1984 Legislative Session: 2nd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MARCH 6, 1984

Morning Sitting

[ Page

3637 ]

CONTENTS

Ministerial statement: Settlement of cutoff land claims. Hon. Mr. Smith 3637

Mr. Howard

Routine Proceedings

Committee of Supply: Ministry of Finances estimates. (Hon. Mr. Curtis)

On vote 27: minister's office –– 3638

Mr. Stupich

Mr. Howard

Ms. Sanford

Mr. R. Fraser

The House met at 10:04 a.m.

Prayers.

SETTLEMENT OF CUTOFF LAND CLAIMS

HON. MR. SMITH: Mr. Speaker, in my capacity as one of the

ministers charged with the responsibility to carry out negotiations

with our native people, I want to apprise the House today that the

transfer of 12,750 acres of provincial Crown land has taken place —

that is, a transfer to five British Columbia Indian bands in settlement

of the cutoff land claims.

This transfer culminates negotiations that began seven years ago,

first between federal and provincial governments and then with the

bands themselves. The settlements were announced late last year in

Vancouver, and it remained for the federal government to pass

legislation enabling these transfers to take place. That has been done

within the last week, and it is now the responsibility of our

government to effect the transfer of the lands within 30 days by

order-in-council. That is being done.

It is important, I think, that we look at the bands affected. The

Squamish band is the first band; it receives 115 acres valued at some

$75 million, including very valuable parkland on the North Shore and

land that approaches the Lions Gate Bridge. The Okanagan band receives

68 acres valued at $7 million; the Westbank band gets 62 acres valued

at $6 million; the Penticton band receives 12,335 acres valued at $12

million; and the Clinton band receives 170 acres valued at $350,000.

The total value of the lands being conveyed is estimated to be

approximately $100 million.

On the eve of negotiations which will be taking place in Ottawa Thursday and

Friday of this week between the first ministers of Canada and the native people,

it's important that the public understand the magnitude of land claim settlements.

While the settlements we're speaking about are the cutoff lands and are

very different from the comprehensive claims made by the native people to aboriginal

title, these claims I'm announcing today represent the largest specific

claim settlement in Canada. The previous largest settlement, which also took

place in British Columbia, was made in 1980 with the Fort Nelson Indian band,

and the House will remember that under that agreement the province paid the

Fort Nelson Indian band approximately $26 million — those payments to be made

from revenues derived from natural gas pools beneath the reserve lands owned

by the province. Those revenues are shared in futuro between the band and the

province. In the transfer of lands today, the cutoff settlements must be very

specifically separated from the comprehensive native land claims that are being

discussed in the ongoing discussions in the constitution. Cutoff claims are

specifically claims to parcels of land which were part of Indian reserves in

British Columbia. They were actually established reserves at the time of Confederation

from which some of the acreage was taken following dominion legislation passed

in the 1920s. That land was taken without the consent of the Indian bands, and

with only partial proceeds being received by the bands at that time. It is to

alleviate that grievance, and to return to the native people land or/and dollars

for that part which they did not receive from their cutoff lands, that these

settlements are dealing with.

In 1977 this government entered into a solemn commitment with the 22

bands involved to resolve the claims through negotiations. I say again,

Mr. Speaker, that they are not to be confused with the comprehensive

claims of the native bands which are advanced by bands right across

this country. In British Columbia almost all of the 194 Indian bands

have advanced comprehensive claims. These claims in some cases cover

all the lands in this province, including Vancouver Island and the

Queen Charlottes, and are asserted by native bands and associations who

maintain that as aboriginal people of Canada they have an interest in

the lands that has never been extinguished. This interest is usually

referred to as native title. Those claims touch every part of Canada.

This is one of the issues on the agenda at the first ministers'

conference in Ottawa. In this province 28 Indian bands or tribes have

filed comprehensive claims with the federal government. One of those is

under active negotiation, and that is the claims of the Nishga. There

is no doubt that these comprehensive claims are within the area of

exclusive federal responsibility. The province of British Columbia

participates in the active negotiation as an observer and is of course

interested in them, but comprehensive land claims are the

responsibility of the federal government under the constitution and

under the provision that it is within federal domain to deal with lands

and land reserves for Indians. The claims today are an important

commitment being kept with the native people to compensate them for the

lands that were taken without their consent many years ago in the

latter part of the previous century and in the early part of the

twentieth century.

Ever since Confederation, I might say, Mr. Speaker, every provincial

government, when in office, has taken the position that native title,

if it did exist in British Columbia, was extinguished by

pre-Confederation proclamations of the Governor and by ordinances of

the colonial Legislature respecting the use and disposition of land.

That has been the position that has been taken by the government of the

day as opposed to the opposition of the day; the government of the day

has always taken that position. If that position is ever to be altered,

it's important, I think, of course that the public understands that

land claims and giving accession to land settlement claims is a very

costly matter and a matter which involves millions and millions of

dollars that would have to be paid in this province and across the

dominion. But I think it's fair to say that we are proud that we were

able to fulfil our commitment in relation to the cutoff lands and to

effect the transfers today, and it's timely and appropriate that those

should happen on the eve of the first ministers' conference.

[10:15]

MR. HOWARD: Mr. Speaker, the resolution, or the groundwork, I

should say, in recent times for the resolution of the cutoff lands

question took place initially in the summer and fall of 1975 in this

building when the New Democratic Party was the government of the day

and sat down and reached an agreement with the native Indian people,

with representatives of the cutoff lands committee of the Union of B.C.

Indian Chiefs. That agreement was signed by representatives of the

cutoff lands committee of the Union of B.C. Indian Chiefs and by the

provincial government, and an announcement was made about it in this

House in 1975. So that's the commencement point in recent times of the

cutoff lands settlement process, which the Attorney-General has

referred to today.

[ Page 3638 ]

He mentioned that there needs to be drawn — and he did draw — a

distinction between the cutoff lands question and the land question in

general, but he also made reference, Mr. Speaker, to the decision in

1920 about this matter which was founded upon the report of the joint

federal-provincial McKenna-McBride royal commission. It's interesting

to note that that royal commission came about as a result of an

agreement between the federal government and the government of the

province of British Columbia to settle the overall land question —

that's what they were commissioned to look into. I think one must not

accept the contention of the Attorney-General that they are two

separate and distinct issues, because the cutoff-lands problem would

not have arisen had it not been for an attempt by those two levels of

government, around the time of the First World War, to settle the

question unilaterally. The matters are connected.

The more important of those two, of course, is the land question. I

don't think it appropriate that we should continue to hold out the

spectre of millions and billions of dollars as the sole criterion that

should be looked at in dealing with the land question itself. Native

Indian people, in talking about the land question and aboriginal

rights, and laying their claims, certainly look at the question of

money, but they also look at the question of their cultural

inheritance. They also look at the question of their way of life and at

an opportunity to have some domain over the lands that they originally

inhabited in order to preserve and enhance their culture and their way

of life. They are not looking exclusively at money, even though the

minister himself might be. If we put that to one side as not being the

sole thing that should be examined, we may have a better opportunity to

deal with the larger question.

As we've said before on many occasions, unless the provincial

government, this Legislature, becomes involved in the negotiating

process with the federal government and the native people about the

land question, the people of British Columbia are likely to be faced

someday with an agreement between the federal government and the native

Indian people that will impinge upon our sovereignty under the

constitution. We will then be in the position of having to react to an

agreement developed without our participation. I think it's absolutely

necessary that the provincial government become directly involved with

that particular set of negotiations.

