annacis.

UTA. The whole concept there, Mr. Chairman, was that we said in

consultation later with the Minister of Municipal Affairs: "Look, there

is a provincial expenditure facing us for urban transit on a

cost-sharing basis with municipalities, with local government in

British Columbia. We are in a position to put our money up in advance

of the incurring of the debt." So that is what we did, and that

certainly was foreseen.

The market, with its volatility, and its tremendous unpredictability

these days.... Mr. Chairman, if anyone in this House can find me

someone with a crystal ball regarding the public bond market, then I

would be very pleased. No such person exists. We understand that. There

are best guesses and best information. At this point, I think that it

would be correct to say that we don't know whether it would be wise for

the Urban Transit Authority on the recommendation of its minister to

lease, to purchase, or to do a little of both. So that money is seen

nonetheless. It was placed in the budget in good faith and was taken

into account in other documents in an effort to provide the provincial

funds in advance of their actually being called upon. That's

fundamental to what we attempted to do in a number of instances, and

that is the case.

The expenditures were foreseen again for the conference centre. I

think that's all I can say with respect to that.

Dental care. The answer is that that was not foreseen in the

mid-term outlook, again bearing in mind when that material was prepared

and the document released. So that is the kind of adjustment in the

continuing revision to the outlook that will occur in years to come.

Nonetheless, we are in a position where with a start of January 1 —

in terms of budget alone; I do not wish to transgress into the area

which is the responsibility of the Minister of Health (Hon. Mr. Mair) —

some $30 million or $35 million in this fiscal year is capable of being

provided for dental care. The mid-term did not see it, but certainly in

the final preparation of the budget we did foresee a figure of that

approximate amount.

I think northeast coal was the last thing the member mentioned.

Northeast coal was and is seen to be essentially self-liquidating. I

say "essentially" because there will be infrastructure — a word I don't

particular care for — in terms of the services which are built into

that area in the communities, such as schools, delivery of water and

carrying away of wastes. Of course, that would fit into normal programs

and would have to be taken into account in normal programs in other

ministries such as Municipal Affairs, Education, and Lands, Parks and

Housing, to name the three principal ones. Beyond that, the position of

the minister and the mid-term outlook of the ministry are not at

variance at all. Northeast coal is seen to be self-liquidating.

MR. STUPICH: Mr. Chairman, as I understand the Minister of

Finance, with respect to almost every one of the items that I

mentioned, what he is saying is that the budget, on page 61, includes

the total provision in the mid-term outlook for these various funds,

and there would be no need to put any further funds into these various

projects, with the exception of the Fraser River Crossing Fund — you

expect to overrun the cost estimate of $130 million.

I don't see anything in the mid-term outlook document itself with

respect to these items. I do see it in the budget on page 61. For

example, there is reference to the Downtown Revitalization Fund; $25

million is provided in this period — $5 million is going to be used;

$20 million is left. That kind of information is provided, with respect

to all of them, in the budget speech. Is that what the minister was

telling me when he said that these are all accounted for in the

mid-term outlook — not necessarily in the mid-term outlook document?

HON. MR. CURTIS: Most.

MR. STUPICH: The one exception was the Fraser River Crossing

Fund: you expect the cost estimates will be overrun.

You said the dental program was not provided for, but that $35

million is considered to be adequate for the 1980-81 fiscal period. I

have a question about that. Is the $30 million to $35 million

additional money, or is some of it transferred from other programs?

For example, to some extent the Ministry of Human Resources provides

some funding for dental services, and I think there is some provision

for it in the Ministry of Education. I wonder whether some of that $35

million is actually being transferred from other ministries. It may be

well spent in this program, but it may not necessarily be an additional

$35 million in provincial government expenditures in the current fiscal

period. Does the minister have any comment on that? If he can give me

any idea as to what extent it is new money, I would be interested.

I have one more question. With respect to northeast coal, he tells

us it will be self-liquidating. That may be; it is arguable. My concern

is that I think not even the government would profess that it will be

self-liquidating in the mid-term outlook. If the government itself is

going to have to put relatively large sums of capital into any kind of

program, then it would appear to me that it should be something that

would be included in the mid-term outlook. I suppose one way out would

be to set up a Crown corporation and say: "It's not our debt; we're

just guaranteeing it."

