1979 Legislative Session: 1st Session, 32nd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, JUNE 22, 1979

Morning Sitting

[ Page

321 ]

CONTENTS

Routine proceedings

Committee of Supply: Ministry of Finance estimates.

On vote 100.

Hon. Mr. Wolfe –– 321

Mr. Stupich –– 324

Hon. Mr. Wolfe –– 327

Mr. Kempf –– 328

Mr. Stupich –– 328

Mr. Levi –– 328

Hon. Mr. Wolfe –– 329

Mr. Hanson –– 335

Mrs. Jordan –– 336

Mr. Hall –– 336

Hon, Mr. Wolfe 337

Mrs. Dailly –– 337

Hon. Mr. Wolfe –– 337

Mr. Howard –– 337

Appendix –– 340

FRIDAY, JUNE 22, 1979

The House met at 10 a.m.

Prayers.

MR. SPEAKER: There are no introductions.

Yesterday

the hon. member for Prince Rupert (Mr. Lea) asked leave under standing

order 35 to make a motion for the adjournment of the House to discuss a

definite matter of urgent public importance: namely, the content of a

telegram indicating that the Fisheries and Oceans department of the

is the international boundary between the Alaskan panhandle and British

Columbia. The hon. member's statement goes on to say that thousands of

pounds of fish may thereby be lost to British Columbia fishermen.

The

duty of the Speaker in considering matters under standing order 35 is

twofold. First he has to determine not the urgency of the matter

raised, but rather prima facie there is such an urgency of debate that

other business of the House should be put aside.

Second, he

has to determine in accordance with the authorities whether the many

general and special restrictions on such motions are applicable.

Although

the hon. member for Prince Rupert may have brought to the attention of

the House a matter of considerable concern, and a matter of some

urgency, it must fail in view of the authorities relating to motions

under standing order 35. It is stated in the sixteenth edition of Sir

Erskine May at page 371: "The motion has been refused when an ordinary

parliamentary opportunity will occur shortly or in time." This

restriction has been applied in this House on a number of previous

occasions — for instance, in the Journals for 1973 at page 155 and in the Journals

for 1977 at page 55. The issues in question fall under the purview of

one or more ministries, consideration of whose estimates have, by order

of the House, priority over all other business, and these are yet to be

considered.

Under this circumstance there is no mandate to dispense with the usual notice of motion, and I so rule.

MR. LEA:

On a point of order, even though I understand that for technical

purposes you had to reach the decision you have reached, I do feel that

this is of such importance and such urgency that I am now challenging

your ruling, so that the Legislature itself may decide whether this

should go forward.

MR. SPEAKER: Hon. members,

decisions of the House are usually not challenged. I will just confer

with the authorities to see whether or not there is even provision for

such a measure.

Hon. members, just a quick review reminds me that there is no provision for the challenge of a decision under standing order 35.

MR. BARRETT: On a point of order, I challenge your ruling on the ruling.

MR. SPEAKER: We have found the measure. Hon. members, the question

is: shall the ruling of the Chair that the decision of the Chair cannot be challenged

be sustained?

Mr. Speaker's ruling sustained on the following division:

YEAS — 31

Waterland

Nielsen

Chabot

McClelland

Williams

Hewitt

Mair

Vander Zalm

Heinrich

Ritchie

Strachan

Brummet

Ree

Segarty

Curtis

McCarthy

Phillips

Gardom

Bennett

Wolfe

McGeer

Fraser

Jordan

Kempf

Davis

Davidson

Smith

Rogers

Mussallem

Hyndman

Nicolson

NAYS — 18

Macdonald

Barrett

King

Stupich

Dailly

Cocke

Lea

Hall

Lorimer

Mitchell

Hanson

Gabelmann

Wallace

Barber

Lockstead

Skelly

Sanford

Levi

Division ordered to be recorded in the Journals of the House.

Hon. Mr. Wolfe filed an answer to question 17 on the order paper.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

(continued)

On vote 100: minister's office, $109,825.

HON. MR. WOLFE:

Mr. Chairman, since I understand this vote has not yet passed, I would

like to say just a word or two. In introducing the estimates of the

Ministry of Finance, which leads off the estimates under our Committee

of Supply, I'd like to make a few explanatory observations about some

events which have taken place. First, for the information of the House,

there's a slight change in the estimates as provided for each ministry

this year. In the past no recognition was given in the setting of

expenditure levels for the savings that occur as a result of vacant

employee positions. At no time are ministries fully staffed. An attempt

has been made to reflect this recruitment saving in this year's

appropriations, and I referred to this in the recent budget speech.

Because

of the difficulty to know precisely in which operating area of a

ministry these savings will occur, a reduction has been made from each

ministry's gross appropriation that must be voted by the House. This is

shown in the

summary prefacing the detailed expenditures for each

ministry. I should also explain that in this year's estimate book our

members will note there's no longer any detailed salary listing; there

is simply a

summary of the

[ Page 322 ]

salary

figure for each particular vote. After careful study by Treasury Board,

we found that this considerably simplifies the estimate book for future

use. No province in Canada any longer shows the detailed listing of

salaries, so a decision has been made in this year's estimate book to

not go into the full detail, item by item, of each classification of

salary designation. There are simply the totals indicated. Questions

may be asked about these, but I'm just explaining that in advance.

Turning

specifically to the estimates of my ministry, I should remind hon.

members of the changes affecting the ministry as a result of the

reorganization implemented by the Premier late last year.

First,

the Government Employee Relations Bureau, under Mr. Mike Davison, which

formed part of Treasury Board and comprised a staff of 54, was

transferred to the Ministry of the Provincial Secretary and Government

Services.

The policy-planning division staff of 15 of the

Ministry of Economic Development was transferred to the Ministry of

Finance and is now identified as the economic policy planning and

research branch under Dr. Jim Rae.

Other staff changes

include the transfer of Mr. Alan McKinley from the

comptroller-general's office as the ministry's first comptroller. Four

new positions were established, two each in the operations of the

comptroller and the financial manager.

I tabled the first

report of the auditor-general at the last session of the previous

Legislature. With respect to the recommendations affecting my ministry

in that report, action is being taken in a number of areas to achieve

the stated objectives.

The critical analysis of the office

of the auditor-general contributes to management by increasing in the

provincial public service the need for accountability and efficiency in

spending of people's money.

This past year Treasury Board

staff investigated more than 2,000 expenditure requests. It is

interesting to note that ministry management now appears to be more

critical and analytical of operations and requests.

The

extension of zero-based budgeting procedures beyond the two ministries

involved in this year's budget preparation should extend us along

management levels.

The consumer taxation branch, which is

responsible for the administration of all consumption taxes, continues

to seek increased effectiveness of these collections. Last year more

than 2,500 audits resulted in additional revenues in excess of $11

million.

As part of the government's programs of

deregulation and efficiency, approximately 11,000 social service tax

accounts were moved from a monthly to a semi-annual filing basis. Total

tax collections by this branch last year exceeded $934 million, at a

cost of administration of 0.36 percent. Commissions paid vendors for

collecting the province's taxes were 1.36 percent. An office at

Campbell River was opened early this year to serve northern Vancouver

Island.

Last year the Purchasing Commission placed more than

48,000 purchase orders for a record value of $154 million. In

recognition of the fact that public purchasing provides an important

tool for economic development, preference was afforded British Columbia

producers. Provincial manufacturers are given first consideration in

all public purchases, provided that suitability to the end user and

delivery terms are satisfactory. This policy includes the provision of

a price preference to British Columbia manufacturers based on a sliding

scale to reflect the actual value added within the province.

The

maximum level of price preference is 10 percent. The commission has

also adopted a policy of public disclosure on successful bids. This

identifies the successful bidder and bid price. In addition to new

purchases, the commission has made major strides in improving

utilization of existing government equipment. An audio-visual equipment

repair and loan service has been established for use by all ministries.

Some 8,000 units of used office furniture were recycled, resulting in

an estimated cost savings of $275,000. The office furniture loan

service was expanded, saving ministries considerable requirements. The

business machines service division expanded its operation to extend

preventive maintenance procedures to Victoria and Vancouver

metropolitan area office locations. The surplus disposal

section

realized a sale record of surplus government assets, resulting in

revenue of more than $2.3 million.

The government agency

system provides 52 government agent offices throughout the province to

provide residents and visitors with easy access to government and with

information on government itself. Agents perform functions for the

ministry in the collection of revenue and the payment of certain

accounts. Where necessary, they also represent other ministries in

other areas. For the fiscal period ended March 31, 1978, the agencies

received over $170 million in general provincial revenue and $29

million in ICBC revenue. Indications are that revenue collections for

the most recent fiscal year will exceed $200 million.

agency office was opened in Chetwynd on November 22, 1978, and it is

planned to open new offices at Cassiar, Mackenzie, Bella Coola and

Valemont this year. Offices are planned for Squamish, Sechelt and

Sparwood, and studies are continuing as to the viability of other

locations that have requested the establishment of government agencies.

New

responsibilities handled by the agencies last year were the

registration of mobile homes, required under the Mobile Home Act, and

supervision of strike votes where required under the Labour Code.

Agency personnel supervised a total of 275 strike votes, which required

an estimated 136 man-days last year.

The income taxation

branch collected over $130 million in revenue last year at an effective

cost of 0.60 percent. Audit and assessment procedures were expanded and

improved.

During 1978 the Logging Tax Act was changed to

harmonize with the calculation of income under the Income Tax Act of

Canada and full deductibility against income taxes paid. The

adjustments also remove the logging tax from charitable organizations,

municipalities and other non-profit organizations which are not subject

to income taxes.

The branch's workload has expanded as a

result of the introduction of revenue sharing with the municipalities.

Since the Logging and Mining Tax Acts formed part of the

revenue-sharing pool, the introduction of new accounting procedures was

required to segregate shareable revenues.

The ministry, in conjunction with the British Columbia Systems Corporation,

is administering the British Columbia Resources Investment Corporation free-share

distribution, which is now basically concluded. Responsibilities include

[ Page 323 ]

the

establishment of appeal and post-application procedures and ensuring

that institutionalized British Columbians are afforded full

opportunities for share applications.

As you know, Mr.

Chairman, property-tax reform was introduced last year in the new

system of equalization of values. I think most taxpayers in the

province are now aware of the fact that the objective of this program

was to equalize assessments across the province, and that this has, to

a large degree, been accomplished. The burden of school taxes on farm

and agricultural reserve land will be lessened next year with the

proposed 50 percent reduction in assessed value for these properties.

The real property taxation branch collected over $164 million last

year, at an effective cost of 0.45 percent.

In the area of

management of the province's finances, zero-balance banking has now

been achieved where practical. The investment of short-term provincial

moneys, utilizing the expertise acquired by the ministry, has resulted

in an increase of provincial revenues by an estimated $5 million. The

bond-trading operation has improved the overall earnings of our

investment funds by over $300,000. Work is continuing on a data system

to provide timely investment and account information.

Mr.

Chairman, the quarterly reports on provincial government and Crown

corporations' finances continue to be well received by the people of

British Columbia. Once again these reports indicated that spending is

being controlled and the budget balanced.

