1987 Legislative Session: 1st Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, MAY 22, 1987

Morning Sitting

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The House met at 10:06 a.m.

Prayers.

HON. MR. STRACHAN : Mr. Speaker, on March 20 this House had the good

fortune to enter into resolutions and discussion welcoming our hero Rick Hansen

to British Columbia. Today we have the good fortune to acknowledge that he's

finally arriving back home at Oakridge, where he started two years and two months

ago.

MR. BARNES : I would like to associate the members on this side of the

House with the remarks by the hon. House Leader and say, in reflecting on March

20, that we did indeed recognize the greatness which Rick Hansen personifies

in ways that I believe touch so many people of such a diverse range. What can

we say, other than: Welcome home, Rick. We believe you have started something

really big in British Columbia which we will cherish and appreciate for generations

to come.

HON. MRS. JOHNSTON : In the gallery this morning are two very distinguished

British Columbians. We have a gentleman who is a former Surrey alderman, a practising

Surrey lawyer, and who also provides legal service to the UBCM. I would ask

the House to please make welcome Mr. and Mrs. Ted Pearce.

HON. MR. DUECK : Today in the precincts are about 30 students of West

Langley Elementary School, with their teachers, Jane Manning and Linda Ewart.

Would the House please make them welcome.

Motions

HON. MRS. JOHNSTON : Mr. Speaker, I ask leave to move a motion without

notice regarding a select standing committee.

Leave granted.

HON. MRS. JOHNSTON : Mr. Speaker, I wish to move the following motion:

"That this House authorize the Select Standing Committee

on Economic Development, Transportation and Municipal Affairs to examine and

inquire into the matter of the Islands Trust Act, with particular reference

to the following: (1) the object of the trust; (2) governmental structure within

the trust area, including representation; (3) provision of local government

services within the trust area, including land use planning and zoning; and

(4) matters arising out of the proclamation of

section 3 of the Islands Trust

Act; and to conclude its deliberations and report to the House on or before

October 1, 1987, if the House shall be sitting, and if not, to transmit its

report to the Minister of Municipal Affairs for disposition thereof.

"In addition to the powers previously conferred upon the

said committee by the House...."

Do I read all of this, Mr. Speaker? Is that correct?

Interjection.

HON. MRS. JOHNSTON : This doesn't seem appropriate somehow to me, but

that's fine.

"In addition to the powers previously conferred upon the

said committee by the House, the committee shall have the following additional

powers, namely: (

a) to appoint of their number one or more subcommittees, and

to refer to such subcommittees any of the matters referred to the committee;

and (

b) to sit during any period in which the House is adjourned and during

any sitting of the House, and to adjourn from place to place as may be convenient."

Mr. Speaker, at this time I want to make it very clear that the introduction

of this motion is not in any way suggesting that we are looking at abolishing

the trust. We are not. It seems appropriate, after having the act in place for

so many years, that upon the proclamation of

section 3, which allows acceptance

of gifts by way of land or money, we have some clearly defined ideas, with input

from the general population, as to how this should be handled.

Mr. Speaker, I wish to move this motion.

MR. WILLIAMS : Mr. Speaker, certainly the functions of the committee

seem reasonable. We would have appreciated greater notice with respect to the

motion, and it is of some minor concern that the committee might meet during

sittings. However, at this time of the year that may not be a major consideration.

Motion approved.

HON. B.R. SMITH : May I have leave to move Motion 67, with respect to

compensation of judges?

Leave granted.

HON. B.R. SMITH : I would move Motion 67 standing on the order paper:

"that the report and recommendations of the compensation advisory committee

be referred to the Select Standing Committee on Labour, Justice and Intergovernmental

Relations for the purpose of recommending a resolution to the Legislative Assembly

for fixing of salaries, pursuant to

section 7(1) and (2) of the Provincial Court

Act."

Mr. Speaker, this report dealt with more than salaries and had some recommendations

as to leave and other benefits. While the statutory duty of the committee is

only to recommend salaries, I would be quite happy if they would like to make

recommendations to the government on those other matters that were covered in

the report. There is no attempt to foreclose that. I look forward to the committee's

deliberating on this now so we can settle the matter of judges' salaries.

MR. WILLIAMS : On behalf of my colleague the member for Esquimalt-Port

Renfrew (Mr. Sihota), I presume, we're certainly encouraged that the government

sees all these important duties for committees, and we assume that the House

will be making the time available for those committees to freely meet throughout

the coming season.

Motion approved.

HON. MR. DUECK : I'd like leave to make a statement. Leave granted.

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HON. MR. DUECK : This week is Canada's Fitweek, and today is British

Columbia Sneaker Day. Just to show what we mean.… [Laughter.]

[10:15]

Orders of the Day

Private Members' Statements

USE OF KNIVES AS WEAPONS

MR. BARNES : I think the Minister of Health (Hon. Mr. Dueck) should have

advised us that this was low-heeled sneakers day, because I have a pair I could

have worn. It might have been of some assistance.

AN HON. MEMBER : Low heels?

MR. BARNES : You've heard the song "High-Heeled Sneakers."

That is, of course, a little more derogatory than the conventional form of sneaker

that they're talking about. We won't get into that.

I will be making a brief statement on a very serious question of

national concern — I think it's a matter of life and death — to do with

the carrying of dangerous knives in public places, particularly in

licensed drinking establishments. I must say that I don't stand as an

expert on the law, although I am a member of the Legislature. I say

that, hoping that the Attorney-General will, in his response, agree

that what we've had for the last 14 years or so with respect to the

question of the menace of knives as weapons of offence — violent

crimes — is a whole lot of equivocation on the part of law enforcement

authorities throughout the country, so much so that people such as the

Downtown Eastside Residents' Association in my constituency have

embarked upon a national campaign to enlighten the public about the

seriousness of the knife as a violent form of aggression in the hands

of people who bear ill will towards their neighbours and their

community. The question, though, Mr. Speaker, is one of legalities

versus government responsibility — moral responsibility.

To get to the point, I would suggest that it's time we regarded any device

whatever, whether a knife or a firearm, to be a potential weapon, and that we

become more aggressive about it. The question today is: how do we categorize

the knife in such a way as to treat it the same as we would the bearing of firearms?

People obviously do not carry firearms around to defend themselves with free

licence. They require a permit. They require some form of authorization.

Now the Attorney-General, I am sure, has addressed this problem. In fact, I've

read his letters and correspondence with DERA, and I have seen statements by

politicians right across this country, from police departments in the various

provinces, and everyone agrees that there is a problem. The situation has to

be addressed, and it has to be addressed by people with a sense of duty and

the political will to recognize that the use of knives has replaced the use

of firearms. As the law became more stringent in its enforcement with regard

to firearms, the knives seemed to replace it. I am sure the Attorney-General

will recall the Sulland versus the Crown case in 1982, when the B.C. Court of

Appeal overturned the challenge that a knife was an offensive weapon, at least

under certain circumstances, ruling that the knife could be legitimately carried

as a weapon of defence.

I think that was a tragic decision, one that has caused serious consequences.

Perhaps I will read, in summarizing, some of the statistics in the last five

years since 1982 in terms of how knives compare with other weapons that are

being used by people who are intent on committing violent crimes. How can it

be possible or logical to argue that it's okay for a person to carry a knife

if it is for self-defence and not, on the other hand, be able to do the converse

and say that if a person is carrying a knife it is with the intent of malice

or committing some evil deed? I think the logic applies one way or the other.

Surely if a person is carrying a knife because they think they may need it for

self-defence, they must be preparing for a fight; and if they knew in advance

that there is going to be a fight, then why don't they call the law? If you

want to turn it around the other way.... You see, this is the beauty of

not being a lawyer: you can look at things more responsibly; you don't have

to look at them strictly from a legal point of view.

What I'm concerned about is that a lot of people are being slashed up and gouged

and threatened and made to be frightened. In fact, I can tell you how I feel

from a social point of view. I feel that people carry knives out of fear that

somebody else may have a knife, and so the thing gets out of hand. When I was

I 1 years of age, in fact, I carried an ice pick. In those days we couldn't

afford a knife and we didn't have electric refrigerators, but I had an ice pick

and I carried it for protection. I was hoping I never had to use it because

I would have been running too fast to stop and do any damage. But the point

is, people are carrying knives for some kind of crazy situation because the

government is not giving them the kind of support they need and they run into

pressure, especially in drinking establishments where there are unemployed who

are hanging out all day. Friends are stabbing each other. It's out of a sense

of impulse, not always premeditated. If the knife is handy, they use it.

So I think that we have to provide relief on a situational basis. Amending

the Criminal Code to deal with this problem would go a long way to assist those

local authorities and at least give them the option to make a choice. In the

hinterlands, perhaps, it wouldn't be a problem, but in a place like downtown

Vancouver where 82 percent of the drinking takes place, it is a problem.

HON. B.R. SMITH : That's a pretty good statement, Mr. Speaker. I don't

think that lawyers could do anything but probably alter the power of that statement.

I would be quite happy to pass those remarks and sentiments on to the Justice

minister. Many times we have raised with Justice ministers the need to strengthen

the Criminal Code in the area of the offensive weapons

section to maybe have

some presumption that where a person carries a knife with a blade longer than

that of a jack-knife, there is a presumption that they intended to carry that

for a purpose that was dangerous, and then put an onus on that person to then

establish and prove that they did carry that knife for some legitimate purpose,

such as cutting cloth or doing whatever.

I'm trying to think of all the defences that I heard in the courts over the

years from people who had ugly-looking knives stuck in their trousers. There

were many ingenious defences, and some of them worked.

A case was just cited here today. I know the police feel that that case set

back law enforcement a good deal in this province and slowed them down in dealing

with this problem. I think the Criminal Code should be strengthened. I support

what the member says, and I'll make another effort

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with the federal Department of Justice. But you know that department is pallid

with terror at the thought of a Charter challenge on anything, so don't hold

your hat.

MR. SERWA : Mr. Speaker, I would like to speak briefly on this particular

matter from a different perspective. I would like to point out to the hon. member

that the knife is not the problem; it's human nature and the individual. This

has been a paramount problem through all of our history.

I come from an area where this is not a problem. I've worn a belt-knife for

most of my life and it's a very handy tool. I think it would be presumptuous

to take a local situation where there is a severe problem and start to apply

legislation throughout the whole of the province. Whether it is being done with

firearms or with respect to knives, where do we stop — a piece of wire,

a pencil, a piece of rope, a piece of chain, an automobile, fists? What effective

tools do we have? We've got to face the fact that the human element is the nature

of the problem. Perhaps in the hon. member's constituency it is the stress of

density of population that is the problem.

I think that we have to attend to the problems and not proliferate legislation

with respect to controls, because throughout the rest of the province this is

not a problem. Basically, a knife is an effective tool, depending on the user.

We can use anything that is a weapon of offence or a weapon of defence.

I think it would be presumptuous, although I admit that there is a very serious

problem. But I feel that if there are concerns, it should be attended to locally

and not provincially or regionally.

MR. BARNES : Mr. Speaker, I appreciate the response from the member for

Okanagan South and from the Attorney-General.

When the member for Okanagan South suggests that it is a matter of human nature,

he points very clearly to the decision that we have as legislators to decide

whether we are going to try to be optimistic about the potential as far as human

nature is concerned, and give leadership and direction to assist people to overcome

some of these so-called natural instincts.

We can have a better society. Otherwise why do we attempt to have a

more peaceful environment and try to educate people and set higher

values on human life, etc.? So I am not in favour of being afraid to

bring down legislation that I believe is for the common good.