The latter part of the minister's statement, I think, has to be

objected to. He says that successive provincial governments have held

firm to the position that if native title ever existed, it was

extinguished by pre-Confederation proclamations. I don't think that is

the case. The case held by one government is that because the

constitution of Canada gave and still does give the federal parliament

of Canada the exclusive jurisdiction over Indians and lands reserved

for the Indians, and because the federal government inherited the

treaty-making capacity of the Crown from the Crown in England, it was

the federal government's responsibility to be the initial negotiator

with respect to that land question.

That particular government, and I'm talking about the one that was

in existence from 1972 to 1975, did not take the position that the

Attorney-General outlines here. They took the position that I mentioned

earlier. I think it is wrong in principle, it's wrong in history and

it's wrong in morality for governments to continue to say that if

native title ever existed — implying that it might not ever have

existed — it was extinguished by some other process. The mere reference

to "if it ever did exist" flies in the face of history and is placing

an emphasis upon the domestic law of this nation as being supreme and

the paramount thing that prevails. It completely ignores native Indian

law and native Indian history. I submit to the government of the day

that if it wiped out of its mind that reference to "if native title

ever existed, " we'd be well on the way to having some amicable

solution to the problem.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

(continued)

On vote 27: minister's office, $185,567.

MR. STUPICH: Mr. Chairman, we had a good discussion yesterday

afternoon. It seems to me we got to the point where the minister said

that the saving in last year's expenditures would total much more than

the $35 million indicated by the figures to this point, but was unable

to tell us just how much the budget last year was reduced in

anticipation of the savings in expenditure that would be achieved. I

don't suppose he has any further information on that, but we'd

certainly welcome it.

This is a small point, and I think maybe the answer is in here

somewhere and I just haven't seen it. Yesterday I was commenting that

the budget gave us details of revised forecasts for estimates for the

year 1983-84 but that we did not have a revised forecast of

expenditures detailed. The minister drew my attention to table 1, but

table 1 doesn't give us the details at all; it simply gives us a total

figure. I'm not faulting that; I'm just saying I was expressing concern

about expenditure detail not being here. I've noticed that both the

revenue and the expenditure totals in table 1, page 20 of the budget,

are exactly $1.8 million higher than the figures in the 1983 budget. It

seems to me that I saw some reference to that, but I just can't

remember what it is. The revenue figure on page 1, estimate for 1983-84

of $6,843,800,000, was actually $6,842,000,000 in the budget last year.

The expenditure is the same thing; it was $8,445,000,000. Something has

happened to add $1.8 million to both figures. It's not terribly

significant. I have a feeling that I heard something about it, and I

just can't recall what it is. If the minister knows, I'd appreciate....

HON. MR. CURTIS: Mr. Chairman, at the moment I can't help the

member with that apparent contradiction, but I have officials available

to the committee and in the course of the morning.... He is speaking,

as I understand it, of the blue book to blue book, as reflected in

table 1 — he nods his head in agreement. He speaks of a slight

variation in estimated revenue and estimated expenditure, nothing to do

with revised forecasts. Therefore I assume it is not something that

would have appeared in a quarterly report where we revise as we go

through the year. If the assistant deputy minister, who is with me at

the moment, is not in a position to find that precise apparent

contradiction, I am sure that it will be sent up from my office, where

officials are standing by.

MR. STUPICH: Mr. Chairman, it is certainly no big deal, as

it's exactly the same amount on both sides. I'd like to know the answer

someday, but it doesn't matter at this point.

[ Page

3639 ]

I have some questions about the BCR. Yesterday the minister did

answer a question of mine, but not with respect to that. I would really

like to know where we are with respect to the guarantees that the

province has made regarding the Tumbler Ridge branch line. I am going

to quote from the latest British Columbia Railway statement, of

December 31, 1983 –– I note the financial statements, note 4, with

respect to the Tumbler Ridge branch line. "In 1981 the railway began

construction of the 130-km Tumbler Ridge branch railway to the

coalfields.... Since inception...the government...has granted" — I'm

skipping — "$2.7 million, purchased $45 million share capital, and

arranged the railway's interim financing to construct the branch line.

The government of the province of British Columbia intends to retire

the interim financing with equity capital financing." I take it from

that that the government has entered into an agreement with B.C. Rail

that the total capital cost of the Tumbler Ridge branch line will be

met by additional equity contributed to B.C. Rail by the government.

The note goes on: "Until such time as the interim financing is fully

retired, the province intends to annually subscribe for equity capital

equivalent to the amount of interest capitalized and to provide annual

grants equivalent to the amount of interest charged to operations."

That apparently was the agreement as at December 31, 1982 –– I think

that would have had some influence on the lenders, and this money has

been available to BCR at one-half of one point less than the prime bank

lending rate. With the government guaranteeing to meet all the payments

— not simply guaranteeing that the railway will but actually

guaranteeing that the government will put equity capital into the

company sufficient to meet these principal payments, and interest to

the extent that it's capitalized — and will further grant to the

railway enough to make up the interest, I wonder whether those

agreements are still in effect, and I wonder why there's no provision

in the 1984-85 budget for any of this money to be turned over to BCR.

HON. MR. CURTIS: I don't have at my desk at the moment the

financial statement to which the member refers; I know it's readily

available. If I understand the member for Nanaimo's point, we now have

some short-term financing in place for BCR, and it is expected that at

an appropriate time — and this week isn't an appropriate time when one

considers the condition of the long-term bond market — we will replace

that short-term financing with another instrument of another nature. I

can't forecast just what or when that will be, but it's a project for

the course of 1984.

[10:30]

MR. STUPICH: This is not a question of government policy right now.

These statements have been audited by an international firm of chartered accountants,

Peat, Marwick and Mitchell. In preparing that note they presumably had access

to documents which proved that the government intended to invest in share capital

or contributed capital to the extent of the total cost of the Tumbler Ridge

branch line, plus interest on any interim financing to the extent that it would

be capitalized, and that the government intended further to make grants — not

loans, financing or anything else — sufficient to cover the interest portion

of any financing with respect to the Tumbler Ridge branch line to the extent

that it was being expensed. Again, if the minister wants to come back later

with that, okay, but the way I see it right now, the minister made it very clear

in the budget speech that the $470 million being given to the BCR — it's

not a loan, a refund or anything; it's a gift — was to be used specifically

for retiring old debt and had no connection at all with the Tumbler Ridge branch

line. As I read the latest financial statement available, there is an agreement

in force which obliges the government to contribute equity capital in excess

of $500 million — I don't know how much interest will be capitalized — at

some time and, further, to continue making annual grants to cover the interest

costs.

HON. MR. CURTIS: The question of the $470 million, which is

the subject of legislation before the House, has been canvassed in the

course of the budget debate and elsewhere. The $470 million — without

offending the rules of the House or the committee — is, as I have

indicated before, for the so-called historic debt. Enough said about

that.

The question of the Tumbler Ridge line is that the government

expects that BCR is going to be required to meet all the financing

costs of the Tumbler Ridge line by some mechanism such as I described

just a few moments ago, and in the most appropriate way that the

government and the board of directors of B.C. Rail consider at some

time in the future. So I'm not ducking behind future government policy

in attempting to assist the member of the committee; I'm indicating

clearly, as I understand — to paraphrase what the member said — that

the firm which reviewed the accounts of B.C. Railway is aware that the

government has some particular action in mind with respect to the

Tumbler Ridge branch line. It is not related to the historic debt

matter which has been discussed and undoubtedly will be discussed when

that bill is called.

