1976 Legislative Session: 1st Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, APRIL 28, 1976

Afternoon Sitting

[ Page

1181 ]

CONTENTS

Routine proceedings

Oral questions

Vancouver East by-election. Mr. King — 1181

Government contract to Lighthouse Communications Ltd. Mr. Gibson — 1183

Psychological testing of workers' compensation claimants. Mr. Wallace —

Vancouver East by-election. Mr. Stupich — 1184

Employment of Ron Worley. Hon. Mrs. McCarthy answers — 1184

Committee of Supply: Department of Finance estimates.

On vote 61.

Mr. Gibson — 1185

Hon. Mr. Wolfe — 1189

Ms. Sanford — 1190

Hon. Mr. Wolfe — 1191

Mr.Cocke — 1191

Hon. Mr. Wolfe — 1193

Mr.Cocke — 1194

Mr. Wallace — 1195

Hon. Mr. Wolfe — 1198

Mr. Stupich — 1198

Mr. Wallace — 1198

Hon. Mr. Wolfe — 1199

Mr. Nicolson — 1199

Hon. Mr. Wolfe — 1200

Mr. Levi — 1201

Hon. Mr. Wolfe — 1202

Mrs. Dailly — 1202

Hon. Mr. Wolfe — 1202

Mr. Stupich — 1203

Hon. Mr. Wolfe — 1204

Ms. Sanford — 1205

Mr. Lea — 1205

Mr. Stupich — 1205

Mr. King — 1206

Hon. Mr. Wolfe — 1206

Mr. Gibson — 1207

Hon. Mr. Wolfe — 1207

Mr. King — 1207

Hon. Mr. Wolfe — 1208

Mr. Skelly — 1208

Mr. Hewitt — 1209

Mr. Skelly — 1209

Hon. Mr. Wolfe — 1209

Mr. Lauk — 1210

Ms. Brown — 1211

Hon. Mr. Wolfe — 1212

Mr. Skelly — 1212

Hon. Mr. Wolfe — 1213

Mr. Nicolson — 1214

Hon. Mr. Wolfe — 1214

Mr. Stupich — 1214

Vote 63 approved — 1214

On vote 64.

Mr. Wallace — 1214

Hon. Mr. Wolfe — 1214

Ms. Brown — 1215

Hon. Mr. Wolfe — 1215

Vote 64 approved — 1215

Vote 65 approved — 1215

On vote 66.

Mr. Stupich — 1215

WEDNESDAY, APRIL 28, 1976

The House met at 2 p.m.

Prayers.

MR. G.H. KERSTER (Coquitlam): A very brief introduction: in

the House today is a group of students and two teachers from my

constituency. They're here on a Crown Zellerbach-sponsored tour,

co-ordinated by Mr. Bob Porter, manager of institutional services. The

teachers are: Mrs. E. Cuthbertson and Mr. Kirk Templeton of Mary Hill

Junior Secondary. The students are, and there are just a few: Shirley

Coltman of Como Lake Junior Secondary, Marianne Potter of Dr. Charles

Best Junior Secondary, Yvonne Dumont of George Pearkes Junior

Secondary, Stuart Cox, Julie Cathy, Raymond Delebeck and Cindy Dawson

of Mary Hill Junior Secondary, Robert Hargraves of Montgomery Junior

Secondary, Norma Hoce of Moody Junior Secondary, and Cheryl-Lynn Otman

of Sir Frederick Banting.

I ask the House to join me in making these students and their teachers welcome today.

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr.

Speaker, I would also ask the House to join me in welcoming a group of

students from Surrey, the Frank Hurt school. They're also here on the

Crown Zellerbach tour.

MR. G.F. GIBSON (North Vancouver-Capilano): In the gallery

this afternoon at 4 o'clock will be 70 students from Carson Graham, and

their teachers, Mr. Krawczyk and Mr. Derren. I would ask the House to

make them doubly welcome.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, we

are very honoured today to have the wife of the Speaker of Alberta in

our gallery, Mrs. Amerongen. I would ask the House to give her a very

warm and hospitable welcome.

Mr. Speaker, also in our gallery today are representatives here to

attend a recreational conference in Victoria for the next three days. I

would ask the House to welcome Commissioner Atkinson, Commissioner

Wayneborn and Commissioner Livingstone from the Vancouver Board of

Parks and Public Recreation, and Mr. Marshal Smith who is our

recreational director in the city of Vancouver, and very many

representatives from community associations in the city of Vancouver.

We welcome them all.

MR. SPEAKER: May I also add a word of welcome to the wife of the Speaker

of the House in Alberta, Mrs. Amerongen, and extend to her best wishes and hope

that she will take back to her husband in Alberta the respect and good wishes

of the House in British Columbia.

MR. D.G. COCKE (New Westminster): Mr. Speaker, in the

gallery, along with the Surrey and Coquitlam group, is a group from the

New Westminster Secondary School. I'd like the House to welcome these

students from the royal city; let's welcome them royally.

MR. W.G. STRONGMAN (Vancouver South): Mr. Speaker, seated in

the assembly today is a long-time associate and close friend of mine. I

would ask the assembly to welcome Mr. Robert McLean of West Vancouver.

MR. G. MUSSALLEM (Dewdney): Mr. Speaker, I ask the House to

welcome 55 young ladies and gentlemen from our municipality of Maple

Ridge, the Maple Ridge Senior Secondary School. The instructor is Mr.

John Doyle. I appreciate your welcoming them.

MR. GIBSON: Mr. Speaker, I'm rising now to say that in

committee last night I was asked by the Minister of Finance (Hon. Mr.

Wolfe) and the Minister of Labour (Hon. Mr. Williams) to table a

document which I mentioned, which shows that British Columbia ranked

10th out of 10 in per capita economic growth over the last decade. I

would ask leave to do so herewith, and also mention a correction. I

said it was the Financial Post — it was from the Financial Times .

Leave granted.

Oral questions.

VANCOUVER EAST BY-ELECTION

MR. W.S. KING (Leader of the Opposition): A question to the

Provincial Secretary. In 1973, when the former Premier, the Hon. W.A.C.

Bennett, resigned, a by-election was called expeditiously to make way

for his son to enter this assembly. The current Premier has indicated

that a by-election would be called in similar expeditious fashion to

make way for the leader of the New Democratic Party (Mr. Barrett) in

his electoral race in Vancouver East. Why has that by-election not been

called to date?

HON. MRS. McCARTHY: Mr. Speaker, it is my understanding that

the by-election was initiated by the former member for Vancouver East

to make way for the leader of the NDP to sit in this House. That

decision has yet to be made by the electorate. Mr. Speaker, in answer

to the question by the acting

[ Page 1182 ]

Leader of the Opposition, I am awaiting the report. I have asked for

the report and when the report from the electoral officer is in my

hands, I will be making a statement at that time.

MR. KING: Mr. Speaker, to the Provincial Secretary, it was

reported by the executive assistant to the provincial registrar of

voters that the enumeration of the Vancouver East constituency was

completed on April 7. Under the Provincial Elections Act, enumeration

does continue until after the by-election is called. In light of that

fact and that revelation by the provincial registrar of voters' office,

what possible justification can the Provincial Secretary have now for

delay other than fear of facing the leader of the NDP?

MR. SPEAKER: Order, please! The purpose of the question period is to ask questions, not make speeches, hon. Leader of the Opposition.

HON. MRS. McCARTHY: The hon. Leader of the Opposition says:

"Right on!" I suggest that he will accept, then, that the Provincial

Secretary can add a little to the answer to this question. First, with

regard to the reference you make to the assistant to the registrar of

voters, I believe I have read the same reference when it came from the

media. On that basis, on Tuesday or Monday of this week I asked for the

registrar of voters to give a formal report to the province which would

incorporate the report which is mentioned by the Leader of the

Opposition on which the Provincial Secretary will then be able to act.

We on this side of the House, even though the opposition leader would

like to make it a political situation, do not see that we are delaying

the calling of the by-election out of fear of anyone in this province,

Mr. Leader.

MR. SPEAKER: Order!

Interjection.

MR. SPEAKER: Would the hon. Leader of the Opposition please

extend to other members of the House the same courtesy he would wish to

have extended to himself?

Interjection.

MR. SPEAKER: I was calling her to order, hon. member. The

hon. Provincial Secretary was on her feet and had the floor. Continue,

hon. Provincial Secretary.

HON. MRS. McCARTHY: Mr. Speaker, I take it I may continue

then in answer to the leader. As I say, we are not concerned with the

suggestion that he makes, in terms of fear of anyone in this House.

MR. SPEAKER: Order, please, hon. Provincial Secretary. Will you stay with the subject matter which was put before you?

HON. MRS. McCARTHY: This has reference to the suggestion

made. We are concerned that everyone has had the ability and

opportunity to be registered that those same people in Vancouver East

were not given before the last provincial election.

MR. SPEAKER: Order, please.

HON. MRS. McCARTHY: That has been fulfilled and the report is on its way to me.

M R. G.V. LAUK (Vancouver Centre): A supplementary question to the hon.

Provincial Secretary. When giving initial instructions to the registrar of voters,

did she not request that as soon as the enumeration was completed, according

to law prior to the call of the by-election, a report would be immediately sent

to her?

HON. MRS. McCARTHY: Mr. Speaker, as the member well knows,

the statutes require the Deputy Provincial Secretary to contact the

registrar of voters. My Deputy Provincial Secretary has so done and has

enacted the letter of the law through the statutes as I would have

expected him to do. Through him I have asked for a report, and we are

awaiting the report.

MR. LAUK: Mr. Speaker, to the hon. Provincial Secretary, in

accordance with the statute, no formal report is required. I would ask

the Provincial Secretary….

MR. SPEAKER: Order, please. What is your question, please?

MR. LAUK: My question is: is not the Provincial Secretary playing games with the law…?

MR. SPEAKER: Order! That is out of order, as you well know.

MR. G.R. LEA (Prince Rupert): A supplemental.

MR. SPEAKER: We have had at least three supplementals on this

same matter at this particular stage of the question period. Is it on

the same matter, hon. member?

MR. LEA: Yes, it is.

MR. SPEAKER: I'll allow a further supplemental

[ Page 1183 ]

from the member for Prince Rupert.

MR. LEA: Mr. Speaker, the hon. Provincial Secretary said, in

answering, that she thought the Leader of the Opposition was trying to

enter politics into whether a by-election should be called.

MR. SPEAKER: Order, please! Have you got a question?

MR. LEA: Yes, I have.

MR. SPEAKER: Well, then, state it.

MR. LEA: I would like to ask the Provincial Secretary when it

has come to pass in this province that the calling of an election isn't

surrounded by politics.

MR. SPEAKER: That's not a proper question.

MR. LEA: I'd like a proper answer to that, Mr. Speaker.

MR. SPEAKER: Order, please. The hon. member for North Vancouver–Capilano (Mr. Gibson) on a different subject.

MS. R. BROWN (Vancouver-Burrard): Supplemental.

MR. SPEAKER: I have allowed all the supplementals on that that I think are necessary at this time, hon. member.

MR. LEA: How can you know until you hear the supplemental?

MS. BROWN: Point of order.

MR. SPEAKER: The hon. member for North Vancouver–Capilano has been recognized.

MS. BROWN: A point of order, Mr. Speaker.

MR. SPEAKER: The hon. member for Vancouver-Burrard on a point of order.

MS. BROWN: Mr. Speaker, is there a limit to the number of supplementals that can be asked on a question?

MR. SPEAKER: It is at the discretion of the Speaker to

determine if, in fact, the subject has been well canvassed. The subject

you are talking about, hon. member, has been before the House on a

number of days, with a number of questions and a number of

supplementals allowed. That is why I now call on the member for North

Vancouver–Capilano, who wishes to enter into the question period.

MS. BROWN: Mr. Speaker, may I humbly suggest that we do not

feel the subject has been fully canvassed. There are a further number

of questions on this issue which we would like your permission to

pursue, and we would appreciate it if you would allow us to ask

supplementals until we feel that we have received the answers we are

trying to get.