As far as the options are concerned, in terms of heavy-handed legislation, remember

that we have a justice system. A good justice system is one that is accessible,

that is affordable and that allows people appeal in terms of challenges under

the Charter of Rights and Freedoms. For any offence, as far as anybody's liberties

are concerned, civil or otherwise, they should have access to due process. That's

what a democracy is about. In the meantime, what about the rights of the individuals?

What about people who are clearly being made to feel uncomfortable and unsafe

in society? I think that we have to be far more positive, far more proactive

and far more willing to provide leadership direction and take our chances. That's

what political will is all about.

The Downtown Eastside Residents' Association have suggested that we should

begin to sit down with municipalities and with local community organizations

and come up with suggestions. One of the problems with this issue is that we

claim ignorance. Many of the federal people are saying they don't know what's

going on; if they knew more, had more statistical evidence, then they could

act. But the evidence is clear: the police all over this country are saying

that the use of knives is proliferating. For instance, Statistics Canada showed

that of all of the robbery offences committed in British Columbia, in 1978 there

were 453 firearm robberies and 333 with knives; in 1979, comparing the same

two figures, 333 firearms, 249 knives; in 1980, 416 firearms, 312 knives; in

1981, 485 firearms, 595 knives.

MR. SPEAKER : I regret to inform the member his time is up.

MR. BARNES : And on it goes. The point is, those numbers are starting

to shift, to the point today, Mr. Speaker, in 1985, where you have 645 offences

committed with knives; and it's continuing to grow.

We should show more courage and confidence in human nature. We can impose laws

that make sense. I think everyone would be better off.

[10:30]

DRUG AND ALCOHOL ABUSE

MR. LONG : Mr. Speaker, today I'm going to speak on a major problem we

have in British Columbia and, I think, possibly right across Canada. Over the

years I guess most of us have known it as alcoholism, but in recent years another

factor brought into it has been drugs. You end up with a problem in this province

and in Canada with chemical dependency. The effects are family breakups and

many costs to the system injustice, health and social services. I think it's

time that our whole province realize that this is a disease that has to be combated.

It's not just something that people do and they become addicted and they're

cast aside. It is a disease that has to be treated.

The government of British Columbia puts a lot of money into treatment, identification

and education of the disease, mostly for the adults. Something that was brought

to my attention recently, which I spoke to the Ministry of Health about, is

that one area that must become more involved is the private sector. The government

is doing their part. They are paying their way. The private sector must become

more involved for our youth. They are not getting the attention they need. We

have a problem out there with youth. We need more treatment centres. But the

treatment centres we need, I'm finding out, are best handled by the private

sector. As well, I find that involvement of the family is important, along with

the companies to help out in the treatment of these youths. They are our kids,

and we must look after them.

The private sector treatment centres that I have seen have approximately an

85 percent rate of.... It's not necessarily a cure but a period of time

with no use of drugs or alcohol. It's probably one of the highest rates around,

and it comes from the private sector.

I could identify some of these homes, but the specific one that I'm speaking

of is right here on the island in Nanaimo, run by people who care and people

who want to help. I think it's one area where our youth have to be given a chance.

We have to identify the problem and we have to give them a chance so they become

healed so we don't run into the horrendous costs later on in our society.

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I would just like it to be known that this is one area in our province that

we must look at together, all of us members, to rectify a major problem within

our society.

MRS. BOONE : I'll certainly agree with the statement that this is a problem

that we all have to try to solve together. It is definitely something that I

hear all the time. We find our youth are virtually falling through the cracks

out there. On the contrary, however, I do not think it is the private sector

that should be picking up on this. I think that government has a role to play.

Government has failed very much in this role in recent years. We find throughout

the province that there are no mental health facilities, very few psychiatric

facilities and very few counselling facilities — particularly when you

get outside the lower mainland area into areas where facilities are lacking

in general, whether you're youth or not.

When you talk in terms of drugs, quite frequently people seem to think in terms

of marijuana, cocaine and various things like that. But one of the major drugs

in this province, and one of the major problems we have in this province, has

to do with the drug that everybody here probably takes at some point or another,

and that drug is alcohol. That's a major problem. It's a real concern of ours,

and a concern of mine in particular — when you look around the province and you

see the liquor control looking in terms of liberalizing our liquor control laws

and what effect that is going to have on our youth. If we really truly believe

that drugs and alcohol are a problem with our young people, and I think most

everyone in this room will agree that there certainly is a problem there, then

we have to address that problem not just in providing facilities to deal with

the effects of it but also in terms of some prevention work. We have to make

sure that there are programs in the schools, that the children are being given

the information and that they are aware of what the problems are out there.

We have to stop making things accessible to people. We have to stop liberalizing

our laws. We do not want to have alcohol in our corner drugstores. We do not

want to have alcohol in our corner stores at all.

So the problem is there. We on this side of the House — or in this corner

of the House, as we so aptly are shown at different times — will want to

do everything we can to assist the young people in this province, but we insist

on prevention. This is the key word, as far as I'm concerned. We've got to stop

the problem before we have it. We have to provide access to our young people

by way of adequate facilities for mental health, for psychiatric care, in every

area along the way and throughout all areas of the province, not just in one

particular section. And we will do everything we can to support the government

when they do take a stand to prevent the problems that are coming through. We

have youth out there who are falling through our system; they're falling through

the cracks out there and we must do something to prevent that.

MR. LONG : Mr. Speaker, I think one of the areas.... The hon. member

mentioned that to take alcohol and so on out of stores or whatever — don't

make it available. I think something has to be realized with this disease: it's

a genetic disease as well.

[Mr. Pelton in the chair.]

What I'm understanding now is that it's a genetic disease; it can be passed

down through families. When we identify that genetic disease and we identify

that the problem is there, it's not necessarily alcohol that creates the disease.

If the person has the disease, the alcohol only exaggerates the disease and

creates a bigger problem.

So I think it has to be brought to bear that this disease should be treated

as a disease, and in the future we've got to realize that it's not necessarily

the alcohol that has caused the problem every time. I think maybe it's the abuse

of alcohol; but, you know, there have been known cases where people have had

one drink and become an alcoholic. I can speak of one case that was told to

me by a good friend who remembers the first drink he ever had. Now everybody

does not suffer that effect. So I don't think we necessarily have to pull everything

out of people's way and say we've got to get rid of the world because they might

use.... I think it's a fact that it is there.

ESQUIMALT AND NANAIMO RAILWAY

MR. BRUCE : Mr. Speaker, it wouldn't be right for me to stand and speak

in this House without introducing somebody. I would ask leave of the House to

make a singular introduction.

Leave granted.

MR. BRUCE : In the gallery today is a good friend of mine and the operations

manager of the British Columbia Forest Museum, Mr. Terry Malone. I would ask

the House to make him welcome.

I would hope, Mr. Speaker, that you would take into account that that took

25.5 seconds, in respect to my time allotment.

What I would like to speak about today is the E&N Railway — the Esquimalt

and Nanaimo Railway that is here on Vancouver Island — and a little bit of a

past history of what the railway is, what it means to us, and perhaps where

we can go with it — that being the federal government and the CPR.

It was in 1884 that it was first constructed here on Vancouver Island, and

in my riding of Cowichan-Malahat Sir John A. Macdonald hammered in the final

spike on August 18, 1886. After that there were a number of extensions that

occurred with the E&N, taking it further north and through other areas of

Vancouver Island, both east and west.

In 1905 the E&N came under the direction of CPR, and of course

for the E&N to develop this particular line initially they were

given extensive land grants and extensive rights to property and

minerals and timber on Vancouver Island. When CPR took it over and in

fact ended up buying the company in 1912, those particular obligations

held with that company, and in return for this tax exemption that they

had on their properties and minerals and so on, they had agreed to

construct and complete the Esquimalt and Nanaimo Railway and for

thereafter to keep it in operational form. This was not only to end at

Nanaimo — the name being Esquimalt and Nanaimo — but was to go further

than Nanaimo right through to Courtenay.

When all the construction had been completed, this railway in mileage totalled

some 200 miles both from Esquimalt to Courtenay and the lines east and west.

Some of those lines of course today are no longer in existence; they have been

abandoned. They were given rights to abandon those particular spurs, and in

some instances the trackage is now up and all that's there is the remaining

right of way.

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It was in 1914, on August 6, that the passenger service started. To that point

it had primarily been freight. Today we see more in the way of passenger service

than we do freight on the line.

Compensation for this was fairly heavy really, when one looks at it. There

have been many words said and things written about the compensation that was

granted for the E&N line, but I think if you went back to a report that

was done and a submission by Mr. Ed Gosnell in 1927 in a commission that had

been undertaken, reviewing some of what had gone on with the E&N, in his

report he says: "The province gave up 2,700,000 acres of its most fertile

land to get the E&N Railway, which under solemn agreement it was entitled

to have built free of cost by the Dominion of Canada."

In other words, and again including the two million acres of land on Vancouver

Island conveyed by the province to the Dominion as a subsidy to the E&N

Railway company, it cost British Columbia in total 4.7 million acres of natural

resource in total to build a line of railway 75 miles long, or precisely 62,666

acres per mile. At a fair evaluation of $10 an acre, that's $626,000 per mile,

an arrangement which outrages all sense of justice or proportion. It's a statement

that perhaps we would concur with today. He went on to suggest that the sale

of timber and land after 1905 was so profitable that it actually covered the

purchase price for CP to buy E&N and all improvements in 1905, about $5.5

million. Compensation was really fairly heavy.

The provincial position has been, since that time, that the land was granted

to the E&N and they were there to build this line. But the company and the

corporate descendants, those that took over the E&N, had to adhere to the

terms of the agreement in that lease arrangement. So it is that they had an

obligation — the E&N and now the CPR — to continue to operate

passenger and freight train service on Vancouver Island in perpetuity, regardless

of cost. In a CTC document entitled "The Need for Rail Passenger Service

and Opportunities for Modal Substitution," done in September 1986, the

average cost of 29 cents per passenger kilometre represented a slight increase

over the RDC services operating in Atlantic Canada. But what they came back

to was a rationale to guide the future of rail service on Vancouver Island:

that it should be the same as Atlantic Canada. If operating costs can be reduced

substantially and/or revenue increased to improve financial performance, the

continuation of rail service could be justified.

[10:45]

There are many things that could be done to improve the revenue position of

the E&N. First, the particular rail car that runs on the E&N today has

the capability of travelling this line at 90 miles per hour. However, because

of the condition of the trackage on Vancouver Island, that train has an average

speed of 40 miles per hour, hardly close to its potential. So to improve the

rail service for Vancouver Island, we need some trackage improvements. According

to documents that I could find, in the last few years there has been some $2.5

million of investment in improved trackage for the island itself. However, there

have been limitations on the Malahat because of curves and grades and so on.

However, I believe that in this day and age we can find ways and means of overcoming

some of those barriers. Certainly from north of the Malahat through to Nanaimo

and on to Courtenay there is no reason why the trackage could not be improved

to the degree that this rail car could run at closer to its optimum speed, perhaps

70 miles an hour, and by so doing provide better service for the people on Vancouver

Island.

DEPUTY SPEAKER : The Chair hesitates to derail the hon. member, but his

time has expired.

MR. LOVICK : I understand that the Minister of Transportation and Highways

would like to respond, and also one of my colleagues. So I shall keep my remarks

fairly brief. I would just like to clarify something, however, and I must sound

like a revisionist historian when I listen to my friend from Cowichan-Malahat.