As the minister has said — and I accept this — we must recognize

that it is the first time this has been done. But, if nothing else, may

I suggest that in future mid-term outlooks it might be much more

informative to include any capital programs that the government might

be involved in, either directly or indirectly through the various Crown

corporations. I think this kind of document would be much more helpful

if we included all the Crown corporations — B.C. Buildings Corporation,

B.C. Ferry Corporation, B.C. Steamship Company, etc. — including one

that may be set up for northeast coal development, and showed what the

total demands upon the taxpayers are going to be, directly or

indirectly, to provide capital funds in the mid-term outlook.

HON. MR. CURTIS: Mr. Chairman, first of all I will give a

detailed answer with respect to dental care. There is an

[ Page 3878 ]

amount in the Ministry of Human Resources for dental care. I think

it is in the neighbourhood of $9 million. I don't have the figure here

but it is approximately $9 million for this fiscal year. The figure of

$35 million, which I indicated earlier, has been allocated. We might

fall below that in the first three months of a major program. The

member opposite knows, as a former Minister of Finance, that when

you're starting up a major program you do the very best you can in

estimating from this distance precisely what will occur.

Assume that we're a touch high: that figure, however, is total;

deducted from that would be the remaining three months, which are now

allocated to the care of my colleague the Minister of Human Resources

(Hon. Mrs. McCarthy), so they would just be a crossover. This is the

total amount which would be used, including the program already in

existence within Human Resources.

Again, I appreciate the remarks the member made with respect to the

mid-term outlook — the mid-term paper. It was a first attempt. I don't

want to be tedious about it, but it is the first in Canada, except at

the national level. There are a number of things I think we can do to

improve on the amount of information and the kind of information which

will come in future years. That paper was prepared by the ministry.

This may be a fine point — and I speak to the member for Nanaimo (Mr.

Stupich) as a former Minister of Finance, albeit briefly — but that was

a ministry document and did not reflect — indeed, I think it would be

wrong for it to reflect — the views of the political person in the

ministry. It is simply a forecast of expenditures and revenues.

The member will also know that it is the minister's responsibility,

leading up to budget time, to determine what revenue measures might be

taken, what taxes can be increased or decreased, what should be left

untouched, what should or should not be done in any area of provincial

finance. That actually forms the political document which is called the

budget for the province for the fiscal year about to commence.

Bearing in mind that the mid-term report is simply the best possible

information from the professional men and women who comprise the senior

staff of the Ministry of Finance — it is their forecast — I am

confident that in subsequent years it can be expanded and improved

upon. I won't make the commitment to the member who is my critic on the

opposite side. I cannot make the commitment today that the document

issued in 1981 will include capital projections. I do make the

commitment that next year we shall have the second of what I hope will

be a long pattern of mid-term reports for the information and guidance

of members of this House and all British Columbians.

MR. STUPICH: I'll just leave that for the time being and get

back to the budget speech; I'm not completely abandoning the mid-term

outlook.

I'd like to briefly quote from a couple of pages in the budget

speech. First, from the introduction on page 5:

"As Minister of Finance it is my pleasure to present

to this House and the people of British Columbia the first budget of a

new decade. For British Columbians it will be a decade of prosperity

and promise. This budget represents a strong statement of confidence in

our province, in our people and in our economy.

"We are part of Canada's booming west; we are

situated to take advantage of growing markets on the Pacific Rim,

our resources are rich and varied, and our people are skilled and

energetic. The ingredients are all there but they will not come

together without effort. The task for all of us will be to put it

together — to build a secure and satisfying future for our

citizens."

You will recall, Mr. Chairman, that this budget was the one that was

read in the House on March 11, 1980.

Skipping over to page 6:

"First, and I think most important, will be a

continuation of the firmly established Social Credit tradition of

fiscal responsibility in government. Public services and facilities

must be provided efficiently, with sensitivity to people's needs, and

at minimum cost to taxpayers. But responsibility has to prevail. We

should not be spending today the tax dollars of our citizens of

tomorrow.

Then there's a reference to "without recourse to government

borrowing."