MR. SPEAKER: Hopefully, hon. member, we will get far enough

in the question period that you can state other questions, if that is

your desire.

The hon. member for North Vancouver–Capilano.

GOVERNMENT CONTRACT TO

LIGHTHOUSE COMMUNICATIONS LTD.

MR. GIBSON: Mr. Speaker, a question to the Minister of Mines

(Hon. Mr. Waterland). Yesterday the minister said to the House that he

gave work to Lighthouse Communications Ltd., and later was quoted by

the media as saying that he engaged that firm to prepare and present to

the mining industry a public relations plan for the mining industry's

use. My question is: did the minister call for proposals on this work

from any other firms?

HON. T.M. WATERLAND (Minister of Mines): Mr. Speaker, I did

not call on Lighthouse to make a proposal for public relations to the

industry. I called upon them to make a presentation as an example of

what they could do. It was a very limited short-term job. I did not

seek bids on the job. It was something that had to be done rather

quickly because I was invited to attend this particular group called

the Mining Support Group and there certainly was not sufficient time to

ask for tenders for a job of this very small nature.

SOME HON. MEMBERS: Oh, oh!

MR. GIBSON: On a supplementary, the minister said yesterday

that no suggestion was made to the industry group that they should use

the services of Lighthouse. I would ask the minister if he doesn't feel

that the engagement of that company by his department and the

introduction of that company to the meeting of the mining support group

by the minister does not constitute a very definite form of moral

suasion against that group to employ them.

HON. MR. WATERLAND: Mr. Speaker, the answer to the question is no.

[ Page 1184 ]

PSYCHOLOGICAL TESTING OF

WORKERS' COMPENSATION CLAIMANTS

MR. G.S. WALLACE (Oak Bay): To the Minister of Labour, Mr.

Speaker, with respect to members of the disability rights association

presenting their claims to the Workers' Compensation Board, usually

with back complaints. Is the minister aware that on an arbitrary basis

certain members are subjected to psychological testing in which the

applicant gives a true or false answer to many irrelevant questions

such as: "I believe in the second coming of Christ; I believe women

ought to have as much sexual freedom as men; sometimes at elections I

vote for men about whom I know very little; if I were an artist I would

like to draw flowers; I like tall women; I think Lincoln was greater

than Washington."? I could go on with many other examples, Mr. Speaker,

but….

This is not really a joke because the claimants apparently have

their attempt to obtain workers' compensation based on the kind of

answers they give to that kind of question. I was wondering if the

minister was aware that the Workers' Compensation Board was using this

kind of technique.

AN HON. MEMBER: How would you answer those questions?

Interjections.

MR. SPEAKER: Order, please. The hon. Minister of Labour has the floor.

HON. L.A. WILLIAMS (Minister of Labour): The member has asked a very serious question. The answer is no.

MR. WALLACE: Supplementary, Mr. Speaker. Could I have the

minister's undertaking to inquire if in implementing these techniques

the compensation board had any prior contact with the Human Rights

Commission, since the outcome and the answering and the importance

attached to these questions might well contravene the individual's

human rights? I would like to know if the minister would undertake an

inquiry and tell the House after the inquiry how much emphasis the

board has been placing on these findings to determine whether a

claimant is entitled to a pension or not.

HON. MR. WILLIAMS: Mr. Speaker, if the member would be good

enough to provide me with details, I will immediately direct the

attention of the Workers' Compensation Board to the matter, plus the

human rights branch, and obtain the information for him. I just would

assure the member, however, Mr. Speaker, that I believe that the

independence of the Workers' Compensation Board should be preserved.

VANCOUVER EAST BY-ELECTION

MR. D.D. STUPICH (Nanaimo): Mr. Speaker, of the Provincial

Secretary. A few minutes ago she said that she did make a request to

Mr. Morton either Monday or Tuesday. I just thought — today is

Wednesday. You said through your deputy. I'm not just sure what you

meant. Was it a phone call or did he make a written request? Since

today is only Wednesday I thought you would know whether it was

yesterday or the day before.

HON. MRS. McCARTHY: Mr. Speaker, for the benefit of the

member for Nanaimo, I know what day of the week it is. I have made the

request; I have given my undertaking that I will let the House know

when that report is received. May I, at this time, Mr. Speaker, ask

leave to reply to a question from the first member for

Vancouver-Burrard (Ms. Brown) ?

MR. SPEAKER: There is leave required.

HON. MRS. McCARTHY: May I answer that question?

MR. SPEAKER: Is it a question that was asked today or a former day?

EMPLOYMENT OF RON WORLEY

HON. MRS. McCARTHY: Yes, it is a question that was asked

formerly. The first member for Burrard wished to know whether or not

Ron Worley was employed by this government. I want to answer that

question. I have canvassed the government and we have no knowledge of

Mr. Worley being employed. I would like to ask the first member for

Burrard why she asked the question. If I could have that answer,

perhaps she has some knowledge.

Interjections.

MS. BROWN: I take that question as notice. (Laughter.)

MR. SPEAKER: Order, please! The question period is terminated by the bell.

SOME HON. MEMBERS: Oh, oh!

Presenting reports.

Hon. Mr. Mair presents the annual report of the Department of

Consumer Services for 1975, which includes the annual reports of the

trade practices branch and the debtors assistance division pursuant to

their respective Acts.

[ Page 1185 ]

Hon. Mr. Gardom presents the report of the Department of the Attorney-General for the period ending December 31, 1975.

Orders of the day.

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

ESTIMATES: DEPARTMENT OF FINANCE

(continued)

On vote 61: minister's office, $78,246.

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Chairman, I

would like to commence by reciting very briefly to the minister some of

the questions I've asked earlier and to which he has given no answer.

Who signed or authorized the $181 million NSF cheque to ICBC? Question

No. 1.

HON. E.M. WOLFE (Minister of Finance): Nobody.

MR. GIBSON: Mr. Minister, I can't believe it when you say nobody. I'm sure that was facetious, Mr. Chairman.

AN HON. MEMBER: There was no NSF cheque.

MR. CHAIRMAN: Order, please. May I remind hon. members that

only the member standing on his feet is being recorded on Hansard ;

therefore it is not advisable that answers be given from a seated

position. The member for North Vancouver–Capilano has the floor.

MR. GIBSON: Mr. Chairman, I heard an interjection from across

the way that there was no NSF cheque. Of course there was. When a

cheque is issued substantially in excess of money in the bank, and when

the province, 24 hours later, is required to be completely debt-free,

and when the cheque is not cashed as of that time, that cheque is NSF.

Let us have no more nonsense about that.

Interjections.

MR. CHAIRMAN: Order, please.

MR. GIBSON: Oh, oh! Mr. Chairman, these interjections are interesting.

The Minister of Consumer Services (Hon. Mr. Mair) says, "unless there are

arrangements made with the bank." Very interesting. The Minister of Consumer

Services ought to read the Revenue Act. The Revenue Act says that the province

must be debt-free in every way as of March 31, midnight. That includes overdrafts,

Mr. Chairman.

Interjections.

MR. GIBSON: That minister gets so red in the face, Mr.

Chairman, I fear for his health. I would suggest that the good doctor

ahead of him swivel his seat around and attend to his choleric

condition immediately.

MR. CHAIRMAN: Order, please, hon. members. We are embarking

on three and a half hours of work this afternoon. I would like the

House to be its orderly self, and let's start with a good beginning.

The member for North Vancouver–Capilano has the floor. Mr. Member, may

I remind you that we are on vote 61?

MR. GIBSON: Thank you very much, Mr. Chairman. I was just

trying to very briefly go through the unanswered questions. We could

have been off that one in about 10 seconds. I'd just like to remind the

minister of it. But I'll take it in a few minutes, Mr. Minister; I've a

few things to say.

To the second unanswered question — and the minister has had

overnight to look this one up, so I can see no excuse for him not

having the answer today. What is the cash position of the province,

approximately? Again, within $10 million, roughly, Mr. Minister. You

should know that.

You gave us the results one day once before. You said that there was

$245 million in cheques outstanding against $25 million in the bank.

What's the condition today? That's all I want to know. He should know

that information overnight, Mr. Chairman.

Now, he gave inadequate answers as to forecasting procedures and

revenue forecast — totally inadequate. The minister waffled on a

question as to whether or not we will have a Clarkson Gordon type

report before this Legislature next year — which we must have. And just

as we reached the hour of adjournment last night, I asked him a couple

of questions which I will ask again.

First of all: the attitude of this government towards the use of

credit unions for the maintenance of certain cash balances. The credit

union movement I believe to be a very important one in British

Columbia. I think that the credit unions, taken together, form our

third-largest — I suppose the word would be quasi-banking — banking

system in this province. I would suggest that they should be utilized

by the government of the province, at least to that degree. I would ask

the minister for a statement of policy in that regard. The former

government, which had some faults, also had some good things. One of

the good things was that they were making greater

[ Page 1186 ]

use of the credit union movement — a locally based, locally controlled financial group in this province.

Next, I would ask the minister if he is aware of the Cragg report.

Professor Cragg, at the University of British Columbia, has done a

study on the effects of the 2 per cent sales tax on inflation in

British Columbia, and on the consumer price index. Professor Cragg, who

was a man much admired by the Social Credit Party last year when he

brought in his report on rent control, I trust will be equally paid

attention to this year when he finds that the effect on the consumer

price index of this 2 per cent sales tax hike will be in excess of 1

per cent.

So I ask the minister this simple question: did he have a study of

his own, before raising the sales tax by 2 per cent, of the effect that

that rise would have on the consumer price index in British Columbia?

It would, of course, be thoroughly irresponsible if he did not have

such a study, given the ostensible concern of that government for

inflation. I would like to know that such a study existed. I would like

to know what it showed as to the probable impact of that 2 per cent

sales tax hike on the consumer price index — and it certainly was in

excess of 1 per cent.

Now going on to the matter of quarterly reports which the Minister

has promised, and monthly reports which I say we should have; we have a

former Minister of Finance in this House (Mr. Stupich) who perhaps may

give us the benefit of his experience in this regard later on. My own

opinion is that the figures are available to the government of this

province from the comptroller-general to produce a monthly financial

report — not a quarterly report, but a monthly report.

I want to tell the Minister, Mr. Chairman, that not only other

provinces in this country but the national government, whose financial

operations exceed ours by a factor of 10 times, is able to produce for

the citizens of this country a monthly financial report which is

received only about one month after the particular month concerned.

That is, you get, say, the April report around the end of May or the

beginning of June.

If the national government with its 10-times-larger scale of

financial operations can do that, why can't British Columbia? I suggest

that British Columbia can, and I suggest that it is important for the

auditing function of this Legislature over the financial operations of

this province that we have those monthly figures. I say that they can

be produced.

Next, Mr. Chairman, I would like the Minister, if he would, to give

us a little lesson in arithmetic and tell us about apples and oranges.

In particular, I would like him to tell us how he gets his 5.4 per cent

increase in expenditures mentioned in his budget, because, Mr.

Chairman, as I read the budget, that is not a very honest figure. It is

a misleading figure. It is a figure which suggests that government

expenditure on a comparable basis, year-over-year, is only up 5.4 per

cent when, in fact, Mr. Chairman, it is up more like 16 per cent when

you make the proper comparisons.

The 5.4 per cent figure was arrived at only by adding in certain

ICBC, B.C. Railway, transit bureau and B.C. Hydro operations in the

past fiscal year and subtracting out certain B.C. Ferry operations in

the coming fiscal year. It is absolutely not comparable, and the

Minister, if he's any kind of an accountant at all — in particular if

he's a good enough accountant to be Finance minister of the Province of

British Columbia, which presupposes an ability to do certain simple

sums — should be able to tell us how he can justify that ridiculous

comparison.

