1996 Legislative Session: 1st Session, 36th 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)

WEDNESDAY, JULY 17, 1996

Afternoon

Volume 1, Number 21,

Part 1

[ Page 431 ]

The House met at 2:08 p.m.

Prayers.

G. Brewin: In the gallery today are four people, two of whom are Burmese constituents of mine: Mr. Ingmar Lee and his wife, Daw Khin Tint Khing. Visiting for the first time in Canada from Yangon, which used to be Rangoon, in Burma, are Mr. Aung Chine and Mrs. Daw Tin Tin Sein. Would the House please make them welcome.

Hon. P. Ramsey: Joining us today are two representatives from the Fraser Basin Management Board: Mr. David Marshall, the executive director of the board, and Ms. Iona Campagnolo, who is the acting chair of the Fraser Basin Management Board. I think all members of the chamber know the excellent work that the board has been doing in assessing the health of the heart of British Columbia, the Fraser River, and I'm sure they recognize the value they have in their work.

I want to say that Ms. Campagnolo is taking over as acting chair from the now member for Vancouver-Fraserview. I intend to be recommending that she assume that chairmanship on a permanent basis, and I would hope that the federal government would join us in that. I think that the board has done excellent work and will continue to work with this government.

Hon. D. Miller: I have two introductions to make. Firstly, Mr. Charles Maynard and Suzette-Taylor Leechee, who are in the gallery today, are officials of the republic of Trinidad and Tobago. They are in B.C. for two weeks, working with officials in the venture capital program in the Ministry of Small Business, Tourism and Culture, and they are trying to introduce similar programs in Trinidad.

Hon. Speaker, I also have the privilege of introducing some constituents of mine whom I hold in the highest esteem, members of the Nisga'a Tribal Council: Chief Joe Gosnell, Chief Nelson Leeson and Chief Harry Nice. I would ask the House to make all the parties welcome.

R. Masi: Today I would like to introduce Mr. Vic Eaton, a longtime political commentator for Delta Cable Television, and I hope a good friend of mine. Will the House please make him welcome.

Hon. G. Clark: I have the privilege of introducing two women who are in the gallery today: Linda Wickstrom, a longtime NDP activist from North Island and her mother, Sylvia Wickstrom, who also happens to be the mother of Ron Wickstrom, who's my executive director. I would ask all members to welcome those two members of the Wickstrom family.

D. Symons: It's my pleasure today to introduce a fine young man, my grandson Jeffrey Symons. He is accompanied here by his charming and young and vivacious grandmother, my wife, Marge Symons.

G. Wilson: I'm delighted to introduce to the House today a gentleman who was formerly the senior intergovernmental affairs officer with the government of Saskatchewan. He's a professor, a lecturer, a writer, an independent scholar and the editor of an outstanding book called A Civilized Revolution . I'd like the House to please make this editor welcome.

L. Reid: I'm pleased to welcome to the gallery today four visitors from Germany: Sinret Woldu, Mike Bader, Pia Hettstedt and Gunnar Hettstedt, who have just arrived in Canada. I trust that they will have an enjoyable stay. I would ask the House to please make them welcome.

Hon. D. Streifel: One of the privileges I've had in this House since being elected in 1991 is to introduce constituents and very dear friends when they're in town. I'd like to have all my colleagues in the House welcome two of my constituents from Silver Hill in Silverdale, which is in the western part of my riding. Holger and Ella Wickstrom are here visiting today. Their daughter Marie and her husband, Arnie Fast, are with Holger and Ella. Son Ross Wickstrom and his wife, Renée, are also here. I appreciate their support, their being here and their saying hi to us. Would the House please make them welcome.

E. Gillespie: It's my great pleasure today to introduce to you some visitors from the Comox Valley: Ron Crowther and his family. We have Daphne, Samantha, Shannon and Alexandra. I'd like to welcome them to this Legislature.

I. Waddell: I too want to add my welcome to the Hon. Iona Campagnolo, former federal cabinet minister and a good friend, and to David Marshall, my former executive director at the Fraser board. I have just two brief points: one is that it's nice to know there is a role for former politicians in using some of their skills; the second is the fact that we've kept the fight to save the Fraser Basin on a non-partisan basis. I see the Leader of the Opposition, who is one of the original fighters for this and for the board concept. I want to acknowledge that and say hello to my good friend Iona Campagnolo.

J. Kwan: In the members' gallery this afternoon are five Members of Parliament from Taipei. The delegation, led by Mr. Yeou-Chi Lee, is on its way to Ottawa under the auspices of the Canada-Taiwan Parliamentary Friendship Association. For all of them, this is their first visit to Canada. Accompanying Mr. Lee is Mr. Schien, director general of the Taipei Economic and Cultural Office in Vancouver. Would members of the House please make them feel welcome.

[2:15]

Hon. M. Sihota: Would all members please join me in welcoming the Coalition of B.C. Businesses strategy group that's here in the chamber today. That group includes the chair of the Canadian Federation of Independent Business, Suromitra Sanatani, Jim Chase of the B.C. and Yukon Hotels Association, John Hansen from the Vancouver Board of Trade, Mr.

Hochstein of the Independent Contractors and Businesses Association, Geoffrey Howes of the Restaurant and Foodservices Association of B.C., Marion Keys from the Motor Dealers Association of British Columbia, Paul LeBranche of the BOMA, Keith Sashaw from the Canadian Home Builders Association of B.C. and Steve Torrence of the B.C. Horticultural Coalition.

Hon. C. Evans: After some of the bigoted and unkind things I might have said in these chambers in the past about the legal profession, it causes me some embarrassment to actually admit that there is a lawyer in the precincts who is my good and longtime friend, Greg Stacey. He's a lawyer from Nelson, Creston and Nakusp. Would the House please make him welcome.

G. Robertson: I'd like to add my thanks and greetings to Linda Wickstrom Nichol, one of my constituents in North

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Island, for all the fine work that she did in my last election campaign, and also for all the hard work she has done in my constituency for many years. I'd like the House to greet her.

The Speaker: In case there's anybody we haven't acknowledged, perhaps the Chair, on behalf of all members, could welcome all others.

Introduction of Bills

BC BENEFITS (YOUTH WORKS) ACT

Hon. M. Sihota presented a message from His Honour the Lieutenant-Governor: a bill intituled BC Benefits (Youth Works) Act.

Hon. M. Sihota: Welfare as we know it will no longer be. Last week our government announced the first of a series of changes to make work a better deal than welfare by introducing the family bonus program, which provides a tax break and fairness to working families in British Columbia. Today, through this legislation, our government is announcing the second step: namely, that young people 19 to 24 years of age will no longer be eligible to collect welfare as we have known it. Rather, as a condition of receiving a living allowance, young people must participate in a training program.

The programs are designed to ensure that young people do not enter into a cycle of dependency -- are no longer dependent upon the state -- but rather have assistance in ensuring that they have the skills and training necessary to fulfil their potential as human beings.

Bill 11 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

USE OF FOREST RENEWAL REVENUES

G. Campbell: My question is to the Minister of Finance. Can the Minister of Finance confirm that last Thursday the Forest Renewal board met and discussed the transference of $400 million from Forest Renewal revenues to the provincial government to help bail the provincial government out of its financial mess?

Hon. A. Petter: I'm not a member of the Forest Renewal board.

G. Campbell: This minister's performance throughout his tenure as Minister of Finance has been incredible, and that's an incredible response.

Let me simply ask the Minister of Forests: can you confirm or deny that the board of directors of Forest Renewal B.C. met last Thursday and discussed diverting $400 million of Forest Renewal funds into the government's general revenues?

Hon. D. Zirnhelt: I can confirm that the subject of surpluses was discussed, that program delivery matters were discussed, that meeting the objectives of the Forest Renewal board was discussed, that the good work that they're doing in communities was discussed and that many specific, good projects were discussed. But I have not been officially notified of any resolutions the board made on that subject, as I wasn't present for that.

G. Campbell: I think the question we all have to ask ourselves is: when is the Minister of Forests going to explain that the Forest Renewal board did, in fact, discuss the diversion of $400 million of Forest Renewal revenues into general coffers? Does the Minister of Forests feel that communities have been sustained and that the unemployed, who have been put out of work because of activities and changes that have taken place in the forests, have been cared for? Do you believe that all the environmental enhancements we need to do under forest renewal have been taken care of?

And why would the board decide to discuss the removal of $400 million for general revenues after just one year and a bit in service?

Hon. D. Zirnhelt: One of the criteria for program approval is wise spending. We're not satisfied, and I'm not satisfied as a board member, that they've done enough, fast enough, to work in those areas where there are unemployed forest workers. But I have to remind the Leader of the Opposition that the program was not created in order to solve all the problems in the forest industry, such as technical change and reductions that might come from overcutting. It was there and it has been targeted where there are land use changes.

Interjections.

The Speaker: Order, members! I would like to hear the questions and the answers. Member for Matsqui.

M. de Jong: For the last three days I've sat here and watched the Minister of Finance avoid, deny, wriggle and slither away from questions about his intentions with respect to forest renewal dollars. He has looked across the floor and has mocked members for suggesting that he was going to take money out of forest renewal.

The Speaker: Question.

M. de Jong: At the same time he's doing that, meetings are taking place where this government is requesting a transfer of $400 million from Forest Renewal. My question to the minister is: why should we believe anything he has to say? Will he stand up in this House now and acknowledge that he wants $400 million from Forest Renewal?

Hon. A. Petter: I'm always astounded by the righteous indignation of members who, if they'd had their way, would never have created a forest renewal fund.

As I've indicated to this House, this government is looking at all programs of government, including forest renewal, as part of a program review. It's altogether appropriate that the Forest Renewal board, which is charged under legislation, would review its program, look at its financial situation, consider its investments, consider its responsibilities and deliberate on these matters. There should be no concern about that. In fact, members should be encouraged that the Forest Renewal board is undertaking this kind of review on its own, and no doubt its recommendations and considerations will assist us in our program review.

M. de Jong: In the span of 25 seconds, the minister has gone from not knowing about the meeting to being encouraged that it took place in the first place. It's obvious that this

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proposal came from the government, because the alternative is that the Forest Renewal board sat down and said: "Gee, maybe we can give $400 million to the government without their asking for it." In fact, they did ask for it. It's not a review. Reviews don't start from the premise: "You're going to give us $400 million."

The Speaker: Question, please.

M. de Jong: Once again, will the minister come clean and admit that he has directed Forest Renewal B.C. to hand over $400 million to general revenues?

Hon. A. Petter: I certainly won't confirm that, because it's not the case. I will confirm that this government is undertaking a program review of all programs in government, including programs the members opposite voted against. In due course, as a result of that program review, we will be improving services for people throughout British Columbia, ensuring that we meet our financial targets. It's altogether appropriate that agencies like Forest Renewal deliberate on their own roles and mandates, that they consider how to improve their programs. As I said yesterday -- and let there be no mistake, hon.

Speaker -- this government is determined to ensure that Forest Renewal continues to fulfil its objectives and mandates, continues to invest in the resource and continues to invest in the people of British Columbia who tend that resource, so we can have a bright future for our forest communities and our forest resource.