To say that the compensation was "fairly heavy" is clearly one of

the great understatements of all time. The compensation was outrageous;

it was one of the most significant ripoffs ever recorded in this

country's history — no question. Indeed, the E&N story is part of

the reason why we have that famous Canadian song, the refrain of which

goes — and I hope this language is parliamentary because I am quoting:

"God damn the CP, god damn the CP, god damn the CPR." I think that is a

widely held perception across much of this country, certainly in the

prairies and in many towns on Vancouver Island.

Regarding the future of the E&N, obviously that too is an issue that stands

before us and should concern us. When the member for Cowichan-Malahat resumes,

I hope he gives us some suggestions as to the kinds of initiatives this government

ought to be taking in terms of putting pressure on the federal government to

upgrade the service on that line and give the people of Vancouver Island something

approaching the kind of deal they thought they had negotiated, lo, those many

years ago.

HON. MR. MICHAEL : Mr. Speaker, I too will make my remarks brief. I thank

the member for giving us the outline of the E&N and bringing it to the attention

of this assembly.

We are aware in this government that federal subsidy is required to keep this

railway in operation, and it's no surprise; all passenger railways in the province

of British Columbia and the Dominion of Canada, to my knowledge, require a subsidy.

Clearly this is a matter for federal jurisdiction, and this minister and this

government will be very active in the next few months in asking for additional

federal money into British Columbia in modes of transportation, whether it be

railway or primary highways throughout the province. The figures and facts are

well known. We are currently sending in excess of $600 million to Ottawa every

year through gasoline taxes and other vehicle-related taxes, and in total we

receive from the federal government for highways and other modes of transportation

less than $50 million.

However, the recent ridership on the E&N.... I've got the figures here,

showing 1982 passenger transportation as 43,135, and by 1985 it had grown to

51,000. So it's clearly growing. However, we do know, in looking at the deficit

and the loss of the E&N Railway, that the subsidy amounts to about $30 per

passenger. Clearly, it's a good service; it needs to be continued and improved,

but it is going to require federal money to make it possible.

MR. MILLER : I will take a very brief moment to express my puzzlement

at why this government is supporting federal legislation that will deregulate

the transportation industry and make it easier for railways like the E&N

to abandon parts of their service. The minister himself objected to the CTC,

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under the current regulations, to E&N's request to abandon. That whole

system will disappear; they will be able to do it. This government is supporting

that change; in fact, they've promised to bring in their own legislation to

do a similar thing in the province with respect to trucking. So I'm a bit puzzled.

MR. BRUCE : Clearly, there are some things that can be done with respect

to the E&N to make it a better and more viable service, a service in which

perhaps the subsidy is not needed to the degree that has in times past been

argued by Via Rail and the CPR. If you just take a look at the scheduling and

the service of the passenger rail there now, it almost goes against anybody

riding that particular service for it to be useful or purposeful in providing

a vehicle by which one can get from one city to another for specific endeavours.

If we were to take a look at the E&N, keeping in mind that

understatement which I'm glad my friend from Nanaimo picked up, the

fact that the E&N and the CPR clearly owe the people of Vancouver

Island a good and decent rail service.… If they were to look at the

aspect of running the service in the way the customer demand or the

ridership was looking for, they would find, I think, the opportunity

and the potential for increasing that ridership. Perhaps they could use

a two-car system — and I only lay this out — one starting in Duncan

early in the morning and coming to Victoria, one starting in Nanaimo at

the same time and going to Courtenay. The return trip from Victoria

would go all the way through to Nanaimo and meet with the train coming

back from Courtenay to Nanaimo so there could be an interchange. With

the train being able to do 90 or 75 miles an hour, there's no need for

this total 4 1/2 hour trip from one end to the other; those two cars

could then make another trip, leaving Nanaimo for Courtenay, leaving

Nanaimo for Victoria, the Victoria run ending up in Duncan in the

evening, and again, the car coming from Courtenay back to Nanaimo —

fairly simple. I think they would find that the ridership would

increase.

The tourism potential of the line is unlimited. Granted, it may not be in their

charter or under their agreement that they must provide that type of service.

However, the trackage needs to be of the capability that those of us trying

to promote tourism for Vancouver Island — the province, the Ministry of Tourism — can take advantage of.

It has been talked about for many years, the aspect of having a steam train

starting here in Victoria. Can you imagine the millions of people coming from

the States on one of the two steamship trips into the harbour here in Victoria,

then being moved from the ship on an old horse-and-buggy carriage around to

a steam train just around the harbour, onto that steam train, up and over the

Malahat, stopping in all that wonderful country of Cowichan-Malahat, spending

some time in Duncan, then in Chemainus, and perhaps even heading up to Ladysmith

and Nanaimo? It would be absolutely fantastic. It would be the type of trip

that people would come from miles around to take in. But the trackage has to

be in the shape that is necessary so that a steam train can run.

Ski packages. I like to ski, and I know there are other members here who like

to ski. My friend from Esquimalt likes to ski; I've met him on the mountain

as well. He too could take

part in an early-morning ride from Victoria straight

up to Courtenay and up the mountain, using that train service as a high-speed

manner of getting to Courtenay.

Mr. Speaker, I realize my time is up. I would like to impress upon the members

of this House: when you're coming to Cowichan-Malahat next week to take

part

in the British Columbia Festival of the Arts, rather than driving up, catch

the dayliner and come on up to Cowichan-Malahat, enjoy that beautiful view over

the Malahat and see what the E&N is all about.

DEPUTY SPEAKER : Your enthusiasm is infectious, hon. member. I've let

you go over a minute. The Chair recognizes the government House Leader.

HON. MR. STRACHAN : I rise on a point of order, Mr. Speaker, and I wish

to address it to the second member for Nanaimo (Mr. Lovick). The point of order

is that one cannot use the device of quoting from a song or refrain or any other

device such as that to bring unparliamentary language to the House, but outside

of that everything you said was just fine — and agreed to.

MR. LOVICK : I would just respond to the point of order, Mr. Speaker,

by thanking the hon. House Leader for drawing that to my attention. I will certainly

be guided by that in the future.

URANIUM MINING REGULATIONS

MS. SMALLWOOD : What I'd like to talk about today is the uranium moratorium

and, more specifically, what I'll term the uranium issue in this province. Over

the last little while, I've been getting a rather intensive lesson in what the

uranium issue is in our province by looking over some of the old material coming

out of the Bates inquiry, some of the briefs and the "Uranium Inquiry Digest,"

which was a

summary of the hearings.

In addition to that, I've just returned from a trip into the Okanagan where

I met with several different environmental groups, and they in turn raised similar

concerns to me. What I'd like to talk about in particular is the regulations

that have been brought down governing the exploration of uranium. I'd like to

outline that briefly for people so they know, more or less, what those regulations

pertain to.

The regulations for this province at this time deal with designated areas specifically.

What they do is spot-zone the province. They have, in essence, zoned all existing

uranium claims in the province and laid out regulations to govern that particular

property. The way the regulations go is that anyone doing any other exploration

for other minerals in the province who should come across significant levels

of uranium and/or thorium then is honour-bound to report that.

They then become part of that designated area and have to do baseline surveys

to record the amount of radioactivity. They have to publish all of that in the

government publications. While I believe both the government and a lot of people

in our province are focusing on uranium mining, there doesn't seem to be enough

attention paid to the fact that there are other health issues related to uranium

in this province.

Many of the deposits in this province are surface deposits, and that makes

them very susceptible to any surface activity and causes concern when the surface

is disrupted and when erosion takes place, contaminating either groundwater

or creeks. The concern that I bring at this point is the lack of overall regulations

that address that concern.

We all recognize that the Bates inquiry was not completed, so we don't have

the opportunity to canvass all of the issues that were thought to be of importance,

like community health and safety. When we do look at the Bates inquiry, we

[ Page

1309 ]

realize that it was a forum to provide international access to knowledge. We

had an opportunity there to bring experts into B.C., to learn from their experiences

and to understand better some of the significant problems we would be facing

in this province.

What I would like to see happen in dealing with the regulations, rather than

spot-zoning the province, is a more comprehensive zoning of the province that

identifies uranium-rich areas, governs the industrial activity in those uranium-rich

areas and has ongoing monitoring and testing of all water supplies, not as presently

exists. I've had it explained to me that it's either on a five- or seven-year

rotation throughout the province in different areas for water other than drinking

water.

When you look at other examples, in particular New Mexico, where there are

significant uranium deposits, what they have done there is identify mineral

belts which are uranium-rich areas. In particular, I refer to the Grant mineral

belt. What they have done is put an overall water management area in the Grant

mineral belt area, and there has been comprehensive testing in that area on

an ongoing basis to monitor the uranium activity and to ensure community health

and safety.

[11:00]

I think that we should be looking at that kind of testing. Not only would it

be a benefit to identifying problems, like soil erosion, whether it's related

to logging activity or road construction or, indeed, other mining activity where

uranium might be found in mine-tailings, or perhaps even housing developments;

it would begin to allow this government to get a real handle on where the problems

are and then allow us to address those problems. That's not going to go away,

whether or not there is actual uranium-mining in this province. The opposition

remains opposed to uranium-mining in the province.

In addition, I think it's important to look at what those areas might look

like. I've done some research into the areas of uranium in this province and

begun with a map with the actual designated areas. You can identify three comprehensive

uranium-rich areas by the claims alone. Beyond that, it was interesting to me

to look at the geological areas in which uranium is found. When you do that,

you realize that there is a trench running throughout this province from top

to bottom, and that trench takes almost two-thirds of the province — areas

where there is the likelihood of finding uranium.

It raises some significant questions for me about the need for work and commitment

from the province. I don't think the regulations and the lifting of the moratorium,

and indeed the inaction since the Bates inquiry, can be excused. I would be

very interested in what the Minister of Environment has to say.

HON. MR. STRACHAN : I'd like to thank the member for the comment and

for bringing this issue to the House today. The government, of course, is aware

that many people are concerned about the action taken.

On February 28, 1987, when the cabinet took the action to discontinue the moratorium

on uranium, cabinet was aware that many British Columbians would be opposed

to the nuclear industry. However, after a thorough review of the issue, it concluded

that there was no practical reason to continue the moratorium. There is very

little likelihood of any significant uranium exploration or development in the

foreseeable future, because the government has no intention of considering nuclear

power as an energy option for British Columbia. Indeed, it would be folly, Mr.

Speaker, to consider that when we're so encouraged about hydroelectric power,

its availability to the province, and also the sale of it to other jurisdictions.

There is also a substantial oversupply of uranium on world markets.

I should point out at this time that the most extensive uranium-mining, exploration

and sale in western Canada was done in Saskatchewan under the administration

of the New Democratic government. I'll just let that observation stand.

We felt the development of other minerals that sometimes occur in association

with very low levels of uranium, such as gold, silver, and some rare earths,

was being needlessly hampered by the very stringent provisions of the moratorium.

The most immediate effect of the moratorium's expiry, therefore, is likely to

cause some increase in exploration activities for these other minerals.

The member has mentioned this, but I'll state it again: cabinet has recently

approved a set of comprehensive regulations to govern all exploration activities

associated with levels of radioactivity above certain prescribed limits. The

regulations, which came into effect on March 1, 1987 — and they came from

the Bates commission — designate known areas of radioactivity where exploration

will be subject to very stringent control, and new areas will be designated

as they are encountered. The regulations require baseline surveys of radioactivity

prior to work and govern the conduct of exploration activities, worker health

provisions and the safe disposal of water and waste materials. Any proposals

to explore in designated areas must be advertised in the British Columbia Gazette

and local newspapers. I might add that British Columbia is the only province

in Canada that currently has regulations governing exploration in uranium- and

thorium-bearing areas.