Last year I

reported on the budget-outlook positions of other provinces. The

situation's well worth restating this year. The following deficit

budgets for the 1979-80 fiscal year are noted: Nova Scotia, a deficit

of $17.6 million; New Brunswick, $91.4 million; Manitoba, $122.6

million; Saskatchewan, $49.4 million; Quebec, $1.45 billion; Ontario,

$1.15 billion. Because of elections in Alberta, Newfoundland and Prince

Edward Island, and the recent federal election, their budget positions

are not available. Except for Alberta, we can expect them to be in

deficit, with the federal deficit in excess of $12 billion. Many of

these governments also have capital budgets, such as highway

construction, for which they borrow.

Mr. Chairman, these

figures show the favourable position British Columbia now maintains as

a result of our budgeting policy. By maintaining budgetary deficits

over a number of years, other provinces have been building up direct

debt.

I would also like to provide the House with these

detailed figures which show that British Columbia has the lowest direct

debt per capita of any province. This is important because it minimizes

the claim of annual debt-servicing costs and taxpayers' dollars n the

provincial budget, and frees provincial revenues for social and

economic programs.

In setting out the comparisons of direct

debt across Canada, I'm aware of the fact that I'm not including

contingent debt. We've been into this at great length in the debate on

the B.C. Hydro financing bill, and we're well aware that Hydro has a

substantial debt which is required to finance capital expansions.

However, I think it's worthwhile to note the comparison of these

direct-debt figures, because they do have a direct impact on the

taxpayers of the province.

As of March 1979 the direct debt per capita of each province was as

follows: British Columbia, $103.55; Alberta, $112.66; Manitoba,

$1,652.45; New Brunswick, $1,341.31; Newfoundland, $2,435.39; Nova

Scotia, $1,679.05; Ontario, $1,774.76; Prince Edward Island, $956.49;

Quebec, $1,074.02; and Saskatchewan, $1,816.15.

One can see immediately the success British

Columbia has had in minimizing direct debt as well as the results of

accumulated deficits in other provinces. British Columbia is faced with

much less debt-weight and debt-servicing claims on its budgetary

revenues, while those provinces that continue to run budgetary deficits

are met with an increase in such claims.

In the economic

policy planning and research branch of this ministry the major activity

has been in the follow-up from the First Ministers' Conference on the

Economy in February of 1978. The document, entitled Towards an Economic

Strategy for Canada, presented at the time, was followed by Towards an Economic Strategy for Canada: The Industrial Dimension ,

which was presented by the Premier at the November conference.

Attention has also been given to the formulation of a provincial

economic strategy with particular reference to science and immigration

policies and deregulation.

The financial analysis and

research branch has maintained the monitoring of the provincial budget

and, assessing the financial implications of program proposals,

participated in a federal-provincial study on taxation of the mineral

industry for reporting to First Ministers, and undertook studies in the

province in a number of financial policy areas.

Mr.

Chairman, that concludes the explanatory remarks of events which have

taken place in the Ministry of Finance during the past year. Before

sitting down I'd just like to pay my personal respects to service staff

members who other members will be familiar with: first of all my deputy

who is sitting with me, Mr. Gerry Bryson. He's no newcomer to this

business; he does a very capable job, and I'd like to recognize him

here today. And, of course, we have assistant deputy minister Bob

Alexander. Hugh Ferguson does a yeoman job in preparation for

ministers' meetings and various briefing material which we require from

time to time. As well, we now have Dr. Jim Rae, assistant deputy

minister, and assisting him Dr. David Emerson, John Elliot and Allan

Eastwood.

In the Treasury Board we have Mr. John Kelly, our

Treasury Board staff director and deputy minister, and John Currie,

director of the administration policy within Treasury Board staff. I'd

like to recognize also our new comptroller-general, Mr. Lionel Bonnell,

and the deputy comptroller Keith Lightbody, and the jobs they do.

course there is our surveyor of taxes, whom you've seen in the House on

occasion here with us, Mr. Jack Moore, who's done a considerable job in

terms of the new property tax administration. As well, we have Mr.

Keith Prowse, director of income tax; Ed Turner, director of consumer

taxation; the chairman of the Purchasing Commission, Mr. Art Charlton;

the head of the Assessment Authority, Mr. Ted Gwartney; and of course

the director of government agencies, Mr. George Brodie. I just think we

should recognize the work done by these gentlemen and with that, Mr.

Chairman, I'll be happy to hear comments and observations by other

members in the Legislature.

[ Page 324 ]

MR. STUPICH:

I notice that the House Leader (Hon. Mr. Gardom) has given up his

attempts to get this vote through. I trust he will be back sometime

this morning.

I would like to start by asking one question

that I've asked, I guess, for four years now. That is a question about

the B.C. Savings and Trust report. In previous years I have asked

whether or not the minister is prepared to make this report public, and

I've always had the answer in the negative. I expect I will get the

same answer this year.

I would like to follow it up with

another question, Mr. Chairman: would the minister tell us where the

Carrothers report is lodged? It was delivered to the government in

1952, I think it was, and was found in 1972 by the incoming NDP

administration in the garage of the outgoing Provincial Secretary. I

just thought I would like to ask annually where this report is lodged

so that when the NDP administration is returned to office in the

not-too-distant future, I hope, we would know where to look for that

report. So if the minister's reply is as it has been in other years —

that he's not prepared to release it — would he at least tell us where

the report is lodged so that we will know where to look for it?

would like to refer to the minister's remarks on June 8 when he

re-presented the budget for 1979-80. I marked some of his remarks. The

opening comment on June 8 by the Minister of Finance was: "A new dental

care program for British Columbians not permanently covered under an

existing dental plan will be developed by the Ministry of Health." This

was also mentioned in the throne speech — I think both throne speeches

that we've had this year — and certainly in the budget speech, as well

as in the minister's remarks on June 8. What I am wondering is what

financial estimate the minister has of the cost of getting into this

program in the fiscal year in which we are currently involved, 1979-80.

I expect not too much; there's nothing in the estimates. But I think

it's a fair question to ask. Surely this must have been discussed by

treasury, by cabinet, and they must have some idea as to how much they

are going to spend in the current fiscal period.

The second

question pertains to a proposal which has been made to provide

developers or building owners who adapt buildings to the needs of the

handicapped with an accelerated write-off or income tax credit. I think

the minister said in April that this depended upon negotiations with

the federal government. I'm wondering whether or not the minister has

entered into these negotiations, whether he will be able to go ahead on

this plan at all without some prior agreement with the federal

government, whether the provincial government will be able to do

something on its own, or just exactly what the state of that particular

program is.

The next question following along the same lines

is about a new type of investment company, and this has been discussed

in some of the income tax legislation, I think. "A new type of

investment company will be encouraged to finance high-risk enterprises.

A special tax deduction will be allowed British Columbia taxpayers who

place their funds in these venture programs." Again, I would like to

know whether or not the minister or ministry has entered into any

negotiations with Ottawa on this and what he can tell us about the

results of those negotiations.

Further on the minister, in

commenting upon the effect on provincial government revenue of the

reduction in personal income tax, stated that this change will mean tax

savings of up to $65 per year per family of four with an income of

$23,000. In that, the reduction does not come into effect until halfway

through 1979. I'm wondering whether that figure of $65 per year means

for a full year or whether that is the figure for 1979 taxpayers.

Speaking

on June 13, the minister was commenting again about this hoary subject,

I suppose, of debt. It's been here for so long now that one wonders why

we have to keep talking about it except that we mention it and the

minister responds. The minister responded at some length in one of his

speeches. I told him that that would come back to haunt him during his

estimates, and I intend to refer to some of his remarks today.

Specifically at this point I would like to ask him a question. He said

on June 13: "We estimate that had the tax increases not been invoked at

that period of time" — he was referring to 1976 — "the alternative was

some direct debt of over $1 billion." I wonder what detail the minister

has to back up that estimate of $1 billion, had they not invoked the

tax increases that they did invoke in 1976.

HON. MR. WOLFE: It would be a lot more than that by now too.

MR. STUPICH:

Mr. Chairman, my question was simply what detail the minister has to

back up that figure of $1 billion. After he has given me the detail,

then we can argue as to whether it would have been more or less had

they not instituted those very repressive moves against the provincial

economy. But that's an argument we will get into later once we have the

information.

I would like to comment on, and perhaps ask the

minister to reconcile, some of the figures. He stated in his budget

speech, I think it was, or perhaps in some of his remarks about the

budget, that expenditures this year are being held within 5 percent of

what they were last year. I have some figures that I've taken from the

estimates for 1979-80. The estimates were $4,567,450,000. The estimates

for 1978-79 were $4,280,350,000. That's an increase of $287,100,000

which I work out to be not 5 percent, but 6.7 percent. That's a minor

difference.

I think it would be proper to look not just at

the estimates but also at the figures provided in the surplus

allocation bills. There was one in 1978-7 in the amount, I think, of

$76 million, and if we add that $76 million to the actual estimates

that were voted in 1978-79, the total figure we're dealing with is

$4,358,350,000. In 1979-80, dealing with the estimates plus the surplus

allocation, the government is proposing to spend $4,787,950, 00 — an

increase of $429,600,000, which works out to an increase not of 5

percent, but actually of 9.9 percent.

Not only that, but we

should take a quick look through the estimates at the new figure that

is described as recruitment savings. That is, in effect, a new method

of portraying the expenditures to be lower, so that comparison between

last year's estimates and this year's estimates is thrown out by the

amount of recruitment savings. I think it's in the neighbourhood of

about $65 million in total, which is another 1.5 percent of total

expenditures. So when the minister says expenditures have been reduced,

that the increase in expenditures is just 5 percent over what it was in

the year before, it is actually 9.9 percent plus 1.5 percent — if we're

going to compare apples with apples — making the increase in

expenditures actually closer to 11.5 percent than 5 percent. Perhaps

the minister can comment on that.

[ Page 325 ]

shouldn't really hold the Minister of Finance to task for some of the

remarks of the Minister of Health (Hon. Mr. McClelland), but they deal

with this question of government debt and government spending. On June

8 the Minister of Health said: "This government is not against

increased government spending. What it is against is increased waste,

as we saw with the NDP government in this province." I'd like the

Minister of Finance to tell us some of the examples of what he

considers to be waste incurred by the NDP administration. He used

figures to show that the overexpenditure for 1975 and 1976 under the

NDP administration totalled $998 million and the overexpenditure during

the three years of Social Credit administration were only $193.2

million — I think those were the figures he used.

Mr.

Chairman, I think we have to look not just at the total figures, but at

what was done with that money. If the minister is going to talk about

waste, then he has to get into some details as to what kind of programs

we wasted money on. During the NDP administration transfers were made

into special purpose funds totalling $330.55 million. Now that takes up

roughly one-third of that overexpenditure. I would challenge the

minister to say that there was any waste in such transfers to special

purpose funds. Indeed, Clarkson Gordon have some comments about how the

government may transfer money into and out of special purpose funds.

contrast that with the present administration, not only did they not

transfer money into special purpose funds; they actually took $40.5

million out of special purpose funds. I noticed that when the hon.

member for Skeena (Mr. Howard) was talking about the money that had

been taken out of special purpose funds by the Social Credit

administration — and he used a figure of $40 million — the minister

challenged him and said that, in fact, it was only $27 million. As a

matter of fact, I think it was $29.6 million, but in addition to that

there was some $10 million taken out of one of the special purpose

funds — it wasn't cancelled completely, but $10 million was taken back.

So the member for Skeena was quite correct in saying that approximately

$40 million was withdrawn from special purpose funds. I contrast that

with our record of transferring some $330 million into special purpose

funds.