The true increase in expenditure year over year, Mr. Chairman, is 16

per cent, roughly, which means that given a growth in the economy,

which the Minister himself has forecast, of 14 per cent in the coming

year, this government across the way, which says that government

interjection into the economy should be reduced, is actually increasing

that involvement in the economy in the coming year. I'd like the

Minister to explain that. I don't really expect an answer, because it's

inexplicable. He's compared apples and oranges, which is not a proper

comparison.

HON. MR. WOLFE: You don't like my answers anyway, so keep it up. Let's have some more.

MR. GIBSON: Generally, Mr. Minister, I don't like your

answers because you slide off the hard points, through you, Mr.

Chairman. You get up and give us some political bafflegab…

AN HON. MEMBER: Oh, oh!

MR. GIBSON: …and do not answer the particular questions.

AN HON. MEMBER: It's true.

Interjections.

MR. CHAIRMAN: Vote 61, please.

MR. GIBSON: Thank you, Mr. Chairman. The Minister is charged

with the responsibility of an entity created by legislation in this

House last year called the British Columbia Savings and Trust Co. I

would ask the Minister: what is the status of that entity? Does it at

this time have any legal status — the B.C. Savings and Trust Co.? Does

it at this time have any legal status? Has it conducted any financial

operations of any kind, including payments to the one person who was

given some publicity as going to be appointed to the board of directors

— whether that was actually ever effected, I don't know — Mr.

[ Page 1187 ]

Eric Kierans? Most importantly, what is the plan of the government for the future of B.C. Savings and Trust?

I was very sceptical of that legislation when it passed, Mr.

Chairman, but one of the more agreeable facets of it was the hope that

this new financial entity based within British Columbia would be able

to maintain within British Columbia some of the fiscal fees now being

paid to entities such as the First Boston Corp. and so on — the usual

fiscal agents of the province of British Columbia in our international

borrowings. There was some hope the B.C. Savings and Trust might be

able to recapture some of those amounts on future borrowings.

Interjection.

MR. GIBSON: That was the hope, Mr. Minister. That was the hope as the past government stated it. I'd like to know….

Interjection.

MR. GIBSON: I'd like to know what the intention of the government is with respect to British Columbia Savings and Trust.

Next I would like to ask the minister if he will investigate the

asset holdings, in terms of investment in British Columbia, of banks

and other national financial institutions, insurance companies and so

on, compared to their deposits in British Columbia as far as banks are

concerned…

HON. G.B. GARDOM (Attorney-General): And do what?

MR. GIBSON: …or their sources of revenue in British Columbia as far as insurance and other financial institutions are concerned.

The hon. Attorney-General says: "Why?"

HON. MR. GARDOM: Yes, and do what?

MR. GIBSON: And do what? Well, the first step to enlightened

action, Mr. Attorney-General, through you, Mr. Chairman, is some

knowledge. We do not have adequate knowledge of the extent to which the

deposits and other forms of capital originating from British Columbia

are in the event invested in British Columbia. We do know that British

Columbia is capital-short. We do know that we seem to need a certain

degree of foreign capital inflow into our province every year to

maintain investment in the economy. If it is possible in any way to

divert the savings of British Columbians in a profitable way for them

towards this province, then that would be a useful thing to do.

HON. MR. GARDOM: How?

MR. GIBSON: The Attorney-General sits there saying "How?"

He's in the government; let him figure it out. I'm giving him a good

objective. The objective is a greater investment of the savings of

British Columbians in the province of British Columbia at a profit to

them. The indispensable first step in that is investigation to

determine what is the status, to what extent do the banks make loans in

British Columbia comparable to their deposits in British Columbia, to

what extent do the insurance companies do the same kind of thing.

The most recent figures available to me — and the banks may have put

out a more recent report, I don't know — is the report by the banks on

the year 1974 in which they indicated that in terms of small loans

there was a reasonable concurrence between lending activity and

population across the country. There was a very significant omission,

and that was large loans. Naturally the larger corporations are

concentrated in central Canada, and to me it is very important to

further follow up the commitment that was made by the national

government at the Western Economic Opportunities Conference over two

years ago now, I guess….

AN HON. MEMBER: Three years.

MR. GIBSON: Three years ago, the member says — to further

follow that up and get more information on what are the regional

financial flows in this country. The federal government tabled another

report quite recently, I see, which also was inconclusive. We have to

know, as far as British Columbians are concerned, how our assets are

being used. Are they being exported to other parts of Canada? Once we

know that, then we can turn to the rights and wrongs of the question,

but first of all we need to know the information. I suggest that study

to the minister.

I want next to commend to him the desirability of a study into

British Columbia having and operating its own corporation tax system.

This is not a new departure in Canada, as the minister will know other

provinces have such a system. The reason for it is simple: to be able

to give to corporations which are the major engines of our economic

activity incentives to move them in one direction or another, such

directions as are thought desirable in the public interest. I made this

suggestion to the last government; I make it to this government.

If we were in control of our own corporation tax system in this

province we would be in a position to shift incentives around in a way

that might be useful to our province, because we have a very different

economy than most of Canada. It is far more resource-intensive. It has

less manufacturing except

[ Page 1188 ]

strictly related to resources, and those things call for different

kinds of incentives in the corporate tax system. I just make that

theoretical point to the minister in the hopes of putting an idea into

his mind that he might explore.

I would now turn to two suggestions that I would ask him to carry to

the federal government at the next Finance ministers' conference, and I

make these in the full realization that changes in national taxation

patterns take a long time to implement. But the suggestions have to

start somewhere.

The minister will agree, I suspect, with the general proposition

that there is a need for the encouragement of savings and investment as

opposed to consumption in our economy at the present time. This is so

because we must increase our productivity to stay competitive in this

world. Our industries in British Columbia happen to be very

capital-intensive, and those savings and investments are needed, if for

nothing else, to have more Canadian investment in our economy and less

foreign investment.

Given that, I would turn to a set of figures given by the head of

the Investment Dealers' Association of Canada on March 11 of this year,

in a speech in which he first of all stated that the figure that we

need between this year and 1985 nationally, in constant dollars, is

$500 billion in savings and investments, and in current dollars he felt

close to $900 billion. These are figures that absolutely boggle the

mind, they are so huge.

But coming back to the given year, 1975, he described how savings

were divided in that particular year, and he divided them into four

kinds: first of all savings from individuals, which amounted to $7.5

billion. And these savings, Mr. Chairman, are the most important kind

of savings because they tend to find their way into the Canadian

capital market and become available for investment in new productive

facilities.

Secondly, savings by business — much larger, generally used to

expand the enterprising question and therefore less mobile as a form of

capital, and, in my opinion, less desirable. I think we ought to have

measures, indeed, to increase the disposition of retained earnings back

to the shareholders and thereby allow them to find their way back into

the capital market, but that's by the by. That type of savings is

estimated at $23 billion last year in Canada.

The next level of savings that Mr. Kniewasser describes is savings

by government, which last year were not a form of savings at all, but

rather so-called dis-savings — a negative figure of $4.5 billion to

finance their budgetary deficits, a trend that is certainly causing me

concern in the way our economy is going.

Fourthly, the remaining source of savings, savings from foreigners.

Off-shore borrowing last year, Mr. Chairman, was $4 billion. To me

that's a disturbing figure. There is every indication that it's going

to go even higher this year when you look at the number of issues that

have been floated in foreign markets just in the first quarter.

So there are some basic figures as to the level of savings in

Canada, and the question I propose to the minister is: how can we

encourage savings, particularly from individuals, to better finance the

productive investment we are going to need in our country, and

especially in our province, over this year and the years to come? If

the minister wants to balance his budgets in future years without

onerous taxation, he needs productive investment in British Columbia.

The plan I would advocate to him, and ask him to advocate to Ottawa,

is a variation of the so-called Canadian Investment Plan which is a

proposal to do in the equity field, and the general financial

instrument field, what has been done in the Registered Retirement

Savings Plan. In other words, it's an incentive to individuals to save

by offering them deferred-tax treatment for the purchase or investment

of certain investment instruments. As to eligibility, this should

include, in my opinion, all resident Canadian taxpayers. There should

be an individual aggregate lifetime limit, probably, and an annual

limit as well, so it couldn't be taken undue advantage of any given

individual. Again there would be the same general ground rules as you

have for the Registered Retirement Savings Plan, with which I am sure

the minister is familiar.

The qualified investments, as set out by the main proponents of the

plan, would include not only equity securities, but federal, provincial

and municipal securities, debentures of corporations and so on. I would

be inclined to advise the minister that these things should be

restricted much more than that, at least to start with, and that this

particularly favourable tax treatment should be given only to new

equity issues properly registered by the income tax department for such

favourable tax treatment.

I would suggest to the minister that this kind of plan could

enormously boost the propensity of Canadians to save, to forgo some of

their current year's consumption for future advantage, which works out

not only to the advantage of themselves, but to the advantage of our

whole country, because I repeat again, Mr. Chairman, we are a

capital-intensive economy. We must find the sources of capital; we must

find ways of overcoming the incentive to spend which our continuing

inflation rate is giving as it erodes the saving base of ordinary

Canadians.

So I ask the minister if he will give consideration to that

proposal, with which I am sure he is familiar, and carry it to the next

Finance ministers' conference in Ottawa, and enlist the support of

other provinces in that fight.

A second suggestion that I believe he should take

[ Page 1189 ]

to Ottawa is an extension of the indexing plan that is currently in

the federal income tax system. Indexing, currently, is for income only.

To me it is a thing greatly unfair and greatly against the incentive to

save, that the capital gains tax base in our country is not indexed.

It's quite possible for a person to acquire a security or an investment

of some kind that appreciates in value each year only by the amount of

inflation, which, if he disposes of it at the end of, say, 10 years, is

worth no more to the individual than when it was purchased. Yet that

individual, with our current rates of inflation, will be subject to a

tremendous amount of tax — easily doubling in 10 years.

Taxation on unreal income, on income that doesn't exist at all —

this is the kind of disincentive to investment, and the incentive to

current consumption that is starting to undermine all of our capital

markets in Canada. I suggest to the minister that even for the very

narrow reason of wanting to sell his own bonds, this capital market has

to be encouraged, And while capital gains tax doesn't as a rule apply

to bonds, the investment market is interconnected through and through,

and the total amount of money there available has a great deal to do

with our own financial position in British Columbia, quite apart from

the investment picture.

Mr. Chairman, there are a fair number of questions for the minister; I would

just add one further one: would he be kind enough to tell us how, if at all,

he has modified the Treasury Board procedures followed by the government?

Could he tell us, for example, whether all proposals to cabinet for

one programme or another have to go through the Treasury Board for some

kind of a cost-accounting figure in the first instance before cabinet

pronounces on it?

Could he tell us how Treasury Board assesses things in terms of costs and benefits as between various programmes?

Could he tell us something about expenditure control by the Treasury

Board and the release of funds to ministers, pursuant to given votes by

this House, or under warrants, or however they may be authorized?

Could he tell us, finally, whether there is any provision in his new

Treasury Board setup for what I would call a performance audit? We are

going to have an auditor-general in British Columbia, we are told by

the government — and this is a very good thing. But auditors-general

customarily look at the dollars and cents rather than at whether a

given programme is really giving the taxpayer value for their money.

It strikes me that a useful addition to any Treasury Board would be

a body whose job is to get out among the departments and say: "Here is

the programme you are asked to do," be it in terms of the delivery of

health services, or human resource services, or assistance to the

mining industry, whatever it is. "Here's the programme you are being

asked to do. How well are you doing it? Are we getting value for our

money?"

That in

part is a job of this Legislature, Mr. Chairman, but we do

not have, alas, the kind of staff that is required on the legislative

committees, or the references to the legislative committees that are

required for this kind of oversight. I would prefer to see the

legislative arm strengthened. But as an adjunct to that I would ask the

minister: what provisions he has made in his Treasury Board setup for

what I would call a performance audit?

That's quite a list of questions for the minister, Mr. Chairman, I'll sit down now and hope for some response.