Further, all mine-development proposals are subject to the province's mine-development

review process, which ensures a complete review of environmental and social

impacts. In addition, any proposal involving significant levels of radioactive

substances would probably require licensing by the Atomic Energy Control Board

of Canada. Through these processes the province will work with federal authorities

to ensure protection of the public, the workers and the environment before any

such development is permitted. Both processes also make provision for public

consultation and review.

While accepting the concern of the member, and I guess of many British Columbians,

the government believes that we have acted appropriately. We've taken due and

thorough consideration for the health and safety of the citizens of our province,

and we are going to continue with this policy. I can't at this point see any

reason to change, or to re-establish the moratorium.

MS. SMALLWOOD : I'd like to thank the minister for his prepared response.

I am somewhat distressed that the minister was not listening to some of the

concerns, because I think they're very serious concerns. And those concerns

that I raised.... While remaining opposed to uranium mining and recognizing

its link with nuclear power and weapons, I am raising the concerns of water

quality; I am raising the concerns of health in uranium-rich communities. I

believe that it is incumbent upon the minister to deal with those concerns.

[ Page

1310 ]

When the minister refers to the stringent provisions of the moratorium, it

is recognized both by the ministry and by others concerned that the moratorium,

in and of itself, did not have the kind of teeth that was of public perception.

The quotes that I heard, when inquiring in the ministry, were that they were

pleased and relieved to have the regulations that were brought down after February,

because it was the first time in law that, indeed, there were regulations that

govern the exploration of uranium and thorium — and I recognize that. What

I am pointing out is that while this is the first time there has been law on

the books that deals with this, it has not gone far enough; it does not deal

with community safety standards; the government has not given the communities

the opportunity to explore the full information and impact of the potential

hazards that are there; the government and the statement that the minister has

made do not recognize the fact that there are creeks in this province that are

at or above the radioactivity and toxic levels set down by the federal government.

What that says to me is that if we do not have a comprehensive plan that deals

with watershed management, that acknowledges that there are these problems in

the province, we will be reacting to those problems rather than managing and

avoiding those problems in advance. The government had much of this information

seven years ago. It has refused to act. Unless the government does act and we

are testing our drinking water standards down the road, at some point we will

find that we have a problem and instead of managing our resources will be trying

to clean them up.

HON. MR. SAVAGE : Mr. Speaker, may I have leave for an introductions?

Leave granted.

HON. MR. SAVAGE : It gives me a great deal of pleasure to introduce to

the House today the 11th Sitka Brownie Pack from the constituency of Delta.

Would the House please make them welcome.

HON. MR. STRACHAN : Mr. Speaker, I call second reading of Bill 37, in

the care of the Minister of Finance and Corporate Relations.

TAXATION STATUTES AMENDMENT ACT, 1987

HON. MR. COUVELIER : Mr. Speaker, the Taxation Statutes Amendment Act,

1987, Bill 37, amends 12 statutes which impose taxation in the province. These

amendments are being made consistent with our policy of providing taxation statutes

which are clear, easily understood, and updated periodically to reflect current

business practices.

The amendments contained in this bill replace outdated existing provisions

for taxpayers to appeal assessments to the courts and provide updated procedures;

amend other sections to ensure that the intent of the legislation is clear;

and provide legislative authority to release tax-related information to the

director of the Canadian Security Intelligence Service, with the approval of

the Minister of Finance and Corporate Relations, when it is in the interests

of national security.

The amendments also repeal the property tax levy under the Grasshopper Control

Act, as the cost of administration exceeded the relatively insignificant amounts

received from the levy.

The exemption of $25,000 of income under the Logging Tax Act is being repealed,

as logging tax is fully deductible against tax payable under the Income Tax

Act of Canada.

All of these sections will come into force either on July 1, 1987, in the case

of the appeal sections, to have uniformity among the taxation statutes, or on

January 1, 1988, in respect of the Taxation (Rural Area) Act, or by regulation

in the case of

section 5 of the Horse Racing Tax Act. The remaining sections

become law on royal assent.

Mr. Speaker, I move second reading of this bill.

MR. STUPICH : The opposition has no quarrel with most of this bill but

does have some concerns, questions and arguments about one

section in the bill

that allows for the release of confidential information.

This

section will give the minister — and I think it's worth discussing

it in second reading so that the minister may have an opportunity to respond

now or be prepared to go into more detail when we get to committee — the

authority on his own to release confidential tax information with respect to

information filed under some nine pieces of taxation legislation to the Canadian

intelligence service. Our concern is that it doesn't stop there. Even if it

were just there we might be worried, but the Canadian national intelligence

service has an agreement with the CIA that allows for the free exchange of information

between those two organizations. I suppose the net effect of that is that no

longer will we have to go to garbage dumps to get confidential information;

we can get it from the CIA direct. And who knows with what organizations the

CIA exchanges information? And to what end, what purpose? Certainly some of

us are very concerned about activities of the CIA over the last several decades.

So we are worried about that.

It is true that there already is agreement to exchange information between

the several taxing statutes among people who are dealing with taxes, and even

with the federal government when it comes to dealing with specific taxes. But

this is to release information for some other, unnamed and unknown purpose,

and the minister is to do this strictly on his own.

The minister did say — not in this discussion but earlier, I think, in

an interview — that some eight provinces have already signed an agreement

with Ottawa to enter into this kind of an arrangement. We don't know what it

is they've signed. The memorandum itself that has been signed has not been made

public, to my knowledge, and I'd like the minister to either file a copy of

that or give us some information as to just exactly what is the nature of the

document that has been signed, because that in itself may offer enough protection

that our concerns will be allayed. We did some checking and found out that Manitoba,

for example, has not signed yet and, as a matter of fact, hasn't even seen the

document that they're going to be asked to sign, although they know the general

thrust of it.

One wonders why it is necessary to give this kind of blanket authority to the

minister. It means that taxpayers involved in paying these various taxes, who,

up to this point.... And that's what our taxation system depends upon, really:

the inherent honesty of people, or perhaps to some extent their fear that if

they don't file proper tax returns then the authorities will be after them.

But generally our tax system is self-policing. People are expected to file honest

returns. Some don't. Some get caught. And perhaps some get away with it. But

if people — corporations or businesses —

[ Page

1311 ]

know that the information they're giving with respect to these various tax

returns.... Are they going to be a little more concerned about trying to

withhold certain information that is otherwise important to government if they

know that that information may be in the hands of an organization that operates

worldwide and in the ways that the CIA, for example, does? Why not have a requirement

that they at least be informed that such information has been asked for about

them and that they be told what information is being passed on? There may be

reasons sometimes when that can't happen, but it seems to me we're giving the

minister himself just a little too much authority to deal rather loosely with

information that up to this point has been considered to be very confidential.

We don't know whether this is the same way the eight provinces that we've been

told have signed such an agreement with Ottawa are handling it. Perhaps there's

more protection there for the taxpayers that the information will not be released

unless there's some exceptionally good reason for doing so. Here the legislation

would give the authority to the Minister of Finance. In other jurisdictions

there may be other hurdles that have to be jumped before that kind of information

can be passed on and made public to the extent that this bill would have it

made public.

[11:15]

Will the taxpayers, when they fill in tax returns with respect to these nine

separate tax collections, be told, when they file those returns...? Will

there be a line on the tax returns to the effect — a warning, if you like, like

on cigarette packages, I'm told; I don't have any, so I don't use them —

that any information contained in these tax returns may be shared with the Canadian

national intelligence service, and it in turn shares it with the CIA who shares

it with anybody that they want to share it with? Will there be that warning?

Will there be any kind of a report at any time from the minister as to exactly

what information is being sought in this connection? And to the extent that

the minister is providing the information, will he sometimes deny requests for

information?

Mr. Speaker, I don't really want to go into this as a point, except that the

minister, as an explanation for not telling us about this when he first introduced

second reading and in response to a comment outside, said it's one of over 20

pieces of legislation that he's had to bring in and he just wasn't aware what

was in which and didn't always have the time to read them. I can appreciate

that. I know the difficulties. But I wonder how easily the same sort of thing

will happen with respect to requests for information from the Canadian national

intelligence service? Will it be simply a sort of bureaucratic thing that somebody

handles? Perhaps the minister may sign it in the same way that Radar used to

it was a blank paper that was being signed; of course Radar knew that, but the

commanding officer didn't. Is that the way this thing will be policed when the

minister gets busy?

We're worried, we're concerned, and unless the minister can show us a copy

of the memorandum, can show us what has been signed and exactly what the agreement

is, or can give us some solid assurances that it will not be abused, the opposition

will vote against this bill in second reading simply to register our objection

to this particular section.

MR. D'ARCY : Mr. Speaker, I believe the first member for Nanaimo, being

his usual reasonable self, understated the issue here. I am absolutely aghast

that the government members, that that Social Credit Party which rhetorically

goes to incredible lengths to tell the world how they believe in the rights

of the individual and the sanctity of personal privacy, would countenance their

minister bringing forth a piece of legislation that has never been needed ever

before in this jurisdiction, has never been needed anywhere else in Canada,

and to my knowledge has not been needed in the United States or in other democratic

countries.

This country is not at war. This kind of legislation, this kind of disclosure,

was not needed for security purposes in the First World War, the Second World

War, the Korean War. What national emergency is there? What occurrence? How

has our security been threatened by the fact that individual taxpayers in this

country, private records, have been protected from the scrutiny of the heavy

hand of the Social Credit government of British Columbia? I know of no instance

where it has even been alleged, however unreasonably, that national or provincial

security has been threatened by not having this kind of knowledge in the hands

of the Minister of Finance of this province or any other. It is absolutely ridiculous.

This

section of the bill should be withdrawn, and our group is going to be

voting and dividing against this bill not for this reason alone, but because

quite clearly it is a totally unnecessary interference with the rights of individuals

in this great province.

MR. LOVICK : Mr. Speaker, perhaps I can strike a balance between the

quiet and calm reasonableness of my colleague from Nanaimo and the member for

Rossland-Trail. I think the issue we're concerned about here is, however, a

fundamental one and cannot be overstated.

I'm not going to suggest for a moment that the Minister of Finance is somehow

treating our concerns cavalierly or would dismiss them as overreaction. What

I want to suggest is that the minister's response, when we raised this issue

before, points to what I think is a fundamental and significant concern that

we must not lose sight of. When we spoke some time ago about our fear concerning

where this information would be given and whether it would be accountable to

anybody, available and accessible to anybody, the minister suggested to us that

we didn't really have to worry. If we continued to elect good, sensitive, responsible

government leaders there would be no difficulty, and that's the point I want

to address, however briefly.

The danger in a democratic system of government is that we too often forget

the frailties of the individuals to whom we entrust responsibility. We fail

to recognize that above all, our system of government relies and rests on a

government of laws rather than on individual human beings. The principle is

one that is enunciated in constitutional law. I'm sure the minister is familiar

with the famous Latin question: " Quis custodiet ipsos custodes? " It

simply says, Who watches over the watchers? or Who takes care of the caretakers?

or Who guards the guardians? I think that is precisely the kind of question

we have with this bill, and we hope the Minister of Finance will indeed respond

to a question that we have presented to deal with that concern: namely, whether

we will get a copy of the federal-provincial agreement alluded to in this bill

so that we can examine and understand precisely what it is that we're dealing

with. Unless and until we know

[ Page

1312 ]

the answer to that question, we feel we have no choice but to vote against

the bill.