Transfers to Crown corporations. I’m not sure whether

the minister would consider any of those to be waste: perhaps he will,

and when we get into details, perhaps we can discuss that. There's one

particular transfer that I thought should not have been made on the

part of the provincial government, but it was. During this period just

$400,000 short of $300 million was transferred to a number of Crown

corporations, and I wonder whether the minister would consider that to

be waste. By contrast, during the course of the Social Credit

administration some $32.6 million was transferred to these Crown

corporations.

Investments in shares amounted to $78 million during the course of

the NDP administration. Has the minister some comments about waste in

those investments in shares? I would think not. When we look at the

specific investments — we've done this on previous occasions — the

largest single investment was $25,457,000 in shares of Westcoast

Transmission, which have since been sold at more than a 50 percent

gain. We bought shares in BCBC of $25 million — the present

administration has since put $10 million into that same corporation, so

I would think that is not a waste; shares in Kootenay Forest Products

and shares in Plateau Mills, both transferred to BCRIC; shares in Panco

which cost less than $5 million were sold for approximately $15

million; shares in Ocean Falls, which they are proposing to sell now —

goodness only knows how much that will bring in. The minister will have

a hard time convincing me or anyone on this side of the House — or even

perhaps some of his own backbenchers who may be hearing the details for

the first time — that there was any waste in those very good

investments for the people of British Columbia.

There

were other investments on the part of the NDP administration totalling

$17 million which I haven't detailed, but I can do so if necessary. In

total those I have listed add up to almost $726 million,

whereas if you

take into account the fact that the Social Credit administration has

sold assets to BCRIC for $151 million, they have had a net withdrawal.

Their sale of assets has exceeded the money they transferred to various

Crown corporations. So they have not only overspent the budget revenue,

they have actually sold off assets and drawn money out of special

accounts. I’m not suggesting that any of that was wasteful or that it

shouldn't be done; I'm only saying that the minister said that we

wasted money. But in view of the description I've given of some of the

items on which we spent it, I'm wondering whether that was waste.

With

reference to actual expenditures within the department, there was one

program that was brand new in 1972-73; there was absolutely no money

spent on it in 1972 — unless I'm looking in the wrong places. In 1976

we had increased that to an infinitesimal degree to almost $9 million.

In fairness to the present administration, they have increased to $22

million the money available for sewage and water, but there was nothing

spent on it in 1972. By 1976 we had increased it to an infinite degree;

by 1979 they had increased it by 150 percent. That accounts for some of

this very large increase in the rate of expenditures under the NDP as

opposed to the smaller increase under the Social Credit administration.

1972 the government spent $39 million-plus on B.C. Ferries. By 1976 it

had increased to $97 million, an increase of 148 percent; that accounts

for some of the increase in our totals. In the Social Credit period

from 1976-79 the amount spent by government on ferries is reduced by 48

percent. So it's easy to show our expenditures growing rapidly when

we're putting money into people services such as the ferries, and to

show theirs not increasing so fast if they're spending less money on

that particular service.

Reforestation is something I've

talked about since I was first elected and will be talking about as

long as I serve as an MLA. In 1972 Social Credit spent $4.7 million — a

very sorry record. By 1976 we had increased it by 193 percent to $14

million. By 1979 the Social Credit administration had increased it by

only 42 percent, just under $20 million.

There was no

Pharmacare program at all in 1972. In 1976 it was almost $24 million.

The NDP administration had increased the rate of spending on Pharmacare

to an infinite degree. By 1979 there was a further increase of only 42

percent to $33.6 million.

The program which used to be

called Old-Age Assistance became Mincome and is now called GAIN. What

about the spending there? In 1972, $5.5 million was spent on Old-Age

Assistance. In the year ended March 31, 1976, our last year, $109.8

million was spent on Mincome, an increase in those four years of 1,890

percent. That accounts for some of the increase the minister talks

about in the rate

[ Page 326 ]

of spending under the NDP administration. There was an increase of 1,890 percent spent on those elderly citizens.

What

has happened under the Social Credit administration? In 1976 it was

$109.8 million; in 1979, during which period they changed the name of

it from Mincome to GAIN, it was $101 million, a reduction of 8 percent

in the amount spent on this program — and they talk about spending

money on people. Those are the figures from the government's own

accounts.

I don't know whether I should stop for a while and

let the minister catch up, or whether I should keep on going. I haven't

exhausted my....

HON. MR. WOLFE: I'm back at question two.

MR. STUPICH: Well, I guess we'll have to wait until we get the Blues and start all over.

Again,

in one of your speeches — and this was a serious charge, Mr. Chairman,

very serious — the minister said that the outgoing NDP administration,

knowing that it was facing a tough year, when looking at revenue

deliberately overestimated certain sources of revenue.

Mr.

Chairman, another minister said at one point in time that we bugged

their room. I know that wasn't serious and I know that the minister in

saying that did not intend to say that the Deputy Minister of Finance

told him that we deliberately overestimated revenue. I'm positive that

that particular Deputy Minister of Finance would never say anything

like that. No one else could be privy to any kind of information or

discussions about how we calculated our revenue and how we calculated

our expenditures, so that was another charge that has absolutely no

basis in information or in fact.

Let's look at the figures.

We're supposed to have deliberately overestimated revenue in 1975-76.

I've got the figures here for 1975-76, 1976-77 and 1978-79. Let's look

at some of them.

Sales tax. Our estimate for sales tax in

1975-76 was $480 million, and it was lower; the actual figure was $444

million. So we did overestimate it by $36 million — less than 10

percent, but nevertheless an overestimate.

Let's look at

1976-77, completely under the control of the incoming Social Credit

administration. Of course, they wouldn't do such a thing as

overestimate revenue. They estimate $710 million; the actual figure was

$663 million. They overestimated sales tax revenue by $47 million. Now

these things happen. I don't suggest it's deliberate because they did

it, but neither was it deliberate when we did it. The figures for

1977-78 show $740 million estimated; $748 million came in. It was very

close that year, so close that you can say it's right on, but certainly

1976-77 was not right on.

Corporation income tax. We

estimated $260 million. We were high because the actual figure was $207

million. But what has been the experience of the present

administration? In 1976-77 they estimated $251 million. They received

$237 million, $14 million over the estimate. In 1977-78, by which time

they've had more experience and presumably are better at it, they

estimated $283 million and received $246 million — $37 million over the

estimate. I can't carry it into 1979 because we don't have the figures

yet.

Personal income tax. Remember how we deliberately

overestimated our revenue? We told our staff to deliberately fudge the

figures to make it look good. The estimate for personal income tax in

1975-76 was $655 million. How much did we overestimate it by? We

received $674 million, $19 million more than was estimated. If we were

really trying to fudge revenue we certainly weren't doing a very good

job of it. In 1976-77 the present administration estimated $816 million

and received $811 million, less than they estimated. In 1977-78, $1,116

million was estimated and $986 million received, $130 million less than

they estimated, yet we're the ones that were supposed to be

deliberately overestimating our revenue. In their year — the last year

for which we have the information — they overestimated personal income

tax by $130 million. In the year that we were supposed to be doing

everything we could to fudge revenue, we underestimated revenue from

this source by $19 million.

Petroleum and natural gas

royalties, leases and fees. This is the one, of course, where we really

would have fudged the revenue to make it look good if we were looking

for it. It's one that's hard to calculate in advance. We estimated $230

million; we received that year $285 million, $55 million more. Over 25

percent more than was actually estimated was received from that single

source.

Now I've listed every source which was in excess of

$200 million. I haven't bothered with the faults of the others, but

I've left out none that were more than over $200 million, apart from

governmental transfers.

So in that period we underestimated

by 25 percent. As for the present administration, in 1976-77 their

estimate was $275 million, with $255 million received. They

overestimated by $20 million. In 1977-78 they very much underestimated:

$246 million, $427 million received.

So I think the

minister's charge about our deliberately fudging revenue to make it

look good does not stand up in fact when you look at the sources of

revenue. And I hope he did not mean to imply he had been told by anyone

we had deliberately cooked the books that year.

On the

question of debt: I made some comments about the Clarkson Gordon

report. The minister said, or indicated, the Clarkson Gordon company,

being auditors, would not knowingly — at least, that was the

implication in what he said — deal with false figures. I don't think

there is any question about that. They were asked to add up certain

figures; but had they any indication at all that the figures were

incorrect, that they were getting information that was not property

backed up, they certainly would not have put their name to any kind of

a report, even one they disclaimed the way they did this one. But I

think we have to look at the source of the information.

I've

done this before and I'm going to do it, I think, more for the benefit

of some of the new members. On December 22, 1975, you requested us to

coordinate the production of certain unaudited financial information.

They weren't asked to express any opinion on any of this information.

The request was simply to coordinate the production of certain

unaudited information for the year ending March 31, 1976, which you had

requested from the Deputy Minister of Finance.

It was

addressed to the Minister of Finance. The Minister of Finance asked the

deputy to bring forward certain information, but since he apparently

didn't trust the Deputy Minister of Finance to put it together in one

package he wanted Clarkson Gordon to do it. That was the extent of

their responsibility.

[ Page 327 ]

the comptroller-general and the management of all Crown corporations,

boards and agencies produced a

summary report of the overall financial

position of the province. They had some problems, and I intend to

discuss some of those problems.

Any discussion of a

province's finances usually starts with a consideration of the

anticipated surplus or deficit, and for five years now we've been

talking about the extent of that surplus or deficit. Based on actual

results to the end of 1975, and estimates made by the appropriate

officials and managers for the rest of the year, the deficit for the

current year is estimated at $541 million. That's the figure they come

up with: $541 million.

The minister now tells us that it was

actually $267 million — $261 million. Commenting on this total, they

were saved. This information is meaningful only if the reader

understands the way British Columbia accounts for its revenue and

expenditures. So before commenting on the results we would like to

discuss in broad terms what a surplus or a deficit is, and what each is

not. I'm just picking out a few lines here and there because the

minister and I have talked about the Clarkson Gordon report before.

First,

used in this sense, surplus or deficit is an annual concept. The

reserves available at the beginning of the year resulting from

surpluses less deficits of all previous years do not enter into the

calculations.

[Mr. Strachan in the chair.]

Second,

revenues and expenditures in cash deal with cash receipts and cash

disbursements. If a building is purchased or an expenditure is made,

that contributes to the deficit, or at least reduces a possible

surplus. For example, Mr. Chairman, we built three new ferries, and

that added to this overexpenditure the minister was complaining about

earlier — the $981 million or whatever. The incoming Social Credit

administration sold these three ferries, and that added to their

revenue. It's just that simple, and there's nothing wrong with it.

Legally, it's proper. But when you start adding up the figures and

comparing the administrations on the basis of one administration

building for the future, acquiring new assets, building ferries, and

the other one coming in and selling those ferries, and you say that one

has a deficit and one has a surplus, you then have to look at how those

figures were arrived at, or else it doesn't mean too much.

MR. CHAIRMAN: Three minutes, hon. member.

MR. STUPICH:

I'I carry on with this, but I think in the meantime the minister may by

now be on question three. I'I have to remember what four was and pick

up from there.

HON. MR. WOLFE: Mr. Chairman, I could

deal with two or three brief questions the member started off with, not

necessarily to his satisfaction, but they would constitute the only

answer I can give him.

He asked about the comments in the

budget speech about the dental plan and whether we had any estimate of

cost. At this stage, it's still being worked on by the Minister of

Health (Hon. Mr. McClelland) and I'm sure that he will have further

information on that during his estimates. This will be in the form of a

measure to be adopted sometime during the fiscal year, as was

indicated. I just don't have any figure I can give you. You'I have to

ask the minister for that.