The Speaker: Assuming there's a supplemental, I recognize the member for Matsqui.

M. de Jong: Hon. Speaker, it's the first program review I've ever heard of that starts from the premise: "You're going to give us $400 million." I've never heard of a program review starting from that premise. For three days this minister has avoided the question. Let me put a simple question to him: when did he think he was going to get around to telling us that these meetings that the Minister of Forests has just acknowledged took place? When was he going to get around to telling us that that proposal for $400 million was on the table?

Hon. A. Petter: The Forest Renewal board meets from time to time. I'm not a member of the board, but it meets from time to time and deliberates on a range of matters, including the extent of surplus funds that the board has accumulated, including how to improve its programs, including. . . .

Interjections.

Hon. A. Petter: Yes, surplus funds are part of the program for Forest Renewal, and how that program gets managed.

Interjections.

Hon. A. Petter: Some of the shock of the members opposite apparently comes from their lack of knowledge about Forest Renewal. I'd be happy to give them a briefing and tell them how the program was initiated, and about our continuing commitment to it and the commitment of this government and, I'm sure, of the board to ensure that the program is improved over time, refined and reviewed within the context of our government's program review. When that review is complete or outcomes from it are complete, I'll be happy to report back to members.

G. Farrell-Collins: I'd ask the Minister of Finance not to challenge the opposition to read back into the record the intent and plan for Forest Renewal, hon. Speaker. We've done that before, and we can do it again if you like.

My question is to the Minister of Forests. Douglas McArthur, the deputy minister to the Premier, sits on the Forest Renewal board. Can the Minister of Forests tell us the first time that Doug McArthur took to or discussed at the Forest Renewal meetings the allocation of those resources and the potential for them to be funnelled into general revenue?

Hon. D. Zirnhelt: No, but I can tell you that the business plan of Forest Renewal is presented to me, and it will be in due course in the weeks to come. After review and approval by me, it will be submitted to the Legislature and will be referred to the select standing committee.

G. Farrell-Collins: We know what happened the last time that report went to the committee. The Chair refused to table the recommendations in this House, and the minister prorogued the House before those recommendations were acted upon. This slimy, sleazy backtracking on behalf. . . .

[2:30]

The Speaker: Excuse me, member. Member, you have some experience in this chamber, and you know full well that kind of language is not appropriate. I would ask you to please withdraw those remarks and then continue.

G. Farrell-Collins: Hon. Speaker, I'll be glad to withdraw those comments. There are many others that I can make.

The forest-dependent communities of British Columbia counted on that money to go back into their communities. The minister should read the Hansard . The member for West Vancouver-Seymour said: "We are not against the concept of this bill. We basically approve of it, as I said. However, it is the implementation that worries us." The member should quit re-creating history and deal with reality.

Will the Premier tell us at what time discussions were first initiated at the Forest Renewal board of funnelling revenues -- or, as the government calls them, surpluses -- into general revenue? Was it before the election?

Hon. G. Clark: I want to know whether the Leader of the Opposition will deny that he met with forest industry executives to talk about eliminating Forest Renewal. They spoke against it in the House, they spoke against it with their friends in the corporate community, and they campaigned against it up and down this island and up and down British Columbia. They are on record as opposing the initiatives we took in this House to defend forestry communities, and that's why practically every forestry community in this province is represented by a New Democrat member.

Now they want to shift. They're against capital spending; they voted against all the school construction. Now there are crocodile tears when we freeze capital spending. They voted against Forest Renewal; now there are crocodile tears with

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respect to forestry communities. People in forestry communities should know that this government will not let them down. We're on their side. That's what we campaigned for, and that's what we continue to stand for.

G. Farrell-Collins: The bluster may work on his backbenchers for now, hon. Speaker.

Again, the question to the Premier is: at what point did his deputy minister first start discussing the pillage of Forest Renewal funds for general revenue? Was it before, during or after the election? A simple question to the Premier.

Hon. G. Clark: They're going to get whiplash from changing their position so much. After five years in this House saying one thing, suddenly after the election they want us to spend, spend, spend on everything.

I want to be clear: every ministry of government is under a program review. Every agency of government and every Crown corporation is under review. We expect every single agency, Crown corporation, ministry and program of government to be subjected to this program evaluation and review, with a view to saving the taxpayers' money. It's entirely appropriate for all these agencies to look at their mandate, at their budgets and at ways in which they can cut costs, so that the taxpayers will be better off. That's what we've said. The Minister of Finance has started this review, and that's what we intend to continue.

Whether it's Forest Renewal or any other agency of government, we're going to be working hard to reduce costs to taxpayers, balance the budget and make sure the taxpayers are represented.

Interjections.

The Speaker: Order, please, members.

W. Hurd: The opposition has learned that at meetings of the Forest Renewal board prior to the last election, Doug McArthur, the deputy minister of the Premier's Office, warned the board that funds could be lost to Forest Renewal B.C. -- diverted at those meetings. Can the Premier confirm that he was aware of his deputy minister's role in those discussions with Forest Renewal B.C.? Can he confirm that he knew prior to the last election that his government had no intention of honouring its commitment to forest-dependent communities in British Columbia?

Hon. G. Clark: I don't know about my deputy minister, but let me speak personally. Since I became Premier, I have been absolutely consistent. In fact, I have been a critic. . . .

Interjections.

Hon. G. Clark: I have said publicly. . . .

The Speaker: Order, members. Can I have. . . .

Interjections.

Hon. G. Clark: I'd like to answer, hon. Speaker.

The Speaker: I would like to give the Premier an opportunity to answer, too. So perhaps. . . .

Interjections.

Hon. G. Clark: I'd very much like to answer.

The Speaker: Excuse me, Mr. Premier, can I just ask for a moment. Members, the high level of enthusiasm in the chamber is desirable. The level of volume, however, is such that I frankly can't hear the questions or answers. I would therefore. . . .

Interjections.

The Speaker: Members, I think that silence will make the point more eloquently than I can. Having said that, I will ask the Premier to please continue.

Hon. G. Clark: I want to be absolutely clear. I met with IWA members all throughout British Columbia; I met with their executives; I met with forest companies; I met with small business companies. In every case, I said consistently that I felt that Forest Renewal was not moving fast enough to deal with problems. I was putting pressure on them to deal with problems. I said that before the election, I said it during the election, and I say it today. We want to make sure that Forest Renewal works the way we intended it to, which is to put money back into the regions, to deal with unemployment in the forest industry communities, to invest that money in a way which protects forestry communities.

They have taken longer than I would like -- and, I suspect, longer than every member in this House would like -- to make the investments we want to see. It is very important that right now the board knows that the government wants to see action on forestry. We want a full review; we want to make sure it's working the way we intend it to. I would suggest that members opposite should support the notion that we want Forest Renewal to work the way we intended it to. That's what we intend to do -- not undermine it, the way members opposite would have us do.

The Speaker: The bell terminates question period.

H. Lali: I request leave to make an introduction.

Leave granted.

H. Lali: I have four individuals sitting up in the gallery who are not only very, very strong supporters of mine, but close members of the family: my niece Rajwant Lali; my wife, Rani; and my two children, my son Ajhmair and my daughter Suman. Would the House please make them welcome.

Tabling Documents

Hon. A. Petter: I have the honour to present the report of the business done in pursuance of the following: the Pension (Public Service) Act during the fiscal year ended March 31, 1995; the Pension (Municipal) Act during the fiscal year ended December 31, 1994; the Pension (Teachers) Act during the fiscal year ended December 31, 1994.

Interjections.

Hon. A. Petter: We're up to 1995 now; it's okay.

I have the honour to present the report of the business done in pursuance of the Pension (College) Act during the fiscal year ended August 31, 1995.

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I have the honour to present the 1995 annual report of the British Columbia Utilities Commission in accordance with

section 15(1) and (2) of the Utilities Commission Act.

And, finally, hon. Speaker, I have the honour to present the 1994-95 annual report of the British Columbia Lottery Corporation, in accordance with the Lottery Corporation Act.

Orders of the Day

Hon. J. MacPhail: In Committee A, I call Committee of Supply to hear the estimates of the Ministry of Attorney General, and within the House I call second reading of Bill 2.

BUDGET MEASURES

IMPLEMENTATION ACT, 1996

(second reading)

Hon. A. Petter: I move that the bill now be read a second time.

Bill 2 amends 12 provincial statutes to implement measures announced in the 1996 provincial budget. The Home Owner Grant Act is amended to increase the threshold at which the grant is phased out, from $475,000 to $525,000. The increased threshold reflects an adjustment for increased assessed values that will ensure that 96 percent of homeowners will receive the full homeowner grant. The College and Institute Act, the Institute of Technology Act, the Open Learning Agency Act and the University Act are amended to allow universities, colleges and other post-secondary institutions to pay grants in lieu of property tax to their host municipalities.

The government authorized universities to pay provincially determined grants in lieu of property tax for the 1995 tax year by resolution of their boards of governors, and this legislation clarifies the authority of the boards of all provincial post-secondary institutions to make such payments in 1996 and future years. The grants to be paid each year will be set by the minister responsible up to an amount equivalent to the general municipal taxes that would be levied if the properties were subject to property tax.

The Social Service Tax Act is amended to introduce a new exemption from the provincial sales tax for tangible personal property incorporated into prototypes. This exemption is designed to encourage further research and development in British Columbia and to contribute to the ongoing growth and diversification of the provincial economy.

The government is committed to making investments in the province's transportation infrastructure to support ongoing economic growth in the province -- investments that are developed with a sustained approach to the movement of people and goods throughout the province. That is why we released a comprehensive transportation plan last year called Going Places , which provides new opportunities to build the province's transportation system in a fiscally efficient and environmentally responsible manner.

To support this plan, Bill 2 amends the Motor Fuel Tax Act to allow the transfer of an additional one cent per litre of clear-fuel tax to the B.C. Transportation Financing Authority. This is a reallocation of current fuel tax revenue, and therefore will not increase fuel taxes paid by drivers. Servicing the debt of these priority transportation projects through dedicated taxes such as the fuel tax allows a better matching of expenditures and benefits over the life of these assets.

[2:45]

The Municipal Act is amended to provide authority to exempt from property taxes certain improvements such as runways at prescribed community airports. This will ensure that the property taxes on airports will be roughly the same as the grants-in-lieu currently paid by the federal government, and removes an impediment to the transfer of these airports to local control. The authority to exempt airport improvements is provided retroactive to 1994 to allow this policy to apply to community airports which have been transferred to local control during the last two years.

The Property Transfer Tax Act is amended to raise the maximum fair market value of residential property eligible for exemption under the first-time homebuyers' program. The maximum value of a home eligible for exemption is increased under this legislation from $250,000 to $275,000 in the greater Vancouver regional district, the Central Fraser Valley regional district, the Dewdney-Alouette regional district, the Fraser-Cheam regional district and the capital regional district, and is raised from $200,000 to $225,000 throughout the rest of the province.

This change reflects the government's ongoing commitment to helping British Columbians enter the housing market for the first time so that they too can enjoy the benefits of home ownership. With this change, homebuyers can now save up to $3,500 on the purchase of their first home.