So I hope we can get those kinds of answers. I hope we can get the assurances

that the individuals whose lives may be directly affected by that transfer of

information will be given some knowledge, some kind of protection.

HON. MR. COUVELIER : First of all, can I just express to the members

of the opposition my awareness of their concern and the reasons for their concern,

and the valid comments they have made this morning. As the House knows, I did

apologize for the rather light-hearted manner in which I introduced the bill

to the House.

As to the question of whether the memorandum of agreement can be shared, I've

already embarked on a request of the Attorney-General's ministry for some guidance

in that respect. The difficulty, as you might appreciate, is that we're talking

about issues of national security, and I have no way of knowing to what extent

the contents of the memorandum might be a matter of public debate. From my point

of view, I have no difficulty with the suggestion that the people's representatives

are entitled to know the people's business. However, I will take guidance on

that particular question from higher legal authorities.

Mr. Speaker, recognizing the valid concerns expressed this morning, I now move

that the bill be read a second time.

[Mr. Speaker in the chair.]

Motion approved on the following division:

[11:30]

YEAS – 30

Savage

L. Hanson

Reid

Dueck

Richmond

Michael

Pelton

Loenen

Crandall

De Jong

Peterson

McCarthy

Strachan

Couvelier

Davis

Johnston

Weisgerber

Jansen

Gran

A. Fraser

Chalmers

Ree

Bruce

Serwa

Vant

Campbell

S.D. Smith

Jacobsen

Huberts

Long

NAYS – 17

G. Hanson

Marzari

Harcourt

Stupich

Skelly

Boone

D'Arcy

Gabelmann

Blencoe

Smallwood

Lovick

Williams

Sihota

Miller

A. Hagen

Edwards

Barnes

Bill 37, Taxation Statutes Amendment Act, 1987, 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. MR. STRACHAN : I call second reading of Bill 11, Mr. Speaker.

SOCIAL SERVICE TAX AMENDMENT ACT, 1987

HON. MR. COUVELIER : Mr. Speaker, Bill 11, by enacting changes to the

Social Service Tax Act, will accomplish a major part of the government's restructuring

of the tax system. In addition, the bill provides certain new exemptions from

tax which will improve fairness and assist specific industries, and makes changes

which will improve the administration of the tax.

The social service tax rate is reduced from 7 percent to 6 percent effective

March 20, 1987. The primary objective of this reduction, the largest single

tax measure in the budget, is to improve the fairness of the tax system. Sales

taxes have often been criticized for imposing a heavier tax burden on individuals

and families with low incomes. In the past, efforts have been made to minimize

the effect on those with low incomes by exempting necessities such as food and

shelter. However, the government has decided that a more effective approach

is to restructure the tax system to reduce our reliance on a sales tax. By lowering

the rate at which this tax is applied, the tax burden will be reduced further,

significantly adding to the progressivity of the tax system.

The expected cost of this measure is $236 million in '87-88. The government

is committed to a further reduction in the social service tax rate to 5 percent

within the '87-88 fiscal year. Although the bill makes provision for this reduction,

the date on which the change will occur is not specified. This is to reduce

possible market disruptions caused by individuals delaying major purchases until

the new tax rate comes into effect.

The third major tax change is that social service tax no longer applies to

restaurant meals. This measure came into effect on March 20, 1987. Eliminating

the tax on meals costing $7 or more removes a significant administrative burden

from the restaurant sector. This measure will also assist the tourism industry

by encouraging visitors to spend more in our restaurants. The expected cost

in 1987-88 is $21 million.

Bill 11 will also make general changes to the list of exemptions from social

service tax. These measures reflect the government's commitment to improve the

equity of the tax system. One of the basic principles of the sales tax is that

an individual should only pay tax once on a particular item. The government

has identified certain types of transactions where the potential exists for

the same person to pay tax more than once on the same item.

New exemptions or refund provisions will be available to avoid multiple taxation

in three types of transactions: sale and lease-back arrangements; repossessions

by the original owners; and repurchase of horses through the claiming process.

This change should eliminate most cases of double or multiple taxation.

Second, effective March 20, 1987, the following changes are introduced to assist

the mining industry: grinding media used to extract minerals from ore will be

exempt; a refund will be available for drill bits used for mineral exploration

and extraction; and a refund will be available for explosives and related blasting

supplies when used for certain specified mining activities.

These changes implement one of the recommendations of the Mineral Industries

Task Force and will provide tax relief of approximately $10 million to the mining

industry in 1987-88. This demonstrates the government's commitment to assist

the mining sector, an industry which has been hit hard by depressed world commodity

prices in recent years.

[ Page

1313 ]

Thirdly, an exemption from knitting yarns and natural fibres used to make or

repair clothes is introduced, effective March 20, 1987. This measure will improve

the consistency of the sales tax because yard-good materials and clothing patterns

used by people who sew their own clothes are already exempt. During the last

year, more than 20,000 people pointed out to me and previous ministers that

taxing yarns discriminated against people who knit their own clothes since yard

goods used to make clothes are exempt. The cost of this measure will be about

$600,000 in 1987-88.

Fourthly, certain safety-, farm- and aquaculture-related items are exempt effective

March 20, 1987. The newly exempt items are similar to the types of goods already

exempt in these categories. These exemptions will also provide additional assistance

to the farming and aquaculture industries. This measure will reduce provincial

revenue by about $400,000 in fiscal 1987-88. Finally, leases or rentals for

terms of less than one month are subject to tax on the lease price, effective

March 20, 1987.

Prior to the budget, short-term leases were exempt from tax. This artificial

distinction between different types of leases has led to administrative difficulties

for some businesses. In addition, there has been an unwarranted incentive for

individuals to create a series of short-term leases when, in effect, an item

is leased for longer than one month. The government is keenly aware of its responsibility

to ensure that the administration of the tax system does not favour one business

over another.

One such case which has emerged in the last year will be corrected by this

bill. Out-of-province television marketing companies which use dedicated cable

television channels to advertise their products in British Columbia will be

required to collect and remit social service tax. Those companies that do not

comply will be unable to use cable television channels within the province.

At present, television marketing companies have an unfair competitive advantage

over British Columbia firms selling similar products.

This is because they do not collect tax on sales to British Columbia residents.

The change will help restore a level playing field by ensuring that these companies

are subject to the same requirements as businesses in British Columbia. This

provision will not become effective until it is proclaimed, in recognition of

ongoing federal-provincial discussions on the issue. The bill also contains

a number of other measures which are designed to improve the administration

of the tax and reduce government costs.

In

summary, this bill accomplishes several important budget measures, including:

a tax rate reduction from 7 percent to 6 percent immediately and to 5 percent

later on this year; changes to the list of exemptions from the tax and other

minor changes which will improve fairness, assist specific industries such as

mining and improve the administration of the tax; and, lastly, removing the

significant competitive advantage currently enjoyed by out-of-province television

marketing companies.

I move this bill now be read a second time.

MR. SIHOTA : In dealing with this bill, I want to essentially focus in

on only one provision that causes me a fair bit of concern. I am sure that the

minister is aware that there is a new subsection (3.1) being introduced in this

legislation that deals with property that is leased by native Indian groups.

On March 16, 1987, the Court of Appeal of B.C., by way of a judgment in a decision

called Metlakatla Ferry Service Ltd. v. British Columbia, ruled on the matter

of conflict between

section 87 of the Indian Act and the provisions of the social

services tax that required individuals to pay tax on lease payments that are

made. In that case the company had acquired a ferry, which was then leased from

the band. As a result of that, under the provisions of the social services tax,

which are obvious, taxes are not payable on the vessel when it's purchased,

but instead a tax is imposed upon the lease payments. I think to that extent

the minister would agree.

However, the company that was leasing this — and it's fair to say that

the company and the band are essentially one and the same, if the corporate

veil were to be lifted.... The tax that was imposed upon the lease pursuant

to the act was not paid by the native group.

As a consequence of the band's decision not to make those payments, the matter

was taken to court, with the government arguing, on one hand, that the provisions

of the Social Service Tax Act ought to prevail, and the native group arguing

that, given what

section 87 of the Indian Act says, the federal legislation

ought to be paramount to the provincial. Just for background,

section 87 of

the Indian Act basically provides that the personal property of Indians or bands

is exempt from taxation if it is situated on a reserve; and in those cases neither

the Indians nor the band are liable for any type of taxation with respect to

that property.

In any event, the issue before the court in simple terms was whether or not

the provisions of

section 87 of the Indian Act superseded the provisions of

the tax legislation. The court, as a result of argument from both sides, ruled

on March 16, 1987 that the provisions of the Indian Act are paramount to the

provisions of the Social Service Tax Act.

[Mr. Pelton in the chair]

That decision was handed down on March 16, 1987 and four days later we saw

the proposed amendments to the act and the introduction of subsection

(3.1) in the legislation. Apart from simply questioning the timing — because

I also appreciate the fact that most of this legislation did come down on March

20, 1987 — so I don't want to suggest that there is any motive that can

be labelled as suspicious on the part of the government. But I do want to say

that if one were to take a careful reading of that decision, it's evident that

section 87 of the Indian Act ought to prevail. It always has and the Court of

Appeal decision simply did that.

[11:45]

We have subsection (3.1) being brought forward which tries to bypass

the Court of Appeal decision, and by bypassing the Court of Appeal

decision it hopes to now attach a tax to these types of lease

arrangements entered into by native bands. It strikes me that the

amendment, without going into the wording of it...because I also think

that the new subsection is very poorly worded. But apart from that, the

point still remains that I believe that at the end of the day

subsection (3.1) will be deemed again to be ultra vires, because I

think we all know as a basic rule that federal legislation is paramount

to provincial legislation.

All the ministry is inviting by introducing this subsection is further litigation

on this very matter. I'm sure we've spent, in the case of taxpayer problems

in British Columbia, a fair bit of money to take this case to the Court of Appeal,

let alone the expenses that have been incurred by the native groups; and we've

just invited more litigation, litigation which, in my humble opinion, will result

in the same type of decision —

[ Page

1314 ]

that the provisions of

section 87 which have been tested over and over again

in numerous provinces, not just in British Columbia, are paramount to provincial

tax legislation.

So on that basis alone I have significant problems with what is being proposed

here in the legislation and I look forward to the comments the minister may

have to make. I would implore the minister — and we'll deal with it again at

committee stage — to take a second look at that provision, which achieves

very little except invite further litigation. I'm sure, given the minister's

comments in the past about people who come from the same profession as I do,

the last thing the minister would want to do is make people in that profession

even more rich, because they are the only profession that really stands to benefit.

I would implore the minister, therefore, to recognize that (3.1) is ultra vires.

It is outside the ability of the province to pass that type of legislation,

and hopefully by the time we get to third reading on this, subsection

(3.1) will be withdrawn.

MR. MILLER : I too wish to speak to that particular

section in a slightly

broader context.

I was pleased to hear, when I first came down to Victoria and listened to the

throne speech.... I am going to quote the words spoken at that time with

respect to the whole question of this government's relationship with native

Indian people in British Columbia and directions that seemed to me were spelled

out: "My government seeks a new, mutually productive relationship with

the native Indian people of our province. The recently formed committee of cabinet

responsible for native Indian affairs will work closely with our native people

in self-government matters and matters of mutual interest."