You asked about the measures

indicated on the incentive for improvements for the handicapped under

the income tax and under the venture capital and other measures

requiring cooperation with Ottawa. Four such measures are now in

negotiations with National Revenue, and none of these has been drawn to

a conclusion.

The two that you mentioned in terms

construction for the handicapped have been accomplished in one or two

areas in the United States in terms of a cooperative tax measure, but

nowhere in Canada. We indicated in the budget that we wanted the

national government to adopt this under their Act so that it would be

more easy to operate in terms of the Income Tax Act.

terms of venture capital, that is currently in progress insofar as

developing legislation and insofar as Ottawa is concerned. Once again

we're negotiating with them on it, because it requires a special credit

under provincial income tax which we, as yet, don't have an agreement

with them on, so I don't have a satisfactory conclusion of that matter

at this point. The change in government and the federal election have,

of course, delayed these matters.

You asked about the

detailed question on the income tax reduction of 2 points where we

referred to the fact that the average taxpayer with a certain income

would save $65. I'm informed that represents the full year of 1 point.

In other words in the future the 2 points would be double the figure,

I'm given to understand. So the $65 represents the year in question

here, 1979-80, which is really involved effectively in 1 point for that

year, having taken effect on July 1.

You challenged me, Mr.

Member, to provide more detail on the estimate of $1 billion in costs

if this government had not instituted tax increases in early 1976. I'I

be happy to provide more information on that. I just don't have it with

me at the moment.

You referred also to questioning the fact

that this budget shows an increase in expenditures of only 5 percent.

You went on about the fact that when you add the expenditures of

previous years' surpluses to this, it becomes anywhere from 6 percent

to 11 percent, when you take into consideration expenditures from

previous years and so on. I'd just like to say that we have had an

announced policy — which is no secret to anyone.... Where we have the

cash flow to accommodate it, we're going to expend these surpluses as

soon as possible where we figure the need is. You may not agree with

this, but this is simply a case of allocating moneys over and above the

budget, as we've indicated here, to areas which are in the greatest of

need. I think you'd agree or wouldn't argue with many of the areas

where this money is being allocated. Sure, we can bandy figures around

about 5 percent, but our budget in terms of the budgetary expenditures

as you and I both understand them has shown considerable restraint when

you look at other budgets across Canada. We can argue with the people

of this province about whether it is 5 percent or 11 percent, but it is

certainly well under the rate of inflation, the rate of gross

provincial product in terms including inflation, and therefore I don't

suppose we'll accomplish anything by arguing that particular point.

You

mentioned waste. I don't suppose you'd ever agree with comments from

this side of the House that always charged you with waste during the

years of 1972 to 1975. The Minister of Health (Hon. Mr. McClelland)

dealt with

[ Page 328 ]

this

the other day. Just have a look at page 6 in the budget speech, which

goes into the detail of each year in which the former government

overspent — and, of course, it is for three years — $998 million; in

the course of the following three years under this government there was

a net overexpenditure of $193 million. Each of those figures is a

substantial amount, Mr. Chairman, but the point is that we had a budget

and we tried to stay to it. We're saying that that side, when they had

the responsibility to do so, moved outside of the budget in very

substantial terms to a tune of 14 percent over their three-year

budgetary figures.

There is no one who can argue with that.

They did overexpend their budgets of those years by 14 percent, Mr.

Chairman, and that's an argument that we could go on with all day

about, but it's fully explained in a "Schedule on Budgetary

Performance" on page 6 of the budget speech.

[Mr. Rogers in the chair.]

MR. KEMPF:

Mr. Chairman, I have just a few short words to the Minister of Finance

on his estimates for this budget. I was interested to hear that in the

plan for this year are government agencies in certain communities

within the province. I was a little sorry to hear that no consideration

is being given government agencies in two communities in my

constituency: Granisle and Fraser Lake. I have for some time now

attempted on behalf of the citizens in these communities to convince

the minister that government agencies are a must in these communities.

the case of Granisle, which is 50 miles from the nearest government

agency, the problem is acute. Citizens looking to get licences, prints,

et cetera, especially during the winter months, have many problems. In

the case of Fraser Lake the distance is only 30 miles, but again,

during the winter months many hardships are faced by the citizens of

this community in availing themselves of a government agent. I ask the

minister that reconsideration be given in this budget year to somehow

make a government agency available to the citizens of those communities

in my constituency.

MR. STUPICH: Mr. Chairman, as the

minister said, I guess we're just never going to agree on some of these

things. He's drawn my attention to page 6 of the budget speech. He says

— maybe he didn't say it this time, but he said it previously — that

they are spending their surplus, and it's a question of time. We spent

money as money came in, and the page 6 figures do show that we did

spend $998 million more than was budgeted.

When we arrived

in office the surplus of the province was $98.4 million. When we left

office on December 22, 1975, to the best of my knowledge there was not

a deficit. Not even the minister has ever told me that there was a

deficit on December 22, 1975.

Looking at that figure of

$998.7 million, I think what we should really do is cut it off at

December 22 or even December 31, rather than at March 31, 1976. For

three and a third months of 1976 control of government spending was in

the hands of this government and this minister. For example, look at

some $265 million of non-budgetary expenditures in the year ended March

31, 1976. With the exception of $21 million of that amount — in other

words, some $244 million — this was money that was paid out by the

Social Credit administration. If we are going to compare these figures,

instead of looking at $998 million against $193 million, we should

really subtract from the $998 million some $244 million, which would

bring it down to $754 million. We should add that $244 million to the

$193 million to make it $437 million, which brings them a lot closer

together.

Mr. Chairman, I have told you in detail some of

the programs that we spent more money on, and of some of the ways in

which we invested surplus funds. I've asked the minister to tell me —

and if he can't, maybe some other minister can; maybe the Minister of

Health (Hon. Mr. McClelland) would like to get back into the Finance

debate; the Minister of Agriculture (Hon. Mr. Hewitt), I know, likes to

talk about Finance — which of the programs were wasteful. Give me some

instance of us wasting money.

Remember also, Mr. Chairman, since we've adjusted the figures down to $774 million, that we spent all that money....

Interjection.

MR. STUPICH: Do you want to do it right now? Because I can come back, you know. You can't cut me off this time; it doesn't work.

Anyway,

we spent that $774 million over budget not by increasing taxes, Mr.

Chairman. We got more money out of the economy. We increased the coal

royalty, remember? The average was 14 cents, and we got it up to $1.44.

We got more money out of BCPC, in excess of $100 million a year. We got

more money from the community through the exploitation of resources,

but we did not increase taxes in the way this administration did.

They

got their money by increasing taxes. The minister has said that had

they not done so they would have been $1 billion in the hole. Well, the

figures don't show that. He's going to give me some detail on that at a

later date, I suppose. I guess I've got to ask him in question period,

or put it on the order paper, one or the other.

I'm still

waiting for him to tell me that there was an instance of waste. I'm not

complaining about the transfers the Social Credit administration made

to Crown corporations. I have done that in the past and will do again

if I'm encouraged to. Some of those were waste, in my mind, and should

not have been made, but nevertheless they were made. I'm simply asking:

where was the waste in our administration?

MR. LEVI:

Mr. Chairman, I want to discuss the Systems Corporation with the

minister. First of all, I want to ask him if he can tell me whether the

Systems Corporation ever filed, in the last fiscal year, under the

Public Bodies Financial Information Act, a report as it was required to

do. I ask the minister that because we haven't been able to find any

information. As usual, he's paying attention and he knows exactly what

I am asking, so I'm going to try again.

Did the minister

file, on behalf of the Systems Corporation, the Public Bodies Financial

Information Act report that it's required to do within 90 days of the

end of any fiscal year? We are not able to find last year's report.

Now

as to this year's report, I don't know why it is, but this government

has made a practice over the past three years of never getting its

reports on ministries in in time, or any relevant information that it's

required to report. I was in

[ Page 329 ]

touch

with the Systems Corporation this morning, and I'm informed that their

latest report which has to be filed under the Public Bodies Financial

Information Act will be filed on June 29, because there's a board

meeting next week. I find it somewhat incredible that the board isn't

able to accommodate this House in making available that report at the

time when the estimates come up. I'm not talking about the annual

report; I'm talking about a report which is required to be filed under

the Public Bodies Financial Information Act. You're going to table it

today?

HON. MR. WOLFE: This is last year's, which was tabled.

MR. LEVI:

It was? We weren't able to find it. We went to the Clerk's office; we

went to the library. That's very good. Well, after the committee

perhaps you would be good enough to file it.

But let's deal

with this year's. There is a board meeting next week, and you're going

to approve the filing of that, and by then we'll be through the

estimates, presumably. You know, you have to make some attempt to make

the information available. Do you mean you're going to file the one for

the current year?

HON. MR. WOLFE: Can I answer that question?

MR. LEVI: Yes, if you would.

HON. MR. WOLFE:

Mr. Chairman, I'd just like to say that I've been attempting the best

way I can to get that report available to the House. Unfortunately,

their year end is March 31, which leaves them a fairly tight

schedule

to have their records audited and so on, and have a complete report

prepared before June 30, which is the date required under the Act.

Subsequent to that I am obliged to file a report by July 15, or within

15 days after that. I've been putting a lot of pressure onto this

company to have that report available, as required, before June 30, so

that is why it was indicated to you it would be ready June 29. That's

the earliest possible date we can get it. It isn't a case of delaying

it, but I'm afraid that's the earliest, mechanically speaking, that it

can be accomplished.

MR. LEVI: It's not a very

satisfactory state of affairs, because what we want to be dealing with

is the most current information possible.

HON. MR. WOLFE: March 31 year end?

MR. LEVI:

Yes, except that that's going to be available after we've finished your

estimates, which means we have to go all the way to next year before we

can really deal with that, unless we get up and ask a series of

questions in the House over the next little while. It's really a

question of looking at what the mechanics of this are, and producing

the information.

The previous government made a change in

the reporting system of the annual reports. Instead of dealing with

information that was only available up to the end of the previous

fiscal year, it was a practice that they would make the information

available up to December 31 of the end of the calendar year before the

House met in the spring. There has to be something wrong, Mr. Chairman,

with that kind of arrangement where it's not possible. After all, the

minister tells us that every quarter he makes available to this House a

non-government state of affairs in terms of the government and various

departments.

In the last quarterly report he issued before

the election, there is information about the Systems Corporation —

albeit unaudited, but it's there. Now I can't understand why it is that

difficult, considering that there is an ongoing quarterly reporting

process, to produce that report in time for the estimates in the House.

There

is a problem, of course. We have traditionally in this Legislature met

in the early spring or the late winter. We used to meet in January, so

then there were fairly legitimate reasons for not having this

information. But now, of course, we don't know when we meet. We either

meet before the end of the fiscal year or we meet in the first quarter

of the new fiscal year. But I'm basically making the point that all the

information that needs to be available to this House should be made

available in time. The only thing that we're going to be able to do is

to ask the minister a series of questions about what is going on in the

B.C. Systems Corporation.

I now want to take him slowly and

carefully through the deputy minister's report that I dealt with in

March prior to when the House met. I'd like the minister to answer a

number of questions in respect to a report which is called the "Initial

Report: Inter-ministerial Committee on the Electronic Data Processing

Services." It was requested by the Minister of Finance. The report,

which is the third draft, is dated October 15, 1978.

