1979 Legislative Session: ist Session, 32nd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, JUNE 13, 1979

Afternoon Sitting

[ Page

95 ]

CONTENTS

Routine proceedings

New Members Assistance Act (Bill M 201). Mr. Rogers.

Introduction and first reading –– 96

Oral questions.

Heroin treatment. Mr. Cocke –– 96

Hospital funding. Mr. Barber –– 96

Parimutuel Incentive Grant. Hon. Mr. Gardom replies –– 97

Social Services Tax Amendment Act, t979 (Bill 3). Second reading.

Hon. Mr. Wolfe –– 98

Mr. Stupich –– 98

Mr. Mussallem –– 100

Mr. Macdonald –– 102

Mr. Brummet –– 102

Mr. Cocke –– 103

Mr. Mitchell –– 103

Mr. Leggatt –– 104

Mr. Skelly –– 104

Hon. Mr. Wolfe –– 105

Income Tax Amendment Act, 1979 (Bill 4). Second reading.

Hon. Mr. Wolfe –– 105

Mr. Stupich –– 106

Mr. Howard –– 107

Mr. Strachan –– 109

Mr. Levi –– 109

Hon. Mr. Wolfe –– 110

Corporation Capital Tax Amendment Act, 1979 (Bill 5). Second reading.

Hon. Mr. Wolfe –– 111

Mr. Stupich –– 111

Hon. Mr. Wolfe –– 111

Pari Mutual Betting Tax Amendment Act, 1979 (Bill 6). Second reading.

Hon. Mr. Wolfe –– 111

Mrs. Wallace –– 111

Mr. Ritchie –– 113

Hon, Mr. Wolfe 113

Revenue Surplus of 1977-1978 Appropriation Act, 1979 (Bill 7), Second reading.

Hon, Mr. Wolfe –– 114

Mr. Lea –– 114

Mrs. Jordan –– 116

Mr. Leggatt –– 118

Mr. Ritchie –– 119

Mr. Howard –– 119

WEDNESDAY, JUNE 13, 1979

The House met at 2 p.m.

Prayers.

MR. KING: Mr. Speaker, I would like

to introduce a group of school children, the grade 7 class from

Falkland Elementary School. They are here visiting in the parliamentary

precinct today, along with their teacher, Mr. Halady, and some parent

chaperons, Gayle Carson, Lise Harrison and Mel Stratton. I would ask

the House to extend a warm welcome to all of them.

HON. MR. VANDER ZALM:

One of the finest schools in the whole of the lower mainland is the

Queen Elizabeth Senior Secondary School, and we have pleasure in having

good representation from the school here today, with 15 students

visiting, and Mr. Hodgson, their teacher. I would ask the House to

welcome the students from the Queen Elizabeth Senior Secondary School

of Surrey.

MR. STUPICH: Mr. Speaker, it used to be

the policy of the House for members to impose introductions when they

had groups of school children, such as the two members preceding me

have done. In recent years we have abused that, I think, by introducing

individual constituents from time to time. But occasionally there is a

very special individual constituent. In this instance I would like to

introduce the very lovely Laura Mottishaw, Miss Ladysmith for 1978-79.

MRS. JORDAN:

Mr. Speaker, the guests whom I have the honour to introduce are

probably not competitive in terms of beauty with the hon. member for

Nanaimo's guest, but they certainly offer a lot to British Columbia in

service. I am pleased to ask the House to welcome Mr. Roger Watts, a

brilliant young lawyer from Vernon, and Mr. David Parsons from Kelowna,

who is on the regional college board and is also chairman of the campus

building committee for the North Okanagan campus. I ask the House to

give them a warm welcome.

MR. MACDONALD: I would like

to introduce a very distinguished parliamentarian, a former Clerk of

the House, an expert on parliamentary procedure, and a fairly good

tennis player, Mr. George MacMinn. Stand up, George.

HON. MR. HEWITT:

I would like to introduce two constituents, very close and dear

friends, Dave and Jean Battison from Penticton. I would ask the House

to welcome them.

MR. REE: I would like to introduce

55 grade 11 students we have from Carson Graham Senior Secondary in

North Vancouver-Capilano. They are visiting our capital today, and are

enjoying its beauty and its weather. They are under the guidance of Mr.