Later on the same page: "...budget policy should be set within a longer

term...." I think that is running a bit contradictory to the

suggestion that it should always be without recourse to government

borrowing. It might be necessary at times, if one is going to budget

for the longer term, to have recourse to government borrowing. It might

be advisable to maintain the level of government services, with the

sensitivity to people's needs mentioned in the first paragraph.

Skipping over to page 7:

"With the provincial finances back in order, with

taxes at a low level, and with a fundamentally healthy economy, we are

now able to take steps to build on our strengths in the 1980s. This

budget demonstrates further this government's ability to provide

improved services to people while keeping to a minimum the tax burden

on all British Columbians."

Well, Mr. Speaker, coupled with that there is a reference in the

budget and the minister announced in the House the achievement of a

triple-A rating. I'm sure we're all very happy the government's

achieved that. I understand the much-maligned federal government has

the same kind of rating; it's only natural, I suppose, that the federal

government would have that.

But let's move from the budget to page 1 of the medium-term outlook.

Again some of the same principles, good principles, that I've quoted

from the budget are included in the mid-term outlook: "Spending

priorities depend upon the perceived needs of people for government

services and programs, and also the need for the government to manage

the province's natural resources and stimulate economic development."

Moving to page 6, we're looking a little bit more at the forecasting.

I'll read selectively from this: "The contraction of economic activity

in the United States, likely to be in the order of 1 percent..." is

one of the problems. "The volume of Canadian exports will" — and I want

you to note the wording, Mr. Chairman; we're talking now about 1980,

the year that we're in currently — "almost definitely" — not quite —

"decline in 1980. The federal Department of Finance forecasts Canadian

GNP will rise by roughly 1 percent in 1980 so long as investment

spending is not too adversely affected by the current high rates of

interest on borrowing." Things have changed a bit in that respect at

least. But my point is that it's so difficult to tell what is going to

happen in the period in which we are living today.

[ Page 3879 ]

The next paragraph goes on to talk about the future: "The recovery

beginning sometime in late 1980/early 1981 will" — not "will almost

certainly," "may" or "might" — "pervade all the industrialized

economies, and growth through 1985...will be in the order of 3 to 4

percent annually...." So with respect to today we can't really say

what's going to happen; with respect to this year we can hardly even

guess what's going to happen; but when you talk about the next five

years it's easy to say how rosy things are going to be. I know that's

one of the problems of forecasting. I think I've quoted in this House

previously — and I use it often in speeches — a saying to the effect

that if all the economists in the world were laid end to end it would

be a good thing.

I'd like to get just a little bit more to some questions that I

asked of the minister in the House that lead up to this question of

restraint — questions that were not answered. The minister gave me some

reason to think they were going to be answered in the quarterly report

when I first asked the questions, and then when I asked them the second

time around he made it clear that those answers would really not be in

the quarterly report. Now it's fairly certain that they just couldn't

be.

The first evidence I have that the government felt it was running

into trouble in the current fiscal period was a story from the Province

dated June 27, 1980: "Cut Spending, Curtis Warns Cabinet; Falling

Resource Revenues Blamed." On June 27, the minister apparently

realized that things were not going well, and in spite of all these

rosy forecasts, in spite of the talk in the budget about the need to

relate spending to people's needs, in spite of the Premier's comments

to the effect that even if we had revenue shortfalls there was nothing

to worry about — we had $600 million in surplus, we could get through

the year quite easily, there were no problems.... Yet on June 27, the

headline is that the Minister of Finance is warning cabinet to cut

spending.

Eleven days later — July 8 — I put some questions to the Minister of

Finance, because I thought if things were getting bad we should know

exactly what the situation is, not what it is going to be, not what it

might be, but what the best information is that the minister has right

now as to exactly what is happening in the province. I asked him just

how far short of his estimate for the current fiscal period the revenue

from BCPC will be. I was asked to wait for the quarterly report; I've

waited for the quarterly report. There is an indication that it is

somewhat less than was expected in the first quarter, but I would think

that the minister would have.... We're now talking about the mid-term

outlook, so surely we can look ahead to the end of this year and come

up with some kind of idea as to just how far short of revenue expected

from BCPC in the current period we will be by the end of the year. I

asked the minister whether or not he could confirm that BCPC sales are

down to half the level of sales for last year measured on a daily

basis, and that question was not answered. I asked a question about

forestry revenue, and the quarterly report did show at least that that

is $40 million above — either above last year or above the estimates

for this quarter, I'm not sure — but certainly holding up very well.