The

first response we got after I released the report was not from the

minister, but from the president of the corporation, who promptly said

that the report was out of date, albeit it was issued in March, which

was five months after the report was done. He also went on to say that

the complaints made by the deputy ministers who made up the committee

who were doing the report was a question of sour grapes and

interministerial rivalry. However, it didn't deal at all with some of

the problems in respect to what the report lays out.

Now

perhaps the minister would tell us the history of how this report came

to be written. I would like to know from the minister when he actually

requested the report. We should bear in mind that the B.C. Systems

Corporation actually came into operation in its own right on April 1,

1978, albeit it was set up in 1977. But it started to operate on its

own completely by April 1, 1978.

Now I'd like the minister

to tell us whether this report was requested some time after that date.

Presumably I would suspect that it might have been requested perhaps

sometime in July of that year, possibly because of the great confusion

that was going on. I'm not surprised that there was confusion;

obviously they were trying to centralize something. So, okay, that's

fair enough; he asked for a report. What I find difficult is, as soon

as the report.... We didn't get the report; somebody sent it to me and

we released it. Then we're told that the report was out of date. I

would like the minister to tell us exactly what he means by out of date.

There

are a number of items that I would like to deal with in the report so

that I can better get the minister to understand what some of the

serious problems were. Now I'll only deal with the recommendations

because I think the recommendations are the important ones. Bear in

mind that

[ Page 330 ]

this

deputy ministers' committee is made up of the people who are the

largest users of computer services in the government. We're talking

about people from Finance, Human Resources, Health, Lands and

Environment; these are the major users.

Recommendation No. 1

is that "the minister be given authority to effectively control the

systems and electronic data programming functions required to deliver

their services." Now what they've said here is they want to go back to

what existed before the B.C. Systems Corporation was set up. The

ministers themselves want to have control over the functions in terms

of the EDP.

They go on to say: "At the present time the

Systems Corporation has what is in fact total control over the system

which ministers depend on and are ultimately responsible for in the

delivery of their services. The manner in which the Systems Act is

being applied leaves responsibility with the ministries and authority

with the corporation."

Presumably this kind of

recommendation was what sparked the president of the Systems

Corporation to say that there's sour grapes and petty rivalries, but

implicit in the first recommendation is that they want to take back

control of their own systems in terms of computer systems. They want to

take it back. That's the first major remark against the idea of having

a centralized system, and this is made by the six major users of the

corporation.

Then they go on to say: "This is the overriding

concern of the user ministries, and this recommendation is the major

one being presented." They are, in fact, going more than 50 percent

along the way to what appears to be the dismantling. Their

recommendation is that half of the function of that ministry should be

dismantled and returned to the ministries.

The second

recommendation is that "each ministry be given the capability and

authority for selecting the computer service best suited to its needs."

This is part of the interdepartmental versus the Systems Corporation

rivalry, because in the government the ministries have always been able

to select the computer service that they most need. It's more

responsive; they can go to it directly. They're asking for that;

they're further recommending a breaking down of the central authority

of the Systems Corporation. They say: "This would eliminate the Systems

Corporation's monopolistic position and would allow ministries to

select EDP services on a cost-competitive basis and to optimize overall

program costs."

For example, it is much more important for

Medical Services to reduce the overall cost of the plan than simply the

computing costs associated with it.

Bear in mind that we are

talking about a report that was done by the deputy ministers, the

people who are responsible to their ministers for the functioning of

the ministry, particularly in respect to the computer services they

need. They go on to say that a maintenance programmer is being assigned

on a permanent basis to user ministries and, where appropriate, he is

to be located on ministry premises — a further request that

decentralization be effective.

They have a third recommendation:

"To improve communications, to reduce learning time and

errors and to improve the service, it is essential that a minimum number of

maintenance programmers be permanently available to the ministries. At the moment

they only exist within the Systems Corporation. The development and operation

of a good EDP system is dependent upon EDP staff, which understands and associates

with the goals of user ministries."

The

big debate that goes on among people in the industry is that people who

have the expertise — in engineering techniques related to planning — to

set up and do the programming do not necessarily have the same kind of

expertise in doing something related to the Health field, or the Human

Resources field, or the Attorney-General's field. Everybody's been

thrown into the same bag. There appears to be a generalist approach to

what is going on, and it is creating a great deal of confusion and loss

of time. All of this is part of the report. We want the minister to

tell us what has happened since the report was issued — although it's a

somewhat confidential document.

The last recommendation is

that "the interministerial committee on data processing be the vehicle

whereby all ministries can exert the necessary level of influence upon

decisions which affect them." They say that the committee would also

assist in the decision-making and prioritizing process involved in

government-wide applications. High priority objectives would be to

coordinate (

a) development of long-range systems and data-processing

plans for each ministry, (

b) requirements for a shared, province-wide

data-communication network. It's somewhat complicated, and it's not

necessarily something that the minister has to respond to here, because

it is somewhat technical and it is not necessary for us to discuss it

in the House.

I want to deal now with the recommendations of

the committee. What has taken place in respect to those recommendations

since then? Perhaps the minister would be good enough to tell us what

actually took place with respect to the Systems Corporation and the

problem that apparently existed in the Ministry of Forests, which was

so bad that it was even referred to in the auditor-general's report.

She says on page 42:

"My examination included

a review of the systems of internal control over the collection and

recording of major provincial revenues. In the course of this review,

it came to my attention that abnormal delays had occurred in the

billing of timber royalties and stumpage fees. These delays were

attributed to problems encountered with a new computerized billing

system in the Ministry of Forests. As a result, an estimated $26

million of revenue, which otherwise would have been collected in the

1978 fiscal year, was collected and recorded as revenue in the

following year. "

Perhaps the minister can tell us what

happened. That's a serious loss to his revenue picture. Reference is

made to this in the report by the ministers. Obviously the

auditor-general has to be concerned with the way revenues are

collected, and she makes a point of saying that this is a very serious

problem.

I want to go for a minute to the staffing of the

corporation. The president, Mr. Alexander, is in charge of the overall

operation. This report was issued in October 1978. Presumably at that

time there were discussions about trying to clean up what was obviously

a great deal of confusion and a mess — what I would characterize as

somewhat chaotic.

[Mr. Davidson in the chair.]

HON. MR. WOLFE: I recall that.

[ Page 331 ]

MR. LEVI: Yes, I've called it the "chaos corporation."

The minister is going to have to convince me that it's not the "chaos corporation."

The

report was released in the middle of October. Having read the report,

the minister would presumably instruct everybody concerned to get their

act cleaned up and straightened out and to work for the benefit of the

whole government and the taxpayers. We presume that action was taken.

Sometime in November the Premier made a statement about BCRIC shares.

And towards the end of the year it was announced that the head of the

Systems Corporation would be responsible for the issue of the BCRIC

shares. I'm only going to deal with the BCRIC share distribution only

as it affects the Systems Corporation. It appears that the man in

charge of the whole operation then became responsible for the issuing

of the BCRIC shares — a monumental undertaking.

My first

question is: if that was the case, who was running the show? We were

constantly getting complaints out of the Systems Corporation that there

was a great deal of confusion and people were dissatisfied. Some of the

things mentioned in the report were characterized as being true and in

some cases understated. Now who was running the show if the chief

executive officer was involved in dealing with the BCRIC shares? We

should bear in mind that the corporation at that time apparently had no

chief financial officer. Mr. Welham had left by the end of December. He

went to work for the Victoria General Hospital. Since that time,

according to the latest information I have — and we're now talking

about a time at least six months after this individual left the Systems

Corporation — there is no chief financial officer in the organization.

There is an acting individual. I understand that they are advertising.

But bear in mind that during all of this time the head of the

corporation was involved in the BCRIC share distribution. Also on his

desk, presumably from the minister, was the interministerial report of

October 15. So who was taking care of cleaning that mess up? What is

the actual situation today? I would have hoped that we would have been

able, had we had the information that is coming next week — and I

presume I'll have to deal with that in questions to the minister in

question period — to get some understanding of what is actually

happening with the corporation.

I would like the minister to

comment on what is happening to the Honeywell project, bearing in mind

that half of the Honeywell operation was taken to Vancouver. The

primary work of that operation was to deal with education financing and

to provide a service to the universities and colleges around the

province. My inquiry in respect to that operation concludes me to say

that that operation is now defunct. I would like the minister to tell

me if it has been decommissioned and what the plans are for that

operation. In my discussions with various colleges and universities I

have learned that the computer services they require in respect to

accounting and the other work that universities have to do are being

provided primarily by either Simon Fraser or the University of British

Columbia — or the colleges themselves. Now what exactly is happening to

Honeywell Information Systems? Two years ago the minister made quite a

statement in this House about how they had renegotiated the contract,

that half the operation would go to Vancouver and that it would be

utilized to the maximum. My inquiries have told me that is now almost

in the state of being decommissioned. If that is the case, I would like

the minister to tell us that and tell us what plans there are for it.

would like the minister to comment on the composition of the board and

whether he did in fact appoint somebody from the industry. I did write

him a letter in 1978 suggesting to him that the board would be well

served by having a member from the private sector on it so that they

could get a perspective other than the government's perspective. I

would also like the minister to comment on how the user committee is

functioning and what kind of priority system is being used.

January of this year the Ministry of Health were advertising for

programmers. There was such an advertisement, and I can make it

available to the minister. What actually is the situation at the moment

with respect to the Systems Corporation and other ministries? Can the

minister tell me whether in fact some of the departments of government

are slowly taking back the function of doing their own computer service

provision? Certainly the Ministry of Health was advertising in January

for programmers. We know, for instance, that the Assessment Authority

is not involved, because they have a rather difficult and complex area.

Are there any other departments that are not actually working with the

Systems Corporation?

I would like the minister to comment on

the statement made on page 4 under item 5 of the report. It's entitled

"Development" and it says:

"For instance, the

justice information system of the Ministry of the Attorney-General has

ceased at the critical integration stage. It took approximately two

years for the adjusted information system to develop the necessary

familiarity with the operation of the ministry to develop what is

generally recognized as one of the best adjusted information system

models in the world today. That staff has been lost to the ministry for

good, and the ministry states: 'It seems unlikely that similar

expertise will develop within the bureaucracy, which is totally

independent of the ministry'."

I would like the minister to

comment on what has happened to the adjusted information system. The

statement made by the ministry that I just quoted deals with this whole

question of the generalist versus the specialist in this kind of work.

They go on to say that loyalty, enthusiasm and dedication are

admittedly intangible factors but they are critical to the development

of the system. This was one of the criticisms of the introduction of

the centralized system: everybody would be thrown into the hopper;

they'd all be generalists. Those who had specialized for years could

very easily be placed on other work with which they would maybe not be

familiar. I would like the minister to tell us what has happened to the

justice information system. I've heard other answers: some people said

that it's not true what the deputy ministers said. Well, I'd like the

minister to confirm this for us. Are they actually stating what has

happened, or are they blowing a lot of hot air?