MR. STUPICH: Mr. Chairman, I'll just say this once more, and

I'll leave it for now. I may get an opportunity in a later vote or

something. As I read that note, the firm of chartered accountants that

audited the financial statements is very clear in its mind as to

exactly what is the government commitment, and it is indeed that the

government will buy shares or inject contributed capital — and we're

talking now of something in excess of $600 million by the time we look

after all the interest charges. There was no question in the minds of

the auditors at the date they audited those financial statements. I

think it would be very poor policy for the government to suddenly

decide on its own that this was going to be changed, having achieved

quite a good interest rate on behalf of the BCR. I'll leave it at that

for now and come back with something else.

HON. MR. CURTIS: If I may call on an attendant, I will return

a document — which I had seen before, incidentally, but I didn't have

readily available.

Mr. Chairman, earlier on this morning the member inquired with

respect to the difference in estimates. I indicated that an answer

would be forthcoming about a $1.8 million difference in the 1983-84

estimates. Sometimes you get a little too close to these things. There

was an increase in the Tourism budget due to the sale of Beautiful B.C. magazine and an increase in revenues to offset the sale of Beautiful B.C. ,

and I would refer the committee to page 230 of the 1984-85 estimates

dealing with the Ministry of Tourism. The heading of that page is

"Special Office and Ministry Reconciliations –– 1983-84" — Ministry of

Tourism, total voted expenditure, transfers and so on. At the bottom,

the last item

[ Page 3640 ]

there is "transfer of Beautiful B.C.

magazine recoveries from voted expenditure to consolidated revenue,

$1.8 million." I trust that is what the member was speaking of.

MR. STUPICH: I'm impressed with your staff for finding it so quickly.

HON. MR. CURTIS: I'm impressed with my staff too, Mr. Chairman, and thank them for the speed with which they provided that.

MR. HOWARD: Mr. Chairman, I don't know how many people I've

spoken with over the years — and I'm sure all other hon. members have

from time to time — who proclaim that they don't understand budgetary

matters; that is, at the level of government. They may understand their

own household budgets, but when it comes to governments, the

complexities are either too much for them to grasp or they are, in

fact, too complex, and the person does not have the time to spend

trying to wade through the documentation that relates to budgetary

matters. The mere fact that on budget day the minister presents to the

House not just a speech but a series of books relating to the coming

fiscal year and the previous fiscal year, and projections and the like,

adds to the inability of the average citizen to grasp what's taking

place. There's a sort of mystique involved in the whole process, and a

sleight of hand as well — not a sleight of hand in an unkind sense, but

a sleight of hand that seems to say one thing when in fact something

else may really be intended. The discussion just a moment ago, for

example, with respect to the auditors and equity financing of B.C.

Rail, what the auditors felt and what the government feels and so on,

is an example of how the central issue in any specific way can become

so clouded and so confused that it becomes virtually impossible to

grasp the full force of it.

Relating this as a problem that we face, in the sense of the

relationship of government and this Legislature to the general populace

— because it is, as has been said so many, many times in the past, and

with such emphasis and such declaration, depending on the intensity

with which one feels about this matter at any given time, that we are

dealing with the public's money.... To comprehend what is involved in a

million or a billion or, in the instance of this budget, roughly seven

and one-half billion dollars, becomes virtually incomprehensible to the

average Joe — to the average family. A million dollars is far beyond

their ken or understanding. They can understand $100,000 or $75,000.

They can relate that and say: "This is my house. I bought this for

$75,000, and I'm paying so much a month." They can see that kind of

physical asset. But to get much beyond that, unless one is.... The

average citizen is just not able to comprehend what that's all about. I

think that by talking in budgetary terms and dollars of that magnitude,

we add to the incomprehensibility. We don't do proper service to that

relationship between the citizens and the government, the Legislature

of the citizens. People who work for a salary or wages and have income

tax and other contributions — Canada pension and the like — deducted at

source lose track of that money. They don't actually see it. They don't

sit down and write out a cheque and say: "I am sending my $500 to the

government. I see it in my chequebook." They don't have that connection

with it. So they're lost in even being able to visualize what is

happening with the deductions. They just see some figures at the end of

the month or on payday, and so on.

I think government adds to this. It used to be that if you went to

the liquor store and bought a bottle of something — whisky, wine or

whatever — the cash register person rang up the price of whatever it

was you bought and added the sales tax on top of it. You could see that

some of the money you were paying for that purchase related to the

social security or sales tax. But not any longer. It's all encompassed

within the total overall price and thereby virtually becomes a hidden

tax. It's hidden from direct view, even at the retail level. It becomes

similar to the federal hidden taxes — excise taxes, customs tariff

impositions and so on — that are incorporated into the price of the

commodity or the price of the object.

A whole series of things that have been going on deny the average

person in the general public a fuller opportunity to understand what

this budgetary system is all about. Citizens are not a real part of the

process. For argument's sake, I'll give you the example of debt. The

minister introduced a bill the other day to increase the borrowing

capacity of B.C. Hydro — and I'm not discussing legislation, I'm just

using that as an example. He and other ministers have done it on other

occasions. It's a standard thing. That's all I'm saying, Mr. Chairman,

lest you feel that I'm about to debate a bill that is coming up for

consideration at a later stage; I'm not. I'm just using this as an

example that that borrowing capacity of Crown corporations, or indeed

of the government itself, is encompassed within a piece of legislation.

The general public has no involvement or opportunity to say: "Yes, I

think that's a good idea. What do you want the money for?" There's no

explanation to them, except de facto that they need the money, and at

an appropriate time — and on a very short-term basis, depending on what

the Legislature is doing — an explanation in the House that might or

might not get out to the general public.

We have involved here — and this is what I'm trying to discuss with

the minister and with the House — an aspect of democracy that really

doesn't serve democracy. We have the feeling.... We have the principal

question involved that once an election takes place and a government is

chosen and takes office, it then says: "We are supreme to do whatever

we feel like doing, whatever we consider appropriate to do, between now

and the next time the general public has this opportunity to vote,

without any further reference to the public." There is the supremacy of

the Legislature in a lawmaking sense, but it is stymied by virtue of

the rigidity that exists in the party lines. It doesn't have the

opportunity because the opportunity, the atmosphere, is not there to

respond to it — the opportunity to put forward a case in anticipation

that that case will be examined on its merits, and not on the basis of

the source from which it comes. So democracy is involved in this budget

process, too, in dealing with the general public.

I submit that a budget is not the exclusive preserve of the

accountants and the bookkeepers and others in the Ministry of Finance

or of the person who is the Minister of Finance; it's in the domain of

the people of the people of the province. While we may give lip-service

to the idea of accountability, we don't in fact do it. If there is a

method of getting to that in the budgetary process, I think we would be

able to serve this province an awful lot better than we have been able

to in the past.

[ Page

3641 ]

[10:45]

Let me give one instance of sleight-of-hand in a way that, on

another occasion, I have dealt with with a little more vigour than I

intend to do now. The minister will know what I'm talking about once I

get on to the subject matter. When the first budget was introduced by

Mr. Wolfe, he forecast that there would be a debt of $261 million. That

was in 1976. He spent a great deal of time and the government spent a

great deal of effort and publicity declaring about that debt and what a

terrible and heinous thing it was to have to be faced with the prospect

of borrowing $261,447,790. That declaration was made in the spring of

1976. Argument has been put forward very eloquently, and with the

substantiation and documentation necessary to prove the case, by the

member for Nanaimo (Mr. Stupich) on many, many occasions, to indicate

that that figure was an imaginative figure and was developed for a

particular political purpose.