HON. MR. WOLFE: Mr. Chairman, as the member has indicated,

there were quite a number of questions. I don't know whether to start

in the middle or the beginning or the end. In any event, he did earlier

refer to where it has been written by anyone anywhere that sales taxes

were not regressive. I think the member across the way has referred to

this occasionally — this is a sort of conversation that's gone back and

forward periodically. I have here the Ontario Committee on Taxation

report, 1967; it's just one example, page 217. I'll just quote a couple

of sentences. They did a study on people with incomes ranging from

$2,000 to $10,000 and it indicates the burden of Ontario retail sales

tax, expressed as a percentage of family income.

The essence of the report states that the table shows that the

existing Ontario retail sales tax burden in terms of family-income

distribution is proportional over the first two family-income brackets,

which are in effect from zero to $4,000, progressive between the second

and third brackets (That's the opposite of regressive, my friend);

roughly proportional from the third bracket to the sixth bracket — this

is leading from about six up to 10; proportional is in the middle

between regressive and proportional — and regressive to the final

bracket for incomes of $ 10,000. I rest my case.

I've quoted to you from a document which is produced by a committee

on taxation of some years back. I think that in any province it depends

on the exemptions under sales tax as to the regressivity which might

apply at a low-income bracket. Certainly B.C. has nothing to be

backward about in terms of exemptions because we have full exemptions

on food, children's clothing and all the matters that we discussed

earlier.

Mr. Member for North Vancouver–Capilano (Mr. Gibson), you referred

to sales tax and the likely impact on the cost of living. My

information is that the likely figure that would be effective through

April's cost of living might be some 0.6 to 0.7 points

[ Page 1190 ]

additional onto the existing rate which, I believe, is about 147.8.

Now, this would depend on the national figures, but our study, or our

computation of what the impact is, is that it would be somewhere around

0.6 to 0.7 points. I will be interested to see what the result is when

the figures come out after April.

You referred to the B.C. credit unions and the degree of extent to which the government deposits with them.

We certainly are in accord with wanting to assist credit unions and

support them, and my information is that at present there's some $22

million on deposit with credit unions on short-term securities. They

have an opportunity to bid on all short-term offerings the government

produces, and at the moment there's some $22 million on deposit with

them.

He mentioned quarterly reports and this is a subject I'm equally

interested in. We've indicated in the throne speech and in other ways

that we do intend to introduce quarterly financial reporting. We're

studying what other provinces are doing, and one document I have here

is the Ontario quarterly report of September, 1975, which basically

includes the year to date, comparative operations, the current year and

last year, then on the other hand the budget expectations originally

estimated and then revised to date, both for budgetary transactions and

for non-budgetary. It also includes certain information on the cash

flow of long-term debt and so on. But that's about what it does cover,

and we're reviewing the possibility of adopting something along these

lines.

I would not agree with you that a monthly report would be as useful

because of the fluctuations. I think that really in a practical sense a

quarterly report summarizes a little longer period which would be more

meaningful.

Incidentally, you refer to the national government, and others have.

They do produce considerable financial information, but we should

remember that the national government produces supplementary budgets

throughout the year, and it's a different sort of ball game for this

reason.

You asked a question about B.C. Savings and Trust. I can only say

that there's no change in the situation insofar as the fact there was

enabling legislation set up to provide this, and I don't know of any

other activity that's been taking place where the B.C. Savings and

Trust is concerned.

You mentioned among other recommendations the possibility of

studying with the national government that the province might collect

its own income taxes and something to this effect. We're watching this,

and naturally in the meetings with the federal department regarding the

Fiscal Arrangements Act, which expires early next year, these are some

of the matters that might affect the revisions there made and the

cost-sharing arrangements. For instance, Ontario is heading in the direction — and I've stated this many

times — that they want to opt out of these cost-sharing programmes and

develop a change in the income tax points in lieu thereof.

Considerations of that kind…. We're trying to develop our own

direction as to where we want to head where the cost-sharing changes

are concerned, which would effect the recommendation you make covering

collecting our own income taxes.

You mentioned registered retirement savings plans, and I think you

were suggesting that they should be more widened to incorporate the

allowances to purchase ordinary securities of different kinds to allow

more investment opportunity, encourage private investment. I don't

disagree with that, Mr. Member, and you can assume that we will be

taking these matters up in our discussions with Ottawa. I thank you for

the suggestion.

And just lastly, you asked a general question on Treasury Board

and…. Mr. Chairman, the member asked a question about Treasury Board

and I wouldn't know where to start on Treasury Board. Treasury Board

does occupy a great deal of our time. I think it's fair to say that we

have strength in Treasury Board. It does meet regularly and we ask all

members of Treasury Board to participate in the decisions of

authorization of expenses that come before it. Treasury Board

authorizes a monthly release of funds to each minister — this is

required to be approved by Treasury Board, each member — the release of

his monthly funds for expenditure as a control over whether he's

staying within his estimates for the year. We have issued, I could say,

several directives having to do with staff and expense control measures

and, as a matter of fact, if you'd like to have a look at some of

these, I can show you these if you'd like to call my office. We have

under review other areas that we hope to enlarge Treasury Board into in

terms of providing a more useful service than perhaps it's been able to

do in the past.

MS. K.E. SANFORD (Comox): Mr. Chairman, I have a question to

the Minister of Finance which relates to taxation, specifically to

taxation on improvements on land which is within a tree farm licence

when that tree farm licence is also within the municipal boundaries. I

know that that whole

section with respect to taxation on tree farm

licences gets very complex, but up in the north end of the island at

the village of Port McNeill there are parts of two tree farm licences

which are located within the municipal boundaries, and on those two

tree farm licences are improvements which could total as much as $1

million worth such as workshops and bunkhouses.

Now the Taxation Act,

part 2,

section 24(

n) reads as follows. I would just like to read this for the benefit of the minister:

"Crown lands held under a tree farm licence

[ Page 1191 ]

by virtue of the Forest Act, or held under an agreement with

the Crown under the provisions of the Forest Act, whereby such lands are subject

to management by the licencee or holder thereof for the purpose of growing continuously

and perpetually successive crops of forest products on a sustained-yield basis…."

That particular reference is to the list of exemptions which is

contained under

section 24. So what happens is that when there are

improvements on a tree farm licence located within the municipal

boundaries, they are not subject to taxation under the Taxation Act;

they are exempted. Members of council in Port McNeill feel that there

is an inequity here because businesses such as hotels and motels and

grocery stores must pay taxes on the improvements on their property.

They feel that the improvements on the TFL within their municipal

boundaries are just as much a part of a business as are the others.

Therefore they feel that there is a definite inequity that exists here.

This is when it is within the municipal boundaries of the village.

Therefore they feel that improvements on tree farm licences should

be taxed when they are located within municipal bounds. I agree with

them. I feel that this is an inequitous situation. They feel that they

are losing a source of much-needed revenue. It is also my understanding

that the companies are required to pay the education tax on those

improvements, although I must confess that I have not researched that.

What I would like to know of the minister is whether or not the

taxation commission which has been travelling the province holding

public hearings has that particular taxation exemption under

consideration. Is that part of their terms of reference? If not, I am

just wondering if the minister could give the House the assurance that

he will look into that particular

section — that is,

part 2,

section

24(n) — with a view to changing it so that improvements on tree farm

licences located within municipal bounds are subject to taxation the

same as any other business located within that municipality.

HON. MR. WOLFE: Mr. Chairman, in answer to the question, it

does sound rather involved. I think in terms of being of greater

assistance, perhaps if you could have the council or the organization

involved write me a letter, through yourself, if you wish, I would be

happy to look into it. You asked whether it is something being explored

through either of the commissions. I would say that it would either

come under the Pearse commission on forestry or, on the other hand, the

royal commission into property taxation. I would think more likely,

since it has to do with property within the municipality, it would come

under the royal commission on property taxation.

MS. SANFORD: Mr. Chairman, I would just like to inform the

minister that the council has made representations to both the taxation

commission and the Pearse commission but they don't know what response

they are going to get or whether either one of those commissions has

that particular subject as part of its terms of reference. I will have

them write a letter and we will see if we can get it investigated.

Thank you.

MR. D.G. COCKE (New Westminster): Mr. Chairman, there are a

couple of points that I would like to explore with the minister for a

minute or two, not the least of which is the phenomenal increase that

we see in the medicare premium and the hospital per diem. Now the

medicare premium is quite straightforward. We discussed that yesterday.

We know it's a 50 per cent increase over what we had previously enjoyed

in this province. I had hoped eventually that we would move to a

position, as many other provinces have in Canada, where it would be

based on an income tax point system whereby that way you are not taxing

those who can least afford it.

I recognize that there is some relief in our system, but I really

think that this kind of an increase toward an objective that we know we

can never achieve is really not biting the bullet. Socreds are famous

for talking about biting bullets. I think, in this particular case,

they did not bite the bullet. They accepted the easy way out, something

that doesn't have to be really thought about a great deal. All it has

to be is announced and the time given, and then you implement that

plan. But I really think that the medicare increase was certainly

retrograde. I would hope that the minister over the next little

while….

He made a lot of quick decisions, snap decisions, that were based

on, probably, impetus from other members of the cabinet. I would hope

that he will start thinking about this whole question, and start

looking at the way they handle medicare in progressive provinces like

Manitoba and elsewhere — even that province that this government, I

think, recognizes as being fairly progressive, which is a neighbour of

ours, Alberta. In any event, as I recall, there are six provinces using

what most people consider to be the proper direction in this respect.

The thing that concerns me, as well as that, is the whole question

of per diem hospital increases. I probably said on two or three

occasions during the estimates of mine in the past that we were looking

at ways and means of seeing to it that where possible board and room

was paid by the people who were in long-term care, which most people

know today as extended care, through some kind of rate structure. I

announced on a number of occasions that we were looking at $5.50 a day,

but the reason we weren't going into it was because we didn't have the

safeguards in place that would see to it that young

[ Page 1192 ]

people…. Young people can be victims: and be chronically ill, and

under those circumstances $7 a day and $210 a month would be a

serious burden on a family that's trying to support a young person in

that situation.

There are also older people who would be faced with a real burden,

and that would be a person who is chronically ill and is eligible and

finally finds himself or herself in extended care, but has dependent

people to care for. We wonder if, in fact, this government has thought

of safeguards for those particular people. Will there be committees

struck to see to it that people will not be injured by this situation?

I think that the $7 a day is somewhat high. It is a tremendously high

price to pay for just straight room and board.

If we're talking in terms of health care being a right in this

province, then we should be talking in terms of the health care aspect

of that particular situation being cared for out of the public purse —

and shared with Ottawa. That's another thing, too. We don't gain as

much as many of the people out there might think. We're saying we're

going to receive an addition from the patient, but it strikes me that

there will be a reduction in the Ottawa contribution in this particular

area, so that sometimes I think that these hasty decisions might very

well be decisions that are not all that fruitful in producing the

desired results — that bottom line of black print that says all's well

in the kingdom of the Socreds.

Mr. Chairman, we don't want to see suffering in this province again.

We don't want to see a lack of priorities in a particular area, at

least of my great interest, over the next few years. If anybody sitting

on that side of the House indicates to us that there was a great deal

of priority given that particular field in the years prior to 1972, I'd

like him to raise his hand, because we're the laughing stock of Canada,

and we can go back to that situation very, very quickly if we're not

careful.

I'm not suggesting to the Minister of Finance that he or any member

of that cabinet should take a position that we have to go the route

that may be somewhat rough on us in the future, and that we have to

condition the public to know that the increasing costs have to be cared

for. But increasing costs in hospital care, increasing costs in

medicare are not going to be in any way reduced — certainly not

practically in any event — by the measures that so far have been

brought up by this government.

I just want to know whether there is going to be a committee struck

to see to it that the parents, for instance, of a child with muscular

dystrophy, or a young person who has dived into a pool without water in

it and suffered a spinal injury that has caused a need for extended

care for the balance of his or her life, possibly, are not going to

have to be made to suffer.

Mr. Chairman, while I'm still on my feet, I made mention in the

House recently that I've been given to understand…and fairly

reliably. I have a number of people that I can talk to from time to

time around the province who shake my hand and discuss things

relatively candidly.