I keep going

back to the report, Mr. Chairman, because it is important to remember

that the report was requested by the minister. It was dealt with by the

staff and support staff of the deputy ministers of the major users of

the system. The report itself is something of a serious condemnation of

the system. It's the third draft: perhaps the minister would comment to

us if a further report has been done. Have they had an opportunity to

review the adjustments that needed to

[ Page 332 ]

made in the Systems Corporation? Are things better off? Obviously in

terms of the operation of the Systems Corporation, it's a bit of a

leaky ship, and some people are unhappy about it. As a matter of fact,

when I released the report in March at a press conference I understand

that people in the Systems Corporations said: "My god, if the NDP get

back, they're going to break up the Systems Corporation." We never said

that. The discussions, in terms of an integrated Systems Corporation,

were held under the previous government,

HON. MR. WOLFE: I think you said that in the House, didn't you?

MR. LEVI:

No, we never said at all that we'd break it up. What we wanted to look

at was its operation. We wanted to look at whether, as the minister

said when he introduced the Act, this operation would be competitive

with the private system. We had the rather strange situation over here

of the socialists arguing the private enterprise point of view in order

to save some of the business for it. The point is what we're trying to

do is to look at this in a critical, constructive way. There was no

question that the system had to be broken up, but there certainly was a

question....

HON. MR. WOLFE: Your press release wasn't very constructive.

MR. LEVI: Oh no, the press release was fine. You didn't read it; somebody read it to you.

HON. MR. WOLFE: I've got it right here.

MR. LEVI:

I know you don't read press releases. You don't even read your own

press releases, because if it doesn't come out at the end of a

computer, you're in trouble. But the point is that there has been a lot

of dissatisfaction.

All right, let's put aside the political

stuff for a minute between the opposition and the government and talk

about the enormous amount of money that's being spent and the kind of

strain that is being put on the system. I pointed out that the chief

executive officer was suddenly designated by the Premier to be the

person to be in charge of BCRIC. That's got to put a strain on the

operation. It's got to put a strain on an operation which, according to

the deputy minister's report, is having very serious problems.

Later

on we will be asking about the financial question: just how much is it

costing to operate? How much contracting-out is being done? What

arrangements have been made for the purchasing of new equipment?

don't expect, Mr. Chairman, to get too many answers from the minister

today because he doesn't have his assistant with him. We don't have the

president of the Systems Corporation, and I can usually tell when the

minister talks to somebody beside him whether he is actually getting

the information. It's going to be interesting to see what kind of

replies the minister can make.

Perhaps the minister will be

good enough to particularly devote his remarks to the report that was

done in October. What remedial work has been done, and how does he

characterize the importance of the report? Is the report important? Did

the deputy ministers know what they were talking about?

HON. MR. WOLFE:

Mr. Chairman, I appreciate the member's constructive remarks and

questions. I know he has had a growing interest in this subject, and

I'm not sure everybody in the House has. Last year's report, which was

a financial report, was tabled on June 28 — just for your information.

MR. LEVI: Yes, but we can't find a copy.

HON. MR. WOLFE: This year we've had reports on systems in each quarter, including the third-quarter report which was released after January.

You

mentioned many problems associated with the Systems Corporation: the

whole concept of centralizing the decisions on equipment; trying to

consolidate the use of equipment; trying to prevent the proliferation

of buying of unnecessary equipment, which is really quite a widespread

problem.

I guess one of the more difficult problems

associated with the job that Systems has had to do is to gather in all

of the data processing people under one umbrella. Of course, this

causes certain unhappiness with people who are separated from former

ministries. I did call upon this user committee to study the matter and

report. I think what you have is probably a partial draft, basically

similar to the one that was the final form. I think we can look

positively on that report, and you can believe that we are going to

continue using a user committee and ask for further reports.

might say that having had their report and observations from the staff

members involved, I had a meeting with senior deputies who had written

that report to get their verbal observations of what some of their

thinking was and some of the, you might say, dissatisfaction with

service. This is what the objective of getting this report was: was

there a problem in terms of delivering the computer data processing

service to ministries by this corporation?

Now it is new,

and it has gathered all these staff members under one roof. So the

software side of this is a problem you find universally wherever you

go. It's a more difficult one to administer. With regard to the finding

of capable people in this field, which they constantly advertise for,

the training availability is to be questioned and needs to be increased

and improved.

Having said that, I consider we should deal

with the report in a positive way and I therefore welcomed it. One of

the major references in it was the fact that we did not yet have

interface positions in the ministries. I think at this stage all or

most of these interface positions have been established. I don't know

whether all of them are filled, but this is a major improvement which I

think is taking place, or has been completed, in terms of the

relationship between Systems and the ministries. Incidentally, this

might explain the advertisement by Health that you referred to. They

were advertising for programmers and it may have been for these

positions I'm referring to.

One thing that was referred to

in the report was the delay that took place in getting approvals for

data processing systems in ministries. The fact that Treasury Board as

well as the senior executive of Systems had to approve this caused a

lot of delay. We've resolved some of those to try to expedite these

applications.

As I say, I'm going to see that this committee will continue to function and get an update on the situation as it

[ Page 333 ]

took place, as you read their report, which was last October or November.

You

mentioned a problem in the Ministry of Forests which was referred to by

the auditor-general. I met with officials when that question was before

us, and tried to solve that problem. It had to do with installing a

new, more modern system in that ministry, which has considerable detail

in terms of weigh scales, and so on, in the reporting of these figures.

I was pretty well of the view at that time that any delay that took

place was temporary, and there was some fault on both sides on that

question. I think you will find that that has been resolved long since.

You

questioned the seconding of Mr. Alexander to the BCRIC project. I think

maybe there's a simple answer to that question, but I can't think of a

project better suited to a person of his background and capability,

which is acknowledged expertise in data processing systems. The BCRIC

project and the delivery of that system, the handling of all those

applications and the systematizing of all this is just exactly designed

for a person with that capability. So that's why the decision was made

to place him in charge of that. In addition, he had other people to

support him, in terms of his ongoing task with Systems.

I'm

pleased to be able to say, in answer to your question about directors,

that we have moved on this and we have now appointed three outside

directors to the corporation. One is Mallory Smith, a business

executive with Coppers International of Canada in Richmond. He has

substantial experience and is a very bright executive, I think, and

he's doing an excellent job in acting on this board. We've also added a

chartered accountant, Mr. Bruce Sangster, for many years with Winsper

Higgins and Company. Quite recently we've added Mr. Bud Stapleton, who

is a senior systems man with MacMillan Bloedel, who is going to be

giving his time to this as well. We are very pleased to have added Mr.

Stapleton to the board, and I think he can add some special expertise

on the practical side of this, for the benefit of other directors. I

think those new additions to the board are going to help considerably

in the problems we have had with Systems in the development of the

Systems concept.

You mentioned the vacancy of a financial

vice-president. We've been very aware of this. I can assure you that a

search has taken place and we have now made an appointment. I'm told

that he has accepted the proposition. He happens to be from Ontario.

We're very pleased that he's going to be coming here because he has

tremendous capabilities. I can't release his name at this stage, but I

can say that position has been closed and he'll be here very shortly.

always bring up the situation of the Honeywell. We always remember that

Mr. Strachan ordered the Honeywell on something like a $7 million or $8

million contract without any examination of what it might be used for.

It was one of the biggest computers in Canada at the time and when we

arrived on the scene in late 1975, this equipment arrived with us.

Nobody seemed to know what it was going to be used for nor was it

compatible with existing systems in government.

That, I

think, exemplifies a basic problem with data processing: you have to

have the expertise to accommodate the equipment that you buy in terms

of it being able to turn out the material that you want to produce.

Anyway, the Honeywell is still here. We've renewed the contract. We've

now extended the contract at a reduced rate, and I'm told that it is,

in fact, being used basically to capacity but I can't give you the

detail on that at this stage. I don't think it's correct to say that it

is defunct at all. I think either a large part or half of it is now

being used in the Vancouver operation.

The justice

information system goes back quite a ways. I know there was a

tremendous reticence on the part of the staff members who had adopted a

very innovative new system in the justice field to being seconded then

to this new corporation. That, I believe, was worked out at the time at

a meeting with staff members of the Attorney-General, and I really

can't report any further on the status of that. There were certain

elements who resisted strongly being brought into this new corporation

and it was very difficult to accommodate this at the time. That's about

all I can say.

MR. LEVI: Like I suspected, Mr.

Chairman, you treat the minister nicely and he doesn’t give you any

information. I think it's rather appalling that the president of the

corporation isn't present, and that the minister wouldn't have expected

that I would get up and ask a few questions.

His information

in respect to the Honeywell is not only incomplete but it doesn't have

any validity. I am going to have to, with the agreement of my colleague

from Nanaimo (Mr. Stupich), keep this debate going at least until

Monday so that the minister will undertake to have the president of the

corporation present so we can actually find all of the facts.

HON. MR. WOLFE: What do you want to know about the Honeywell?

MR. LEVI:

I want to know exactly what is happening to it, because it is my

understanding from discussing with people that it has been

decommissioned. It was originally intended to take care of most of the

educational financing problems in the province.

In my

discussions and calls to various colleges, asking what services they

were using in respect to computing all of the work that they have to do

in scheduling classes and that, it's not being used. It's sitting there

on Renfrew Street in all its glory but it's not being used. So that's a

question that we've got to understand.

Your remarks about

the justice information system are only the beginning of the facts that

exist. We know that there was a great deal of protectionism going on

with the staff. After all, they'd worked on it for a couple of years.

We know all that; we know that people were a little reluctant to get

dumped into one big hopper. I would ask the minister now whether he

would like to be candid with us and say that if they had to do it over

again — I'm not disputing the fact that the thing needs to be

integrated and to some extent centralized — whether in fact they would

not have agreed to go much slower, that it was not necessary to do all

of the integration and throw everybody into the hopper at the great

speed that they did, because one of the things that it resulted in was

that staff left. That was a great loss to the whole operation. There's

no doubt that these people are in demand. There is a great deal of

mobility in the system. There is a constant upgrading in the technology

and people do tend to move on. That's apparently one of the paramount

problems faced by the industry anyway. That whole situation was

exacerbated by the fact that the

[ Page 334 ]

government insisted on throwing everything together immediately.

said to them in 1977 that if you were to do this thing on a piecemeal

basis you will have less trouble. You will be out to learn as you go

and you won't have what could result in a great deal of confusion. We

have from the minister's report the verification that confusion did

come about and it was a problem, a very serious problem.

Now

I would like the minister to tell me, on another tack just for now —

this is in relation to his own direct financial estimates — how much

money his department spent on computer services. I know that there are

two things together, computer and consulting. Last year in the

estimates there was something like $6.8 million for computer services

and consulting. This year it has an increase of $1.4 million. It's up

to $8,032,000.

Now can the minister tell me why there is a

significant — and it is significant — increase in the amount of money

that has been estimated, and whether...? We don't actually get into the

Ministry of Health's estimate on this, but I would like to know from

the minister why it is that last year the Ministry of Health

appropriated $7.7 million for computer services and this year has $2.1

million. I would like to ask in terms of his department. There is a

significant increase in what he is doing in his own department.

While

the minister is listening I'd like to ask him some other questions. I

don't know who is taking down the notes, but we may have to go back

over it again.

Can the minister tell us, within 5 percent or

10 percent, just how many people are employed by the Systems

Corporation? Has he that figure available? I did receive a letter from

the personnel people in the department on July 12 of last year, which

said: "Effective July 1, 1978, there were 357 employees with the

Systems Corporation plus an additional 25 students hired to cover the

summer holiday schedule." What I would like to know from the minister

is whether he can tell me how many regular employees there are — an

estimate — and how many more employees were hired as a result of the

job they had to do to issue BCRIC shares. It's my understanding that

the staffing in respect to BCRIC shares resulted in an increase of

about 125 to 180 personnel. On top of the 357 they already had, we're

looking, possibly, at 500 to 550 people.