A. MacKinnon, one of their teachers. I would ask this House to welcome

them.

MR. ROGERS: The constituency secretary for Vancouver South, a very hard-working

person, is Barbara Duggan. We thought we would let her come over tonight and

see what really goes on here. I would ask the House to make her welcome.

MR. HYNDMAN:

I should like to introduce Mr. Peter Hebb. Mr. Hebb is an elected

member of the Vancouver School Board. Of more relevance to these

buildings, he is the principal of the George F. Laidler Co., which

specializes in fine oak furniture, much of which adorns the offices of

this building. In making Mr. Hebb welcome, would members please note he

has probably had as much experience in cabinet making as the Premier

and the opposition leader combined.

HON. MR. PHILLIPS:

Mr. Speaker, it's not too often that I can rise in this Legislature and

welcome a group of visiting students from the mighty South Peace River

constituency. So today it gives me a great deal of pleasure to welcome

to Victoria a group of 40 students and their teacher from the Grandview

Elementary School. I hope the House will give them a very warm welcome.

HON. MR. GARDOM:

I'm very pleased to introduce to the assembly this afternoon four

outstanding young citizens who have expressed their individual concern

and desire to help save lives, increase public awareness and develop

public attitudes in the province concerning the great misery, damages

and dangers that can result from drinking and driving. These two young

ladies and two young men, Mr. Speaker, have each been awarded a $500

scholarship for their entries in a competition which was held under the

Counterattack program. I would say without qualification that the

creativity developed by each of them in their submissions to attempt to

educate people to the frightening problem of drinking drivers was very

imaginative. It was contemporary and realistic.

First of all

I would like the hon. members to welcome Mr. Jeffrey Sutherland, a

graduate of Shawnigan Lake School. His project was a very excellent

questionnaire survey among his fellow students to determine areas

wherein teenagers lack knowledge about drinking-driving.

Secondly,

please welcome Miss Gloria Macarenko from Prince Rupert Senior

Secondary School. Gloria's now employed at a Prince Rupert radio

station. She has produced a number of taped interviews with local

authorities about their attitudes to drinking and driving.

AN HON. MEMBER: And was Miss Prince Rupert.

HON. MR. GARDOM: And was Miss Prince Rupert, indeed, sir.

Miss

Pearl Leaney, of Carson Graham Secondary School in North Vancouver

wrote an essay entitled "The Third World War," its theme being the

automobile in alliance with alcohol versus man, and man will lose.

Lastly,

Mr. Speaker, Mr. Mark Heine, of Stelly's Secondary School in Saanich,

created a poster which we've exhibited on the front page of Lifeline.

It says: "One More for the Road." We have a skeletal hand and a

cocktail. and it certainly does tell all.

Hon. members, I'd

very much like you to join with me in this rather lengthy introduction.

I think it is necessary and certainly fitting to express our greatest

congratulations to these young people for a job excellently done.

[ Page 96 ]

Before

sitting down, Mr. Speaker, I'd like the members also to welcome Mr. Ron

Boyle, the director of Counterattack, and his associates Mr. Hugh Earle

and Ms. Patty Manudca.

Introduction of Bills

NEW MEMBERS ASSISTANCE ACT

a motion by Mr. Rogers, Bill M 201, New Members Assistance Act,

introduced, read a first time and ordered to be placed on orders of the

day for second reading at the next sitting of the House after today.

Oral Questions

HEROIN TREATMENT

MR. COCKE:

Mr. Speaker, I would like to ask a question of the Attorney-General.

Dr. J. Ekstedt called the heroin treatment program an infringement on

human rights, a creation of a social dilemma, and not the best

solution. Dr. Ekstedt is the senior policy adviser in the

Attorney-General's ministry and former commissioner of corrections.

Will the Attorney-General be advising his colleagues, especially the

Minister of Health, that they are on the wrong track with the heroin

treatment program?

HON. MR. GARDOM: It's easy to

respond to a question like that in the negative, but I'm not going to

just say "no" in response. I would like to mention a couple of other

items, hon. member. The Heroin Treatment Act was certainly amply

debated in this House. Government policy is well known and I can assure

you, sir, that government policy is not altered. We're attempting to

help, save and cure people of this very terrible addiction. I have not

had the opportunity of having a discussion with Dr. Ekstedt but I am

informed that his remarks to a great extent were summarizing a seminar

at which he was present. He may well have expressed some personal

opinions and I can assure you, sir, that in a democratic society people

have the right to express their personal opinions.