Finally I asked the minister whether he could give us some idea as to

just what the revenue shortfall will be on the basis of the information

that he has from all sources; that is, the fact that every other source

of revenue is holding up extremely well — is generally apparently over

target — but the one shortfall is in the area of BCPC. Can the minister

give us his current appraisal as to what the percentage revenue

shortfall for the year ended March 31, 1981, will be?

HON. MR. CURTIS: Mr. Chairman, fundamental to the action

which was taken in late June was immediate response to the very

earliest indication that I had received — and by early I'm referring to

sometime prior to that date, late June — that a number of factors had

come into play since the budget was prepared and introduced. I would

like to take just a few moments with respect to the natural gas

question. I can't answer the member's question this afternoon with

respect to how much the shortfall will be, because, frankly, I don't

know. I don't think that the British Columbia Petroleum Corporation

knows, and I don't think that the Minister of Energy, Mines and

Petroleum Resources (Hon. Mr. McClelland) knows, because the factors

which would help us to answer that question are in the future.

First of all, Mr. Chairman, the equivalent cost of our natural gas —

and I'm subject to minor correction on these figures — in the United

States is some $24 per barrel of oil. There is now in apparently

abundant supply in California, and I think as well in Oregon, residual

oil. I don't intend to give the committee a lecture, because I don't

have that knowledge, but residual oil is a term which is well known in

the industry, and that is available. The equivalency there is about

$17. Bearing in mind that a large percentage of our natural gas is sold

to commercial-industrial users rather than residential, it is very

clear to see that if a plant manager, superintendent, foreman, whatever

it may be, has the capacity to change from hydroelectric power one day

or one week to natural gas for another day or another week, or to

residual oil for another day or another week, he makes that decision

based on availability. If we assume that he has the capacity to change

from one to the other, first of all he's going to make that decision to

keep his plant or business operation running on the basis of

availability and price, or indeed price and availability. When the

recession in the United States finally arrived, plus the impact of

Mount St. Helens on some of the lumbering, manufacturing and processing

industries in southwestern Washington and northwestern Oregon....

Taking those factors into account, but particularly the recession

and the availability of other energy sources, it's quite clear that

British Columbia natural gas has been seen as a more expensive

commodity, and we have been the user's last choice.

Now I don't make the next remark in any way facetiously, but there

is no member of this House who can tell me what kind of winter it is

going to be in the northwestern United States and in British Columbia

and Alberta. Is it going to be a severe winter? Is the recession

actually over? There are those who are confident that the United States

recession is at an end, notwithstanding some difficulties in the

automobile industry and in other major industries there, but if the

recession is over and it is a relatively cold winter, then clearly our

natural gas is going to be in great demand. If the recession, even

regionally in the northwestern United States, continues for any number

of reasons and we experience a mild winter, then I would think that our

sales are going to be lower.

None of this, of course, takes into account the spectre of a

federally imposed natural gas tax which, frankly, I find just

impossible to contemplate or accept. I don't speak about that, but I

say that is yet another factor, and there are those who think that it

might be $1 per MCF or a little more. The impact of a federally imposed

natural gas tax would obviously

[ Page 3880 ]

further affect the revenues, which we forecast and expect and which

BCPC have forecast and expected on the best available information. This

then makes it, I think, essential that a Minister of Finance happens to

be at this particular time and in this government.... A Minister of

Finance should address himself to a resource revenue stabilization

fund. I have spoken about this. No, it is not the B.C. equivalent of

the Alberta Heritage Fund, but rather it is an attempt to take some of

the peaks and valleys and even them out in terms of revenues accrued

from the forest industry, natural gas, mineral exploration and the

export of a variety of our products. We see far too many tremendous

increases and dramatic fall-offs in revenues from those sources.

In precisely which form it will come is a matter yet to be

determined by the senior officials in this ministry, myself and my

cabinet colleagues. I would expect that we can have something for the

House, the Legislature and the people of British Columbia to examine in

1981, but certainly not before then. We do want to build into the

collecting of these revenues and the setting aside of that money

something that will help us over the valleys and smooth out the peaks,

because frankly the forecasting.... The member for Nanaimo (Mr.