AN HON. MEMBER: Name one.

MR. COCKE: Evan Wolfe, for instance. I can't talk in this

House to him because he can't talk back to anybody, but those are the

orders that he has from the Premier; that's not his fault. I know

perfectly well that were he given his head he'd be standing up and he'd

be answering questions just like a charger. As a matter of fact, you

know what he'd be doing, Mr. Chairman? He'd be anticipating questions.

He'd be jumping up in this House and telling us all about where we're

going, financially, over the next few years.

Interjections.

MR. COCKE: He'll tell me where to go? Now he's even getting nasty.

Interjection.

MR. COCKE: Mr. Chairman, this is so unlike that minister. You

know, really and truly, he's not that type of person at all — I know

that. You can tell to look at him he's a darling; he really is.

AN HON. MEMBER: Oh, no! That's not fair.

Interjection.

MR. COCKE: That's smearing him, he says.

AN HON. MEMBER: You're talking about Evan?

MR. COCKE: You know that funny little bit of a comic in a

newspaper that I saw the other day where he's dressed up with a wolf's

head on him? No-o-o-o-o….

Mr. Chairman, seriously, I said in this House the other day that

hospitals were advanced moneys that were unanticipated moneys prior to

August 30. I got a runaround as far as the question was concerned. Then

I noted that the Minister of Health (Hon. Mr. McClelland) in The Daily

Colonist on April 16, after I was out of town, answered the question,

and he started talking about the ways that advances are paid to

hospitals. I'm not quite sure that he knows all of the ways of

describing this situation, but I note here that he's saying that one of

the major items in this year's advance payments was for retroactive

wage increases — that was $6 million. We all know about that. That was

going and that's forgiven. There's no

[ Page 1193 ]

question about that. I'm not discussing that in any way, shape or form.

Nor, for that matter, was I discussing in this House the question of

year-end adjustments. The Minister of Finance has his able deputy with

him and he can tell him what year-end adjustments are. In the hospital

business there are always year-end adjustments. Sometimes they're met,

sometimes they're not met, but I mentioned that I recognized that those

funds would be paid. No question about those funds.

I'm not worried about that, but if I don't get some fairly good

answers this afternoon, you will be finding questions on the order

paper for every little, big and medium-sized hospital in this province,

until such time as we get some answers in this respect, because my

information is that there were major sums paid out of 1975-76 — major

sums payable to hospitals and earmarked as follows: loans, undesignated

but repayable in 1976-77. Can you understand, you backbenchers, what

that would do?

Interjections.

MR. COCKE: You can understand, with the exception of the

member for Omineca (Mr. Kempf), who has difficulty acclimatizing

himself down here. Mr. Chairman, the rest of the members can think

along this line. If any of you are business-oriented…and according to

some of the information that I read during the election, 35 of your

number out of 55 running were in the car business, so most of you

should be able to read balance sheets and that kind of thing. But if

you think in terms of a way to kind of build a set-up….

Interjection.

MR. COCKE: Let me sort of educate you a little bit. So you

take it out of 1975-76, you put it into 1976-77 with the implication —

and not only an implication but an order — saying that it must be paid

back in 1976-77. You win both ways. You proved what you were saying in

that report. My colleague from Nanaimo, what was the name of that

report?

Interjection.

MR. COCKE: Some kind of a report that was put forward by a

group of chartered accountants, who incidentally had nothing to do with

it. They were given figures and they just did their thing, adding them

up.

Interjection.

MR. COCKE: Add them up they did. But that's the charge I

make, Mr. Chairman. The charge is that there were undesignated loans

made to hospitals in this province. I'm not talking about year-end

adjustments. Besides that, I understand that there are also adjustments

made for next year too, in anticipation of certain wage increases. But

you know, those wage increases, if in fact they're not going to occur

until 1976-77, are not to be cared for in 75-76.

Now this is the kind of festering thing that's been going on around

the province. Without any difficulty at all, we learned that the

universities were suddenly plumped $7.5 million in anticipation of some

increased expenses for the next year. Now we're finding the same thing

cropping up in the hospital situation. It's a good way, Mr. Chairman,

to cook the books in such fashion as to almost make a person believe

that he's going to get away with it. Fortunately, some of us have ears

and use them from time to time.

So, Mr. Chairman, with that, I'd like to hear about any kind of

commitment to the people in this province that they're not going to be

faced with an illness that they cannot live with in the family —

long-term illness. For that matter, I'd like the Minister of Finance to

justify the increase in acute care.

Sitting in the seat where the hon. member for Comox (Ms. Sanford)

now sits, there was a relatively quiet member for Langley (Hon. Mr.

McClelland) — that is, until he got excited, and then he would become

most vociferous. He even called people names in the House, but, you

know, every time I made mention of any kind of search or any kind of

look at rates on hospitals, he used to stand up like a gladiator,

waving his arms: "You would tax the sick!" Well, Mr. Chairman, isn't

that interesting? Only a short while ago that minister, who,

incidentally, doesn't make all his decisions…. The Minister of

Education (Hon. Mr. McGeer) makes more announcements in health care

than I've ever seen in my life from a non–Minister of Health. We

probably feel that there is a little bit of direction being given.

But we noticed that minister, on February 23, making a statement

that there would be no discussion, there had been no discussion, they

weren't looking, Mr. Chairman, at the whole question of increasing

medicare or hospital per diems. I wonder if he learned it when the

Minister of Finance read the budget. Oooh! Wouldn't he have had a

sinking feeling in his stomach? He would have looked at those two

ministers — the Minister of Education and the Minister of Finance — and

he would have said to himself: "I wonder which one of them did it to

me."

Mr. Chairman, can we have a couple of answers?

HON. MR. WOLFE: Mr. Chairman, the member opposite has brought

up his favourite subject, and I would simply ask in reply whether he

would not advocate that any increase in medical services — rates or

hospital per diem charges — were long overdue.

[ Page 1194 ]

MR. COCKE: Do you want an answer?

HON. MR. WOLFE: I'm assuming from your indications in the

speech you just made that you feel it should remain as it is for some

time. It's simply true to say that hospital rates at $1 a day have been

the same since about 1952, at which time the cost of a hospital room

was perhaps $4 or $5 a day. Today, as he well knows, the cost of the

average hospital room in British Columbia is perhaps more like $75 to

$100 per day. I don't think it can be argued really, Mr. Chairman, that

it isn't a case that is long overdue, when some more measures of this

kind were expected.

As far as the medical services plan, this had represented a

substantial drain on the provincial treasury which he was aware of. Let

me quote:

"This plan, at March 31, 1975, had $46 million in cash

and investments which related to premiums paid in advance and estimated

future claims to be made against the fund. At the end of the current

year, no cash or investments would have remained."

This would have been at the end of March, 1976.

"If the plan were to be put on the same basis as last

year — that is, if it were to have cash and investments on hand at

March 31, 1976, sufficient to cover premiums paid in advance and

estimated future claims — a transfer from the province of $51 million

would have been required."

That's the

section from the Clarkson Gordon report, and there's similar information provided in the budget.

Mr. Member, the decisions to increase both medicare and the per diem

room charges for hospitals were not hasty decisions. They were very

reluctantly made and they were made with considerable consideration.

You've also raised a question, Mr. Member, regarding payments made

to certain hospitals which were intended, I believe, to cover deficits.

I'm not aware of any payments which were made — as you indicate, loans

undesignated. I'm not aware of any such situation. You might direct a

question of this nature to the Minister of Health (Hon. Mr. McClelland)

when he's back from Ottawa in a couple of days. I'm sure he'd be quite

prepared to answer that question. I'm not aware that there have been

moneys paid on an unanticipated basis to hospitals except to cover the

intention of deficits.

MR. CHAIRMAN: Just before I recognize the member, it occurred

to me during the speech of the member for New Westminster (Mr. Cocke)

that some of the subject material he was covering might better be

discussed under the estimates of the Minister of Health; however, I did

not wish to interrupt.

MR. COCKE: Well, thank you, Mr. Chairman, and I recognize

that, but, you know, the Minister of Finance is the fiscal agent for

all of the area, and certainly where large transfers of moneys are

made, he naturally has to involve himself. These are made by word, made

by order, and we all know how that occurs.

But, Mr. Chairman, let me show you from the budget and allow me to

read just a

section from page 22. Listen to this for philosophy. I feel

for you, Mr. Minister of Finance, through you, Mr. Chairman. But listen

to this for a philosophy, and I am not sure too many of you have read

it. "Another service which was turned from a profitable to a deficit

operation during the short term of the New Democratic Party

administration in British Columbia was the B.C. medical plan." Now when

on earth does a government insured medical programme have to be or

should be profitable? What the blazes are we trying to run over there,

Mr. Chairman? It should not be profitable. That's the kind of wording

that indicates to me who they are, Mr. Chairman.

MR. J.J. KEMPF (Omineca): We know that's your philosophy.

MR. COCKE: Well, you know, look, if I were you I would

protect my loins and keep quiet because this is the kind of

ridiculousness that will gain you a reputation over the next number of

years. But, okay. So it's not profitable any longer. Now we are trying

to make it profitable again. The minister asked me a question and I

feel I should answer because I don't feel one should be asked a

question in this House and not give a full answer to the question. He

asked me a question instead of giving me any particularly direct answer.

No, Mr. Minister, through you, Mr. Chairman, no, I don't agree that

the medicare increase is valid. I believe it should be an entirely

different system. Had I agreed that that was so and had my colleagues

agreed that that was so, we would have done it. But we didn't "done"

it. No, sir. No. Because the direction — the impetus — must be towards

the fairest way of exacting this kind of money. We know it costs money

and the income tax route is by far proven in many, many other

jurisdictions. I would suggest to you that probably they all will go

that route and B.C., given a Socred government, will come in kicking

and screaming at the tail end of everything. But anyway, no, I don't

agree with that.

Secondly, what did I understand from his question about the per diem

for a hospital? The one thing that we established in our minds was that

the dollar a day wasn't going anywhere. There's no question about that,

nor will $4 a day, Mr. Chairman. Patients are admitted to hospitals by

their doctor. They don't go to hospitals just because they feel a

stomach-ache,

[ Page 1195 ]

because they can't get into a hospital under those circumstances.

They have to be admitted by their doctor. Okay. That being the case,

there's no point in us setting up barriers. Because if we set up

barriers, who do we barrier? The poor, the oppressed — we don't need

the barrier there. They are already afraid to go to the doctor in the

first place.

The second thing that I suggest to you is that the way to handle

that — maybe eliminate it, I don't know — is get full sharing from

Ottawa. But you are going to have to do the job in the end, Mr.

Minister of Finance, and your colleague the Minister of Health (Hon.

Mr. McClelland) is going to have to do the job in the end to curtail

the increases, the excessive increases in hospital costs. You are not

going to do it with $4 a day. And who do you hurt? You hurt the person

who can least afford it.

When a young family person — a wife or a husband…. If the husband

gets ill, oftentimes they lose their source of income temporarily. I am

talking about acute care now. If the wife gets ill oftentimes they have

to bring somebody into the house to look after the children. They've

already enough financial problems without us giving them another that

has very little return — very little return. So that's really all I'm

saying.

So to the minister's questions I say, no, no, I don't agree he did

it the right way. The third one, as far as extended care is concerned,

he didn't give me any assurance whatsoever that there is going to be

any kind of safeguard. Yes, I do agree. I agree that there has to be

more money put into the system with respect to board and room. That's

fair enough. They are getting paid pensions or whatever. Many of them

are. But there are those who are not and those who are not should be

safeguarded, and that's all I am asking in my questioning, Mr. Chairman.

MR. G.S. WALLACE (Oak Bay): Mr. Chairman, I noted your

comment about relating one's remarks to finance rather than hospitals

and I will do so. But a primary responsibility of the Minister of

Finance is to try and bring about an equitable imposition of taxation

on the individual, based on ability to pay, and if that isn't the No. 1

principle on which the minister is functioning, then indeed we are in

trouble.