What I want to get to is how the matter was approached subsequent to

that. Some months after that declaration was made — June 22, 1976, as a

matter of fact — the government borrowed the first instalment of the

$261 million fictitious debt. It borrowed $50 million. Three months

later, in September, it borrowed another $50 million. This was six

months after it had said we were going to have this debt — created in

the preceding fiscal year, incidentally. In November they borrowed

another $50 million and in February 1977 — roughly speaking, about a

year after — they borrowed $100 million. On March 15, 1977 –– 15 days

before the end of the fiscal year — the government departed from its

round-figure borrowing and borrowed $11,447,790, the exact amount

required to satisfy the declaration in the budget for that fiscal year

that there was to be a debt.

Why do you have to go through the process of borrowing precisely to

the cent? Simply to keep alive the fiction. I don't have the precise

figures in front of me, but when the end of that fiscal year came,

which was 16 days after March 15, 1977, the government then boasted at

the end of that fiscal year that they had a surplus of something like

$70 million or $90 million. The figure $76 million comes to mind. That

may not be the accurate one. But the government said: "We had a

surplus. We did so well that we had a surplus of some $70 million." If

that were the case, why was it necessary 15 days earlier to borrow

$11,447,790? I submit it was purely and simply to serve the fiction

that such a debt and deficit existed in the first place. That's almost

ancient history and may not be exactly appropriate to the minister's

administration at this particular time except to the extent that a

great portion of that debt still exists. That debt was carried from

year to year over a period of two or three years without any attempt

being made whatever to reduce the capital of it. In fact it was rolled

over a higher interest rate, thereby costing the general public a great

deal of money.

I am told that on that debt of 1976 we still owe the great portion of it —

probably over $200 million because it's been rolled over and not paid off

and that we have paid something in the neighbourhood of $170 million in interest

on a fictitiously created debt in the first place. That doesn't serve the

interest of the general public. It may serve the interest of politics, which

is a separate question. But it would seem to me that faced as we are with some

fiscal difficulties, from what we can glean from budget matters, we should attempt

to level with the general public more than has been the case until now. There

is never any explanation given to the general public about why it was felt necessary,

15 or 16 days before there was about a $70 million surplus, to borrow the exact

amount of money — $11,447,790 — to balance exactly with the amount projected

to be the deficit in that fiscal year.

Yes, there is a mystique; yes, there is sleight of hand that takes

place; and yes, unfortunately, consciously or otherwise — I would hope

otherwise — there isn't much recognition given to the fact of life that

the average citizen does not have a full comprehension of what's

involved in budget matters. The average citizen realizes from the

publicity that was given to it that maybe $470 million has gone from

general revenue to B.C. Rail. He doesn't understand or appreciate the

difference between debt and equity, or that a commitment was made a few

years ago, or that the capitalization of B.C. Rail was altered by this

Legislature to give it the opportunity to issue additional shares,

preferred or common. He doesn't understand that or maybe doesn't

understand what equity money is. He only knows that $470 million has

gone from his pocket over to B.C. Rail, and the B.C. government — he,

the taxpayer — now has, or is going to have, the debt.

What I am trying to say to the minister is that we need a little bit

more open declaration about what we're doing here. I think we also need

to look at the question of the federal deficit and what's entailed in

that, and the fact that this government, on one occasion that I know

of, urged the federal government to re-engage in a practice which would

add, if not to the federal deficit, at least to the lessening or

diminution of tax flow — cash tax flow from the taxpayer to the federal

government — because of its advocacy of tax-writeoff situations. I

refer to MURBs. We have probably far too many tax-writeoff schemes at

the federal government level. The result of those tax-writeoff

schemes....MURB is just one of them; films is another that was a disaster.

HON. MR. CURTIS: So were the films.

MR. HOWARD: I saw one of them. I had the occasion to visit

some people in Terrace a few weeks ago over a weekend to have dinner,

and they showed one of those films on cable or pay TV — whatever it was

— and it was a disaster. The film wasn't worth watching. But in any

event, they are tax disasters. Research and development is a disaster.

What occurs with these tax writeoffs, as the minister knows — and it

may he worth putting it on record — is that a company, corporation,

firm or group of people in the business develop a limited partnership

structure, and they sell units of this just as you sell bonds or

stocks. They say to investors: "You put your money in this particular

venture" — let's call it a MURB, a multiple-unit residential building —

"and you will own a certain percentage of this apartment block,

depending upon how many units are sold. You pay a certain amount of

money this year, a certain amount next year and so much the next year."

Usually the total amount is spread over a four- or five-year period. It

might be $10,000 to $20,000, depending on the project.

[Mr. Pelton in the chair.]

Part of the sales pitch also is the tax writeoff. The advantage to

the investor only reaches its ultimate if that investor is in,

approximately, a 50 percent tax bracket. If the investor is in a lesser

tax bracket, then the full tax advantage doesn't accrue to him, but

what does occur is that the individual investor can acquire a portion

of an apartment building. As a

[ Page 3642 ]

partner, along with others, in the ownership of

that apartment building, he can acquire, by putting up perhaps $15,000

over a year, a capital asset worth maybe $100,000 and not use a penny

of his own money, Mr. Chairman — not a single solitary cent in the

final analysis. The MURBs basically were structured in such a way that

the initial development costs — or soft costs, as they were called —

plus the capital cost allowance in subsequent years were such that the

investor may put in $15,000 over a period of time, but over that same

period of time would get that back on tax write-offs. In other words,

if he didn't have the MURB, he'd have to pay the money in income tax to

the federal government. Naturally, he put the money into the MURB —

just talking about it as an example.

In addition to that, Mr. Chairman, in some MURBs that I know about —

if the mortgage is, say, five years or even ten years — it's possible

on the rewriting of the mortgage for the person to take borrowed cash

out of that project and pay no tax on it whatever. It's free money,

because that extra money, by federal tax law, is considered to be an

obligation because it represents a portion of the remortgaged amount at

a higher rate and because it's considered to be a debt. Incidentally,

in many instances because of federal decisions — Revenue Canada

decisions — while the mortgage may exist and while the person, in

theory, as the investor, may have one one-hundredth of a building and

therefore you would assume he has one one-hundredth of the mortgage, in

fact he has no obligation for the mortgage whatever; that was

eliminated some six or eight years ago.

[11:00]

We get dozens of these things across Canada. The result is a

shortfall in tax money for the federal government; the result is. a

shortfall in tax money to the provincial government.

Interjection.

MR. HOWARD: Well, up until now it's been a variable amount,

but for the last few taxation years it's been 44 percent of the basic

federal tax which accrues to the provincial government. If the basic

federal tax is reduced by a tax write-off scheme, then obviously we get

44 percent of a lesser amount of money. We're in a deficit position

because of that, and yet there is encouragement given to the idea of

tax shelters for write-off purposes. Look at the newspapers before the

end of the calendar year. They are replete with advertisements. Even a

former member of this House, Gordon Gibson, is involved with somebody

in a tax write-off. That's fine; he's in that business. But what I'm

talking about is an exploitation for investment purposes of something

which has a negative effect upon the tax flow of money into the coffers

of the federal and the provincial governments.

One can argue that it's necessary to put these carrots out there.

Otherwise people wouldn't invest their money in those kinds of things

and we wouldn't employ people; we wouldn't build apartment buildings;

we wouldn't have research and development; we wouldn't make films or

whatever else it is we couldn't do; or we wouldn't save Western Forest

Products, because that's involved in a tax-shelter investment program.

That's the kind of situation — I read it very quickly — where you can

put in $100 and write off $166, which is what Dome Petroleum did in the

Beaufort Sea for a long, long period of time, the result being that the

federal taxpayers basically put in the money for drilling in the

Beaufort Sea.