MR. COCKE:

In view of the throne speech and the government's stated priority for

human rights, is it not subverting its direction with the program?

HON. MR. GARDOM:

No, and I would also commend the hon. member and all members of the

House that there is at present before the Supreme Court of British

Columbia a reference concerning this case. It is under adjudication and

deliberation. I think it would be inappropriate to start discussing the

program in detail because those matters are now before the court sub

judice.

HOSPITAL FUNDING

MR. BARBER:

I want at the outset to indicate that no one on this side of the House

is making charges regarding the administration of the Juan de Fuca

Hospitals. I'm asking questions only, and I want that clearly

understood by everyone.

In regard to the Glengarry Hospital

has the minister requested and/or received by this date a report

concerning certain complaints made recently by the staff at that

hospital?

HON. MR. McCLELLAND: No, Mr. Speaker.

MR. BARBER:

On a supplementary, have you requested such a report of your own

ministry concerning allegations of inadequate operations and staffing

at the Glengarry Hospital?

HON. MR. McCLELLAND: Mr.

Speaker, I haven't requested any formal report. The operation of

hospitals within the system is a matter for continual discussion among

myself and members of my staff, and it will continue to be so.

MR. BARBER:

On a further supplementary, will you commission such a report, Mr.

Minister, on these operations at the hospital? If you do so, will you

agree to make that report public?

MR. SPEAKER: The question is not in order. It anticipates the action of a minister.

MR. HANSON:

I have a question for the Minister of Health. As you know, Mr. Jack

Howard is the administrator responsible for Glengarry Hospital, and Mr.

Howard has been quoted as saying that his hospital has difficulty

getting supplies and that the cutbacks imposed by the government have

resulted in a reduction of staff of six or seven at the moment. My

question is: does the minister question or doubt the veracity of Mr.

Howard's statements?

HON. MR. McCLELLAND: Mr.

Speaker, of course not. If there is any doubting of the veracity of

people who are operating our community facilities, it does not come

from this side of the House but may in fact be coming from other

members.

Mr. Speaker, I just want to make it very plain

again that there have been no cutbacks to hospitals and there are no

cutbacks intended. There will be an increase to the Juan de Fuca group

of hospitals in terms of the amount of budget they will be receiving

this year over last year, and there has been an increase over every

year that this government has been in office. I expect that that

attention to the needs of the health care facilities in this province

will continue; certainly it will continue for as long as this

government is in office.

MR. SPEAKER: I would remind the House that perhaps answers to questions should not go beyond the scope of the question itself.

MR. HANSON:

On a supplementary question, Mr. Speaker, if the minister does not

challenge the veracity of Mr. Howard's statements, then would he please

at long last abandon the 5 percent ceiling that has been so destructive

in the health care system of B.C.?

HON. MR. McCLELLAND:

Mr. Speaker, I don't know where that member has been, but he obviously

hasn't been in British Columbia because there is no 5 percent ceiling

and there never has been.

SOME HON. MEMBERS: Oh, oh!

[ Page 97 ]

HON. MR. McCLELLAND:

At the present time, if the member for Victoria would check the budget,

he will see that there is an allocation made available from surplus

appropriations of $25 million. We'll have the opportunity to discuss

that in full during the debate of that bill — perhaps this afternoon,

for all I know — which allows the hospitals to have a further 2.5

percent on top of their budgets over last year, to deal with some of

the questions which they've put forward to me, particularly those two

most difficult questions of increased staff wages and the increased

cost of supplies and services which are non-salary items. That extra

2.5 percent, Mr. Speaker, is the result of negotiations with the

hospitals over quite a lengthy period of time. So that has already been

done, and I would be very happy to take

part in the debate of that bill.

just want to say that in the comments the member made in asking the

question of me, he made reference to a public official saying that it

would be difficult to live within certain budget restrictions. Yes,

it's difficult, Mr. Speaker, to manage at the best of times. It's

difficult for you and I to live within our budget restrictions, but we

do have to do it, and that's the mark of a good manager. That must be

done.