Stupich), my chief critic in this debate, said: "Yes, if all the

economists were laid end to end, that would be great." I say in all

kindness that I think there would first be an argument over which

direction the line should go, but once that was decided upon, fair

enough. It is very, very difficult for those who advise a Minister of

Finance in a province such as ours to forecast in the very short term

the extent to which a revenue target is going to be met or missed and

by how much it is going to be missed.

Incidentally, Mr. Chairman, I'm sure the member has more things to

comment on. The quarterly report, from April to June 1980, perhaps

gives a misleading — not deliberately — picture of forest revenues. The

reason it is up to about forecast is that there have been accelerated

collections. The payments have been coming in. Therefore I would not

want the member to think that all is rosy in the forest industry in the

very short term. That revenue figure that has been achieved is due

largely to accelerated collections.

The housing-start situation is something the member may want to

discuss later.

[Mr. Strachan in the chair.]

MR. STUPICH: First the minister raised the promise or the

spectre — I'm not sure which — of a revenue resource fund. I like the

idea. It's going to be something that would prevent us from falling

into the sort of situation where the minister is faced with some

warnings that there will be a shortfall in revenue and immediately

issues orders to departments that they must cut back on the level of

people services. If it would get us beyond those problems, then I think

it's a great idea. But if, as I was informed initially when the

announcement first came out, the revenue resource fund is something

that is going to be added to by cabinet order-in-council and something

that is going to be spent after discussion behind the closed doors of a

cabinet room, then I can assure you, Mr. Chairman, that there will be a

very substantial amount of opposition raised by the official

opposition, regardless of which party happens to be in opposition when

that happens. I don't think the members of the Legislature will accept

that kind of legislation in the event that it is brought in. There have

been some bills brought before us which come awfully close to that, but

I hope that is not the minister's intention. I would welcome him

reassuring us that he, as Minister of Finance, would never introduce

that kind of legislation with respect to a revenue resource fund.

With respect to a news release issued by the minister on July 10....

He was referring to the need for the public staff freeze, and one

paragraph reads: "First we have had a settlement to the wage dispute

involving the province's nurses, which was far in excess of anything

which had been anticipated. This alone amounts to $135 million." What

I'm wondering is whether or not that's the total cost of the package in

the current fiscal period — that is, the wage increase — or whether it's

$135 million beyond what was anticipated. I find it very hard to

believe that with all of the pressure from the nurses for some sort of

catch-up, which has gone on for quite some months, the government did

not provide something somewhere, or at least was not cognizant of the

fact that there was going to have to be a pretty hefty bill to be

covered somewhere in estimates. I'm wondering whether this was left out

entirely in the hope that no lead or encouragement would be given to

the nurses, whether the $135 million is on top of everything they

anticipated or whether the $135 million is the total cost of the

project.

The minister has told us, in response to my question about exactly

what is happening with respect to revenue, that he just can't tell us.

Mr. Chairman, I can accept that; I'm aware that forest revenue has held

up in this period in part because of increased collections. The

auditor-general has told us for two years in a row that collections in

the Forest Service were down below what they should be. I believe on

March 31, 1979, they were something like $80 million below; and I think

the situation worsened rather than improved in the next 12 months. We

were informed by the auditor-general that there was a catch-up on that,

and so I knew, when I saw that the forest revenue figure was holding up

well, that this could very well be attributed in part to the recovery

of some of those overdue amounts — not overdue, because they hadn't

been billed, but to additional recovery of amounts that had not been

billed and were recovered. So I know that.

Mr. Chairman, I think my problem is.... The minister has said that

he doesn't know what's happening with respect to revenue, He's got a

feeling that it's down. He does go on in this very same press release

to say that "other provincial revenues are on target or are slightly

above the estimates." So in every area, with the exception of BCPC....