What we need to have — we haven't had and we don't have — if not at

the federal level, if there is an inability or a reluctance to do it

there, is a study and a commission of inquiry into the affairs in this

province to see the extent to which we the taxpayers of British

Columbia and we the Legislature and the government of the province of

British Columbia lose because of some of these fancy tax-shelter

schemes put into effect by the federal government. We need to have that

kind of examination, I submit; we need to put together some paper and

some documentation to show how we have suffered by that process. I'll

bet you that we would find that if that didn't exist at the federal

level — you can argue it's good for investment or it's good for jobs —

we wouldn't be a billion or two billion dollars in debt or whatever it

is; we might have had an additional cash flow there. So I put that

forward as a proposition to the minister; I say to him that while the

advertising and the publicity declarations about the value of tax

shelters may sound fine in the advertising sense, there is a negative

side to it as well, and that is that the tax money doesn't come into

the provincial government's coffers as might otherwise be the case if

it weren't for situations such as that. Maybe the minister has

something in those hundreds of documents that he tabled with his

budget. It is a very serious question that I think needs to be examined

before it gets even more helter-skelter and runaway.

Just look at the film industry and the fact that we went into tax

shelters for films. Those people — and this was also part of the sales

pitch of those who had put together film tax shelters — hoped the film

would be a bust and lose money.

MR. R. FRASER: How ridiculous!

MR. HOWARD: Is he saying that I'm kidding? Oh, he says it's ridiculous.

If those films started to generate income for the people who put

money into them, they'd be paying tax; if it was a complete loss, they

could project and carry forward additional tax writeoffs against other

income into the future. Revenue Canada subsequently plugged that

loophole.

Interjections.

MR. CHAIRMAN: Order, please, hon. members.

MR. HOWARD: Unlike some of the chatterers on the other side

of the House, Mr. Chairman, I don't have a vested interest in these

things. I am able to talk about it with some aloofness.

Interjections.

MR. CHAIRMAN: Order, please, hon. members.

MR. HOWARD: I should say to you, Mr. Chairman, that no matter

how much that member down at the end of the line here wants to

interrupt me, he will get no response from me whatever. I believe it is

beneath the dignity of members of this House to respond to that

honourable gentleman.

I think it would be well worthwhile, and I urge the Minister of

Finance, because of the availability to abuse tax shelters, because

abuses were made of the tax shelter system — and maybe still are — and

because of the loss of revenue that accrues to us, and, incidentally,

to every other province in Canada, to have an examination into these

abuses to

[ Page

3643 ]

indicate our loss position, and that of the federal

government, with respect to tax shelters, many of which don't create

any employment whatever. All I'm asking the minister to do is to look

at those things and do something of that nature.

HON. MR. CURTIS: Mr. Chairman, I'd like to respond at some

length in the same chronological order as the member for Skeena

developed his themes. If I miss any, perhaps he or any other member in

committee may remind me.

At the outset let me say that I disagree with the last conclusions

the member came to with respect to the reason for some individuals

entering into a tax shelter situation, but I will speak of that later.

The member started by speaking about the budgetary process in

government, whether it's provincial, federal or municipal. I hope I do

not raise yet another issue. I've been in the budget-making process in

the public sector since I was a freshman alderman in 1962 in the

municipality of Saanich. The only years when I was not directly

involved in the process of making a budget were the three years of

1972-75, when I first served in this House and participated in the

criticism of the budget. Whether it is as a completely green alderman

or hopefully a somewhat more experienced member of the government, so

far as I'm concerned there has always been a need to ensure that the

person whose budget is being made — i.e., the taxpayer — has as much

information afforded to him or her as possible.

The member then spoke about 1976, and he used the phrase "almost

ancient history." I think I would be tempted to enter into yet another

debate on the budget of the 1976-77 fiscal year, but I have some

difficulty relating that to the administrative actions of the Minister

of Finance in the year of Our Lord 1984. But, okay, he did speak of

that.

With respect to the mystique of the budget, let me just say that I

have the impression that it might be easy for some of us in this

chamber to at times underestimate the intelligence of the individual

citizen whom we represent in terms of what goes into a budget, what is

required and what is expended, where the money comes from and where the

money goes. Certainly in the course of the few budgets that I've had

the honour to present here, much of the mail — not necessarily from

someone with a degree after his or her name — indicates a very clear

understanding of what is required by a province such as British

Columbia in terms of its revenues and how that money is expended.

Also, admittedly, at the same time there will be those who disagree

violently with the way the money is taken in and expended, but that is

the democratic process. I suppose it bears repeating that having

introduced it in 1976, we continue to issue quarterly reports, and

these attract considerable attention around the province as well as

outside of the province. These are reports on every three-month fiscal

period in order that people do not have to wait until virtually the end

of the fiscal year or after for a clear understanding of where the

money has come from and gone and how much has been involved in the

total transaction.

I think the members of this Legislature — I'm not lecturing members here;

I'm simply stating what I believe to be perceived as the case by all members

— have a responsibility to inform and interpret each year's budget for our

constituents, and I would think that almost without exception we do that. We

apply our own particular views of the strengths or shortcomings of the budget,

depending on where we sit in the House. It is our responsibility to continue

to do that. It's the responsibility of the news media to inform and interpret

the budget and matters which flow from it; some do that exceedingly well and

some do not, and again we would place our own

interpretation on the skill, or

lack of it perhaps, which is attendant in that. That's not an attack on

the media; that's simply indicating that I think they also understand that

they have a responsibility.

This year, for the first time — and as an experiment which I think

worked out very well — I invited members of the taxation committee,

representing essentially the accountancy and legal professions, to

enter into a budget lockup on budget morning in order that they would

have a clearer understanding of the underlying themes of the budget, as

well as the actual numbers, and could transmit that information to

their associates as soon as possible after the commencement of the

delivery of the speech in this chamber. On the basis of the response

that I've had in that particular action, I think I would entertain vet

another budget lockup for another group of British Columbians if such a

group identified itself and indicated a willingness to enter into that

procedure. There's a physical limit to how many groups can be locked up

during budget morning and early budget afternoon, but it seems to have

worked very well. We've traditionally had a budget lockup for the

press, radio and television; that will continue. We tried something a

little different this year; it seems to have worked very well and

indeed may merit expansion in years to come on the basis of how groups

feel about it.

[11:15]

We have tried for improvement in accountability through the few

years that I've held this portfolio. It's perhaps worth restating in

the debate of these estimates that we also have technical briefings

offered by individuals in the Ministry of Finance, almost on demand,

whether for representatives of the press, particular groups in the

province or, indeed, if it is wished, even for members of this chamber.

This is the kind of technical briefing that would assist them to better

understand certain aspects of the budget process. When I say almost on

demand, it is literally that. In the event that a group sought, wished

and then indicated the desire to have a briefing, such would be

arranged. That might be a special interest group — i.e. the Union of

British Columbia Municipalities, the B.C. School Trustees' Association,

the B.C. Teachers' Federation, or a group of interested professionals.

That sort of thing has occurred over a good number of years and I have

absolutely no reason not to encourage that process to continue and to

be expanded, up to the extent that it does not really start to

interfere with the duties assigned to the officials in the Ministry of

Finance who would conduct the briefing. But that is a fact. Certainly I

think it's well worth reflecting on in the context of what the member

for Skeena said.

In the structure of the estimates, yes, we have our debates back and

forth across this chamber, but we see over a good number of years, I

believe, an earnest and very straightforward attempt to improve the

structure of the estimates. Certainly, Mr. Chairman, for as long as

I've had the job we have wanted to provide more information, not less,

to the members of this assembly, as well as to the people who pay the

bills, and whenever one wishes to suggest ways in which the estimates

process and structure can be further improved, I would welcome those

suggestions. But I'm satisfied also that I do not need, as minister, to

instruct my officials to improve the system. Indeed, they have taken

the initiative, and I support them in that initiative to make the

estimates more

[ Page 3644 ]

complete, more detailed and therefore more informative for the interested reader.