Bill 2 also amends the Property Transfer Tax Act to prevent tax avoidance on the purchase of land by associated corporations. It has recently come to our attention that an exemption under the act for statutory amalgamations has been used by associated corporations to avoid the higher 2 percent rate of tax on property values in excess of $200,000. This avoidance has been achieved through the creation of numerous associated corporations, each of which purchases a $200,000 interest in the same property, and then amalgamate, exempt from the tax.

Under this bill, the tax will be imposed on the total value of all partial interests in the same land purchased by associated corporations within a six-month period. This amendment parallels an existing provision in the act which prevents value-splitting by related individuals and will thereby guard against abuse.

The Industrial Development Incentive Act is amended to increase the industrial incentive fund's funding cap from $300 million to $400 million. This increase is necessary to make strategic provincial loans and investments in important economic development projects, such as the Columbia-Kootenay region power projects and the proposed Kemess mine development near Smithers.

Since 1981 the government has had an informal partnership with the province's anglers and hunters for the protection and enhancement of fish, wildlife and their habitat. At their request, surcharges on angling and hunting licences were established, with these funds flowing to the habitat conservation fund special account. These moneys have been used for a wide array of enhancement projects.

In response to advice and interest from a number of groups, the Special Accounts Appropriation and Control Act and the Wildlife Act are amended to establish a new Habitat Conservation Trust fund for the administration of these surcharges. Retroactive to April 1, 1996, all revenues which used to flow to the habitat conservation fund special account will now flow into the new trust fund.

The legislation also provides for the transition from the special account to the separate trust fund -- that is, the existing balance in the special account will diminish over time as the funds continue to be used to finance enhancement initiatives.

Other minor amendments to the Special Accounts Appropriation and Control Act and the Wildlife Act will have

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the following effects: they will protect existing revenue by authorizing the payment of interest on funds held in the special account and trust fund, allow the fund to pay for its operation by authorizing the payment of administration fees, and enhance revenue-raising ability by providing that revenues derived from fundraising will be directed back into the trust fund.

Hon. Speaker, these changes are part of this government's efforts to protect fish and fish habitat throughout the province. Since 1981 the habitat conservation fund has invested over $24 million for fish and wildlife enhancement projects. More than $12 million of that was spent on fish conservation and enhancement -- over $2 million in the last fiscal year alone. I might just add that it is another component of this government's tremendous investment in fish habitat through Forest Renewal and other agencies. Under the new Habitat Conservation Trust fund, these initiatives will continue and increase in the coming years to ensure that our fish stocks are protected for future generations.

Those are the key elements of the bill. I think they are all good news for British Columbians, addressing a range of issues of interest, and I think they merit the support of all members of this House.

F. Gingell: We all recognize this bill is more appropriate for debate in the committee

section of the movement of this bill from first draft to legislation, but there are some issues that I would like to deal with.

The first is that I'd like the minister to make sure that I get briefed on the issue of how much money is going to be in this grant-in-lieu-of-taxes pool for the universities, colleges and institutes relative to the municipalities. I do understand that certain grants were paid last year -- for instance, Simon Fraser University to the municipality of Burnaby, an amount substantially below what the normal property taxes would be for such a property. Those funds were put into the hands of Simon Fraser by the provincial government. The provincial government gave them the money to make these payments.

It's terribly important for this government to recognize that as they continually tie the hands of independent boards. . . . They appoint independent boards to administer universities and colleges. I spent some ten years on college boards, and I know their circumstances. They give the board the responsibility, but then they tie their hands with such things as tuition freezes. Now, I'm not suggesting tuition freezes are good or bad, but I really believe they are decisions that should be made by the governors of the colleges.

So you freeze this one source of revenue that maybe only constitutes 12 to 15 percent of the income of the institution, and then you put in these programs that now allow them or cause a moral commitment, perhaps, to start to contribute towards the cost that municipalities bear to provide services to these institutions. So it's critically important that the minister recognizes the need for the government to ensure that the colleges, institutes and universities are put in funds to make these payments. I leave it at that at this moment, but it is an important issue.

I think confirmation by the minister that such is the commitment of the government will help us to deal with that in committee stage.

The second issue I'd like to deal with briefly is the issue of relaxing the sales tax requirements to be paid on prototypes. The provisions of the act, as I understand them, require that the tax will be paid when the prototype's use is changed from being a demonstration plant to commercial production. I would ask that the minister talk to his officials between now and the time that we discuss this in committee. He may wish to bring forward an amendment to it: that the provincial sales tax that's charged on the unit as it changes its use from demonstration to commercial be based on the fair market value of the unit at that time.

Prototypes are often long and difficult exercises. Parts are purchased and taken off and remachined and changed and fitted, and usually the cost of developing the prototype is substantially greater than the fair market value of the equipment after its work is completed -- that is, its tangible value. Its market value may indeed be greater because now, perhaps, it has resulted in new technology or new processes being developed. But the tax that should be paid is the tax on fair market value at the time that it changes use.

It may be substantially less and, as I read the act at the moment, it may cause some problems if it requires the tax to be paid on the original cost of all the bits and pieces that went into the manufacture of the prototype in the first place. So that's something I think the minister could discuss with his officials.

The next issue I would like to deal with briefly is the issue of the 1 cent going into the TFA. We all know the problems this government is facing with respect to the commitments it made about its so-called balanced budgets. There's a definitive commitment here to move a further 1 cent a litre from gasoline tax into the Transportation Financing Authority, but the date when it happens has been left in abeyance. It's going to come into effect as soon as it is passed by order-in-council.

I would suggest that it would be appropriate for the Minister of Finance to make a commitment that the order-in-council will be processed and passed as soon as this act is enacted rather than leaving it hanging out there. The people of British Columbia need to know how much of their tax dollars are going into this specific program to service debt from the construction of transportation infrastructure. So I would suggest to you, Mr. Speaker, that it's appropriate that the minister make up his mind about it, not just put it into place and leave it dangling there, as it were.

The last issue I wish to deal with is the Habitat Conservation Trust fund. This bill does both things: it creates the trust fund and moves funds that come from angling fees and all sorts of other things, such as surcharges on angling, hunting, guiding and trapping licences; revenues derived from lands administered by the Ministry of Environment, Lands and Parks for the benefit of fish and wildlife; interest, bequests, donations, court-enforced payments and fundraising projects undertaken. . . . This money has just been going into a special account in past years. We know what that means.

It's just a notational account that's kept in the accounts of the government to indicate that these funds are sort of available for this purpose and are going to be paid out without going through the process of votes by this Legislature. They are preapproved votes, in effect.

Now, they're doing an interesting thing here. I guess there's been pressure on them, because they have been behind in spending the money. At the end of 1995, there was some $3.5 million in the fund that hadn't been spent. They substantially underspent in 1994-95. Let's go to 1995-96, a more relevant year, when they took in $4.8 million in revenue. They had originally anticipated spending $3.6 million of that, and the fund increased by some $1.1 million.

So the pressure is on them to say: "Okay, let's take this money, and instead of putting it in the consolidated revenue fund, let's put it into a trust fund." Then, as I understand it, there will be a bank account, an actual account. There will be securities, probably held by the treasury, representing this. Having listened to question period, this is exactly what they did with Forest

[ Page 437 ]

Renewal B.C. They're simply going to take these revenues, these surcharges, and they're going to put them into a special fund for this particular and specific purpose.

The minister has made a great point that we kept voting against Forest Renewal B.C. The minister knows in his heart, truthfully in his heart. . . . The minister, as we know, is a man of education and knowledge, and has been brought up by his mother to understand the truth in these issues. We were for reinvestment in the forest; we just didn't think that setting up a separate organization, and the bureaucracy that would go with it, was the right way of doing things.

I will happily, in third reading, take my full two hours or whatever reading back into the record the words that were spoken by opposition members supporting reinvestment of excess -- or so-called excess -- surcharges on stumpage and royalties into communities -- into retraining, the recovery and reconstruction of streams, the taking out of old logging roads, and dealing with slope stabilization and reforestation.

[3:00]

But now, one and a half years later, or two years after FRBC came along, clearly there is a plan to go back and see this as a source of revenue to come back into government, or to try to move some government programs into FRBC to deal with the current issue of a balanced budget. Here in this fund they're going the other way. I really think the government needs to think about whether it really wants to create another separate fund.

Are you going to set up an independent board of directors to administer such a fund -- a board that will represent wildlife interests, that will bring independent recommendations and decision-making to the expenditure of these funds in the future? I take it from the accounts that the fund has roughly $5 million a year to spend. It's important.

We are all for habitat conservation, but we're all for simplifying government; we're all for not creating any more bureaucracy; we're all for doing things in the most effective manner. Both sides of this House are committed, I hope -- I'm sure -- to a program whereby we will evaluate programs by clearly stating beforehand what the goals are, what the intended outcomes are, how we intend to get there, the amount of money that will be spent doing it, what the time frame is and how we will measure success.

During the course of committee debate on this bill, I think it might be appropriate for the minister to give us his thoughts on exactly how he sees the fund being administered, the kind of organization, and whether there have been clearly enunciated goals and measurable benchmarks to measure the success of these changes.

I think that takes me through all the subjects in this bill, other than property tax exemptions for portions of airports. Wonderful. Transportation infrastructure is important in this province. It's particularly important in the small communities that don't have major airports. I want to see devolution move along faster, from federal government to local bodies, and anything this government can do to assist them in the area of property tax on devolved airports -- if that's the proper adjective to use -- I strongly support.

Mr. Speaker, in principle we support the provisions of this bill. There will be some further questions, and I thank you for this opportunity to speak to it.

The Speaker: I thank the member for his comments on second reading. Seeing no further speakers, I recognize the Minister of Finance, whose comments will close debate.

Hon. A. Petter: Hon. Speaker, I just want to thank the member for his measured and constructive comments. I sometimes regret that in other parts of the proceedings of this House, we can't engage in measured and constructive discussion of the kind that we've just heard from the member opposite.

I think the information on grants-in-lieu is on the way to the member; if not, it will be shortly. I'll make sure it arrives in time. I will take his suggestion about prototypes under advisement, consult with my staff and comment on some of the other matters during third reading debate.

I just can't resist responding to his point about the trust fund. Since we are in a more measured and less confrontational forum here, I think the member knows in his heart of hearts --if I can return the favour -- that this government is deeply committed to the reinvestment of funds -- in this case with respect to wildlife and in the case of Forest Renewal with respect to forestry expenditures. One does one's best to establish programs that will achieve their purpose, and if one is forward-thinking, one isn't afraid to review them from time to time. In each case, one has to consider: are they meeting their objectives?

In the case of Forest Renewal, the objective has been to build up towards and then maintain a steady flow of investment. That remains the objective, hon. member. As the Premier indicated in question period, perhaps that investment hasn't built up as fast as we had hoped, and there are issues there to consider. I think, in his heart of hearts, the member knows that the reconsideration, the program reviews and other things surrounding forest renewal are not in any way a departure from the commitment of this government to maintain that continuity of funding.