That's an unknown factor. It's one of the things I considered myself in

the estimates — that BCPC must include looking at the Farmer's Almanac

to see what the weather is going to be this coming winter. It's very

hard to determine what's going in BCPC sales. Yet in the face of that,

and with a $600 million surplus, the minister embarked upon what he

called "a crude instrument of restraint." It seems to me he was doing a

disservice to the people who, he had earlier said in the budget speech,

deserved a certain level of government service. If he knew that there

was going to be a shortfall and could estimate how much that was going

to be, then I can see the need for some sort of restraint program, but

he had a very substantial surplus of $600 million. He couldn't tell

whether or not revenues were going to be seriously or even

significantly short by the end of the year. All the evidence was to the

effect that every area of revenue was

[ Page 3881

holding up better than expected, with that one exception, yet in the

face of that the minister embarked upon "a crude instrument of

restraint."

He's quoted as saying that it would save some $80 million. Frankly,

Mr. Chairman, I'd like him to give us some kind of calculation as to

how he arrived at that figure of $80 million. I certainly don't

understand it myself. The program was not announced until the end of

June, and there are nine months left in the fiscal period. The crude

instrument of restraint with respect to staff freezes did not call for

the firing of anyone, to the best of my knowledge; it simply called for

a slowing down of the hiring program. We were informed that

advertisements and moves already in process to hire people would not be

stopped; there would be no interference with such moves. So there would

be some increases to staff beyond June 27, but then there would be some

slowdown in the hiring process. To save $80 million, even if one were

going to say that per individual.... It's usually the ones in the lower

salary ranges that you don't hire. If we're talking about the people

who are going to cost the government, say, $24,000 a year, I would

think there would not be a saving for any more than a third of the year

on the average, which is $8,000 per employee. Are we really talking

about cutting back the government service in effect or cutting back the

hiring program by 10,000 people in this period? Does the minister have

some calculation to show me how he arrives at a figure of $80 million?

Beyond that, in commenting on the restraint program and with the

lack of any evidence as to the need for any restraint program.... I'd

like to quote here briefly from the Employers Council. This is dated

July 15, 1980. They are concerned, although they didn't say so in those

words. They said: "The Employers' Council of British Columbia predicts

a 3 percent real growth in the provincial economy for 1980, down

slightly from the 3.5 percent previously forecast. Substantial cuts in

government spending could further reduce the forecast growth." So

there was real concern on the part of the Employers Council that any

panic program — and I don't know what to call "a crude instrument of

restraint" other than a panic program, especially with the lack of any

concrete evidence as to the need for it — was going to hurt the whole

of B.C. economically. I made that point, I think, in my response to the

minister's statement released with the quarterly report.

I'm concerned about the wording in the quarterly report, and I did

make reference to that as well. The first paragraph of the press

release putting out the quarterly report to the uninitiated would

indicate that we had actually lost money, that we had spent more money

than we had earned or more money than we had received in that first

quarter, because the first paragraph reads in part: "Expenditure

exceeded revenue by $118.9 million." You had to read the quarterly

report itself to find out that included in expenditures were some $235

million of money that had been shifted from one pocket to another and

that in fact there was a surplus of budgeted revenue over budgeted

expenditure in that period of, I think, $135 million.

With that kind of a cash surplus in three months and with no real

knowledge of any revenue shortfall, simply some concern about one

area only, the minister embarked upon a crude instrument of

restraint that had the Employers Council worrying about the

effect on the economy. Not only that, but in the press release

accompanying that quarterly report he also made reference to revenue

measures as though he were considering increasing existing taxes

or imposing new ones.

Mr. Chairman, that's really the double whammy: to cut back the

economy in the absence of any solid information that there was need to

do so, to scare the Employers Council, to scare people into thinking

that some 10,000 people would perhaps not find government jobs and to

scare the government service into thinking that it's not going to be

able to provide the needed levels of government service — to do all of

that and then to give the double whammy by saying to the people in the

community, that he is currently considering imposing increased revenue

measures because they might run a little bit short of money this year

seems to me to be doing a disservice to the economy of British

Columbia. I would welcome the minister's comments.

HON. MR. CURTIS: Mr. Chairman, I'd like to get back to where

the hon. member for Nanaimo started. He issued a warning, and it is not

necessary. That warning was with respect to a resource revenue

stabilization fund. That would not be a cabinet instrument, but rather

an instrument of fiscal policy within British Columbia which would be

debated in this House. As long as I am Minister of Finance.... It is

fair enough for the member to express the fear, but I would find it

completely unpalatable. I can only reassure him and the committee on

that point. It is what we would seek. Again, there isn't some material

that is drafted; there isn't a document which I could even allude to in

general terms today.