AN HON. MEMBER: Hear, hear.

MR. WALLACE: With that very basic initial statement I would

like to make just a few comments on the whole question of financial

changes which the minister has agreed to, particularly in relation to

hospital services.

I am sure the minister has also received many letters — as have we —

and I would like the answers to one or two of the questions. First of

all, in the extended-care situation, as the minister probably knows, I

already questioned the Minister of Human Resources (Hon. Mr. Vander

Zalm) and discovered that all patients who qualify for Mincome were not

in fact receiving it in extended-care hospitals, and yet some were. But

the government philosophy behind raising the rate to $7 a day was in

large measure related to the assumption that patients who had no other

income other than Mincome were receiving that amount of $265 a month

approximately, and were in fact living at a total cost of $30 a month.

We have pointed out in earlier question period in the House that this

is not happening.

The other part of the philosophy which, I am sure, motivated the

government to make this very dramatic increase from $1 a day to $7 a

day was the assumption that most of the patients are elderly, have no

dependents or have no spouses. While it has been pointed out by others

in this House that this is not so, I would like to read into the record

the statistics for the extended-care situation in the greater Victoria

area.

The total number of patients in the jurisdiction of the Gorge Road

Hospital and the Juan de Fuca Society hospitals added up, on April 6,

to a total of 619 patients. Out of that total, 92 per cent were over

the age of 65. But of the number of those patients over 65, the

breakdown between single status and married status shows approximately

an 80-20 ratio. In other words, approximately 20 per cent of the

patients over 65 in extended-care hospitals have a spouse. In many

cases that wife or husband, as the case may be, has reasonable and

substantial expenses even in visiting their husband or wife in the

extended-care hospital, not to mention other associated costs.

So it was too simple a concept that patients in extended-care

hospitals — or almost all of them — were accumulating assets. It is

also correct to place on record that, yes, some patients were

accumulating assets. But the terribly important point in this whole

debate, I hope, will be establishing the fact that the changes in

taxation were of a blanket nature which seemed to ignore the very

legitimate hardship which 20 per cent of these patients would undergo

if, in fact, the proposed changes of the Minister of Finance are

implemented in an across-the-board or blanket fashion.

The other point that must be recorded accurately is the case of

patients under the age of 65. Again, from the hospitals that I have

surveyed — and I will just recall for the House that the total is 619

patients — out of that 619, 49, which is 8 per cent of the total, are

under age 65. While I will not go into the details of these 49

patients, they are represented by about 15 different diagnoses. These

are younger persons who, for one reason or another…. Quickly I can

relate conditions such as Parkinson's disease, malignant disease, head

and spinal injuries, paralytic

[ Page 1196 ]

polio, epilepsy, rheumatoid arthritis and so on. There are many

others. If the minister would like, I can easily send him a copy of all

of the data and the figures that I have here.

The point that must be made, Mr. Chairman, is that that first

principle of taxation, which should be equitable and based on the

ability to pay, is not being followed by a blanket increase in hospital

charges which either is unaware of or has not taken recognition of the

fact that 20 per cent of the patients not only are not accumulating

assets, but will subsequently be placed under very severe hardship if

this tax increase is applied to them.

Two other examples I would like to quote, Mr. Chairman, relate also

to the Eric Martin Institute in Victoria where on the fifth floor we

have some very seriously disabled children of varying ages — disabled

both physically and quite often mentally — who are classified as

extended care, and where in their case the parents of these children

are now suddenly faced with the possibility of paying approximately

another $180 a month.

[Mr. Veitch in the chair.]

MR. WALLACE: On the sixth floor of the Eric Martin Institute

we have another programme for emotionally disturbed young people,

teenagers and adolescents. Mr. Chairman, we so often hear about the

importance of prevention — and I notice the Attorney-General (Hon. Mr.

Gardom) is very interested because these children often come into

contact with the law because of delinquent behaviour where there is an

underlying emotional or psychiatric problem. So in the case of these

children also or young adults, the increased charges is just one more

significant difficulty imposed on a family already under great stress

and strain because the parents of these young children are anxious

enough to try and help the children, although in some cases the child

is probably the product of a home where there is strife and

disagreement between husband and wife, and there may be great

disagreement as to even paying the bill. If there is dispute over

financing, the few dollars extra that might be brought in by the extra

charge would probably be well outweighed by the ineffectiveness of the

treatment or the very fact that the child may never show up to be

admitted when all the plans have been made to have the child admitted.

So all I'm really trying to emphasize is that the taxation changes

in relation to the hospitals were basically sound to about 80 per cent,

I suppose, if you want to try and be smart-alecky and quote figures.

But in general terms, all I'm saying is, Mr. Chairman, that I hope the

minister, in cooperation with particularly the other cabinet colleagues

in this field, Human Resources and Health, will take a very detailed

look at that substantial minority group of about 20 per cent of

patients who will suffer seriously if they have to start paying $7 a

day instead of $1 a day.

I have numerous letters that I could quote from, and I don't want to

take a lot of the time of the House, Mr. Chairman, but letters have

appeared in the press as well, and there has been, I think, a very

legitimate argument made that these charges are not based on the

ability to pay. We've already worn threadbare the argument that the

sales tax hits hardest at people with lower incomes, and here again, as

I say, these persons visiting their spouse or their son or daughter in

an extended-care hospital are going to be paying increased travelling

charges, increased prices for gasoline and increased sales tax on other

goods just the same as you and I, Mr. Chairman.

When you add it all up, this proposal by the Minister of Finance

really is unfair, and I'm sure he realizes that. He's obviously taking

notes, and I would tell the minister, through you, Mr. Chairman, I

discussed this with the Deputy Minister of Health, who is well aware of

the problem and is also seeking to find either a programme of

exemptions or some kind of other alternative allowance which will take

into account the minority group who really don't fall within the

general philosophy behind these tax increases.

We've had some discussion this afternoon on which is the right way

to go, and I think this is the kind of argument that is basically a

philosophical one and I don't propose to go into great lengths on it.

But I do agree with the government that either you get rid of the $1 a

day or you make it realistic in terms of the proportion contributed by

the patient in relation to the total per diem cost.

Frankly, I still feel that the rate of inflation is such, and the

political ramifications of this kind of budget are so far reaching,

that even putting it up to $4 a day to me seems to be a very temporary

finger-in-the-dike approach. I wonder if the government might not have

been wiser simply to abolish the $1 a day, or any such similar figure

when, as the minister mentioned, the per diem rate in the Jubilee

Hospital, for example, right now is $125 a day.

As the former Minister of Health (Mr. Cocke) pointed out, the amount

by which the patient contribution is raised is considered offset

revenue by the federal government. In other words, if you put it up by

$3, we are simply saving the federal government $1.50 per patient per

day. That leads to my next question, and it's a bit presumptuous

perhaps because I think the minister may not have had the opportunity

to discuss this with the federal authorities. But the federal minister,

in talking about cost-sharing programmes at a convention of general

practitioners in Harrison Hot Springs just two or three weeks ago, gave

the first inkling that somehow

[ Page 1197 ]

or other authorities from all across Canada have finally got it

through the federal minister's head that there are better ways to find

the dollars to finance medical and hospital care.

In two respects he has acknowledged that unless you assist the total

spectrum of care, it makes so many inequities and discriminations to

pick off certain segments and cost-share that there is just a

consequent abuse of the facilities that do exist. As the minister

pointed out a minute ago, a lot of this we'll go into in great detail

during debate on the health estimates.

As far as the dollars are concerned, I keep coming back, it seems,

in debate after debate in the House to this whole area of

federal-provincial cost-sharing, and I made some comments on this

yesterday.

The most specific question I would like to ask the minister today

is: is there any indication, either from written communication or

discussion with the federal minister, as to a basic change in federal

policy regarding cost-sharing of the actual specific cost of the care —

that is, regardless of whether the province pays $100 a day or the

patient $5 or whatever? The present system is that any patient

contribution is deducted from the total cost, and the federal

government shares half, approximately, of what's left, with the

exception of intermediate care where nobody shares anything — the

patient gets stuck with the whole bill.

This in turn leads me to my next question: is the minister, who is

trying to raise dollars in a fair manner and spend them in an efficient

manner, aware that much of the abuse, or the misuse, of acute-care beds

relates to the fact that, for example, in Victoria any day in the week

there are 100 acute beds occupied by patients who don't need acute

care? The reason they are in these beds is that, first of all, there

are no facilities to accommodate them in the kind of care they really

need, and there's no financial assistance from the provincial

government, unless they're on welfare, of the magnitude of assistance

that is afforded either to acute- or extended-care patients.

While I realize this is a very big subject, and the minister may not

have had an opportunity to discuss this recently with the federal

government, it is very essential as to whether we will ever achieve two

things: an equitable degree of assistance to all patients, regardless

of their diagnosis. That's one of the real disasters in our present

setup — that depending on your diagnosis and the kind of care you need,

you may be very well looked after at $1 a day, or you might be sitting

in some very substandard facility receiving very poor care and paying

the whole bill yourself.

How we as a society can consider that as at all fair or just I don't

know. I realize that both this government and the former government

were trying to do something about it, but I have to repeat that the

reason it's difficult to do something about it is the inequitable and

unfair agreements with Ottawa about cost-sharing.

My third question is a pessimistic one, I suppose, because I don't

think the federal government will change its attitude to cost-sharing.

If it doesn't, does the minister feel that we are close to making that

crucial decision to finance intermediate care by provincial dollars

alone? This has happened in several other provinces where the

provincial government, just like this government and the former

government, hammered away at the ivory tower in Ottawa for years and

years to try and get fair and equitable treatment for all patients who

need hospital care, and they've been told that there will be no

cost-sharing formula for intermediate care.

Then these provinces have said: "Well, in that case we will raise

the tax dollars so there will at least be provincial government funding

for these purposes."

Now, these are rather important questions, Mr. Chairman, and I'm not

expecting that the minister has all the answers. But it has already

been stated this afternoon by the former Minister of Health (Mr. Cocke)

that some of the language in the budget, I think quite unintentionally,

gives the impression that this government is indeed trying to operate

and finance hospital and medicare services in the same kind of

philosophy that you would run a sawmill or an industrial plant, or a

business — or a peanut stand, for that matter. But somehow or other the

income and the spending have to be equated one to the other. I think it

was a most unfortunate choice of words to talk about having to

criticize the former government for having reduced the medicare budget

from a profitable position to a loss. This kind of use of the word

"profitable" suggests, indeed, that the occupation of looking after

sick people should turn over a dollar profit.

I personally don't feel that was the intention of the language in

the budget, but since we've criticized this government as being

preoccupied with black ink and that somehow or other, from an operating

point of view, there must never be a dollar deficit, there must be

apprehension in the minds of many people in British Columbia if the

budget has conveyed that impression in relation to the government's

policies on financing of hospitals and medicare.

I personally feel, and I've said this many times, that not too many

years ago the cry across this country was: "You must protect the

individual against catastrophic health-care costs." That was an

absolutely valid statement. All I'm saying is that the pendulum appears

to have swung to the other extreme inasmuch as most people seem to

expect that the government revenue, that fund we call the consolidated

revenue fund derived from 15 or 20 different sources, should pay the

total costs, and the

[ Page 1198 ]

citizen should not directly pay any dollar cost for these services.

I suppose it is some reflection of the Conservative philosophy that

it is not unreasonable for the individual receiving a benefit to pay a

small fraction of the total cost at the time they receive the service.

I still personally believe that that is not at all unreasonable — in

fact, is a very fair system — with one particular proviso. That is that

the kind of minority groups we're referred to this afternoon should be

clearly recognized, and special provision should be made for these

minority groups. If 80 per cent of the population can contribute a

reasonable fraction of cost at the time of receiving the service, then

it would seem to me that this would be a fair and equitable approach to

raising the dollars for these services.

I have one or two other questions, Mr. Chairman, on another issue,

and perhaps the minister would like to answer these ones first.