Similarly here, there's been a concern expressed about providing greater security for this funding, and we're trying to do our best. It doesn't mean that in the general scheme of things, things won't be reviewed in the future; but it means that in this legislation, we are sending a very positive signal about the management of these funds and their allocation. In that spirit, I appreciate the member's comments, and I move second reading.

Motion approved.

Bill 2, Budget Measures Implementation Act, 1996, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. A. Petter: I call second reading of Bill 3, the Tax and Consumer Rate Freeze Act.

TAX AND CONSUMER RATE FREEZE ACT

(second reading)

Hon. A. Petter: I move that Bill 3, the Tax and Consumer Rate Freeze Act, now be read a second time.

Bill 3 extends the tax freeze until the year 2000 for British Columbia families and small business. It also implements the government's commitment to protect British Columbia families from increases in three key areas by freezing tuition fees charged by post-secondary institutions for two years, freezing automobile insurance premiums for two years and freezing B.C. Hydro rates for three years.

This legislation underscores our commitment to helping middle-income working families and small business. We have listened to British Columbia working families who are finding it difficult to make ends meet, and we have made things a

[ Page 438 ]

little easier for them in the coming years. Freezing taxes until the next century, together with the freeze on key costs such as hydro, ICBC and tuition, will allow families to face the future with more confidence and more money in their pockets. Indeed, the average family of four with two children will save up to $500 a year from these rate freezes and the income tax cut announced in the budget.

The government has also made it clear that our first economic priority is jobs. Therefore Bill 3 also freezes corporate income taxes for small businesses, which often struggle to get by and yet have been so instrumental in supplying new jobs in recent years. This tax and consumer rate freeze will provide British Columbia families and small businesses with some certainty and protection from increased charges into the next millennium. The freeze will not jeopardize our commitment to health care and education, and it will be accomplished at the same time that we meet the targets laid out in the debt management plan.

I think all of these measure are indicative of this government's commitment to supporting British Columbians, particularly small business and middle-income families. For that reason, I hope they too enjoy the support in principle of members opposite. I again move second reading.

F. Gingell: Well, Mr. Speaker, these kinds of bills are usually acts that are introduced into the House towards the end of a parliament. We don't have to look back far, to 1991, just before the election of October '91, when the previous Social Credit administration passed something called the Taxpayer Protection Act. The Taxpayer Protection Act, if I remember rightly, was hailed by the Premier of the time, Mr. Vander Zalm, as the finest thing that their government had ever done -- the most significant thing that his government had ever done. And what happened?

This government came in and in a few short days, with the stroke of a pen, wiped out this wonderful act -- put an artillery shell through it and knocked it down.

I'd like to read into the record some of the words that were spoken at that time: "This act was passed only last year. It was apparently an attempt by the previous government to stop tax increases by legislation. It failed in such a short period of time because it froze taxes in the same year the government was experiencing a record deficit." Now, where have I heard those words before? Oh yes, that's right -- a deficit. This government is experiencing a deficit.

In fact, if you look back over its administration from the day it got elected on October 17, 1991 -- or November 6, 1991, when it was sworn into office -- until it called an election on April 28, 1996, it had incurred a record deficit for the five-year period for which this government had promised faithfully to the taxpayers and the voters of British Columbia in the 1991 election they would balance the budget over the economic cycle. Not in the first year, not every year, but over the economic cycle, all the pluses would equal all the minuses.

So what did this government do? They took some of the major expenditures out of the consolidated revenue fund and said: "Well, we won't count those." Every other province in this country includes in the calculation of their deficit or their surplus expenditures on highway infrastructure. In fact, some provinces include the construction of schools and hospitals, a practice that hasn't been practised in this province for 20 years or more.

But a lot of these things are purely and simply icing; they're purely and simply a veneer.

What this government needs is determination to stop the growth in government spending -- not just to slow it down, but to stop it -- and to ensure that the resources that are available -- some $20 billion a year, almost one-fifth of the provincial economy -- are spent in the most effective and efficient manner to deliver the services that British Columbians need -- not to deliver special deals for their friends and insiders; not to have special deals like the health accord; not to have special deals like union-only on the Island Highway; not to have special deals like all the patronage appointments that this government has made, but to ensure that the resources are being properly spent.

Twenty billion dollars has to be enough; almost one-fifth of the provincial economy has to be enough.

In the early 1980s, all provincial services were delivered for around 14 percent of GNP. By the time we got to the end of the 1980s, that 14 had grown to 17. Shortly after this government had been in office, that 17 had gone up to almost 21. It is coming back. It depends how you measure GNP; it's a very elusive measurement, I think. But recognize this: it's all very well to freeze taxes now, but if they don't freeze debt, they haven't frozen taxes, because debt is just taxes in the future. Deficits are just taxes in the future.

Money that this government has to borrow to pay for current programs and for servicing the current deficit is purely and simply deferred taxes. It's us irresponsibly taking the services and benefits now, and allowing -- one normally says one's children, but my children are already doing it, so I have the privilege of saying this -- our grandchildren to pay for our excesses.

So a tax freeze by itself, although something in the right direction -- I wish we could make it permanent -- is not enough. It needs a freeze on debt, too. It needs a real commitment by this government to reduce the level of government expenditures. Try and get by for a couple of years just holding the level of expenditures level.

I'd like you, Mr. Speaker, to take the Minister of Finance back to the debt management plan produced by his predecessor, Elizabeth Cull. That debt management plan, which was included in the budget of 1995, showed projected expenditures for the years '95-96, '96-97 and all the way through to the year 2000. The first problem this government has is its overspending -- way over -- in the first year. That particular year in that debt management plan, they had proposed that the total expenditures for this current year would be $20.210 billion, from memory. What are they the first year?

I know there is $300 million more: $20.572 billion, way over the first year on their debt management plan. What happened to the debt management plan? Well, they were out $450 million on their first year.

That's not all; that was before. Then they weren't going to be out $450 million, on the basis that they had a $16 million surplus. But as the minister has now said, we anticipate the deficit being $235 million. So that's another quarter of a billion dollars out. Instead of the debt management plan of this government, in its first year, being out by $450 million, it's out by $700 million.

[3:15]

An Hon. Member: Shame, absolute shame!

F. Gingell: It is a shame.

This government needs some discipline to not only freeze taxes but freeze expenditures, do their program reviews and ensure that the resources are being used in the most effective and efficient manner -- so we know what they're trying to accomplish, how much money they intend to spend on programs, what the time frames are and what the benchmarks are

[ Page 439 ]

by which we shall measure success. So we'll stop spending money on accomplishing little and start using the funds available to us from our taxpayers and citizens in the most effective manner.

This bill identifies certain things.

Section 2 identifies a hydro rate freeze. Again, this government, as governments before it, has appointed independent, free-thinking citizens of our province to take the responsibility for running Hydro. They appoint them as directors. They do have an MLA appointed to act as a liaison. But they appoint them as directors to act in the best interests of all British Columbians, to do what they believe is right. Then they go and put a bunch of rules down. "Well, you're not to increase hydro rates. You've got to pay us a $214 million dividend this year, up from last year's $125 million to $214 million."

They've got holes in their dams about which we are just as concerned as them, but they've got holes in their heads, too. You can't put in a hydro rate freeze and ensure that Hydro looks after its responsibilities in taking water out of the Campbell River up in Squamish. There are a whole series of issues where Hydro has not been acting in as responsible a manner as it should. I guess they've been concentrating their time on setting up tax havens in the Cayman Islands for the benefit of directors and their families.

As the minister well knows, Hydro is a critically important port of the infrastructure of British Columbia. To tell them that they've got to pay us a $214 million dividend this year, up from $125 million last year -- and they didn't even make that kind of profit. . . . I don't have the statements here, but from memory, their profits were around the $100 million mark. They're going to pay us a $214 million dividend. I hope they're going to start to look after some of their responsibilities. They've got some serious issues to do with this dam that I'm sure are going to cost them money.

The last thing we want them to do is not deal with those issues properly because of lack of funds. I'm sure the minister would be as concerned about that as anybody else.

When you appoint independent directors, you really should let them direct. You shouldn't make short-term, politically opportunistic election promises, to say things like: "Vote for us and we'll freeze your hydro rates." If we don't look after Hydro, it won't heat our homes, and it won't be your rates that will be frozen, it'll be your backsides.

The same is true about the auto insurance premium freeze. You've got an independent board of directors. Automobile insurance premiums are supposed to be based on actuarial calculations, not just suddenly frozen for political purposes at election time. And then people start scratching their heads and saying: "Well, we can't let ICBC go bankrupt, so what are we going to do?

Well, let's start talking about no-fault insurance." So, all of a sudden, the bogeyman of no-fault insurance again raises its head and our phones start to ring, not only from lawyers who are involved in the process of representing the interests of people injured in automobile accidents through no fault of their own and believe that they have some rights at law, but from people who have been through the process and their cases are settled. I have had cases where people phone me up and say: "There are rumours about no-fault insurance -- naught for naught.

Don't let it happen, because I went through it, and I can tell you that it simply would not be the right way of treating us." It's more Big Brother: government will decide; we'll make out a schedule, and if you lose one hand you get this much, if you lose two hands you get a little bit more, and if you lose a leg you get a little bit more, etc. That's not the way this world should carry on.

People have rights. They should be able to defend their rights; they should be able to bring action against people that have brought them damage. I am afraid that this issue of no-fault insurance is coming before us because ICBC senior executives are saying: "My God, how are we going to get by with a rate freeze?"

In my office I have a photocopy of a cheque that was faxed to me by one of my constituents living in Ladner who got a refund for $1. How much money do you think that cost B.C. Hydro to put out? I don't have a clue, but I'll bet it's $20 to make a $1 refund. That's the way this government spends taxpayers' money -- the citizens' money -- to live up to their short-term, foolish election promises.

The next issue is exactly the same: tuition fees. It's the job of the board of governors of our universities, our colleges and our institutes to ensure that the students of British Columbia are getting the best education -- the most relevant education, the most worthwhile education to prepare them for the next century -- that money can buy. This government goes and shackles them. It puts handcuffs on them, and says: "Well, you can't increase tuition fees."

There may be all kinds of different things happening: new programs that might come along; new technology that will require greater revenues or greater resources in order for the universities to deliver these programs. Don't manacle them. Don't put handcuffs on them. Appoint good directors, good boards of governors. Your government appoints them. I'm sure you go through quite a process in determining who gets appointed. I question some of the people who are appointed, because I think there has been too much emphasis on partisan politics.

But I think all of them, whatever party they come from, all want the same thing. They want to do the best damn job that they can. They give of their time, and they want to do something worthwhile. You shouldn't be restricting them. You shouldn't be handcuffing them.

I don't want to see tuition fees go up, because I don't want to see circumstances that might deprive worthwhile young people from a university education. But tuition fees are not the only issue. There are many other issues, too. If you are living in Prince George or Prince Rupert or in any northern part of the province, and the particular program that you wish to take at university is, say, medicine at UBC, or you have to travel, your travel costs and your living costs away from home are going to be a far bigger issue -- or could be a far bigger issue -- than tuition fees. So maybe you should also be thinking about freezing airplane fares, rents and the price of food, etc.