Having heard that, as I said, and having been somewhat heartened by the tone,

and what I sensed was a change in direction, I am disappointed that the government

has brought this

section into Bill 11. It seems to me that a lot more work is

required to be done by the government in trying to improve their relationship

with the native Indian people. Beyond that, and much more important, is to try

to resolve some of the outstanding issues that we have in this province around

the question of aboriginal title and land claims.

The government indicated that they wanted to deal with the issue more in the

vein, if you like, of economic development. I would really wonder at the impact

that this kind of change is going to have in terms of that question. My colleague

has mentioned the issue of the Metlakatla ferry, and it was with some struggle

that that band managed to put that whole enterprise together. It was welcome,

and I think it is always welcome when we can see that kind of initiative and

enterprise in terms of job creation and people being productively employed.

Perhaps some members don't realize the great odds that exist in some native

communities in trying to promote those kinds of developments. Certainly this

amendment contained in Bill 11 will do nothing to foster or enhance that kind

of development.

I hope my colleague from Esquimalt-Port Renfrew is absolutely correct when

he suggests that the provision would be ultra vires, and I hope that is the

case. But even if it is not, there are lots of reasons why the government should

not proceed with this kind of amendment. I don't think it is going to do any

good for their relationships or any efforts that they are going to make in trying

to improve the situation for native Indians in this province, in terms of the

revenue that would be gained by the amendment. I don't know if the government

has an estimate of what it would be, but I would suggest it is not that large.

So I think there are ample reasons for deleting this section.

MR. STUPICH : It is very difficult for the opposition to consider voting

against a tax reduction. May I say that we are not up to the challenge; we are

not going to vote against it. But may I say also that personally I have some

real question about the advisability of this and wonder at the direction of

the government. The minister did try to tell us something of his philosophy

in introducing second reading of this bill, but there is a lot more that I would

like to discuss with him, and will on this bill to some extent, and perhaps

to a greater extent in his estimates, assuming we get to those eventually.

When I think of the loss in revenue.... The minister drew attention to

the figures. Dollarwise it is the largest single item in the budget, $236 million.

Something just over half of that is being paid by the consumers, so they are

saving perhaps $132 million, according to the latest figures I have been able

to get. So it is a significant saving. But it is a saving that I feel is not

as progressive as it would have been if we were still under the rules as they

were when the sales tax was first imposed, for example. There have been a lot

of exemptions that have made it a less regressive, more progressive tax.

I think of what could have been done with that extra $240 million by way of

helping those who aren't able to help themselves. The minister, for example,

did say that the GAIN supplement is being increased this year, and it is being

increased by an amount calculated to protect those who are receiving GAIN from

the increase or the service fee they are having to pay for prescriptions. Let's

hope that one will balance the other off, and some who don't use prescriptions

might even come out a little bit ahead. But those are the people that are spending

the money in their communities and keeping the wheels going. If they had that

extra money to work with, instead of giving $120 million back to industry by

reducing the sales tax.... That is approximately the portion that industry

will be saving. If all that saved money were used and were given to the lowest-income

people in the province, then they would be spending it in their communities,

they would be improving their own lives to some extent, and they would be improving

the economic life of their communities.

There are better ways that it could have been done, rather than to simply reduce

the rate — a rate, to the best of my knowledge, about which there was little

concern. I heard all kinds of suggestions as to what the minister could do in

his budget; I'm sure he and his staff heard many others as they travelled the

province. I don't recall ever hearing anything about the rate of the sales tax.

I know it's higher in some provinces, and I know Alberta has none. I just don't

believe there was that much objection to the sales tax; not nearly the objection

that there has been raised to the new imposts introduced by the minister in

the budget before us. When I think of the ways in which he's gone after the

lowest-income people in particular: in other legislation changes to the homeowner

grant, which are going to hit those of lowest income, and to some extent the

senior citizens; the changes in income tax, which reduce the rate of tax for

the highest-income people and increase it for the lowest; the insurance premium,

which, again, is hitting everybody to the same extent, I suppose, but it hurts

the lowest-income people hardest; the prescription fee I've already mentioned;

the fee for ancillary

[ Page

1315 ]

house services, at $5 every time you go — it's $5

for each one of us, for each time, but the lowest-income people, again,

are the ones hurting most.... So it would seem as though this is one

more way in which the minister said that those who want to go out and

spend their money on luxuries....

I didn't mention the restaurant tax. I think it is a good move to take that

off. I agree with the minister: it was costing a lot of money to administer,

from the point of view of the restaurants, and was almost impossible to check.

Restaurants were trying to find ways of getting around it. It was a nuisance

more than a way of raising money. That is a good move. And there are other good

moves in this legislation.

Personally, I can't feel very happy about supporting a move to reduce government

revenue by $140 million, when at the same time I know that more than that amount

is being taken out of the pockets of the lowest-income people in the province.

I think there could have been a better way.

The opposition will support this legislation.

MR. D'ARCY : Naturally we're pleased — I think, as all members are —

at the appropriateness of any tax reduction when the Minister of Finance deems

it possible.

I want to speak briefly about the restaurant tax, and say how pleased I am

that it is being eliminated. It was clearly one of the most insidious and ridiculous

taxes that we've had in the province of B.C. in recent years. Once again, the

first member for Nanaimo (Mr. Stupich) was very reasonable when he said it was

a nuisance tax. I can think of far more heavy-duty descriptions of it than that.

So we're very happy that it is gone. And I hope, Mr. Speaker, that we never

again see that type of taxation in British Columbia that's retroactive; that

there's an exemption up to a certain point, and then, all of a sudden, it's

retroactive to one cent, which is what the restaurant tax was. Clearly it taxed

unfairly one of the major job-producing areas of our economy. I'm heartily happy

to see it gone.

However, a more important point I want to make, Mr. Speaker, is that, while

I'm naturally happy to see reduction in this overall sales tax, it is my view,

strongly held, that the Minister of Finance, if he has room in his budget to

reduce some taxes in British Columbia, should be looking at taxes, the reduction

of which would produce jobs and economic activity in British Columbia.

Next to the restaurant tax, the silliest tax in terms of killing jobs in B.C.

is the water tax, or electricity royalty. Although the minister will, like his

predecessor, get up and say: "Oh no, it's not a tax or a royalty; it's

indeed a water rental," that term "water rental" is worthy of

George Orwell himself. The fact is, no tax in British Columbia has suppressed

jobs in the resource industries and in manufacturing and impacted — to

use the minister's own term — regressively on the consumer as that tax

has. On the average it applies to about 20 percent across the board to electricity

costs in the province of British Columbia. I think the term the minister used

was: he wants to reduce the "regressivity." I think he must have been

talking to the Hon. Mr. Joe Clark when he came up with reducing the "regressivity,"

because that's the sort of language we would expect.

However, Mr. Speaker, I want to impress my feeling, hopefully on the minister,

that in the province of British Columbia the basic economy is fuelled by jobs

in manufacturing and in the resource industries. The service sector and the

retail sector take their money and recycle it from those bases. After all, to

the unemployed person, Mr. Speaker, it doesn't really matter whether....

To the person who has no money to spend on taxable items, it really doesn't

matter whether the sales tax is 6 percent or some other figure. The bottom line

is to get more people working in British Columbia, and a good way to start with

tax reduction would have been the water tax.

[12:00]

HON. MR. COUVELIER : Mr. Speaker, the points made about subsection

(3.1) deal with a very sensitive subject, the relationship on native Indian matters

between the federal government and the provincial jurisdiction. For the information

of the members opposite, our best information is that the amendment dealing

with that subject will not be ultra vires and is defensible.

The very question that was raised is passing strange, and while far be it from

me to comment on a decision of the courts, I nevertheless find it difficult

to understand how a ferry that's used off the reserve was found to be based

on the reserve and therefore tax exempt. In any event, we're talking about a

principle here, and we have all kinds of evidence that suggests that the exclusion

of sales tax on transactions undertaken by natives, which might at their choice

be passed on to others, thereby providing a tax advantage and increasing the

lack of competitiveness in the marketplace, is something that has to be addressed.

There is a basic inequity in the situation as it presently exists, and we are

very actively involved in discussions not only with the natives but also the

other ministries and other governments on that subject.

I can remember a press statement only two weeks ago by a native leader, commenting

that it was their intention to import taxable goods and sell them to non-natives

tax exempt. If you talk about the economic impact in rural B.C., I can't envisage

any more dramatic impact on a retailer, say, in the local communities of this

province with any kind of major initiative that might be undertaken by native

bands in that respect. I trust the members would agree with that comment.

So, Mr. Speaker, with those comments I'm pleased to move second reading.

Bill 11, Social Service Tax Amendment Act, 1987, 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. MR. STRACHAN : Mr. Speaker, I call second reading of Bill 8.

INCOME TAX AMENDMENT ACT, 1987

HON. MR. COUVELIER : Mr. Speaker, the amendments made by Bill 8, the

Income Tax Amendment Act, 1987, are an integral part of the government's program

for restructuring the taxation system.

The current tax legislation is extremely complex, making it difficult for the

average taxpayer to comprehend. Let me stress that the government is committed

to easing that situation. These amendments will reduce complexity, through the

revision and elimination of certain sections of the Income Tax Act. The first

step in this process is the repeal of the 10 percent high-income surtax and

the 8 percent health care maintenance surtax. Those sections of the 1984 Income

Tax (Health Care Maintenance) Amendment Act, which have never been brought into

force and which relate to the health care maintenance levy, will also be repealed.

[ Page

1316 ]

One of the fundamental principles underlying the design of the income tax system

is the progressive nature of the taxrate structure. Application of this principle

ensures that fairness and equity are maintained in the levy of provincial income

taxes and that taxes increase as the taxpayer's ability to pay increases. It

is due to the progressive nature of the income tax that the government has chosen

to shift the burden of taxation onto this tax from the less progressive social

service tax. Thus, the basic individual tax rate is being increased to 51.5

percent from the average effective rate of 48 percent, including the previous

surtaxes. This single rate is applied through the federal-provincial joint tax

collection system to basic federal tax, which in turn is calculated by applying

the federal rate structure to taxable income. By applying a single provincial

income tax rate to basic federal tax, the provincial system automatically reflects

the progressiveness that is inherent in the federal rate structure.

[Mrs. Gran in the chair.]

Unfortunately, this increase in the personal income tax rate has substantially

increased the degree of disparity between the individual and small business

corporate tax rates. Failure to correct this situation would result in some

taxpayers — especially high-income professionals — incorporating simply

to reduce their effective rate of income tax. The government is committed to

preserving a measure of harmony in the integration of the individual and corporate

tax rates in the interest of fairness. Accordingly this bill increases the small

business corporate tax rate by 3 percent to 11 percent.

The repeal of the individual surtaxes and revision of the individual basic

tax rate will take effect January 1, 1987, for the 1987 and ensuing taxation

years. As the changes are being introduced part-way through this year, the new

rate will not be reflected in source deductions until July 1, 1987. However,

source deductions in the six-month period July to December 1987 will be adjusted

to ensure that collections reflect the 51.5 percent rate applied over the full

1987 calendar year.

Finally, by virtue of the straddle provisions contained in this bill, the small

business corporate tax rate adjustment will be effective July 1, 1987, for whatever

portion of each company's taxation year occurs after that date.

I move the bill be now read a second time.

MR. STUPICH : Madam Speaker, this is easier. We have no problem at all

with this bill. We all quite wholeheartedly oppose the legislation before us

right now — that is, on the opposition side.