The 1976-77 deficit: as I say, the member raised it and categorized

it as almost ancient history. But I think I am obliged to point out

that the key step, the bond issue to finance the 1975-76 deficit, was

taken on May 1, 1978, when the province issued a 10-year $261 million

bond at 9 1/8 percent to consolidate the instruments which had been in

place from 1976 onward. So May 1, 1978 was the date; it is repayable in

annual instalments. For the member's information, and for the

information of the committee, the unmatured debt on this particular

bond as at December 31, 1983, was $130.9 million, a number that is

somewhat lower, as I recall, than the member indicated when he was

developing that part of his remarks.

He then moved to the question of the federal deficit. It is a matter

of record that at federal-provincial meetings earlier on in my time in

this House, particularly when I was Minister of Municipal Affairs and

Housing, I advocated the establishment of a firm and continuing policy

regarding so-called tax shelters for housing construction. The big

problem, it seemed to me at that time.... Well, first of all, the

reason for that advocacy was that there was a very serious shortage of

housing — rental housing in particular — not only in British Columbia,

but particularly in British Columbia. As I recall, it was less — and I

think one would simply reflect on the fact that it was less — in some

other provinces. It was particularly tight in B.C. and Alberta, and in

one or two other provinces. So I advocated that.

But the focus of my comments at those federal-provincial meetings at

that time was that we had this great rush toward the end of each

taxation year — not fiscal year, but each calendar year — because the

federal government for several years at least — and other members of

the committee may recall — would not indicate until the last several

weeks of the year that the program would be extended. For perhaps three

years I recall saying: "Would you please give us some predictability?"

We had that tremendous rush. The federal government never really came

to grips with that single problem. Activity with respect to the

construction of housing which would be capable of receiving a tax

shelter would sort of putter along in a happy way for much of the year,

and then came that feverish rush, almost a gold-rush of activity, in

October and November. Usually about the end of November or early

December there would be an announcement that the program would be

extended. The inconsistency and lack of predictability was perhaps more

serious than any other aspect of it.

I think some so-called tax shelters have a reasonable part to play

in the total structure of what we do as individuals in this country,

but those must be very carefully vetted. I interjected when the member

was speaking about the films, and I regret that I interjected. He said

that the tax shelter in the film industry was a disaster; I interjected

that some of the films were a disaster, but that's a generalization.

Some of the films produced in that particular way are a credit to the

film industry in Canada. My interjection was off-the-cuff and certainly

unseemly, and I withdraw that. There may have been some disasters, but

not all of them. So whether it's for R&D, housing or exploration in

the northern part of the country, there is a role to play in the total

structure of what individuals do in our country. Again, predictability

is important. If a particular mechanism is established, it should be

very carefully thought out before it is announced, and then it should

stay in place.

The member called for a review of its impact on provincial revenues

in the province of B.C. I would refer him to the material that was

produced a couple of years ago — I think it was 1982; certainly in

recent time — in terms of tax expenditures, forgone tax revenues within

B.C., which dealt with that kind of thing. It's a matter of public

record, and it was released. It was issued. If the member is suggesting

that a study of revenue forgone through personal and corporate income

taxes should lead to specific action — i.e. a separate tax system; he

didn't say that, but one might take that as a logical conclusion of a

study with regard to the impact of forgone revenues — then it follows

that we would have to examine a separate tax system. I have spoken of

that before, as have others. We have separate tax systems in whole or

in

part in other provinces. We would have to give three years' notice.

I have mixed views. Certainly it's the sort of thing that I

discussed at length in the consultative meetings held late in 1983 and

into January of 1984 as to the merits, or lack of merit, of having our

own separate income tax system. I've reached no conclusion. I've

carried no recommendation, even in the most general form, to the

executive council. I don't know when I would reach a conclusion. On the

basis of analyzing the pluses and minuses, certainly I would be

reluctant to consider a completely separate tax system within the

province of British Columbia, but that could be one of the unavoidable

outcomes of the kind of review which the member has suggested. I do

commend to the committee a review of the tax expenditure tables that

were produced I think two years ago.

MS. SANFORD: Mr. Chairman, I want to pose a couple of

questions to the Minister of Finance based on what is happening to

people across the country and here in British Columbia. We've had some

figures recently which indicate that according to Statistics Canada

there were 3.5 million people in this country who were living in

poverty in 1981. In 1982 there were 4.1 million — a significant

increase. The estimate for 1983 — the figures are not quite compiled

yet — was 4.4 million.

What's happening here is that the biggest impact in those poverty

areas relates to families where there is a single parent trying to

raise children. Statistics Canada tells us that in 1982 the poverty

rate jumped in that category by 8 percent in Canada. Half of the

single-parent families with children live in poverty in Canada. Of

course, the percentage of mother led families is rising in this

country, so I assume that increase will continue to occur. But another

statistic that I would like to bring to the attention of the minister

is that in the spring of 1982, 95 percent of the people in Canada who

were unemployed were able to receive UIC benefits. But by the fall of

1983 that figure had dropped. Only 75 percent of those people who were

unemployed were able to collect UIC benefits, because others had run

out.

[11:30]

I'm very concerned about what appears to be a trend in Canada with

respect to poverty. I'm particularly concerned about what's happening

here in British Columbia based on the fact that we've had a number of

programs cancelled. We know, for instance, that there are lineups at

the food banks and that the food banks that are trying to provide food

for

[ Page

3645 ]

those people can't even obtain that basic

necessity. We know there are lineups at soup kitchens. We know that

there is difficulty out in the community raising money in order to keep

people fed. I'm wondering what sort of research the Ministry of Finance

has undertaken with respect to the impact of the measures that they are

adopting here through the Ministry of Finance. Are you people taking

any interest at all, through research, to determine the impact on those

people who can least afford the various cuts and the various increases

in taxes and user fees?

I would assume that no government in its right mind would want to

penalize those people in the lowest income levels any more than they

have to. In fact, any government would attempt to assist those people.

What research has the Minister of Finance or his ministry carried out

with respect to the application of the taxes and the user fees that are

applied in this province on those people in the very lowest income

levels — that is, those who are at the poverty level according to the

definition issued by Statistics Canada? What about the impact? Has any

research been done by the ministry on the impact of the lack of

increase in moneys made available through the Ministry of Human

Resources to those who are in greatest need? What impact has the fact

that there has been no increase over the years in Human Resources

benefits to those people who are at the very lowest end of the scale

had? Of course, we have heard, either through the Minister of Finance

or the cabinet all together or the Premier's decree or the decree of

the Minister of Human Resources (Hon. Mrs. McCarthy), that not only

will there be no increases but there are going to be cuts in categories

of those who are receiving Human Resources assistance. What about the

impact of the removal of rent control on those people who are at the

very lowest end of the scale?

There are a lot of people who live at the poverty line who are not

necessarily recipients of Human Resources assistance at this stage.

What about the impact of hospital fees and medicare premiums? What kind

of research, I'm asking, Mr. Chairman, has this government carried out

on the impact of its financial policies on those people who live below

the poverty line? We are told by Stats Canada that in 1983 it's likely

to be around 4 million or 4.5 million people.

HON. MR. CURTIS: Mr. Chairman, this is a matter which I want

to draw to the Chair's attention. It probably might be considered

difficult for the Minister of Finance to respond to — not in terms of

the issue of poverty or those who live at or below the poverty line....