The Minister of Transportation and Highways grabs it with two hands. Her opportunity to determine how the world shall live and what services will be offered. . . . When this minister was a young lady she lived in the lower mainland. She was a citizen of Delta. But she didn't have to face, at that time, those tremendous expenses of going to school many, many miles away from home. I just think that you really should look at a slightly wider vision than this on its own.

The next issue is a tax freeze. Wonderful! I dealt with that earlier on. We shall have, I'm sure, during estimates debate, a discussion on exactly what a tax is. And there are some interesting quotes in Hansard -- statements made by the present Premier and other members of the NDP caucus who were in the Legislature prior to 1991, during the last Social Credit administration, when they kept talking about what a tax is. So we will revisit during committee stage, I'm very sure, those particular issues, because they are going to be relevant.

The other issue in Bill 3 is the issue of a provincial property tax freeze. This is very interesting; I've been trying to

[ Page 440 ]

think this issue through. How do you deal with new construction? How do you deal with assessed values of specific individuals? Are we talking about freezing the total amount of money that the government will receive, and so it will all be a reapportionment? So those of us who do have homes on which we pay property taxes, but don't plan on adding any value to them, will encourage all our friends -- because the more they construct. . . . Then the taxes they pay will take away, I presume, from the taxes that everybody else pays.

It says: "The average residential gross taxes payable during the freeze period to the government under the School Act and the Taxation (Rural Area) Act must not exceed the average residential gross taxes payable in the taxation year immediately before the freeze period." I think that's going to be a nightmare and terribly difficult to administer. It wouldn't surprise me if the courts get clogged with a series of cases. Not the assessment board so much, but exactly how this will be administered. . . . It will be very, very difficult. It isn't clear. I don't have a feeling of comfort that this has been clearly thought through and that the full range of consequences of this particular

section have been dealt with. I think there's going to be a great deal more discussion during the committee stage.

[3:30]

Am I going to vote for a tax freeze or against it? Well, I must say that it's very hard not to vote for a tax freeze. We wanted a tax freeze, and I think both parties were promising it. But we added more to that statement. We made a commitment that over a period of five years we'd bring the portion of the provincial economy that the government spends delivering all the services that the province delivers from around the 19-20 percent that it is now down to 16-17 percent. Over a period of five years we would have reduced the portion of the GDP that the provincial government spends by just under 3 percentage points. That's what is needed, because in the end the result is very interesting.

It's very complicated. If you take what you take in by way of revenues and deduct from it what you spend, and if what you spend is more, then you'll have to go out and borrow some money. That's what this government does, and it's only dealing with one issue -- the revenue side. They need to deal with the spending side, and they need to deal with the borrowing side. And the debt management plan? They haven't shown the people of British Columbia that they have the discipline that is needed to live within the commitments they made one year and two months ago -- but they should.

I think they should rethink this. In the meantime, however, we will support Bill 3. We look forward to some interesting discussions during the committee stage, and I hope that I have tweaked the interest of the minister in regard to thinking about the other two sides of the equation: taxes and costs.

J. Weisgerber: With respect to this legislation, let me say first of all that I found the comments by the member for Delta South to be very interesting. I found myself very much in agreement with his analysis of the legislation. It seems to me that what we have here is a bill that resulted from a promise by a desperate government. They really had no confidence prior to the last election in their ability to be re-elected. We had a government and a new Premier desperate enough to promise anything in order to score points in the period of time leading up to the election.

I quite honestly believe that he and the members across the way were among the most surprised British Columbians to find themselves back again in government and therefore with an obligation to at least initiate some of the promises made by the Premier in the period leading up to the most recent election.

Mr. Speaker, I quite honestly don't think this bill, Bill 3, is worth the paper it's written on. I quite honestly don't believe that by the end of the time periods outlined in this legislation any of these so-called freezes will still be in effect. I believe that you'll see the government systematically and cynically abandon every one of the freezes, whether they be ICBC, Hydro or tuition freezes. I don't have any confidence that the government will follow through with these promised freezes, simply because they can't afford to.

They haven't factored into their fiscal plan the cost of freezing insurance rates, etc. They haven't calculated the impact on the Crown corporations that these freezes will result in.

I believe that with the next budget, which will be tabled in this House within nine months, most of these freezes will be abandoned. The Minister of Finance is there, and with a bit of bad luck on his part he'll be there to present that next budget. I think he will be standing in this House, explaining to us why it no longer makes sense, why it's no longer reasonable. He does that. I'm not quite sure whether the minister actually believes those things or whether years standing in front of a class have given him the ability to look sincere when he says things that he simply knows are not factual.

Mr. Speaker, having watched the demonstration earlier today in question period, you can't help but reflect again on promises like the forest renewal bill, which Reformers voted for, perhaps to our chagrin, perhaps because we believed the government was sincere when it said it was going to establish a fund, that it was going to legislatively protect that fund from the greedy hand of government and that there would be no way -- no possible way -- that government would ever be able to reach into that forest renewal fund and use that money for general revenue.

What we have here is exactly the same kind of bill. I'm not sure whether the members just have a very short attention span, whether they don't remember from year to year the promises and the commitments that underlie those kinds of promises and the legislation that supports them, whether they simply are willing to abandon those principles at the first opportunity or whether there was never any intent in the first place to follow through. Those are really the only options. I suspect that the Minister of Finance knows without any doubt that he's going to have to abandon these promises, that they simply aren't doable, that they don't make sense to do.

[G. Brewin in the chair.]

If indeed the minister carries forward, the member for Delta South was bang on. It will either be debt and deferred taxes that suffer, or in the case of corporations, postponed or delayed expenditures will wind up costing more than any savings that might have been realized at the end of the day. Hydro is a classic example. Hydro has the ability to postpone maintenance and rehabilitation projects for long periods of time. Hydro can abandon right-of-way clearing for several years.

Ultimately the trees grow up, present a hazard to the line, are more expensive to clear and you have to have a very concentrated period of expenditures on right-of-way maintenance. Dams may well be another area where Hydro can decide to have a regular routine maintenance program, or they can defer those expenditures. Certainly the people living downstream of the W.A.C. Bennett Dam don't want to see Hydro making those kinds of decisions while they find a sinkhole in the dam. They don't want to find the government

[ Page 441 ]

deciding that Hydro has a dividend obligation, or a freeze on rates, and that it is pouring, according to the government, millions of dollars a day in water over the spillway. Those aren't areas where government or Hydro have a lot of flexibility, a lot of discretion. But there are millions and billions of dollars where Hydro can defer expenditures and make them more expensive in the long run. So I don't have any confidence that we are going to see a rate freeze in place.

I think the member for Delta South was again bang-on with his notion of: "Let's introduce some confusion with no-fault insurance, because then we can really put people off balance. They are not going to be buying the same product, they are not going to be getting the same kind of insurance. Let's really confuse them. We'll throw a rate freeze into the mix and we will play with some notion of no-fault insurance." If British Columbians stand up and reject that, then they can always use that as the rationale for an enormous rate increase a couple of years down the road.

It is a tragedy that they didn't look at the rational alternative with ICBC. That was for the government to get out of the insurance business and allow the private sector, through competition, to provide automobile insurance in much the same way as our houses are insured, and in much the same way as insurance is done in other parts of the country. I've talked before about the competitive situation in the Peace with private insurers in Alberta and ICBC on this side. But nonetheless. . . .

What we have is the government introducing legislation that, I am convinced, it has no intention of following through on. I think we are going to see the government abandon this legislation; I think we are going to see them move away from it. I simply do not believe that Hydro rate freezes will be in place for residential consumers -- and that's where the freeze applies -- through the year 2000. I just don't believe that will happen. An automobile insurance freeze, if it's in place, will result in double-digit increases -- the kind that we saw when this government first came into office in 1991-92, and in 1993.

Tuition freezes. Again the challenge is to get spending under control. Artificial freezes will see fewer seats, less expenditure for rehabilitation, maintenance, capital and the kinds of projects that should go on in those kinds of institutions; or, in fact, we will see debts piling up as well.

As for the promise of no new taxes, if this were a government that hadn't come into office in 1991 with a promise of no new taxes, people could look at this and perhaps have some confidence. It was these folks who said no new taxes, no. . . .

Interjections.

J. Weisgerber: Oh, these folks: no, they didn't, no they didn't. I'll tell you, the selective memory of the members opposite is staggering. It causes one to sit back and say: do they simply wipe from their minds their promises as soon as they are made? No friends and insiders. I remember the 40-point plan.

An Hon. Member: Forty-eight.

J. Weisgerber: Forty-eight -- it was eight they kept and 40 they broke; that's what it was. Forty points we'll ignore after the election.

The point is. . . . We'll hear from the minister, I'm sure, and when we get into committee stage I will enjoy, with other members, taking

part in probing these freezes one by one. Quite honestly, I think they are about as temporary as a glass full of ice cubes on a hot day. These freezes don't enjoy the benefit of refrigeration; their shelf life is going to be very, very short.

Madam Speaker, I'm going to take my chair. I'm going to look back next March or April -- whenever the government winds up the courage to bring in a budget again -- and we'll see at that time how many of these freezes are still in place after the next budget.

[3:45]

G. Wilson: In rising to speak to Bill 3, I certainly echo some of the concerns the leader of the Reform Party has indicated with respect to the possibility that much of what is intended in this legislation may not be able to be achieved. I say that not because I wish to impugn the motive of this minister or this government, but rather because of the structure by which we currently try to apply taxes and administer the finances of the province. I guess time will tell whether or not this is a political ploy.

But for the moment let's assume that it is not; let us assume that this is a sincere effort to try to do something positive with respect to the people of British Columbia and the burden they pay in terms of taxes.

Whether that's a bold assumption or not, I guess time will tell. I don't intend to speak at length on this in principle, because much of the issue with respect to delay of rates and cost in the future have already been raised by the member for Delta South, the opposition Finance critic, and I don't take issue with much of what was said there.

If we do make that assumption, I think it's important for us to recognize that if this is going to be achieved, particularly in relationship to the Hydro rate freeze, auto insurance issues, property tax matters and so on, which have artificially constrained in large measure the government from being able to meet natural market considerations, it means we're going to have to entertain a significant change in the manner we fund the activities of government. After all, that's what taxation levels are about: finding ways we can generate revenue to government in order to provide services that the people of this province wish government to provide.

I would strongly suggest to the Minister of Finance that one of the ways we can avoid the very kinds of concerns the member for Peace River South, the leader of the Reform Party, just alluded to is if we change the system by which we apply finances in the province and move toward a four-year-based financing system. This is something that members of the PDA, and I as leader of the PDA, have been advocating for a long time.

By going to a four-year budget system, not only will we be able to provide a greater degree of security in terms of dollars-to-program services, we will also be able to react much more effectively to changes in the market that will ultimately determine revenue flow to government.

One of the issues we're looking at now is with respect to a decline in forest revenues, for example -- which has given great grist for the political mill, although I'm not sure it means much more than that, frankly, -- in terms of the general lives of British Columbians. But certainly as grist for the political mill it has given opposition ammunition to hit this government with.