All this

information, I presume, will be available to us in some respect in the

report he's going to table next week. I did ask the minister, but maybe

he could comment on what did happen to the report they are required to

publish, the public bodies report for last year. We haven't been able

to find it. Perhaps the minister might find out for us where that

report is, and if he could make a copy of it available, that would help

us to some extent too. We would like to know just what costs were

incurred in starting up the operation. I'I carry on, because I presume

the minister would like to wait for his deputy to come back.

There

appear to be some significant changes in expenditures in respect to the

operations of the Systems Corporation, as we can gather from the

estimates book. In some respects there is reduction in departmental

expenditures, or at least the estimates; we still don't have the

expenditures. So as I sit down, I would ask the minister if he has any

idea what the final figure was in his own department on the

expenditures for computer services. May I ask the minister that? Is he

able to tell me? Has he a figure for the final expenditures within his

department for computer services? The estimate was $6.8 million last

year. Has he any idea just what it is, within $100,000? Can he tell us

that?

HON. MR. WOLFE: You mean the final figure for last year now?

MR. LEVI:

For last year, because what we have for the coming fiscal year is an

estimate of more than $8 million, an increase of $1.2 million. I'd like

to know what the expenditure was for the last fiscal year, and what the

reason is for the increase. I did ask him to comment, if he can —

because he is responsible for the Systems Corporation — why there is

such a dramatic drop in the Ministry of Health's estimate on computer

services from $7.7 million down to $2.1 million. Does he understand why

this dramatic drop in that department from $7 million down to $2

million for computer costs?

HON. MR. WOLFE: Which one are you talking about now?

MR. LEVI:

Well, I've asked you about your own department, which was $6.8 million

in the last fiscal year. How much did you spend? You're going up to $8

million this year. I've also asked you whether you can comment on why

it is that the Ministry of Health last year had a budget of $7.7

million — we don't know how much they spent. But this year they're

budgeting only $2.1 million. There's a difference of more than $4

million. What's taking place there?

HON. MR. WOLFE: That's in Health?

MR. LEVI:

That's in Health, yes. There are some dramatic changes and you can go

down to some of the others. Transport and Communications, for instance,

which last year was more than $4 million, is now $2.6 million. So from

the minister I would like to know the reason for these very dramatic

changes in the expenditures. Does the minister want to reply now, or

shall I carry on? Just in case any of my new colleagues on this side of

the House are going to say, "There's a stranger in the House," that

gentlemen who just came in is Mr. Alexander from the computer

corporation; so we're okay.

Well, I guess I'I have to keep talking, Mr. Chairman, or else I'I lose my position on the floor.

MR. CHAIRMAN: Something like that.

HON. MR. McCLELLAND: Or you could sit down.

MR. LEVI:

I don't want to sit down. I'm trying to find out about the Minister of

Health's (Hon. Mr. McClelland'

s) department. Why has his estimate in

the computing gone from $7 million down to $2 million?

would like the minister to let us know in respect to the appointment of

the directors. In the letter that I wrote to him I suggested that he go

to the industry — and there is an industry association — and suggest to

them that they might recommend a representative from the industry that

might sit on the board. He's announced that there are three new people

on the board. Could he tell me whether any of the three people who have

been appointed to the board were nominees from the industry itself?

[ Page 335 ]

Now that the Premier's come in, we're not going to get any answers out of him, because he's got to deal with three people now.

HON. MR. WOLFE:

I don't know if I can answer all these detailed questions, Mr.

Chairman, but perhaps I could answer some of them after today with

written replies and so on. But I'll try.

The number of staff

at March 31 is 378. The number of staff involved in BCRIC on a

temporary basis is 38 students, plus about 50 other temporary employees.

You

mentioned the public bodies report. I'd have to check this further

myself, but I'm advised that under their Act it's required to be tabled

there. But I don't think it's required to be tabled in the House. But

I'll check the public bodies information report further.

Now the reason for the reduction in the Health vote is mainly the removal of the medical plan from this particular vote.

You

asked about the Finance vote increase. I think you'll find that they

spent approximately their estimated amount during the previous year.

The increase in expenditure is about 99 percent represented by charges

payable to the Systems Corporation for development and operation of

information systems. It's the development of new systems — for

instance, a new sales tax system and so on, which is very extensive. I

don't know whether the new payroll system would be included in that or

not. I think the new payroll system revision is in that too.

MR. LEVI:

I just have one other question for the minister. He did announce that

there were three new directors. When I wrote to him last year I

suggested that he might have a discussion with the industry and its

association about the possibility of appointing somebody from the

industry. Now can he tell me whether any of the three individuals that

were appointed were designated or suggested by the industry association

itself — whether that was followed up on? No, I don't think it was.

[Mr. Rogers in the chair.]

HON. MR. WOLFE:

I can only say that I consulted with many people in trying to find

people who were prepared to serve. Mr. Stapleton is not in the industry

directly, but indirectly he is well known to many people in it. I guess

the answer to your specific question is no.

MR. LEVI:

As I understand it then, there was no consultation with the association

or the industry itself as suggested. I gave you a name. I suggested you

might contact somebody.

Then the answer is no?

HON. MR. WOLFE: Yes, except for maybe informally. There's been no direct consultation with them.

MR. HANSON: I have a couple of observations to make and then a couple of questions to ask.

Having

been a union representative representing the employees of the B.C.

Systems Corporation, and having talked extensively with those employees

over some period of time, there are a couple of things I think the

House should know about the way the employees feel about the

corporation itself. To put it in a nutshell, I guess you would have to

say that the main observation that the employees make is that there are

too many bosses and not enough workers.

I think some

interesting figures would be to look at the payroll for the B.C.

Systems Corporation and do a breakdown of the proportion of salary paid

out to exclusions and the proportion of salary paid to employees within

the bargaining unit. I'd also like to know the number of excluded

positions and the number of positions in the bargaining unit. It looks

like I'm going to get that answer, but perhaps I could just continue.

addition to the number of excluded positions and the number in the

bargaining unit, I would like to know the breakdown of salary for the

bargaining unit and for the exclusions.

As you know, our

party is in agreement that there had to be a rationalization of the

equipment, the hardware, and it doesn't make sense for ministries to be

going about building their own computer network. We are not in

disagreement with the concept. However, there are a number of things

that happened when the corporation was established. Within the public

service, the prior arrangement, the public service is pyramidal in

structure. In other words, it's got lots of workers at the bottom and

it comes to a point as you go higher up the management scale.

What

we have in the B.C. Systems Corporation is a rectangle. The

relationship between line worker and management is an almost direct

one-to-one ratio. We have a $60,000-a-year manager and a $20,000-a-year

line analyst.

There are other aspects of the

employer-employee relationship that I think are interesting. Employees

are given a charge-out rate. They are regarded as revenue generators

for the corporation. A line employee from government service, rather

than being regarded as a systems analyst paid a certain amount per

month, is thought of as a $40 an hour charge-out. In other words, that

employee must generate $40 an hour for the corporation to justify his

existence.

The pyramided public service and the rectangular

corporation means that the employees — the people who have to do the

work, who do the key punching, who do the systems analysis and so on —

have to carry a large number of high-paid exclusions. That may make

sense in the computer industry but it has a deleterious effect on the

employees. This is a guess on my part but in the outside industry I

think the relationship between the number of managers and the number of

workers is that there are not as many managers as there are workers. I

think it's a characteristic of the systems corporation at this time.

The

deleterious effect is that there is a high stress aspect on the

employees because it is a new corporation and because of the

facilities, particularly the Wismer House on Fort Street. It is not a

building that was built for that operation. It's leased and it is not

conducive to a good work situation. The pressure for the corporation to

compete on the market, and to compete on the market carrying these

large number of managers, results in a high stress factor. There has

been a high incidence of nervous and emotional problems among the

employees of the B.C. Systems Corporation.

The bargaining

agent and the employer have had some meetings on the need to have a

stress study in B.C. Systems. But I think that it's something that the

members of

[ Page 336 ]

the

Legislature should be aware of. As the corporation is presently

structured and presently operates, the employees are under a tremendous

amount of pressure to carry fat at the top.

I would like to

hear the minister's comments and his reply regarding the proportion of

salary paid to excluded positions. My understanding is that a large

number of the excluded positions are from out of province. Why are we

not able to recruit the expertise here in British Columbia? Do we not

have enough suitable managers from the computer industry within British

Columbia?

There's been some controversy over the use of the

social insurance number. My understanding is that the social insurance

number is to be used by Revenue Canada and by the Unemployment

Insurance Commission, but not to be used by other agencies. I gather it

is being used in computerized credit systems and so on. I would just

like to know — Mr. Alexander is here, perhaps he could clarify that for

me — what are the restrictions on the use of the social insurance

number in the computer industry.

While Mr. Alexander is here

— if he would care to respond; he is certainly under no obligation to

respond — I would like an answer from him regarding the occupational

health and safety stress study that was proposed to the employer. Will

they participate? Will the employer be embarking on that program on

behalf of the employees? I know that management is aware that there is

a serious problem in B.C. Systems, the stress problem among the

employees. I would be happy to hear those answers.

MRS. JORDAN:

I don't intend to take up much of the House's time or the minister's

time, but while we're discussing all these esoteric subjects on

technology, I would like to bring up a subject that relates

specifically to people. It involves an area that became part of

Okanagan North in redistribution, Edgewood, Fauquier, Burton and Arrow

Park, and was charmingly represented in the past by the hon. member for

Shuswap-Revelstoke (Mr. King) — perhaps not effectively represented. In

fact, some of the best-kept secrets in the world were government

policies. The people of the area might better have been able to learn

how to plug into those programs. I recognize the difficulty of keeping

them informed.

The basic economy is forestry. The population

is small and is in the four isolated communities which are very much

removed from the mainstream of this province except via the Monashee

Highway. We've given much thought to how we might better serve them and

how we might add some impetus to their economy. We looked at tourism as

a possible assistance.

I would advise you that the only

government entity in that area is the Forestry office in Fauquier which

is serving as a clearing house for almost everything relating to

government. Ineffective as this is, it is certainly an added

convenience, though one which perhaps wrongly utilizes the people in

that office. We could investigate the feasibility — I have discussed

this with the ministry — of establishing a provincial government

contact within that area.

I understand the community of

Nakusp is seeking a government agent office. If we go that route, then

that government agent should visit the Fauquier-Burton-Edgewood-Arrow

Park area for perhaps half a day once a week in order to see if there

is a response to the opportunity to receive information and to converse

directly with government.

If that is not possible, perhaps

it would be of greater advantage to the people if we could consider

hiring a local person half time. We could bring him to Victoria in

order to familiarize him with the overall workings of the various

ministries and where to go for information. We have to recognize that

the economics of such a presence would be in question, but we have to

consider the need of these people for service and for access of

information. For my own part, I hope to be an outstanding MLA in that

area, give them the very best service possible and keep them well

informed as well as charmingly informed. The everyday needs in relation

to business operations are beyond the scope of MLAs to respond to as

much as they would like. I bring this to your attention, Mr. Minister,

for your consideration and study. I hope that some sort of contact is

made as a start, so that we can test its desirability and feasibility.

MR. HALL:

I'd like to ask the minister four or five questions on his salary vote

before we get to vote 52 and the other ministry for which he is

responsible.