MR. HANSON: On a supplementary, Mr. Speaker,

again to the minister, do you not feel that a reduction of six or seven

employees in a service as small as Glengarry Hospital is a very high

reduction?

HON. MR. McCLELLAND: I don't know what kind of an opinion I can give about that.

MR. SPEAKER: The question suggests its own answer.

MR. COCKE:

I am motivated, Mr. Speaker, to ask the Minister of Health a question.

I would just like to remind him of November 19 last when he sent around

a memorandum to all hospitals on 5 percent. What's he talking about?

Another thing too, Mr. Speaker — it is a cutback if he doesn't match

inflation.

The question relates to the Health Sciences

Association charge that they have difficulty reconciling the minister's

claim of $100 million annual capital expansion for hospitals and the

staff cutbacks in the major hospitals. Those major hospitals are the

Royal Columbian, Lions Gate, Burnaby General, Shaughnessy, et cetera,

just to name a few. Can the minister explain his high priority for

fanfare against, on the other hand, his lack of concern for the ill

people in this province?

HON. MR. McCLELLAND: Mr.

Speaker, I would, under normal circumstances, have asked that you ask

that that be withdrawn. That's the kind of statement that shouldn't be

allowed in this House. Nevertheless, considering where it came from, I

wouldn't dignify it by asking for that withdrawal.

I don't

know what you call fanfare. But, if you call fanfare the building of a

new hospital in Victoria after having had it under discussion for 20

years, if you call fanfare the building of a new children's hospital

after having it under discussion for 20 years, if you call the complete

redevelopment of Royal Jubilee Hospital in Victoria a fanfare if you

call fanfare the $60 million redevelopment of Vancouver General

Hospital after having talked about it for 20 years, if you call the $20

million redevelopment of St. Paul's Hospital fanfare, if you call the

new hospital in Delta fanfare, if you call the new hospital in

Coquitlam fanfare, if you call the complete redevelopment of the

hospital in Kamloops fanfare, if you call the complete redevelopment of

the hospital in Prince George fanfare, then I'm guilty of fanfare.

MR. COCKE:

I would like all those who applauded to phone back home and find out

what's actually happening with those proposed constructions.

Interjections.

MR. SPEAKER: Order, please. Hon. members, we are in question period, lest it has escaped your notice.

MR. COCKE:

Since the minister has been the object of the ire of almost every

health body in the province, including BCMA, RNABC, HEU, Health

Sciences Association....

Interjections.

MR. SPEAKER . Order, please, hon. members. The question is on the way.

MR. COCKE: The Attorney-General (Hon. Mr. Gardom) is very upset about Ekstedt. I don't blame him for that.

Will

he begin listening to those groups who have the best information for

him and who are best informed of the needs of the people in this

province? The minister obviously hasn't got that.

Since the

minister decided not to answer that question I just want to ask him one

more. The minister has a 25 to 1 ratio in his newest heroin treatment

program, as of April 14 — 25 staff to one patient. If he can afford

that for heroin treatment, why isn't he doing something about our

hospital service in this province?

MR. SPEAKER: Order, please. That's a rhetorical question.

PARIMUTUEL INCENTIVE GRANT

HON. MR. GARDOM:

Mr. Speaker, the hon. member for Cowichan-Malahat (Mrs. Wallace) asked

me a question yesterday, and I have received the answer. Her question

dealt with the pari-mutual incentive grant. If you have a pencil handy,

Madam Member, the total amount of the grant was $510,537.44. Cheques to

qualified breeders of brood mares have gone out for the breeders.

Cheques for breeders of stallions are being processed and mailed. The

breakdown of the fund is as follows: brood mare breeders whose horses

raced at Exhibition Park, $365,415.53, and at Sandown, $12,885.10;

stallion breeders whose horses raced at Exhibition Park, $92,168.06,

and at Sandown, $2,507.10. That is a total of $472,875.79. There was

also interest accrual of $37,661.65. This was paid to two societies in

grants: the Quarter Horse Society of B.C., $858.74; and the B.C.

Thoroughbred Society, $36,802.91.

I have some additional

information for you. A new program of awards is being made to standard

breeders, and to the end of May of this year, the following amounts had

[ Page 98 ]

been

paid: Sandown, $22,420.69, to standard breeders who race there; to

those who raced at Cloverdale, $119,061.53; Lower Fraser Valley

Exhibition, $742. The total payment is $142,224.22. I apologize to all

of the hon. members for reading this lengthy answer in question period,

but I would like to emphasize the point that this is the type of

question best placed on the order paper and responded to on the order

paper.