Those kinds of considerations would not have occurred if we had put ourselves in a four-year financing system where we are able to meet those market changes by providing either front-end or back-end loading on service delivery of programs and carry forward financing in a way that would allow us the opportunity to meet the fluctuations that occur within the market.

[ Page 442 ]

I offer that to the minister as a way we can mitigate the kinds of concerns that have been raised -- legitimately, I think -- by both the official opposition critic, the member for Delta South, and the leader of the Reform Party.

I have only two other brief comments to make. With respect to the matter of the tuition freeze, this will come as a great welcome to students who clearly are now finding it an enormous burden, and to those students who don't have employment -- and there's a growing number of those. Their parents, if they're so lucky as to have parents who are going to be financing them through university. . . . I know firsthand the cost of that. It will come as a great relief that there is a tuition freeze.

However, the reality of funding post-secondary education and the reality of meeting the changes, particularly as we start to retool within our institutions toward a greater degree of services provided for employment-based or employment-related economic activities. . . . Clearly, the tuition freeze is going to put an enormous burden upon those financial institutions. Even though the proportion of dollars they gain is relatively small in terms of the overall percentage, it is one that they have had flexibility with in the past that they no longer will have flexibility with now.

I offer as a solution that that minister seriously consider entering into co-op educational programming so that we can start to entertain financing and funding of programs that are specific with respect to employment in industry and allow industry to become a partner in long-term financing with respect to those job-specific kinds of programs, and relieve the liberal arts educational system from the kind of burden they are going to have placed on them, so that we do not lose sight of the fact that post-secondary education has to also allow students to get a broader kind of education than we might see if we found them all funnelled into technical trades training. I offer that as a suggestion.

Lastly, let me talk about the matter of the freeze with respect to tax on income, which is talked about in the act in terms of the

definitions, in terms of the levies that are placed against individuals. They talk about no new taxes essentially meaning "taxes payable to the government on income or on the acquisition, use or consumption of property. . . ."

If this minister will take seriously the proposition that we need to move toward an integrated single tax within the province and that we need to move to collect all taxes provincially, we will find ourselves in a situation where we do not have the level of constraint with respect to monetary flow to government that we currently do. These kinds of freezes will become a reality -- a reality that we'd be able to deal with on a long-term basis. I ask the minister to seriously consider that movement toward the collection of all taxes provincially. I'm not talking about a duplicative system.

The minister and I have talked about this outside this chamber. He knows what I'm referring to, and I understand the legalities of the question on the matter of the constitution that he refers to. The time has now come if we are to seriously -- and I for one would like to take seriously this proposition, because it does provide relief for British Columbia citizens, and goodness knows, they need it -- consider changing the manner by which we collect revenue for government and the manner by which we commit that revenue, so that these freezes can in fact be a reality and not simply a stopgap political measure.

R. Neufeld: Hon. Speaker, I don't wish to take a lot of time, but I can hardly let a bill like this go by without standing up and talking a little about this government's past record when it comes to taxes and levying all kinds of new fees on the people of British Columbia and now coming through with the Tax and Consumer Rate Freeze Act.

It wasn't that many years ago that we had the Taxpayer Protection Act in this province, and one of the first things -- as I recall, in 1991 -- this government did was to rescind that act. Today they would have us believe, after four and a half years, that through this period of time they've seen the light, that actually the taxpayers of British Columbia have almost been taxed to the max.

It's cynical at best when we look at the record of this government -- the record debt that this government has got itself into in a short four and a half years. This is the government, which the member for Peace River South talked about, that didn't ever in their wildest dreams think they'd get back here the second time. They were going to leave an omelette for someone else to unscramble, and all of a sudden they're in the frying pan. It's absolutely amazing -- a $10 billion increase in debt in four and a half years, and a budgetary increase of about $4 billion in that same period of time.

And they would have us believe that they really believe in freezing tax rates. That's just a little bit too hard for me to imagine.

When I go back and think about discussions that we had in this House when the minister who is now the Minister of Education was the minister responsible for B.C. Hydro, and tried to lecture all the opposition members on how B.C. Hydro had to act as a business, as a corporation. . . . He was saying that to us so they could justify imposing 2-3 percent increases per year in hydro rates. I remember that very clearly. We had the minister -- now Minister of Education, the member for Esquimalt-Metchosin -- lecture us about how B.C.

Hydro had to have the latitude -- and how could anyone on this side of the House be so silly as to think that they shouldn't have the latitude to get a decent return? It would be interesting to go back and pick up in Hansard some of the terms that minister used. I believe one was "a realistic return on investment." All of a sudden, as part of this cabinet, not responsible for B.C. Hydro anymore, he believes -- I suppose along with the rest -- that we should freeze hydro rates for residential consumers. All of a sudden we can magically freeze hydro rates. I find that hard to believe.

I also wonder about the ramifications of what will take place once those hydro rates are unfrozen. What's going to happen at that time? Who's going to be in government then, and who's going to have to live with what has to be done? I think the member for Peace River South related quite eloquently what happens to the dams, what happens to Hydro's lines, when they put aside all the maintenance that they should do.

It doesn't take a rocket scientist to figure out that in British Columbia for too many years we've put aside real rehabilitation on our road system. And that's not just in the north. Many members have stood up in this House and talked about our road systems in the whole province of British Columbia, and the glue that we're in. At some point in time the piper's going to have to be paid.

Here we have a group of individuals in government -- squeaked by again -- all of a sudden trying to act as the greatest financiers in the whole world. It's pretty sad when we see that.

For instance, the W.A.C. Bennett Dam. Who knows -- maybe they do opposite -- what's going to happen with our weather systems in the next year? What's going to happen after we drain the dam down ten or 20 feet, and we won't be

[ Page 443 ]

able to generate hydro out of the W.A.C. Bennett Dam -- which actually generates 38 percent of the hydro used in British Columbia? What's going to happen when we have to start buying some of that coal-fired power from Alberta to subsidize British Columbia's needs? What happens then? Whose pocket do we dig into then?

It's the same taxpayer, the same person at the bottom end of the chain. And if we don't do it through the period of this freeze, it's going to hit them hard in the pants when the freeze comes off. It's unfair, and it's cruel to people to tell them that we can freeze all these rates and nothing's going to happen in the future.

Auto insurance premium freezes. I mean, this is another one. The member for Delta South did speak quite a bit about no-fault insurance, and throwing it all again into the frying pan, into the omelette. We'll see what comes out in the end. In the end, let me tell you, people are going to get it. Not only will no-fault insurance not work, on top of it, ICBC will go into their contingency fund to be able to operate. We'll see ICBC cut costs that they should really be looking after on a yearly basis.

This is after the government -- and they should be reminded -- increased ICBC rates by almost 40 percent in the first two years when they were in office. Almost 40 percent. You folks, you group of socialists over there, increased ICBC rates by almost 40 percent in the first two years you were in office, and today you would have the people of British Columbia believe that you give a darn about how much they pay. You're a pretty cynical group.

[4:00]

In question period it's pretty hard to take members opposite. The Minister of Finance sits there shaking his head and dancing around about Forest Renewal B.C. I know you want to get your hands on the money, but wouldn't it be nice if you lived up to your commitment and spent just even. . . . You don't have to spend more in the north than what you take out of there, but just get close. All you're doing is again raping that part of the province -- the interior, the Kootenays -- and bringing it all down here into the lower mainland so you can look after the people on the Island and the people in Vancouver.

I'll tell you, hon. Speaker, it's catching up. The people in the Clayoquot, the people who were told they wouldn't lose any of their jobs. . . . Here's a group over there wondering what they're going to do, and talking about taking $400 million out of Forest Renewal B.C. to live up to a bit of -- and I don't want to say it -- untruth about what the real deficit was. Strangers to the truth, I guess is the phrase.

There was a 37 percent increase in auto premium rates in the first two years you folks were in office, and now, all of a sudden, you're feeling for the taxpayers of British Columbia and the people who insure their cars. It's cynical at best.

Tuition freezes, and what that's going to do. You talk about 7,000 new spaces -- everyone who wants to enter post-secondary education will have a spot to go to. Well, there are quite a few that I have had contact with that can't get a spot. We'd rather try to recruit physiotherapists out of Europe or the U.S. than train them here. So some of those things I don't believe. On top of that, Mr. Minister, if you go back in your record and look at tuition rate increases, I believe that you increased tuition fees by about 25 percent in the first two years you were in office. Now, all of a sudden, you have a feeling for the students. Where are you coming from?

We've become very accustomed to how this NDP government determines what a tax is and what a fee is. If there is anything that you've been able to do, it's increase fees and create new fees better than anyone else that has ever been in government. If you go to the

schedule you'll find that eight taxes are protected by this act, not the list of all the fees you already have in place -- and guaranteed there will be a tremendous amount of increases in fees. It just doesn't make sense that there won't be, and you will have done it all legally.

The provincial property tax freeze -- and that's the last one I want to briefly touch on -- is another thing that compares to rural roads. And in the end, someone is going to pay. Freezing property taxes until the year 2000 -- interestingly enough, that's about a four-year term. I guess that's where you're heading. You talk about four years, and after that you're going to let somebody else try to unscramble it.

Interjection.

R. Neufeld: Someone says not to tell them four years. They've been talking about four or five years. You can bet that the Premier of today will not be calling an election before he absolutely has to -- guaranteed. But in any event, at the end of that time there is going to be an increase -- very much so. There is going to have to be, because you can't go that long without having some increases. The whole world economy and everything doesn't just freeze for the NDP government in British Columbia. So we're probably going to have some substantial tax increases at that time, and it's going to be left to someone else to deal with.

I don't believe for a minute that this socialist government really believes in the Tax and Consumer Rate Freeze Act. This is just a ruse, because they know they have to come forward with something -- with the promises that the now Premier made during the last election. A lot of this will disappear fairly quickly, as the member for Peace River South said earlier.

Deputy Speaker: I now recognize the hon. minister to close debate.

Hon. A. Petter: With the exception of the member for Powell River-Sunshine Coast, I have not heard such a discursive set of whining and moaning and groaning from members opposite in this House in a long time. I think members might want to pick up their Aesop's Fables and read some of the fables about dogs in mangers and sour grapes, because some of those fables certainly seem to fit in this case.

Members have been going on and on about this and that, in every complaint, in a desperate attempt to try to hide the fact that they're going to end up voting for this bill, which they apparently disagree with in so many different ways, although the members from the Reform Party didn't say how they're going to vote. But I want to predict that they're going to vote for it, notwithstanding all of their whining and moaning and groaning.

At least the member opposite from the official opposition had the forthrightness at the end of his presentation to admit that despite everything he had said and all his whining and groaning, he was going to vote for the bill. So I appreciate at least that much.

[ Page 444 ]

This bill is about priorities. It's about commitments that were made by this government and about priorities, and in particular, saying that as we move forward our priority is to ensure that ordinary British Columbians -- middle-income British Columbians -- are not going to be asked to pay a greater price in the future, whether it be through tuition fees, auto insurance premiums, hydro rates or a tax freeze. This is a clear indication of this government's commitments and priorities, and the members opposite apparently don't want to hear that.