HON. MR. WOLFE: Mr. Chairman, I would like to draw the

attention of the committee to two keen political students who are in

the Speaker's gallery transfixed over this exciting debate. Their names

are Margaret Demarinis and John Wolfe, who have come over for the day.

I think the fact that they have stayed here for a couple of hours is

something that is to their credit.

MR. WALLACE: Any relation?

HON. MR. WOLFE: Yes.

MR. R.E. SKELLY (Port Alberni): Give them some answers.

HON. MR. WOLFE: Right. To the member for Oak Bay, he dealt

with certain questions which I realize he knows are in the hands of the

Minister of Health, who is aware of this. I appreciate his information

on the study he has made in this hospital, which I think the Minister

of Health would appreciate — you know, the facts that he has indicated

here.

I can only say to the matter of extended care, insofar as Finance is

concerned, Mr. Chairman, and I can't really speak for the Minister of

Health who is down at meetings now in Ottawa dealing with cost-sharing

and other matters to do with the federal vis-a-vis the provincial

finance picture…that he is not unmindful of this situation in the

new extended-care rates, and has it under study.

You were asking a question relating to the increase in the per diem

and how it would affect the future of our cost-sharing. You were

concerned that we would only benefit from part of this increase insofar

as the fact…. And you were advocating that whatever increase or per

diem we charge provincially would not affect the eventual sharing of

the provincial and the federal cost-sharing arrangement — that this

should come after all of that. This has been the case for some years.

I'm not sure that in the present restudy of the fiscal arrangements it

will zero in on this problem or not. Actually, what is happening is

that the Ministers of Health are discussing this question now. The

matter of the cost-sharing arrangements will come under discussion at

the Premiers' conference in either late May or June in Ottawa, and a

latter one later in the year as well. So there are several matters of

cost-sharing that are coming under those meetings.

As I said earlier, Mr. Chairman, the future direction of this

province, where cost-sharing is concerned, may develop in a different

direction where we — like other provinces have indicated — may want to

head in the direction of opting out of these cost-sharing arrangements.

I'm sure that the federal government are not entering into these

discussions with a view to adding to their own share on costs incurred.

So the thing is in a state of review this current year, and it's

difficult to say, at this stage, what direction it's going to head in.

You were indicating, I think, that we have an accent in the budget

on the fact that we will not tolerate a deficit and so on. Naturally

it's true that we are trying to budget, and we feel very firmly that we

do want to budget without having a deficit for the provincial accounts,

but it is not so that we do not wish to have a deficit in the Health

department, or a deficit in the hospitals, or a deficit in the

medical-care situation.

Our particular emphasis, where finances are concerned, is on trying

to balance the accounts in the provincial government for the current

year.

MR. D.D. STUPICH (Nanaimo): Mr. Chairman, I will defer very

shortly to the hon. member for Oak Bay (Mr. Wallace). Its just that

the hon. Minister of Finance encouraged me to introduce someone in the

gallery as well. Seated in what was formerly called the ladies' gallery

and is now — the what?…the persons' gallery or something — the

members' gallery, is another student of economics, one Kathleen

Stupich, who has sat as long as the minister's guest, and we'll see who

outlasts whom. I'm not speaking as between us — I'm thinking of the

students.

I might ask one question while I am on my feet. I notice under the

summary the last item: "less staff reduction salary savings." Later on

I intend to ask the minister what portion of this reduction would be

applied against vote 61, and I hope the answer will be none.

MR. WALLACE: I just have one or two brief questions. They may

be seeking some kind of breach of cabinet secrecy, but when submissions

are made to

[ Page 1199 ]

the Minister of Finance prior to the budget, to what degree does the

minister receive the sort of ancillary information rather than just the

ball-park figures to determine how fair or unfair, for example, the $7

increase in extended care is? Is the minister just given a variety of

options in dollar terms, or does the minister in fact get the kind of

background information that says that if you raise it from $1 to $7

you'll save the federal government $3 per patient day and that will

raise X amount of dollars, but it will have the following disadvantage

and will penalize 20 per cent of the people in extended-care hospitals?

I think that when a Finance minister has to draw up a budget with

this very basic principle in mind that you're trying to raise money in

the fairest manner and distribute the financial loan upon those who

seem best able to afford it…. But do you just get ball park…?

That's a poor word. I don't mean that they're approximate figures, but

do you just get the absolute dollar figures and then you make the

purely arithmetical calculations as to how much money you need and the

area in which it should be raised? That's one question.

A second question just arises from comments that the minister made

earlier on this afternoon about each member of Treasury Board being

asked to contribute his or her thinking. Is there such a thing as a

quorum in relation to Treasury Board meetings? If so, and there are

five people on Treasury Board, how many members of Treasury Board have

to be at a meeting to make some of these crucial financial decisions?

I have a last couple of quick questions, Mr. Chairman. Under this

vote, I notice that the ministerial assistant's salary has been reduced

from $23,710 to $17,550, a reduction of 26 per cent. Now I presume that

the job has been regraded or reclassified and I would also have to

assume it is a different person. Or has the same person been demoted?

There are so few examples in the budget of ministers' staff having

reduced salaries that this one's fascinating.

Travel expense for the minister's office is up from $7,500 to

$11,500, which is an increase of 53 per cent upwards. Although I don't

like to see increased expenditures, I'm hoping that this is to pay for

all these extra trips that the minister's going to make to Ottawa to

hammer out better cost-sharing arrangements with the federal

government. I'd be very interested to know if, in fact, that increase

in travel expenditure is in some way related to the anticipation of

more frequent and more fruitful trips to Ottawa.

RON. MR. WOLFE: Mr. Chairman, in answer to the last question, as you

state, the travel expense increase has to do with the many meetings in Ottawa

which we anticipate this year. Several already have taken place.

The ministerial assistant last year was paid $23,710 and this year

$ 17,550. Last year it was Peter McNelly, I believe, and he was not

paid as a minister's assistant at that time, I'm advised. I don't have

an executive assistant and haven't had one, but there is one provided

for at the reduced figure of 10 per cent from the former I think it was $19,000 provided.

You asked about the Treasury Board quorum. I don't think there is

such a thing as a Treasury Board quorum, officially. We make a real

effort to have every member of Treasury Board — as you say, there are

five members — see all the submissions. There is the odd occasion when

maybe one member is not able to see the submissions. There's not a

quorum, but I think it's fair to say that almost all members of

Treasury Board see almost all the submissions.

MR. L. NICOLSON (Nelson-Creston): Mr. Chairman, earlier today

the member for North Vancouver–Capilano (Mr. Gibson) talked about the

concept of having done pre-studies or impact studies. Of course, Mr.

Chairman, when we undertake such a thing in this province as the

building of a new hydro-electric dam, we look at an impact study, we

look at the economic effects, we look at other things. We look at the

environmental impact, we look at the social impact, and so on. I would

submit, Mr. Chairman, that changes in taxation certainly have social as

well as economic ramifications.

I'm not sure if the minister did respond — I was out of the House;

about the first time I've been out of the House during these estimates

since they've begun — but did the minister respond to the question: was

there a similar report to the Cragg report prepared prior to taking the

decision to increase sales tax by 2 per cent? Were the impacts on, for

instance, the cost of living, on disposable income and on retail sales,

et cetera, looked at?

Also, the member for Oak Bay (Mr. Wallace) and the member for New

Westminster (Mr. Cocke) have been expressing a concern which I also

share. I frequently visit hospitals. There is Mount St. Francis

hospital in my riding in which many people are permanently or

terminally institutionalized. A great number of these people are young

people — young people with families — and they have the misfortune to

suffer from diseases such as multiple sclerosis.

I don't see the question answered there in terms of: was some

pre-study done before these changes were proposed? I asked the

Minister, through you, Mr. Chairman: how was it initiated that an

increase was to take place in the per diem rate in hospitals, in

chronic-care hospitals as well as in acute-care hospitals? Was it

initiated? Did you give the Minister of Health (Ron. Mr. McClelland) a

block fund and say: "Well, for this year you can only have so much, so

you're going to have to increase your revenues"?

[ Page 1200 ]

Did you ask the Minister of Health to increase his revenues, to look

at the historically low costs, or did the idea of increasing these

rates originate in the Department of Finance? Specifically, were the

exceptional cases such as MS patients with families taken into account?

Was any consideration given to them before making this decision?

While we debate about this, and while some of these people might be

confined to a bed, their minds are perfectly active. In fact they have

so much time that their minds can dwell on uncertainties like this. And

while there is an uncertainty in this area it creates a great hardship,

so it's a sociological impact on people in this province not as

fortunate as most of us — people whose years are numbered, whose minds

are active but whose bodies are very slowly giving up.

Another matter which I mentioned a little bit during Bill 3 — and

I'd like the Minister to make note of this — has to do with the

Endicott Home in Creston. It's a home for mentally retarded children

and adults. It's run by a non-profit society and it's also supported by

people in the community; it's supported by groups such as the Fraternal

Order of Eagles.

I have a letter from Mrs. Anita Hale. She's the chairman of the Dr.

Endicott Committee of the Fraternal Order of Eagles in the B.C.

Division. So the Eagles do take an interest and they have a special

committee which devotes its time to the raising of funds from their 24

organizations throughout the province. She says that she's a member of

the Fraternal Order of Eagles. The auxiliaries, 24 in number, of

British Columbia have been donating money to the Dr. Endicott Home for

the Mentally Handicapped for several years. Last year and this year

they have donated between $1,000 and $3,000. Now, this money isn't given

in a lump sum. She has bought: educational articles for the classrooms;

skates for the children; record players; craft articles for the craft

shop; T.V. for the more learnable, as they can learn from Sesame Street

and the educational programmes from Spokane.

MR. CHAIRMAN: Hon. member, I really do believe that you should perhaps mention this to the Minister of Health. We are on Vote 61.

MR. NICOLSON: Oh, I'm talking about taxation, Mr. Chairman.

Thank you, but I'll relate it very quickly here because the next

paragraph refers to myself, as one Lorne Nicolson. This letter was sent

to the commissioner of social services tax with a copy to me, but I

never received any copy of any reply.

But it is, Mr. Chairman, to the commissioner of social services tax. So I am sure that it is under the purview of the minister.

"When Lorne Nicolson was here, he thought I should be exempt

from the 5 per cent sales tax as all the projects are helping to educate children.

As a teacher I realize that educational materials are subject to exemption."

So the person has asked the commissioner if this can be done.

"How can I go about doing this? Last year I spent over

$1,000 on the project and plan to spend the same amount and more this

year with the emphasis on education. We also have a gift for each child

— a gift at Christmastime. Can this tax be deducted from this?"

Well, I'd like to have some opinion as to whether or not these

things are educational materials. Of course, I don't think there is a

prescribed curriculum, so it might not be some of the curriculum —

required articles that one would find under the rules of the council of

public instruction and so on.

But I would like, especially since the sales tax is now 7 per

cent…. The money which is being donated by the Eagles could be

stretched much farther. It is a charitable act. As it stands right now

this is a tax on charity. So I would like to have the minister's

opinion. It would appear to me that it is no different than when I

order spectrographs, for instance, for a physics lab in L.V. Rogers

Senior Secondary School. These are tax-exempt. So if it should be

tax-exempt for a public school, should not educational matters such as

craft articles, record players — which are also, I believe, tax-exempt

if they are purchased for a regular public school…? Is there some

room for

interpretation? Is there a committee — a special committee —

that might make a decision on this? Do you have the latitude or

discretion either through committee or just through your office? So I

would ask….

I would repeat the three questions: was there any kind of an impact

study done prior to the institution of the 2 per cent increase in sales

tax? Was the department — your department — the initiator of the

increase in the per-day rate for hospitals, chronic, acute and so on,

or did it originate with the Department of Health, and were there any

considerations given to the exceptional cases such as MS patients?

Thirdly, the Endicott Home, would these charitable donations qualify as

tax-exempt and could refunds be applied for?