What we would seek to do there is cushion provincial revenues, the

provincial economy, the provincial government economy and the

provincial government budget with this kind of instrument. This is

obviously where the mid-term outlook paper or document, which the

member and I discussed earlier, would play a very important

part in an

attempt to forecast those periods, over five years, which are going to

be more difficult than others. So I seek to reassure the committee on

that particular point. Obviously legislation at least would be needed.

That's a matter for another calendar year.

Mr. Chairman, the additional amount in the nurses' settlement is

just that. An amount was provided in our budget calculations. The $135

million, which I referred to as one — and I emphasize "one" — of the

factors, is a net increase and not the full amount. Of course, we did

provide what we thought was a reasonable sum in the 1980-81 budget in

connection with pending settlements with the nurses of British Columbia.

I'd like to take just a few moments to attempt to answer the member,

and to explain a couple of matters as well, with respect to the staff

freeze. I used the phrase "a crude instrument."

Interjection.

HON. MR. CURTIS: I think that's the first interjection we've

had this afternoon.

It is a crude instrument. It is an instrument designed to attract

attention in the shortest possible time and to stay in place for the

shortest possible time. While I didn't particularly enjoy the process,

it did indeed secure a number of headlines and focused attention

throughout the public service, the government and the managers of

government. That is what it was intended to do and it is, I think, what

a Minister of Finance must do when he or she sees signals which are not

that encouraging. Nine ministries have now been exempted from the staff

freeze. It has been in place for a very short space of time.

The figure of S80 million, to which the member for

[ Page 3882 ]

Nanaimo has referred, was, to the best of my recollection, given at

the time of the press interview following the announcement that a staff

freeze was in effect. I believe that I'm almost absolutely correct in

answering the question this way. A member of the press said: "What

would this save you over the balance of this year?" The answer, taking

into account the normal salary savings which just occur on a regular

basis — because it takes longer, it seems, to replace someone, to deal

with applications and to get someone into the provincial service....

The normal salary savings plus this, if left in place, would have

brought about a saving of $80 million, but what they neglected to

report — and I don't say that I was misquoted — was my answer; I went

further and said it would not stay in place for the balance of this

year. It could not stay in place because the chaos it would create

would be intolerable for the people of British Columbia. I also

mentioned at the same time that we had put into place the capability of

granting immediate exemptions — I don't have the exact words with me,

but we had the capacity to respond very quickly when a case was made by

a ministry, while under the freeze, that five more positions were

immediately required in that ministry, or whatever it might be. So that

capability remained.

It wasn't panic, Mr. Member, and I assure you of that. It was not

panic; it was a very crude instrument designed to immediately attract

attention throughout the public service immediately and to send out the

warning flag, so that we could then examine other ways in which we

could bring expenditures and revenues into balance for the balance of

this year. It has therefore virtually served its purpose. We stand here

on August 12; it was announced — I take the date from the member's

comments — on June 27; and it served its purpose as a signal. The

second signal was the freeze, still in place, on the engaging of

consultants other than those that had already been contracted for. That

will remain for some little time yet while further responses come back

from the ministries.

That's what it's all about, Mr. Chairman. I had to send a signal to

all sectors of government, to all managers in government and to my

colleagues. It had to be a loud signal, it had to get their attention,

and it succeeded in doing so.

MR. HALL: Mr. Chairman, I want to spend a couple of moments

just interjecting myself into this portion of the debate dealing with

this particular administrative action by the Minister of Finance. The

timetable of the Minister of Finance, as he has outlined it, is

interesting. The fact of the matter is, of course, that the Minister of

Finance received information that resource revenues were expected to

come down. Any responsible ministry led by a minister who is at all

alive and warm and can read is going to have to deal with that problem.

As I understand it — the minister can correct me if I'm wrong — he

asked his colleagues for some assistance in dealing with that problem.

I'm pretty certain that, as is always the case with all Ministers of

Finance — whether it be the federal Minister of Finance, a Social

Credit Minister of Finance or a New Democratic Minister of Finance —

the response he got was less than overwhelming. The fact of the matter