I want to caution the members opposite, too, that they come perilously close to demeaning not the members on this side of the floor -- I guess it's their role to try to demean members on this side of the floor -- but to demeaning the public. Prior to and during the election campaign, the public responded very positively to these very commitments that were made. The public said: "Yes, we believe that tuition fees should be frozen. We believe that auto insurance premiums should be frozen. We believe that B.C.

Hydro rates should be frozen, that tax rates for middle-income earners should be frozen and that small business should get a tax break, too." That's what they said. For these members to now stand up and throw all their cold water, their sour grapes, their melting ice cubes and their half-fried omelettes on all of this is to throw it not on this government but on the people of British Columbia who spoke in the last election and said that this is what they believe government should listen to and respect in terms of commitments. And that's why they're sad.

The members opposite try to minimize and belittle this. They talk about this being icing and veneer. Let me assure the members opposite -- particularly the member for Delta South, who used those terms -- that it is not icing or veneer to a taxpayer in this province to have the assurance of a tax freeze for three years. It is not icing or veneer to a student in this province to know that the barrier that would be posed by increased tuition fees will not exist, because this government has made this commitment.

It is not icing or veneer to say to those homeowners who pay hydro rates that those rates will not be increased, or to say to those drivers in the province who have in the past been hit with increases under numerous governments that we're not going to get the ICBC house in order on the backs of those drivers. That's not icing and veneer; that's a commitment we've made to protect the interests of middle-income, ordinary British Columbians.

The members opposite may not like to hear that. They might want to pour omelettes and ice cubes and cold water and sour grapes over it all. But I warn them, that's what the people of British Columbia voted for in the last election, and that's what this government is going to ensure that they receive in this legislation.

In the last four years. . . .When we became government we inherited a deficit of $2.4 billion and we said we would work to eliminate that deficit over the course of the mandate. We haven't achieved that goal and that's unfortunate, but we have eliminated nine-tenths of that deficit over the mandate.

Interjection.

Hon. A. Petter: Absolutely. We have ensured that the house of British Columbia has been put in order by reducing that deficit burden year by year by year.

The members from the Reform Party refer to increases in taxation. They should review the record. Do you know when the greatest tax increases in the last ten years occurred, in percentage terms? Let me tell you: 1988, 15.79 percent; 1989, 12.47 percent; 1990, 16.10 percent. Who was in power in those years? And now they have the audacity to lecture us, when their predecessor party -- I forget the name -- was responsible for those kinds of tax increases. What was the spending record of the Social Credit government that the leader of the Reform Party and his fellow member were involved in, in 1990, 1991 and 1992?

Increases in the order of 12 and 13 percent every year in government spending were brought down by this government, systematically, to the point that we now have increases in spending below the rate of inflation and the rate of growth in population. I agree we have to do more, but that has been the tendency, so I don't want to hear a lot of sour grapes and melting ice cubes and omelettes from members whose own record, I think, calls their lecturing and their own commitments into question.

Now let's talk a little bit about the future, because the member for Delta South, in between his discursive statements and an attempt to hide from the fact that really, at root, he doesn't support tuition freezes or hydro freezes or. . . .

Interjections.

Hon. A. Petter: No, no, he said so, hon. members. He said he doesn't really support them, but that he's going to vote for them. That's the principal position of the Liberal Party on this issue: "We don't support ICBC; we think you should let the corporation decide in terms of setting rates. We don't support a tuition freeze, but we're going to vote for it." That's the principal view of the members opposite, from the official opposition -- on the record!

But let's just talk about what the member says, in terms of debt and in terms of spending. He says some things I agree with, but we have to put them into context, like all things. The member is very good at telling me to put things into context, so I'm going to try to encourage him to do the same. He says we should stop growth in government spending. He says we need to be more focused on debt and debt freezes. Actually, he said we need a freeze on debt.

I think we have to do a much better job, even than the one we've done, in terms of reducing the rate of government spending, and I've already outlined the record in terms of that reduction. And we have to tackle the issue of debt; I agree with that as well. Those are two commitments that I have made and that I intend to see through.

But let's put it in context. What has been happening in this Legislature in the last few weeks? Every time this government comes forward with a proposal, it is attacked by members of the opposition. We came forward with a freeze on capital that had not yet been legally committed or was not underway, in order to deal with the issues of the debt, and the members opposite get up, castigate the government and cry crocodile tears. They get upset because we're dealing with the very issue that the member, in his discursive statement today, said we should.

Wouldn't it be better, hon. member, if you really cared about this issue and not politics, for you to support us in terms of that capital freeze? Wouldn't it be better for you to say: "We think you done right, hon. minister"? I think it would. I think it would be refreshing, and I think your constituents would respect you for it.

[4:15]

We introduced a program review. Instead of saying, "Good on you; we need a program review," they cast about

[ Page 445 ]

for the first issue they could find to make political hay on, and brought it to this House. They're up and down and jumping around on program review in respect of Forest Renewal B.C. Well, give me a break. Do they care about containing the cost of government spending? Do they want a program review or don't they? Do they want to control capital spending or don't they? They can't have it both ways. Oh, excuse me, they're Liberals; they can have it both ways, which is why they say they oppose the freeze on Hydro and the freeze on ICBC and the freeze in terms of tuition -- but of course they're going to vote for the bill. Excuse me, I forgot that that's the way the Liberal Party operates.

I want to make one final comment. I think there is an opportunity here to work together on these issues, and I look forward to doing so. I think the suggestion made by the member for Powell River-Sunshine Coast concerning a multi-year financing plan, for example, is a very constructive proposal. I think we have to work together in looking at multi-year financing. I think that the member for Delta South has made a number of constructive proposals -- when he's not drawn into the political hurly-burly by some of his more intemperate colleagues.

I hope we can work in that constructive way, and I hope that members opposite would see fit to give the government and the people of British Columbia more credit when we act on the priorities in the way that we have in this bill.

With that I move second reading.

Motion approved on division.

Bill 3, Tax and Consumer Rate Freeze Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. A. Petter: I call second reading of Bill 4.

INCOME TAX AMENDMENT ACT, 1996

(second reading)

Hon. A. Petter: I move that Bill 4, the Income Tax Amendment Act, 1996, be read a second time.

Bill 4 provides tax relief for virtually all British Columbians by reducing personal income taxes. The vast majority of British Columbia residents pay the second-lowest taxes in the country. Despite this, many middle-income working families often find it difficult to make ends meet. To make things easier for these families, the government decided to introduce a modest tax reduction that would particularly assist lower- and middle-income earners. The reduction in personal income tax will be accomplished by reducing the provincial tax rate by one percentage point this July and by a further point in 1998.

The reduction will be capped for the highest income tax payers, earning more than $80,000. This cap will reduce costs and direct the relief to those who need it most: lower- and middle-income taxpayers. This measure will put an additional $68 million in taxpayers' pockets in 1996-97 and $150 million annually when the reduction is fully implemented.

Bill 4 also provides tax relief for small business by reducing the small business corporate income tax rate from 10 percent to 9 percent and by introducing a two-year corporate income tax holiday for eligible new small businesses incorporated on or after May 1, 1996. This government recognizes the importance of small business to British Columbia and to the British Columbia economy. Job creation is a high priority of this government, and small business has been instrumental in creating new jobs in recent years and in stimulating the economic development of this province.

To sustain this momentum, the government is reducing the small business corporate income tax rate by one point, to 9 percent. This will benefit approximately 40,000 small businesses and will support additional job creation in this sector. I may say I think it sends a very positive signal to the small business community concerning recognition of that community's efforts in creating jobs and support for that community on the part of this government and, if the bill is supported by this Legislature, by the Legislature as a whole.

A two-year corporate income tax holiday is also being introduced for eligible new small businesses incorporated after April 30, 1996. The eligibility criteria will help ensure that new small businesses with real job creation potential can benefit from the tax holiday. Targeting the income tax holiday will complement the small business rate reduction and provide additional assistance to one of the strongest job creation engines in our economy. These two measures combined will reduce taxes for small business by approximately $29 million annually.

With that, hon. Speaker, I again move second reading of Bill 4.

F. Gingell: I'm really pleased that this government sees fit to reduce the corporate tax rate for small businesses from 10 percent to 9 percent. Let's think about that. It used to be 9 percent, didn't it? That's right. It was 9 percent for many, many years, and somebody put it up to 10 percent. Who was that? It was this bunch, the NDP government. One of the first things they did when they came into office was repeal this strange act the Socreds had put in called the Taxpayer Protection Act, and the first thing they did was raise the corporate tax rate on small business from 9 percent to 10 percent. They've finally seen the light and reduced it to 9 percent. Good on them. Well done.

An Hon. Member: They're a little slow, though.

F. Gingell: About four years slow, I think.

The second issue is that this government is starting to bring down the personal tax rate, and I'm pleased about that, too. I'm sorry they're not going to push it through the whole of our tax system. It is true, as they say, that low-income taxpayers in British Columbia pay the second-lowest tax rate. I think that's correct; I haven't got all the statistics here. I do know what is true, and that is that our highest earners pay the highest tax rate. You've really got to get up terribly high to get to the highest tax rate, but you can get there.

We believe in progressive tax rates, but we have to recognize that the most important thing in British Columbia is good, family-supporting jobs. We have to encourage job creation. Does this bill do that? Well, I'd like to suggest that tax rates on the high end don't produce a tremendous amount of money for the province but are a barrier to the creation of jobs in B.C. -- not the new, small startup businesses but the movement of large amounts of investment to B.C. that will create jobs. We've got a lot going for us here. We have a wonderful environment. We live in a wonderful part of the world.

We have a health care system that's not as good as it should be, but it's better than others in other parts of the North American continent. We have an education system which I think can be described in the same fashion. It's a pretty good place, and it's a wonderful location to ensure that you have access to the North American free trading area and to the Asian Pacific

[ Page 446 ]

Rim. So we really do need to take advantage of the advantages that we have, the pluses, and build on them. Does this bill do that?

There is a two-year tax holiday for new small business. I'd like to suggest to the minister that the issue of corporate capital tax, although I know it will not be applicable to these businesses because they will be under the exemptions. . . . The corporate capital tax has a way of spreading its evil tentacles throughout our economy. One of the expenses that small business finds most difficult to deal with is the cost of renting commercial and industrial space. Most of these rental agreements on such space are what we call triple-net leases. Corporate capital taxes feed into that triple-net lease exercise.

So you might think about further exemptions from the corporate capital tax where the cost of that tax is borne by these very new small businesses that you're trying to help.

I'd like to suggest to the minister that one of the other problems new small businesses have in getting started, and why they sometimes go to other parts of the world, like just south of the border into Whatcom County, is the volume of regulation, additional taxes and regulatory costs that small business in British Columbia has to bear. Besides this tax holiday, this government needs to look at regulation. What's the effect of the widening scope of Workers Compensation Board coverage and assessment? What effect have the recent changes that this government brought in to the Employment Standards Act had on the creation and encouragement of small business?