While it does provide for a tax reduction in some ways, it much more

than makes it up with the increase. And in spite of what the minister

said about the progressivity of the Income Tax Act in raising

government money, it moves a step away from that by doing away with the

high-income surtax. While the minister said that it makes the tax form

less complicated, I would think that the 102,500 people who paid this

tax in the year just finished, to the tune of some $30,600,000, are

much more interested in saving the $30,600,000 than they are in seeing

one line left off the tax return. I think it does little to improve the

tax return, but it would have cost the government -had it been in

effect a year earlier-some $30,600,000. It does reduce the rate of

income tax for the people in those highest-income tax brackets, along

with increasing it for the.... Everyone in the lowest and in the

middle-income groups will be paying a higher rate of tax than before.

The people in the highest tax brackets will be paying at a lower rate

of tax — more tax, but at a lower rate than they were before.

So, Madam Speaker, it's not progressive; it's regressive in its application

in that respect. While I can appreciate the desire and the good sense it makes

to incorporate the health maintenance surtax in with the general income tax

rate.... That's really what it was in any case, just another way of calculating

income tax and putting a fancy name on it, and we opposed it at the time it

was introduced, partly on that basis and partly on the basis of the increase

at that time. But in this particular instance the bill on the whole is regressive

rather than progressive, and on that basis the opposition opposes it.

MR. MILLER : Madam Speaker, I too want to register my opposition to it.

Unless we start to deal with the whole problem of tax fairness in this country,

we're going to get into the tax revolts that we've seen in other jurisdictions.

Working people, when they do have well-paying jobs, really pay through the nose.

There are no exemptions and none of the devices used to escape tax that are

so common in the business world. They really get socked when they're earning

a fairly decent income, and increasingly they're starting to register their

displeasure at being the main taxpayers in this country. Unless we start to

get into reform of the tax system.... We see some reforms in the United

States. But to perpetuate a system — and this bill really does perpetuate a system —

that really sees the people in the mid-income level paying a much higher level

of real taxation than those in the upper income brackets.... We're doing

nothing to solve what I think will become an increasingly important question.

This bill is clearly designed just to raise additional revenue, and it's not

creative or imaginative. It really does not deal with the fundamental problem

of tax fairness. I think that that's an important question and one that governments

increasingly are going to have to pay attention to, and do that fairly quickly.

HON. MR. COUVELIER : Madam Speaker, I can well understand why the opposition

party would have difficulty dealing with a tax increase and therefore would

vote against it, but frankly I cannot agree with the comments I've heard so

far on this bill. It seems to me that it was intellectually and morally correct

to remove the two surcharges that had existed in our income tax schedules for

many years.

If you look at the charts comparing tax rates of other jurisdictions

across the country, they are so full of footnotes and qualifications

and different trigger points and different exemptions that

comparability is absolutely confounded and becomes impossible. In

attempting to deal with the question of what is a fair tax structure —

and we spent considerable time considering that matter — it became

obvious that most provincial jurisdictions hid behind a lot of almost

artificial devices that created the impression, in the public mind at

least, that they had a low tax rate. The fact is, there were

surcharges, exemptions and different trigger levels, such that the

spoken statement of fact was frequently not quite accurate. In any

event, we think it's morally defensible to eliminate those surcharges.

Secondly, dealing with the question of tax rates for the poor, no matter at

what point you set your plateau for higher tax rates or lower tax rates, those

falling just under the net or

[ Page

1317 ]

just out of the net will feel abused, and we can all wax eloquent about how

they're being treated unfairly. Any progressive tax system has to have plateau

and trigger levels, and all we can do in that respect is our very best to try

to be fair about it. But the basic point made with the budget taxation philosophy

is that we wanted to get into a progressive tax system, which is what an income

tax system is. We could hardly have reduced the sales tax had we not also found

some other devices that might enable us to raise the revenues we need to increase

spending in the areas of education, health care, student aid, social services.

We made, with this budget, the most dramatic increases in spending in the recent

history of this province, and I'm very proud of that. Obviously that has to

be paid for.

With the modest increases in provincial income taxes contained in this bill,

we are still the second lowest of all the provinces in Confederation. No one

who studies the figures could claim logically that the British Columbia resident

is abused by the income tax rules and regulations in this province. They are

not, Madam Speaker. Our tax structure compares very favourably vis-a-vis the

rest of the country. But most important, we made a philosophic decision that

we were going to get into progressive taxation and away from regressive taxation,

and that's what this bill does.

I now move second reading.

Bill 8, Income Tax Amendment Act, 1987, read a second time on division and

referred to a Committee of the Whole House for consideration at the next sitting

of the House after today.

HON. MR. STRACHAN : Madam Speaker, I call committee on Bill 5.

ASSESSMENT AND PROPERTY TAXATION

AMENDMENT ACT, 1987

The House in committee on Bill 5; Mr. Pelton in the chair.

Sections 1 to 5

inclusive approved.

Title approved.

HON. MR. STRACHAN : Actually, the minister should do it, but I'll do

it. I move the committee rise and report the bill complete without amendment.

[12:15]

Motion approved.

The House resumed; Mrs. Gran in the chair.

Bill 5, Assessment and Property Taxation Amendment Act, 1987, reported complete

without amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 7, Madam Speaker.

CORPORATION CAPITAL TAX

AMENDMENT ACT, 1987

The House in committee on Bill 7; Mr. Pelton in the chair.

Sections 1 to 3 inclusive approved.

section 4.

MR. STUPICH : Just looking at

section 4, 18.1(1), I just want to make

sure I understand this. The way I read this, the corporation calculates its

corporation tax payable and from that deducts any income tax payable. Is it

total income tax payable to the federal government and provincial government?

HON. MR. COUVELIER : That's correct.

MR. STUPICH : I find it hard to see a situation — but I guess I

haven't seen corporation capital tax returns — where a company would be paying

more corporation capital tax than it would income tax, but maybe financial institutions

do. I thought the minister yesterday in second reading said that it would be

from the provincial corporation tax, and this didn't read that way, and I wondered.

Now corporation tax itself is deductible before you calculate income tax. It's

a deductible expense. It seems to me this is going to make the calculation a

little more complicated than the high income surtax was. As I understand it,

you calculate your corporation capital tax, you then calculate your corporation

income tax and deduct, along with all the other expenses of operating, the corporation

capital tax, and arrive at an income tax payable, and then start all over again.

I'm not sure — how does this work?

HON. MR. COUVELIER : It's been some years since I've filled out a tax

form in that respect myself. However, it is is true that the reason we have

been concerned with the amount of taxation that has been paid by financial institutions

is that they have not had very significant income tax payments. As a consequence,

we felt compelled to introduce our own taxation measures to make sure that we

did get at least some minimum level of return for their presence in our province.

Now in terms of the sequence of presentation, if you had some specific questions

maybe we could deal with them, but I have some trouble with the general nature

of the question. Could you help me out so that I might give some specific answers?

MR. STUPICH : Mr. Chairman, I am going to try. I am having a little difficulty

too.

You calculate corporation capital tax on the basis of the criteria, the amount

of money borrowed, long-term borrowing and reserves, and all that kind of thing.

That's the calculation that takes place before you calculate corporation income

tax, because corporation capital tax is an expense that is included before you

arrive at your taxable income. It is one of the expenses deducted along with

all the other expenses before arriving at the income upon which you calculate

your corporation income tax.

You have to then know what the corporation capital tax is before you can arrive

at your corporation income tax, and having decided what your corporation income

tax is, that then is deducted from the corporation tax. In the event that it

is zero or less, then there is no corporation capital tax paid. That is the

last opportunity that the two of us will have to discuss this, Mr. Chairman,

and I am afraid we are not going to get very far. I wonder if the ministry really

has thought this

[ Page

1318 ]

through in detail. I suppose they must have, because it is not a very long

bill. But I don't understand the calculation; it is going to be difficult.

HON. MR. COUVELIER : Mr. Chairman, I will be pleased to send a memo showing

those calculations at the earliest convenience.

Sections 4 to 6 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report

the bill complete without amendment.

Motion approved on division.

The House resumed; Mrs. Gran in the chair.

Bill 7, Corporation Capital Tax Amendment Act, 1987, reported complete without

amendment, read a third time and passed on division.

HON. MR. STRACHAN : Committee on Bill 10, Madam Speaker.

INSURANCE PREMIUM TAX AMENDMENT ACT,

The House in committee on Bill 10; Mr. Pelton in the chair.

Sections 1 to 3 inclusive approved.

Title approved.

HON. MR. COUVELIER : I move the committee rise and report the bill complete

without amendment.

Motion approved.

The House resumed; Mrs. Gran in the chair.

Bill 10, Insurance Premium Tax Amendment Act, 1987, reported complete without

amendment, read a third time and passed.

HON. MR. STRACHAN : Committee on Bill 12, Madam Speaker.

HOTEL ROOM TAX AMENDMENT ACT, 1987

The House in committee on Bill 12; Mr. Pelton in the chair.

Sections 1 to 3 inclusive approved.

MR. STUPICH : Mr. Chairman, you're moving a little bit fast for me. I'm

sorry, but I'm trying to find this "other entity" phrase, and I'm

not sure which

section it's in. I thought we were on a different bill; I was

on 13 when you were on 12. It refers to municipalities, regional districts,

or other entity....

AN HON. MEMBER :

Section 4(3).

section 4.

MR. STUPICH : Thank you. Yes, it says "eligible entity." Who

could that…?

MR. WILLIAMS : What is an eligible entity?

HON. MR. COUVELIER : Mr. Speaker, the difficulty we have in considering

how to draft this particular legislation is that it is conceivable that there

may be in some areas of the province a particular limited geographic area that

is neither a regional district or a municipality but rather some other organization

or some other geographic structure that might be represented by a different

type of organization.

The tourism industry is probably one of our most dynamic industries currently

in B. C., and I'm sure the members opposite are aware that in their own communities,

there are new alliances, new consortiums of mutual interest being formed for

the purpose of promoting tourism and doing a variety of things related to tourism.

In order to ensure that we had the flexibility to react quickly to whatever

a community or area wanted to do in terms of its tourism efforts.... I don't

use the word "promotion," because it may well be and I think it currently

is.... There is enough financial flexibility in the area of promotion itself.

But in the broader scheme of things, there may be some areas of the province

that need some seed capital — some nurturing — and we wanted to provide

it with this kind of description.

Unless the Minister of Tourism (Hon. Mr. Reid) were able to provide

a current, up-to-date report as of 12:30 today as to what likely

structures might arise.... I know I'm not able to do it. But in

discussing how the act would be drafted, we considered and wanted to

make sure that we had as much flexibility as we could for the local

communities to deal with this.

MR. STUPICH : Mr. Chairman, I question the need for this other eligible

entity. The legislation provides that at the request of a municipality or regional

district, the minister will agree to the imposition of an additional two points

in the rate of hotel room tax. Now if the community of Nanaimo, for example,

wanted to do something for one area within that community, then what it has

to do is pass a bylaw, and the minister approves it, or whatever the procedure

for approving it is, and the municipality says, "This is precisely what

we're going to use it for. We're going to use it for developing this particular

project." You don't need a special entity.

[12:30]

For example, could this eligible entity be a gambling casino? The minister

is shaking his head, so of course that's ridiculous. Perhaps it is ridiculous,

but then what isn't? If we put in and give the authority to the minister to

determine whether or not an entity is eligible, when he already has the authority

to deal with a regional district or a municipality, and the whole of British

Columbia is covered by regional districts.… There isn't a square inch of

the province that isn't in some regional district. It would seem to me that

if it has the support of the elected officers of a municipality or of a regional

district, then the voters in the area have had some say in deciding whether

or not this kind of thing should happen. But if it's left to an undefined eligible

entity and we don't even know how it is going to be defined or who it will be

[ Page

1319 ]

defined by, then I feel this brings in something that may lead to abuse. The

minister said, in discussion of another bill, that all you have to do is elect

good people. I would suggest that right now the majority of people in the province

feel they didn't do that in the last election.