The member for Comox has asked a number of specific questions regarding

the impact of certain measures taken in certain ministries.

MS. SANFORD: All related to money.

HON. MR. CURTIS: Mr. Chairman, I've had to point out before

that whether one is discussing something as distressing as those who

are unemployed, those who are on UIC or those whose UIC benefits have

been exhausted.... You could debate virtually every single aspect of

government under the estimates of the Minister of Finance, quite apart

from legislation that is before the House regarding health.

The member mentioned rent control. I would refer the member to the Minister

of Consumer and Corporate Affairs (Hon. Mr. Hewitt) who is responsible for

matters relative to rent. She referred to the question of human resources, and

I would refer the member to the estimates which will be called at some point

for the Minister of Human Resources (Hon. Mrs. McCarthy). In terms of employment

development — or, stating it the other way, the lack of the lowering of unemployment

— I have to refer the member to the Minister of Labour (Hon. Mr. McClelland)

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

Both would have some direct responsibility to speak about that — the Minister

of Health (Hon. Mr. Nielsen) as well.

I think, Mr. Chairman, that I look to the Chair for a ruling on

this. Anything relative to dollars which come to government and which

are expended by government could be, if one ignored the practice and

the tradition of this chamber, debated in this one estimate. Frankly, I

don't believe that should be the case.

MR. CHAIRMAN: The minister's point is well taken. The Chair

was remiss, I suppose, in letting these matters pass, although the

debate in this chamber on estimates has been reasonably free-wheeling

and fairly open. I would suggest to the hon. member that the matters

she wishes to discuss would quite possibly be much more properly

addressed when the estimates of the particular ministry come before the

committee. Would you like to continue, hon. member?

MS. SANFORD: Yes, I would, Mr. Chairman.

I think that what I was asking was what research had been undertaken

by the Ministry of Finance on the impact the policies that relate to

money have on those people who live in poverty. The Minister of Finance

is responsible for the way in which that money is going to be collected

and presumably the way in which it's going to be distributed throughout

government. It's all very well to say that I should ask what impact the

cuts have had through the Ministry of Human Resources or these other

ministries, but surely the man who is responsible for disbursing that

money to the various ministries, for chairing the Treasury Board and

for making decisions about where cuts are going to be made and about

what's going to be made available to the various ministries, should

also undertake some research to determine the impact of those decisions

on those people who can least afford it: that is, those people who live

at the poverty line in British Columbia.

I think that for the minister to impose an increase in sales tax

without determining the impact it's going to have on the lives of those

people who are already in a very desperate situation.... A government

that has any concern about people or any concern about what happens to

those people who turn to government most, because of the fact that

there is no work for them and they are in desperate circumstances....

Surely no Minister of Finance would impose user fees and taxes, remove

rent controls and allow all of this to happen unless he had some

measure of the impact of these actions on those people at the very

bottom of the income scale.

The minister has answered my question. Obviously the Ministry of

Finance has undertaken no research, because he has referred me to the

other ministries. I know that the other ministries are handed a sum of

money with which to operate every year, and they haven't done any

research either, so my question has been answered. The government has

not done any research; it doesn't know the impact and, based on the

food banks and soup kitchens and things that are happening around the

province, they don't intend to take any action.

[ Page 3646 ]

HON. MR. CURTIS: I don't wish to leave it at that. I

explained for the member for Comox that in terms of the specifics which

the member identified earlier, those should more appropriately be

addressed when other ministerial estimates are presented — i.e., Human

Resources, Health, Industry and Small Business Development, Labour,

Consumer and Corporate Affairs — and I still believe that. If I could

just take a moment of the committee's time to explain the process, each

ministry at the officials level and then later at the executive level

is asked by Treasury Board to establish its — I don't care for the

phrase — programmatic priorities. It is not simply as it may have been

many years ago, the Minister of Finance saying, "All right, ministry X,

you get this — no debate, no argument, no suggestions, no input, that's

how much you get for the next year," and going through some kind of a

little ritual which might appear to be consultation. Each ministry is

asked, from number 1 through to 30 or number 1 to 10 or whatever it

might be, to establish its priorities within the jurisdiction of that

ministry. Then we enter into the debate, first at the officials level,

then at Treasury Board with several of my colleagues and, as I've said

before, at the cabinet level. I think that the development of the

expenditure side of the budget is too important to be left to one

committee of cabinet but, rather, must involve all members of cabinet.

I honestly believe, Madam Member, that the specific concerns that

you have expressed can be and should be addressed to individual

ministers as their estimates are brought up in the course of the next

weeks and months.

[Mr. Strachan in the chair.]

MR. R. FRASER: Mr. Chairman, I've been listening with some

interest to the positions put forward by the members opposite. While it

is really not my political philosophy to comment too much about that,

it does strike me that the arguments put forward in the main seem to

concentrate on the smaller details of the estimates rather than the

outlook that the minister and the government might have for the

province and for the people of the province. Certainly we have to take

a long-range view of where this province is going and what our people

can do. It's true that we have a deficit that must be faced one way or

the other, and it's also true that everybody is concerned about

deficits. Even the magazines you pick up on a newsstand these days will

be commenting with some alarm on the deficits in B.C. or the deficits

in Canada or, in fact, in the States or in Europe. While it may not be

possible for everybody in the province to have a really comprehensive

understanding of the budget or the estimates or what we actually do

here, I think the minister is correct when he points out that there is

a sense of understanding in the electorate, for whom I have a very high

regard. They do understand that today, when they have certain

undertakings and responsibilities to the community, they may in fact

have to tighten their own belts at home, and they see no reason why the

government and those of us who support the government should not

continue with the same philosophy over here. While it is always easier

to spend more than it is to spend less, when those realities face you,

you are better to face them sooner rather than later, as a lot of

people have found out to their sorrow.

[11:45]

We've had some comments from certain members of the House that we

have to go into high labour-intensive activities, but in fact that is a

philosophy that's so far out of date that it really should be brought

forward again and dropped immediately. If you want to look at some of

the industries where high-tech in fact has created employment — and

it's my position that high-tech does that — you can look back to the

early days of the automobile when it was a luxury item built only for

the few at enormous cost. Then we have the introduction of high-tech to

that business, and we find that in fact everybody can afford one. We

also find, if we look at the North American continent, hundreds of

thousands of people employed in that industry. So while we may have an

apparent fear of high tech, in fact it is the movement to this thinking

that will lead us out of the problems that we now appear to be in.

There was a comment earlier this morning that many people made

investments with the hope that they would lose them, because that was

the way they could avoid paying income tax. This is a line of thinking

that I find completely incredible. There can't be anybody in the world

who plans to lose. You'd probably have more fun if you threw it out of

an open window than if you planned to lose. What you do is you plan to

defer income taxes — as in MURBs, if you want to use that example — and

then what you do with the money is build some housing for people who

may not otherwise have it. So there are advantages in MURBs, and it's

obviously seen by some that tax credits are a way of creating

employment and a way of creating houses and other things that are

really essential for the people of the country and of this province.