I'm not suggesting that they get wiped away. I'm just suggesting that when you bring in legislation, you should have clear ideas of how you will measure its success. In evaluating your programs, which the minister speaks of, it is perhaps time to evaluate some of these other issues that members on this side bring up as concerns to the creation of small business.

So there is a tax holiday. Now, the tax holiday is only going to apply to corporations. It's not going to apply to individuals. Those corporations either have to start their small business as a corporation or have the incorporation of the business within 90 days of its creation. I can appreciate the problem of administering a tax holiday that was pushed through to individuals. That would, I'm sure, create a lot of problems.

But, you know, I spent 25 years in public practice as a chartered accountant in a small firm, dealing with small businesses. They don't start off their business by incorporating. They start off their business as a proprietorship or a partnership. They don't have money to pay for lawyers for companies to be incorporated -- with due deference to my honourable friend. I know you now can go and buy a book for $50 to tell you how to incorporate your company.

Interjection.

F. Gingell: I'm not supposed to mention that, I guess. But that's not the way business is done. Businesses normally start as proprietorships and partnerships. They go along for a couple of years, and the business has grown, and they get to the point where they're suddenly bringing in employees and are concerned about liability that others may make them responsible for.

They come to the conclusion -- perhaps for tax purposes too, because they're starting to make some profits that are going to be reinvested back into the business -- that rather than have those profits, which they can't spend personally anyway, taxed at the highest of their personal tax rates, they will leave the funds in the company for reinvestment to pay corporate taxes.

But that usually happens sometime later, when the business is established. I would like to suggest that they should perhaps think of extending that period. You should perhaps think of trying to make this incentive real to the majority of cases, which will be proprietorships and partnerships rather than corporations.

Yes, we do need to help small business. Yes, we do need to do those things that will help create good family-supporting jobs in this province and good economic activity. The minister criticized me earlier for saying that if there are Hydro freezes, they should be determined not by this government but by the board of directors who you have appointed and given the responsibility for administering them. It's exactly the same way with the universities on tuition fees: you need to think about these things with a slightly wider vision. You need to think the whole thing through.

That will cause the government to think about the issue of regulation; it will cause them to think about the issue of surtax on high individuals. I don't think those will collect you a lot of revenue but they sure do you a lot of damage on economic development. You need to think about how corporate capital tax costs get spread through and do get borne by small business.

[4:30]

There are some issues that we wish to deal with relative to the information-sharing portions of this act -- which perhaps my friend understands a lot better than I do -- and the consequences of that. I hope the minister will give the suggestions and thoughts that I've had some consideration before this bill comes back to us for committee stage reading.

G. Plant: I listened with interest to the Minister of Finance introduce this bill in second reading and introduce it by reference to two basic purposes, the first of which was identified as the implementation of what he described as a modest tax reduction for personal income taxes, and the second of which was identified as a tax freeze or a tax holiday for small businesses.

These are purposes that I'm prepared to support, and I share almost all the views which have been expressed by my colleague the hon. member for Delta South, with the exception of his momentary lapse from good taste in insulting the members of the legal profession. However, there is buried within this bill a third -- and important -- provision which raises, in my view, a large question of principle: the question of privacy.

The provision in particular is

section 6. I want to say two things about

section 6 in a general way, by way of introduction to my comments. The first is that it did not play any

part in the introduction of this act by the minister. I think that's important, because what that means is that it doesn't really have any part to play in the implementation of the basic purposes of the act. The basic purpose of the act is to put forward and implement two tax freezes, neither of which, as far as I can tell, is in any way dependent upon the enactment of a provision related to information-sharing. What we have buried in this bill is, I think, a

section that doesn't have anything to do with the basic purposes of the bill, yet it compromises the ability of anyone who wants to support its other basic objectives but is nonetheless as concerned as I am by the privacy issues that are raised here.

What this

section does, as I read it, is allow the Minister of Finance, with the prior approval of the

Lieutenant-Governor-

[ Page 447 ]

in-Council, to enter into something called an information-sharing agreement with any government, or any official or agency of any government, anywhere in Canada or in North America, including all the public bodies that are defined as such in the Freedom of Information and Protection of Privacy Act.

An Hon. Member: Big Brother.

G. Plant: This is Big Brother, big-time.

What does the act call an information-sharing agreement? It seems to include almost any kind of agreement for the exchange of almost any kind of information which the government considers necessary for the administration of almost any statute -- either this act or any other statute in British Columbia -- in any province of Canada or in any state of the United States. It is an enormously broad-ranging power to make agreements for the sharing of information between the government of this province and almost anybody else in North America about almost any subject.

I, for one, acknowledge that it is necessary for the government to have information-sharing agreements entered into between a particular minister and another minister, or between a particular branch of one government and another branch. We saw an example of how this worked just last week, when we were looking at, debating and passing the B.C. family bonus. There were particular provisions in that

section designed to give it effect by allowing information-sharing agreements to be entered into between particular specified individuals.

I should say that in my view, that was the right approach -- that is, if information needs to be shared for a particular purpose, then in order to minimize the infringement of individual privacy rights, a statute should be created which specifies and limits the information-sharing that can take place. There may be a need for other information-sharing to take place in the government of B.C. We don't have an explanation from this minister in the introduction of this bill as to what that information is or why it's needed.

Neither do we have stated in the provision, or anywhere else in the act, any limitation on the kinds of agreements that can be entered into that ties those agreements to particular important, valuable, acknowledged legislative purposes. What we have is broad, open-ended, unrestricted power, and no apparent constraints on its exercise.

That gives me serious concern. I am concerned that the power that is conferred upon the minister, who has to do it with the approval of cabinet, is too broad in terms of both the breadth of information which can be subject to it and the lack of description of the open-ended, enormous and wide-ranging agencies with which the information can be shared.

There are ways of dealing with this short of requiring a complete repeal or rejecting the

section in its entirety. One is to clearly define the purposes for which information is required. If this is information which is required for the purpose of implementing the provisions of this bill, then let's say it, and let's have the

section worded in that way. There are, of course, other ways this problem can be dealt with. There could be oversight mechanisms put into statutory mechanisms like this that allow the freedom-of-information and protection-of-privacy commissioner to have an opportunity to review provisions like this before the agreements that are made pursuant to these provisions come into force.

I must say that I have an additional concern: to the best of my information and understanding, this

section was not referred to the information and privacy commissioner for any kind of comment or input prior to the introduction of this bill.

So we don't really have, at least in a public way -- and the information and privacy commissioner was not given an opportunity to provide any -- input into whether this provision strikes a balance, which I say can be struck, must be struck but is not struck, between the need to exchange information which does arise in the course of the business of government and, on the other hand, the fundamental and all-important right and need to protect the privacy of particular individuals.

I have a serious concern with the breadth and the scope of this provision, which is not just simply a technical drafting issue but an issue of principle.

G. Farrell-Collins: I too want to speak to this bill and echo many of the comments that were raised by the member for Richmond-Steveston, because as one reads through this piece of legislation, virtually all of it deals with the tax cuts. It deals with tax cuts for individuals, for small businesses, all of which we agree with.

Certainly the comments made by the member for Delta South that it was this government that raised the taxes in the first place and now expects the people of British Columbia -- the small business people, the individuals, the working families -- to get down on their hands and knees and bow low to the New Democrats for relieving some of the pressure on the tourniquet that has been around their neck for the last four years. . . .

While I applaud the government's attempt to release the tourniquet half a turn, I suggest that they shouldn't have turned it in the first place, and now that they've decided to head in that direction, they perhaps could unwind it a few full turns rather than partially.

Hon. Speaker, as you read through the bill -- page after page,

section after

section -- all of a sudden, on the last page,

section 6 just leaps out at you. It's completely unrelated to any of the information that's in the bill with regard to tax cuts. It's a

section that seems to have no relationship whatsoever to what's in this bill. I try not to be cynical, but each year that I spend in here it gets harder and harder.

There have been countless instances that I've seen over the last four and a half or five years that I've been here, where the government has brought in bills that they term as "housekeeping." If you dig hard enough, if you get the spade out and shovel through the stuff that's in the bill, eventually you hit a rock -- and there's the rock, buried somewhere deep down in the inside bowels of the legislation. This one was a little easier to find. It wasn't in the traditional three-inch type of miscellaneous statutes amendment acts we get. I suppose that my cynicism may well have borne itself out once again.

When one looks at this section. . . . I don't want to get into a detailed debate on the content of the

section itself but rather the intent of it. Why is it here? Where did it come from? How does it relate to this bill and the principle of the bill?

The bill talks about being an income tax amendment act, and it's specifically to deal with the items that have been raised as tax cuts. Why is it that the government needs to engage in an information-sharing agreement with every other jurisdiction in North America, as it relates to the income information that they have? I ask the question. I hope that when the minister speaks in closing the debate on second reading, he will explain that for us, because I'm curious as to why it's here and what it's intended to do.

The only thing that entered my mind that the government may want to bring this into effect for would be perhaps to seek out those individuals who refuse to pay their child support payments and family support payments. That's the only one I can think of. But if that were the case, why not have very restrictive wording in this bill? Why not have a separate

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[4:45]

Here's another example that maybe the minister hasn't thought of. What about those people in Whatcom County that love recruiting small businesses and businesses from British Columbia? Better than that, what about the people in the mining association in Alaska that just sent a mailout to all the people in the mining industry in British Columbia? That mailout said: "Come to Alaska. We've gutted our labour laws.

Come to Alaska and bring your money here; bring your investment to Alaska." All they have to do is make an information-sharing arrangement with the government agency in Alaska that deals with the mining sector, and then they know all the tax information they need to know about all those mining companies. That's just an example. There's no restriction on this. I can't fathom for a minute, other than the item that I gave as an example, why the government would choose to do that. If that was their goal, why not do it in a much different, more restrictive way?

Another thing that concerns me is that prior to the election, Mr. Gunton, the hired gun of the Premier, went to the Ministry of Finance and asked for tax-related information on corporations in British Columbia -- how much they paid in corporate capital tax. It was not general, not the whole figure, but how much individual corporations paid in corporate capital tax. That's a big difference. That's not a statistical piece of information -- how much money came in, how much money went out -- that he would normally be entitled to or that the Minister of Finance would be entitled to see.

This was a hired gun of the Premier -- somebody working for the Premier in the Ministry of Environment -- going to Treasury Board and Ministry of Finance staff and asking them for specific information on specific corporations about how much capital tax they paid.

Where did that information end up? Did it go into the top drawer of Mr. Gunton's desk and sit there quietly? No. It ended up in the day-to-day announcements of the Premier in the lead-up to, and during, the election campaign. Private corporate tax information is supposed to be sacrosanct. It's not supposed to be available to anybody other than those people who take the oath and occupy the Douglas Building, here in British Columbia, and it ends up first in the hands of the hired gun of the Premier and then spewing out the Premier's mouth at campaign announcements.

What else happened during the campaign? I seem to remember the Premier talking about the amount of money that top executives earned in British Columbia. Remember that? He was talking about the top executives in British Columbia earning this much money; it was part of one of their campaign announcements. I don't know where they got that information. Maybe the Minister of Finance can tell us where