SOME HON. MEMBERS : Oh, oh!

MR. STUPICH : That isn't a safeguard. It might be for today, but by tomorrow

people's opinions change. So it isn't enough to say: "I'm a good minister

and I won't abuse this." I don't think that power is needed, and I'd like

the minister to convince me that it is necessary.

HON. MR. COUVELIER : Mr. Chairman, I agree. I can't envisage it either

in the area of Nanaimo, where anything other than one of the local elected bodies

would deal.… But we have areas of this province where the regional districts

are so huge that there's hardly any compatibility or agreement in terms of what

one community or one town in that regional district might wish to do over another.

It's also conceivable that there might be an entity even larger than a regional

district. Let's consider, for example, Vancouver Island. We have often talked

at the local government level about the fact that Vancouver Island is, and should

be, the destination centre for tourists — not Victoria, not Nanaimo, not

Sidney, not Port Hardy, but Vancouver Island — and that it's about time

we came to grips with the fact that we will be far stronger as an island people

if we can work together and cooperate to develop our own tourism infrastructure

that maximizes the opportunities that are out there for us.

The finance critic suggested — and focused on this — that the problem

might well be smaller jurisdictions, or part of an existing local government.

But the reverse might be true; it might be an amalgam of many regional districts.

On Vancouver Island we've got five or six regional districts, if I'm not mistaken.

So for an Island-wide initiative to be undertaken, it would obviously have to

be a different entity than either a local government or a regional district.

It would likely be the Association of Vancouver Island Municipalities, which

is a very loose confederation of local government members.

I think it's important, given the dynamics inherent in the tourism industry,

that we introduce and maintain as much flexibility as we possibly can so that

no opportunities are missed; maybe more importantly, the opportunity for local

government representatives, whether elected, appointed or self-appointed —

it doesn't matter — to make a case that would convince the government that

they should be considered a separate entity. It is a fast-moving industry with

a whole different set of dynamics than we have ever experienced before.

MR. MILLER : Just for clarification, if that term "or other entity"

wasn't in there — let's use his own example, an association of municipalities

or regional districts on Vancouver Island — is the minister saying then

that they would be prohibited from getting together and deciding in each of

their territories, whether it be municipality or regional district, to carry

out the kind of program that you were talking about, a group program in terms

of: "We'll all do this in our respective municipalities for a broader purpose?"

Is the minister saying that without "entity" they would be prevented

from doing that?

HON. MR. COUVELIER : I don't know whether I am being confused or the

questioner is. As I understood the question, it was that it should be adequate

to leave as a definition a municipality or regional district; why would you

add "other entity"? If I understand the thrust of your question, it

is: "Are you saying that you wouldn't allow another entity?" Am I

not following this properly? Maybe you could elucidate a bit so I can be wiser.

I would like to be wiser.

MR. MILLER : In elucidation, Mr. Minister, you used as an example for

having this entity in the legislation some unforeseen circumstance, some unforeseen

situation that would not be covered by a municipality or a regional district.

You used the example of Vancouver Island, where presumably you were talking

about a collection of municipalities or a collection of regional districts.

You seemed to suggest to me that that would qualify as an entity, and that is

why you required this in the bill.

My question to you was, I thought, fairly simple. If that word "entity"

did not appear, are you suggesting that they could not do that, that they could

not combine forces and still carry out the purpose of the legislation in terms

of enacting this tax? In other words, is the term really needed?

HON. MR. COUVELIER : Not being a member of the legal

fraternity, I am starting to move into waters I could be quickly

criticized for not being competent in. But as I understand that

wording, "a municipality, regional district...shall not expend for a

purpose other than a prescribed purpose...." It seems to me that that's

a limiting clause, and in order to allow total flexibility, you've got

to add "eligible entity." I think it's obvious to all of us that.… I

haven't introduced it here in my response, but the obvious entity that

might qualify under this would be a convention centre, in terms of how

to pay for its loss if there is a projected loss in its operation. So I

can visualize in some communities — greater Victoria being one of them

— that local governments may choose to use this option for that

purpose; and there are others around the province, I think. But it

isn't intended merely for the operation of convention centres, I hasten

to add. It really is sort of an enabling piece of legislation that

allows a dynamic industry to, upon application to us, move in some new,

exciting directions as those opportunities may occur to them.

MR. MILLER : My understanding is that only government can tax. Would

this allow this entity, private corporation, whatever...? Are they going

to be allowed, under this legislation, to tax? That's surely the purview of

government only — elected government; not appointed, elected. The levels

we have in this province are provincial, municipal, regional district and school

board. Is there a danger here? I don't want to blow this thing out of proportion,

but is that a danger here?

HON. MR. COUVELIER : I apologize. I didn't understand where you were

coming from. Quite clearly, we're not expanding the taxing authorities in the

province. So these entities would be making application to the appropriate

[ Page

1320 ]

taxing authorities for permission to tax. There is no suggestion that we would

be expanding the taxing authority. That's not suggested.

MR. WILLIAMS : But they get the revenue.

HON. MR. COUVELIER : You know, we can't have it both ways. I don't think

we can sit in this House and say we're the wise people and we will adjudicate

what's best for the people in the communities, or, on the other hand say: "Here's

a piece of enabling legislation; tell us that you need it and we've got this

enabling legislation to provide it." We can't have it both ways, Mr. Chairman.

MR. STUPICH : I think even the minister doesn't really know

why he wants this, and if it is something that's important, it could be

done at a later date. I want to move an amendment to

section 4, dealing

with 2.1(2), where it reads: "...where on the request of...." My

amendment is to delete the words "municipality, regional district or

eligible entity" and to substitute "municipality or regional district."

The effect is to remove the reference to an eligible entity.

I invite the minister to accept this amendment. It's not hurting the purpose

of the legislation in any way at all. It does away with concerns we have. As

a matter of fact, at one point the minister said it doesn't matter whether it

is an appointed group or an elected group. Well, it does to us. We think that's

important, and what we're suggesting would certainly not in any way at all impede

the progress of any plans now being considered by the minister. Of course, the

Minister of Tourism, Recreation and Culture (Hon. Mr. Reid) isn't here. It's

always possible that something might have to be done at a later date to clear

this up, and at that time there would be a better argument in favour of it and

some specific reasons for wanting to include it. So I commend this amendment

to the minister's attention.

MR. CHAIRMAN : The member has filed a copy of the amendment with the

table, and it is in order.

On the amendment.

HON. MR. STRACHAN : The government will not be accepting the amendment.

Also, the amendment is incomplete because it doesn't refer to other mentions

of "entity" throughout the bill. We will not accept it out of principle,

but there is also a flaw.

MR. CHAIRMAN : The amendment is still in order, so we'll call the amendment

section 4. Shall the amendment pass?

Interjections.

MR. CHAIRMAN : I would say the noes have it.

MR. REE : On a point of order on the proposed amendment, I draw the House's

attention to the definition of "municipality" under the

Interpretation

Act, which gives the impression that there are legal entities within the province

other than a municipality or regional district. I would suggest this term "entity"

is appropriate, so I will be voting against this amendment. If hon. members

would look at the

Interpretation Act, I think they'd appreciate the reasons

for it.

MR. STUPICH : Mr. Chairman, I think we already voted, and you declared

that the nays had it. I'd like to call for a division on that.

Amendment negatived on the following division:

[12:45]

YEAS – 13

G. Hanson

Stupich

Skelly

Boone

D'Arcy

Gabelmann

Blencoe

Smallwood

Lovick

Williams

Miller

A. Hagen

Edwards

NAYS – 26

Savage

Reid

Dueck

Richmond

Loenen

Crandall

De Jong

Peterson

McCarthy

Strachan

B.R. Smith

Couvelier

Davis

Weisgerber

Jansen

Gran

A. Fraser

Ree

Bruce

Serwa

Vant

Campbell

Long

Huberts

Jacobsen

S.D. Smith

section 4.

MR. BLENCOE : I just want to comment briefly upon this eligible entity

question. I think I know what the Finance minister is trying to achieve, but

unfortunately, where I think we got into trouble this morning is that the minister,

for whatever reason, hasn't laid out the entities that will be eligible. I know,

for instance, and the minister referred to it, that the Association of Vancouver

Island Municipalities.... There are other associations across the province,

like the North Central, that I have had discussions with, who would like the

ability to be able to do some regional kind of tourist promotion and that sort

of thing, and they don't have the ability to do that on a financial basis.

I think we were correct in voting against this

section and moving an amendment.

Unless we have laid out those elected groups that will receive public dollars,

we could get ourselves into trouble with this kind of section. Being the Municipal

Affairs critic, I certainly would suggest that the minister go back with whichever

other ministries are involved and lay out which elected groups would have the

power to participate in this

section and who would be eligible. I certainly

don't think we would have any trouble, Mr. Chairman, if a region.... We

as a party are promoting regional differences and uniqueness and the ability

to develop them on an economic basis, but we would like to see a list of what

groups are eligible.

As to the minister's point that there may be areas that don't have representation

or elected groups, well, partially that's true. But every area, as our critic

suggested, is represented by a regional district, and the minister is aware

that that regional district could apply for those funds. Then, as an elected

group, if they see fit they could allocate those dollars to an organization

in the region that wished to carry out promotion or whatever. I think that would

be the appropriate way. I think you've got to work through elected bodies, and

at the moment that's clearly not laid out, and that's our concern.

[ Page

1321 ]

But we would certainly support some regional approach to tourism. No question

about that.

Section 4 approved.

Sections 5 to 8 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report

the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 12, Hotel Room Tax Amendment Act, 1987, reported complete without amendment,

read a third time and passed.

Interjections.

AN HON. MEMBER : Adjourn.

HON. MR. STRACHAN : No, the second member for Saanich and the Islands

has some business to do.

VICTORIA FOUNDATION ACT

MR. HUBERTS : Mr. Speaker, I move that Bill PR402 be read a second time.

I've mentioned already that the Victoria Foundation is a successful non-profit

foundation which was created by private act in 1936, and today has assets totalling

more than $2.5 million. In the last decade it has given close to $1 million

in grants for the aged, for educational programs, for cultural and other charitable

purposes.

MR. G. HANSON : Mr. Speaker, I would just like to indicate that we are

supportive of the objectives of this foundation, which are to receive donations

and to hold in trust property that is donated by individuals in the greater

Victoria area. We would like to urge support for the foundation.

Motion approved.

Bill PR402, Victoria Foundation 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.

UNIVERSITY OF VICTORIA FOUNDATION ACT, 1979

AMENDMENT ACT, 1987

MR. HUBERTS : Mr. Speaker, I move that Bill PR406, the University of

Victoria Foundation Act, 1979 Amendment Act, 1987, be read a second time now.

MR. G. HANSON : Mr. Speaker, I understand that this particular statute

allows the University of Victoria to administer scholarship funds. We are clearly

in support of that — the more the better, given the educational system

in this province. We support it.

Motion approved.

Bill PR406, University of Victoria Foundation Act, 1979 Amendment Act, 1987,

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. MR. STRACHAN : I will advise the House now that in all likelihood

we will be sitting Wednesda