I notice in the estimates that we seem to be

grouping all the figures together. I presume this must have been the

practice over the last couple of years. So we can have it down on the

record, would the minister tell us about his office staff and the

disposition of the salaries, number of personnel, and so on, all of

which make up the $87,149? Who indeed will be sharing in the travel

expense of $12,062? In other words, tell us about the minister's office

itself in vote 100: what the salaries are; who gets what; and how the

travel moneys will be apportioned out of that $12,062. Who is entitled

to draw from that fund?

The Minister of Finance is

responsible for getting together all of the figures which go to make up

the budget. In going through the estimates, I notice there is a line

that appears in almost every department: "Less recruitment savings."

It's not explained in the notes in the back of our estimates. Can he

tell us what "recruitment savings" means, how they are going to be

achieved, and what he thinks their level of success and achievement

will be?

Again, a general line that appears throughout the

estimates is the British Columbia Building Corporation rentals. What

level and what formula is used to determine how much rent each

department pays? As I understand it, there are some departmental

comptrollers who are not exactly ecstatic with the amount of money

they're being charged for the rent for the premises that their

departments occupy. That is question 3.

Question 4 is to do

with the liquor distribution branch. Again I refer to the

auditor-general's report and also to press releases over these past

three years and speeches in the House over the last ten. Page 43 of the

auditor-general's report simply and boldly states: "In general the

accounting systems and procedures were found to be inadequate for

today's business environment." The minister was quick to point out to

my colleague, on the other complaint which has to do with the forest

system, that he had already met with the forest department and that was

all fixed up. I wonder if he could tell us what he's done about the

liquor distribution branch, and whether now the controls are adequate,

and if some of the investigations that were going on into the liquor

distribution branch reported in the press from time to time have been

(

a) finalized, (

b) acted upon, or (

c) found

[ Page 337 ]

noteworthy and perhaps noteworthy to the extent that this House should be advised of what the investigation did produce.

The

fifth question is: am I correct in assuming that we are going to go

into vote 52 next? I didn't understand what the House Leader said this

morning at roughly 10:15. Is the next vote vote 52?

MR. CHAIRMAN: The Chair has no knowledge. It may be possible that someone can advise you, but certainly not the Chairman.

HON. MR. WOLFE:

Just a couple of things, Mr. Chairman. The member asked about details

on salaries in the minister's office. I can supply him that after the

breakdown — there are five staff members, including myself.

asked the question about travel. That's associated with anyone in my

office. For instance, my executive assistant would be included in that

travel appropriation as well as myself.

Could I indicate

too, Mr. Chairman, that his questions regarding how rent is computed

might be better asked of the Provincial Secretary (Hon. Mr. Curtis),

who is responsible now for the B.C. Buildings Corporation and their

method of computing the rentals and space charges. Similarly I would

suggest that questions on problems associated with the operation of the

liquor distribution branch might be better answered by the Minister of

Consumer and Corporate Affairs (Hon. Mr. Nielsen).

MR. HANSON:

Mr. Chairman, may I redirect that question again to the minister? Could

I expect an answer regarding the breakdown or the proportion of

salaries to excluded positions versus the bargaining unit in the B.C.

Systems Corporation?

MRS. DAILLY: I have a question

with reference to assessments which now exist and the placements of

these assessments and the effect they have on the work done by

fraternal organizations. I'm sure that the minister and many other MLAs

have received letters from fraternal organizations which are making

what I consider to be a fairly good case for the fact that they are

non-profit; they are doing a lot of good work, as we all personally

know, particularly for the young people. In my own riding of Burnaby

North there is a lodge whose assessment has gone up 56 percent since

1977. The minister is nodding, so I know that he is very much aware of

the problem, Mr. Chairman, and therefore you know what my question to

you will be. Is your ministry giving any consideration at all to any

concessions for fraternal organizations which are non-profit and which

can show that they are aiding and helping in the community?

HON. MR. WOLFE:

I'm very much aware of the problem indicated by the member in terms of

the assessments of the fraternal organizations. Previous to the new

system, various municipalities offered different treatment toward

fraternal organizations; to quite a degree it's up to the local

municipality how they might want to apply a benefit toward a fraternal

organization. The fact is they enjoy, probably to a large degree, the

residential assessment, but the problem lies in the fact that many of

them do supply a commercial service of one kind or another. We've had

considerable study on this and at this stage there has been no

resolution of it in terms of the provincial Assessment Authority.

MR. HOWARD:

Mr. Chairman, I think probably the more often a particular statement is

repeated — especially over the years — the more it tends to become

accepted as fact and truth when it may not be so. I think this is the

case with respect to the continual reference by this minister and other

ministers to the question of the debt of the province. It falls in the

category of being almost mythology at this stage. As often, I think, as

the minister or other members of the Crown want to perpetuate that myth

by making reference to it in that way, then just as often it will be

necessary to put the other situation forward, to point out that the

continual reference to the direct debt of the province, or the

debt-free situation in the province, and so on, comparing with other

provinces, does not — and the minister knows this as well, too, being,

as I understand he is a chartered accountant — reflect the full truth

of the matter.

Before we get to that, though, I would like

to reiterate, as we mentioned earlier, that there are — as is contained

in the public accounts, and reference is made to it from time to time —

some debt obligations of the province, money which the province itself

borrowed directly, looks upon as being its absolute debt and its sole

obligation, and lists in the book as being an obligation to the

province directly. It's been reduced somewhat now, I understand, but

the initial $261,000,447 which this government borrowed a few years

back.... Some of that money was borrowed in earlier years at 8 percent

and, as of May 1, 1978, a little over a year ago, this government and

this Minister of Finance took that $261 million of debt, which was then

coming due and coming to maturity, and rolled it over into another debt

for a period of ten years at a higher interest rate.

A year

ago in May — when we had a direct debt of the province of some $261

million and were paying slightly over 8 percent of the taxpayers' money

to service that debt — the minister, in his wisdom, decided that the

thing to do was to renegotiate that debt that was coming due and float

it out at a rate of 9-1/8 percent. As a result of that, the general

public in this province have been required to pay an additional $2.3

million a year in interest to service that debt.

Before May

1978 and right now as a condition of having borrowed the money at 9-1/8

percent, the province can retire that debt at any time, can wipe it off

the books, can pay it off. If you pay it off completely, you will be

saving the taxpayers something in the neighbourhood of $21 million to

$23 million a year in interest payments that otherwise have to be paid.

Because this government has such an aversion to the idea of direct

debt, gloats throughout the years about having a debt-free province,

shudders at the thought of there being debt on the books, continues to

tell the general public what a heinous thing it is to have to pay

interest on debt, continues as.... The Minister of Health (Hon. Mr.

McClelland) says that if he could just get his hands on that $20

million that is now being paid out in interest on the debt, he could

finance the whole Pharmacare program. When references of that nature

are made, it seems to me that it behooves the Minister of Finance to

tell the people of this province why he didn't before in May 1978 or

why he doesn't now pay off that $260 million in debt. He has the right

to do it. The borrowing that was engaged in in May 1978 to roll that

over into 9- 1/8 percent, carried with it

[ Page 338 ]

the

right to retire the debt in whole or in part — that's what the words in

the public accounts say; that's what the arrangement was. I ask the

minister why he doesn't use all the resources that he has available to

him to reduce the debt.

I know he can't pay it off in its entirety. Instead of carrying the....

MR. RITCHIE: Carry on; you're okay.

MR. HOWARD:

I hesitated there a minute because the Minister of Finance was getting

his instructions from the Premier, and I didn't want him to interrupt

that conversation — that's all. There were other reasons as well, which

I can't disclose at this time. And I have difficulty hearing the

Premier when he speaks in such an out-of-order way. I would suggest the

Premier read pages 261 to 266 of May's seventeenth edition, that I was

ordered to read. If the Premier would take that advice, we'd be much

better off in this House.

I would like to know, just with

respect to that debt question — because there is such a sensitivity

about debt on the part of the Minister of Finance — why he doesn't move

speedily to retire it or reduce it as much as he possibly cannot just

the absolute amount of 10 percent per year, as he is contemplating

doing.

The question I pose to the minister is: will he take

some steps to reduce that debt as quickly as possible, and not just at

the prescribed rate of 10 percent of the initial amount every year, so

that it is retired in ten years? Can he tell us why he doesn't move to

use the surplus funds to do that?

I wonder if I could ask

the minister that question again; I see he didn't hear it. Why doesn't

the Minister of Finance, in carrying out his duties and obligations to

the people of this province to save them money, reduce that debt as

quickly as he possibly can so the taxpayers are not paying out undue

and unnecessary amounts of interest over the years?

HON. MR. WOLFE:

Mr. Chairman, as I've said earlier in the House many times during this

debate, those funds are being used very importantly for hospitals, for

job creation and for very necessary programs that you would be the

first one to agree with.

MR. HOWARD: The funds that

the minister borrowed, the $261 million, are being used for important

purposes. I understood him to say that. Also, the taxpayers of the

province are paying out $23 million a year in interest on that. That's

what I'm getting at: if it's such a terrible thing for the taxpayers to

have to pay interest on money that this government borrowed, then why

doesn't it relieve the taxpayers of that onerous burden of continuing

to have to pay interest on unnecessary debt? Because the cash is in the

bank to pay it off. The only reason that the Minister of Finance wants

to keep that debt on the books is so that regularly and periodically he

can continue to pay homage to that myth about debt within this

province, that's all. It's a political game and he's charging the

taxpayers of the province $23 million a year to supplement his

declarations and his statements. That's not a very sincere way to

approach things, Mr. Chairman, in terms of dealing with the general

public's money.

Let's take the next step in discussing

direct debt. It is highly misleading, Mr. Chairman, for this minister

and members of this government regularly and continuously to talk about

the debt of the province and say it's only whatever it is — $100 per

capita year or something of that nature — and then compare that with

other provinces. Isn't it terrible how these other provinces are going

into debt and how beautiful it is that we here in B.C. don't have any

of that terrible debt lying around?

Let's just look at the

public accounts, Mr. Speaker, for last year. The public accounts carry

an amount of debt obligation in there guaranteed by the province under

the B.C. School Districts Capital Financing Authority. It shows it to

be an amount of $851 million in debt under that particular Act. Now

that, as I understand it, is capital debt, money borrowed by school

districts to build schools. There's some money in some sinking funds in

there, so there's a net position of some $693 million.

Disregarding

the sinking fund for a moment — and I don't think it matters whether

you use the $800 million or the $693 million figure — the essence of

what I am putting forward is the same. Under the process of funding

school buildings, of financing capital projects in school districts, of

paying for the building of new schools, there is a direct obligation on

the part of the provincial government to pay half of that. There is a

formula arrangement involved. But there's an absolute and undeniable

direct obligation on the part of the province for 50 percent of the

capital money for school districts.

Because of a

desirability on the part of an earlier Premier in this province to

display to the public something that was not fully truthful....

Interjections.

MR. HOWARD:

I didn't say "untruthful"; don't be sensitive about this. It was not

fully truthful what happened and it's not fully truthful what is

happening now in talking about debt. At one time if a school district

wanted to build a new school, it borrowed half of the money and the

province borrowed half of the money. The province gave to the school

district the half of the money that the province borrowed so that the

school district could pay for the building of the school. The province

then carried that as debt on the books of the province, and paid it off

paying the interest as it went along. Starting in the early '50s an

alteration was made so that the school district borrowed all the money.

The school district borrowed