There was an interesting

article in the Globe and Mail

yesterday which points out that we have problems with funding both the

social programs that we have in Canada and in the world, and certainly

in addressing the problems of unemployment, since the growth of the

country is not keeping up with the growth of the spending. In fact, the

OECD acknowledges some big burdens, some big problems and some big

financial binds that all of us are in. So, Mr. Chairman, I'm really

pleased to associate myself with the government and with a minister who

understands that while some things are desirable, they may not be

essential. The essential thing that we are doing here, as I see it, is

looking further into the future than just today or just whether or not

one debt has been paid off or not. What we're trying to do in B.C., as

I see it, is to make B.C. the window to the Pacific Rim; to build those

industries that will employ our people in nice, clean, pollution-free

environments; and to make our markets open to everybody who is a buyer

and to receive their products back in return. In fact, we will help the

whole nation, if not part of the whole continent. We have the

philosophy here, the longterm outlook, where employment will be

created, lifestyles will be acceptable and we will be able to fund

programs for those who, for reasons that may or may not be of their own

making, are unable to get by without some assistance which I, as a

taxpayer, would be happy to provide them with. But there's no sense

sinking the whole boat. If you have to put a lifeboat over to get to

shore and get back, fine, but there's certainly no sense throwing the

whole thing away when you can trim a little bit or take a sail down

when you're in a storm. Cutting back a bit and saving the ship is what

we're doing. As I said a few days ago, we are trying here, as I see it,

to create an opportunity where we have more people pulling the wagon

than we have riding on it. That's simply what we have to do.

MR. STUPICH: Yesterday I asked the minister a couple of questions. With respect to one of them, he referred me to

[ Page

3647 ]

the Minister of Industry and Small Business

Development. I notice he did that several times this morning. I'm sure

he's doing that tongue-in-cheek, Mr. Chairman. I think he knows that

the only time one ever asks the Minister of Industry and Small Business

Development anything is if one wants to see him play the buffoon or if

one wants to take up time if cabinet ministers are missing at question

period. We certainly don't get answers from that minister.

One question I asked about that ministry was that although the

comptroller-general's interim financial statements estimated figures

show a total of $141 million, as does the budget for last year, and

although the same interim financial statements show that $111 million

of this has been spent, the budget presented a couple of weeks ago

shows that it's expected that only $49 million will be spent this year.

If I can't get the answer out of this minister, I don't think I'll get

it out of the Minister of Industry and Small Business Development.

The other question I asked about the third quarterly statement was

with respect to his own ministry, where it appeared as though he would

be underspent by $125 million. He suggested that perhaps all of that

would be because finance charges are lower than expected, a portion of

which is attributed to the interest rates being lower than expected. It

doesn't nearly make up $125 million. I wondered if he had any more

up-to-date figure as to exactly how much he does expect to spend in the

current fiscal period.

HON. MR. CURTIS: Mr. Chairman, I do have information

regarding the variance between the nine-month statement — the interim

financial statement which was tabled on budget day — and the original

estimate for the full year. I do not have the information regarding the

Ministry of Industry and Small Business Development. I will undertake

to provide that to the member in writing within the next several days.

With respect to the Ministry of Finance, the underspending in

interest on the public debt is quite significant. I alluded to that

fact yesterday. We were looking at probably $181 million and the most

recent information available is that it will be about $72.9 million.

That's a big chunk of the difference. I also referred to the fact that

contingencies included fire suppression as well as the vote in the

Ministry of Forests, and clearly we did not spend as much there. The

timing of expenditure on some other contingencies within the Ministry

of Finance, where the vote is to be found, often occurs toward the end

of the fiscal year.

I trust that that is satisfactory information with respect to the

Ministry of Finance. The interest is forecast to rise somewhat in the

fourth quarter.

MR. STUPICH: Do you mean the rate or the amount?

HON. MR. CURTIS'IS: The interest rate. That's twice the

member has had to interject — the interest rate. The chart which is

provided daily — which all of us see in one form or another — on U.S.

treasury bond yields doesn't look too good at the moment. With 5-year

to 10-year U.S. treasury bonds just nudging above 12 percent, and

30-year U.S. treasury bonds a fraction below that but still just over

the 12 percent line, that would be the highest since August of 1983. So

we see some additional expenditure in the third quarter in terms of the

interest rate, and that would particularly reflect on treasury bills.

MR. STUPICH: Mr. Chairman, in last year's budget the minister

spoke about an employment development act allocating a total of $415

million for capital works and job programs. The minister then talked

about the need and admitted the need for the government, in spite of

its very poor financial position, to do something about job-creating

programs. To the best of my knowledge, there was no mention at all in

the budget about any concern for job-creating programs. Indeed, a sum

larger than that — $470 million — is being turned over to B.C. Railway

to make provision for old debts, some of which I gather do not come due

until the year 2005.

In view of the economic condition and the concerns expressed by the

hon. member for Comox (Ms. Sanford) about the effect of the restraint

program, the government's actions and in some instances lack of

actions, how can the minister rationalize last year's budget with this

year's budget? How can he justify borrowing $470 million in today's

market for something that is not going to have to be paid — some of it

— until the year 2005? If that money were being borrowed now to

continue with job-creating programs, as we talked about last year, I

could understand, accept and support it. But when it is being borrowed

to simply make provision for debts, as I say, that aren't going to come

due for a long time, I believe that some rationalization should be

expected from the minister.

HON. MR. CURTIS: Mr. Chairman, we will have the legislation

before us dealing with the resource-revenue stabilization fund, and we

can debate it then. The member nods in agreement. But I would point

out, as I think he said towards the end of his remarks, that there are

varying maturities on that debt. The last one is in the year 2005. I

don't have the list readily available, but there are some due every

year, every other year and every three year maturities, right on

through the piece for the next 21 years. In terms of priorities of

expenditure, I think those were pretty thoroughly canvassed in the

budget debate. That was the essence of the debate which flowed from the

presentation of the budget.

I appreciate that the other side of the House would have produced a

somewhat different budget, but my view is that the one which I

presented on February 20 was the appropriate one for the province in

this fiscal year. It would have to be seen as part of a multi-year plan

as we move into recovery.

MR. STUPICH: I don't want to belabour this, Mr. Chairman. You

wouldn't let me, and it's not the appropriate time, but in the next

eight years only $74 million of that $470 million comes due.

I would like to come back to supplementary estimates. The minister

said that their aim is to provide more information. That may well be

the case in some instances, but the information system or the method of

presenting it changes from year to year and makes it very difficult to

follow. For example, it used to be the case that estimates included

figures as to how many employees were on staff in the previous year and

how many are expected to be in the current year. Now we have a figure

for salaries that includes the minister and whoever else is in his

office. We have no idea how many. If the minister can tell us how many

were included in vote 27 for 1983-84, and how many are being provided

for in the vote for 1984-85, I would appreciate it. Also, how many of

those are order-in-council appointments as opposed to people coming

through the system?

[ Page 3648 ]

It used to be that we knew what a minister was doing with respect to

travel. Now I believe all this is in one ministry, and it's a ministry

where it's difficult to get any kind of information at all. So again it

would seem that unless we ask the minister now where he went last

year.... I seem to recall that he went on a trip to India to sell coal.

If that was the case, I think perhaps the minister might like to tell

us. I don't know exactly what was the purpose of the trip, who he

saw.... I doubt that we would have been looking to India to borrow

money from, but perhaps this would be the one opportunity for the

minister to tell us what government travel he engaged in. If he could

give us anything about his plans this year. We don't know how much

money we're voting, or how much his ministry is asking for for his

travel for 1984-85. There's just no way of getting that breakdown that

I'm aware of.

[12:00]

HON. MR. CURTIS: Mr. Chairman, I think that my answer will

take a little longer than we have available before the luncheon

adjournment. I will deal with staffing and vacancies in the Ministry of

Finance after lunch. I would be happy to describe the purpose of my

travel last year and to indicate in general terms that which I propose

to undertake this year — propose; one never knows — but I could do that

a little later this afternoon. Mr. Chairman, I move the committee rise,

report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Schroeder moved adjournment of the House.

Motion approved.

The House adjourned at 12:01 p.m.

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