HON. MR. WOLFE: Mr. Chairman, with respect to the Endicott

Home and the letter the member has which was addressed to the

commissioner, I am not aware of it personally but I would like to see

the letter. I will look into it and find out. I have a description of

the exemption which applies, of course, to school supplies. I presume

the problem is that there are certain educational supplies within an

institution such as you referred to which are not exempt under these

regulations. We can certainly have a look at that.

[ Page 1201 ]

The regulation is defined now as "school supplies when purchased by

or on behalf of students for their use in courses of study given by any

school, college or university or by any business, trade or vocational

school." That would appear to be a definition which doesn't include the

type of organization you are referring to at the moment. I can only….

AN HON. MEMBER: Can this be changed by order-in-council?

[Mr. Schroeder in the chair.]

HON. MR. WOLFE: Yes, this is a regulation under the Social Services Tax Act which could be amended by order-in-council.

You referred to studies regarding the impact of the increase in

sales tax. This has come up in previous debates. I think we have said

repeatedly that there was extensive study made before we came as a last

measure of the package of tax changes which were made to sales taxes.

Obviously they have some impact on the cost of living, as I have

indicated earlier today. We wouldn't deny this nor that it is a tax

measure we welcome as government. No government does. But you must look

at the entire budget as a package of measures that had to be adopted,

including changes in the income tax points, changes in the corporation

taxes and other measures.

MR. NICOLSON: Mr. Chairman, with respect to the particular

increase in terms of hospital day rates, did the increase originate

with the Department of Finance or did it originate with the Department

of Health? And how did that come about?

You say that there were studies. Would the minister be prepared to

table some of the studies that show…to reassure us that these things

were not ad hoc, that they were carefully prepared, and some

consideration went into them? After all, it's been done. It's not as if

we'd be hearing about proposed changes in taxation before they

occurred. It's after the fact now. So could the people not judge the

basis upon which this decision was made?

HON. MR. WOLFE: Mr. Chairman, the change in the per diem rate

in the hospitals was, of course, researched extensively by the

Department of Health, and the decision to arrive at this recommendation

to cabinet to incorporate the changes that you see was reviewed by

Treasury Board in a series of meetings. The Health department had

extensive information to arrive at the result that you see. That's

about all I can say to that question.

MR. N. LEVI (Vancouver-Burrard): I'd like to welcome the

minister to the club that all ministers eventually get into, which is

the club of those who go down to Ottawa to try and get more money on

the cost-sharing programmes. I wish you a lot of luck on that. The

deputy's well experienced on that kind of thing.

He was talking before about cost-sharing, and I realize that he was

musing and not announcing government policy, that there has been, over

the years, some discussion by various provincial governments about the

whole question of opting out of cost-shared programmes in favour of the

tax point advantages. I notice the minister nods his head. He's aware

of that.

The point I wanted to make is that during the years that I went down

there we often expressed the opinion that, although we go down as a

province to talk about cost-sharing, we are, in fact, part of the

family of Canada, and there are some very undesirable features about

pushing the idea of opting out in favour of tax points in terms of the

total country, because the have-not provinces are the ones that suffer

very much from the fact that they have really no advantages in tax

points because they don't have that kind of base.

The important thing is that in terms of the cost-shared programmes,

particularly under the Canada Assistance Plan, and certainly, I think,

in all of the medical programmes and the education — the universities,

the post-secondary programmes — there is a minimal standard that we

agree to subscribe to. Certainly we agreed to subscribe to that kind of

standard, because we'd like to see at least minimal standards

maintained in every province across the country. If we do have a number

of governments opting out of these programmes, then I think we will

find tremendous inequities across this country in terms of programmes.

That, I think, would be a very unsatisfactory feature.

Now I agree that no doubt the future discussions in relation to

provincial equalization payments.... That question is something that is

coming up again anyway, and we on this side will be having something to

say about it. Because as early as May, 1973, we did express the desire

that we really would look for an improvement in the cost-shared

programmes, as opposed to the opting out of these programmes in favour

of tax points.

I'd like to ask the minister a couple of questions. One is in

relation to a statement that he made during the budget speech, and

perhaps he could tell me exactly what he had in mind when he said it.

He talked about the GAIN programme, and I don't want to deal with the

GAIN programme, but the paragraph reads…. Well, if I read the two

paragraphs, the minister might get the input.

"Services for senior citizens and handicapped persons will

cost about $187 million, and $128 million represents the British Columbia Guaranteed

Available Income for

[ Page 1202 ]

Need Act. This programme is $23 million more than last year and

extends benefits to qualified persons in the 55-to-59 group."

Then he goes on to say:

"These extended benefits will provide $17 million more

in payments, taken at very little extra cost to the province, because

the bulk of the funds will be provided through federal sharing. The

previous government, in our opinion, was remiss in not taking advantage

of the federal money that was available in previous years to provide

for this increased benefit."

Now my question is: from what the minister has said in here, having

been part of the federal-provincial discussions over the years on the

improvement of payments to senior citizens and the low-income working

poor, is he there referring to a programme that presently exists or one

that is envisioned to exist? It is my understanding that there is no

programme at the moment wherein the federal government — I just want to

get the quote right — "at very little cost to the province…." Canada

Assistance Plan sharing is still 50 per cent, 50 per cent, and I

realize that the discussions that are going on in relation to the

recently held security…. Discussions that went on for three years did

suggest 70/30 per cent, with 70 per cent in favour of the federal

government. I understand that may be down to 66-2/3 and 33-1/3 per cent.

Is the minister there referring to the new programme, or does he

have some other programme in mind that I'm not aware of? That's one of

the questions. The other one is: is the minister able to tell us in

round figures the breakdown of the main items of the cost-sharing

expected revenue, which is something in the order of $651 million for

this new fiscal year — just approximately what the ratios are in terms

of health and education and the social services?

HON. MR. WOLFE: Mr. Chairman, in answer to the last question

on the breakdown of the cost-sharing, I'll have to get that for you. I

don't have it here in the House.

On the first question on page 24 in the budget as to the

implications of the additional extended benefits providing $17 million

more in payments, I'm afraid I can't answer that question. I'll have to

refer it to the Minister of Human Resources (Hon. Mr. Vander Zalm), if

you wouldn't mind bringing this up under his estimates.

MR. LEVI: The point of my raising this, Mr. Chairman, is

really in relation to the general tenor of the budget speech document,

which we already dealt with extensively. I'm just going to suggest that

that $17 million in fact makes reference to a programme that presently

is not in place legislatively federally. If we're to take the Minister

of National Health and Welfare's remarks of two weeks ago in Vancouver, that legislation is

not likely to be in place before 1978. He doesn't expect to be able to

get it into the House until next spring, as I understand it.

I will ask the Minister of Human Resources, but that could have

implications, Mr. Minister of Finance, for your budget to some extent

because if you are expecting to cost-share at that level on a programme

that doesn't exist, you may find the province will have to carry a

substantial amount of the load that you are expecting the federal

government to carry, simply because the programme is not there.

MRS. E.E. DAILLY (Burnaby North): We heard this afternoon

that the Minister of Finance regrets very much that he's had to raise

taxes in the province of British Columbia. We've heard the Premier make

the same statement. Now I've listened to this debate fairly closely for

the last two days, and I must say to the Minister of Finance, through

you, Mr. Chairman, that I have not heard any validation from the

Minister of Finance as to why it was necessary to impose all the taxes

which his government has imposed on the people of this province.

The Minister of Finance piloted through Bill 3, based on the whole

concept that this province was $400 million in debt. I listened to the

debate and to the questions being asked, and the Minister of Finance

has still not explained to the members of this House or to the public

of B.C. why $400 million was needed.

In early April an order-in-council was passed for $250 million, not

$400 million. I really feel that the time has come when the Minister of

Finance should once and for all level with the people in this House,

explain to us in detail why $400 million was needed. Explain to us how

much you expect to raise from these increased taxes, explain to us why

in April an order-in-council for $250 million was passed, and also tell

us in detail if you are expecting to have to put forward further

orders-in-council to reach the $400 million. If you are, I think you

should explain to the House in detail just what those deficits were.

HON. MR. WOLFE: Mr. Chairman, we have dealt at length on

these questions, but in answer to the member's question regarding what

revenues the tax increases provided and so on, I would refer her to

page 31 of the budget speech. The increased tax measures cumulatively

develop $267 million in the fiscal year 1976-77.

She is curious about why there is a need to have a borrowing

authority for $400 million. This question has been asked by several

members across the way. As we have repeatedly answered, the borrowing

authority is a maximum. We have to have authority to borrow, but I

would hope that we wouldn't have to borrow this amount. One must keep

in mind that the

[ Page 1203 ]

anticipated deficit of $400 million is a book deficit, Mr. Chairman.

It is a book deficit and not a cash deficit. One must understand that

in looking at the cash position on any one day there are outstanding

cheques and there are other items affecting the book accounts which

would be included in a $400 million anticipated deficit for the year.

So the fact that we indicated by an order-in-council that borrowing

of $240 million was required and anticipated that there will be more

required does not really have a direct bearing on the authority asked

for to borrow $400 million.

MRS. DAILLY: Then I understand, through you, Mr. Chairman, to

the Minister of Finance, and thank you for replying to my question.

Bill 3 therefore, as you say, we know was just giving authority to

borrow, and therefore the province of British Columbia was not left in

the disastrous financial situation which the minister pointed out

during the budget speech. So we are very pleased to know that the

fiscal situation in B.C. left by the NDP government was not nearly as

disastrous as the Minister of Finance informed the House earlier.

HON. MR. WOLFE: Mr. Chairman, it's obvious the member puts

the answer in her own terms. I do not agree with what she said. It's

obvious that when a government budgets for a $3.2 billion deficit and

the anticipated result of revenues is $2.9 billion, indicating an

initial shortfall of at least $300 million, this does not indicate a

very capable or responsible job having been done by the previous

government. I do not agree with her that we have misled the people of

the province in indicating an anticipated deficit of $400 million.

MR. STUPICH: Mr. Chairman, I did ask a question when the

other Chairman was in the chair, and I am just going to repeat the

question now and go on to a couple of others. With respect to the item

in the

summary that's described as "staff reduction and salary savings"

in the amount of $1,362,280 for the whole department, my question with

respect to vote 61 is whether or not any of this saving would come into

vote 61. I certainly hope the minister is not going to try and get

along with less than two of his staff, apart from his executive

assistant whom he has not yet named.

I would like to question further…. The hon. member for North

Vancouver–Capilano (Mr. Gibson), I believe it was, raised the question

of income tax indexing and the hope that the minister would look at the

possibility of some indexing system for capital gains. Well, I

certainly wouldn't want to join him in that request, but my question

that I would like to ask of the minister is: how much is personal

income tax indexing costing provincial government revenue in the budget

that is before us now? What is the effect on the budget before us, the

revenue from personal income tax, of the federal government income tax

indexing; that is, in the expectations for this year?

With respect to the proposal, the campaign promise — and it was

repeated in the opening speech — the throne speech promised to

establish an office of the auditor-general. I am wondering if this

would come into vote 63, under the Department of Finance, or would it

come into vote 1?

I would like to come back for a moment to this question of the

difference between the $250 million and the $400 million. While it may

be appropriate to talk about the difference with respect to ICBC — for

example, we can talk about the differences between book deficits and

cash deficits — it is not nearly so appropriate to talk about the

public accounts in that same way, because there should be a very close

relationship between cash deficits and book deficits as was pointed out

in the Clarkson Gordon report. I quoted from this yesterday: "The

government public accounts measure actual payments made, with some

latitude in the month of April only." In general, they measure payments

made and money received up to the end of March, with only some

latitude, and certainly not the provisions for reserves that are

included in ICBC and that have to be included in ICBC and in other

Crown corporations. So to talk about the $400 million and the $250

million and say that the difference is accounted for by the fact that

you have to consider one as a book deficit and the other as a cash

deficit is not appropriate in this instance.

Mr. Chairman, the minister made reference to the actual revenue of

$2.9 billion. I would remind him that that was the figure quoted