Orders of the Day

HON. MR. GARDOM: Public bills and orders. Second reading of Bill 3, Mr. Speaker.

SOCIAL SERVICES TAX

AMENDMENT ACT, 1979

HON. MR. WOLFE: Mr. Speaker, my

recent budget stated that tax reductions were to be proposed which

would provide the most effective stimulus to the British Columbia

economy. This proposed amendment to reduce the rate of tax from 5

percent to 4 percent certainly fits within that objective. The

reductions in tax will significantly reduce the cost of living for all

British Columbians. It will provide the average family in the province

with tax savings of some $70 a year. The $70 saving will assist

business, as it will result in increased consumer demand. The reduction

will also lower the cost of doing business in the province by reducing

by 1 percent the cost of all taxable purchases used in operating that

business. Generally, Mr. Speaker, the reduction in tax will benefit all

residents of the province by exerting downward pressure upon

inflationary forces.

In addition to this, exemption from

this tax is being proposed for vitamins, dietary supplements, diabetic

and ostomy supplies. Vitamins and dietary supplements would include

tangible personal property sold in liquid, powered, granular, tablet,

capsule, lozenge or pill form, when sold as dietary supplements or

adjuncts for human consumption. Diabetic supplies are syringes, needles

and diabetic testing materials purchased by or on behalf of a diabetic

for his own use. Ostomy supplies are equipment and supplies of a

specialized nature, purchased by or on behalf of a person requiring

such specialized items for his own use. The exemption would include

pads, cement, gaskets, tubing and supplies specially produced for use

with ostomy equipment. The exemption would not include products such as

skin creams, deodorants, cleaning material, et cetera, which, by their

general nature, may be used for other purposes.

The loss in

revenue from the tax reduction and additional exemptions is estimated

at $133,250,000 for the 1979-80 year. The proposed changes are

effective midnight April 2, 1979.

In addition, an amendment

is proposed to allow refunds of tax paid in error to be made upon the

minister's approval of the commissioner's certificate. This is to avoid

the present cumbersome procedure of an order under the Revenue Act. The

procedure is the same as provisions now in the Corporation Capital Tax

Act, the Logging Tax Act, the Mining Tax Act, the Insurance Premiums

Tax Act and the Taxation Act.

Also, as provided in other

provinces with sales tax legislation and in the federal sales tax and

income tax Acts, a three-year time period in which to make an

application for a refund is proposed. This will mean refunds of tax

erroneously paid will have to be applied for within three years of the

payment of the tax.

Hon. members should note that with the

change in the rate of the tax to 4 percent, this will be the lowest

rate of this tax in British Columbia since 1954. It will also be the

lowest of any province in Canada with such a tax.

This

amendment to the sales tax Act tells the story of the responsible and

careful management of public funds of this administration. It really

summarizes that story in the effect and results of that administration.

I move second reading.

MR. STUPICH:

The Minister of Finance, introducing second reading, talked about a

couple of sections of the bill about which there can be little argument

or discussion. The one giving him the authority to remit sales tax paid

in error without having to go to cabinet makes sense. The one removing

from sales tax certain items also makes sense. It's very hard for

anyone to make a case for opposing a government bill to reduce taxation.

suppose one could start by saying that the title itself is in error,

although we're not discussing the title. But I think we can agree it

should really be called the Act to Effect the Re-election of the Social

Credit Government, the bill to try to persuade people that the

government that has instituted such repressive tax legislation, tax

policies and user-rate policies over its three years in office that it

didn't deserve to be re-elected was now coming to the people and

saying: "Look, we changed our mind. We've changed our arguments. We now

think it would be a good idea to roll back taxes. Will you please

re-elect us and we'll change our attitude toward taxes in the future?"

the hon. Attorney-General indicated, it did, and with a substantially

reduced majority; but it did work. It's one of the things that did work

— all the more reason, I think, for changing the name of the

legislation.

I would like to refer to Hansard

in second reading of this legislation and to some of the remarks of the

Minister of Finance when he was telling us why the tax had to be

increased from 5 up to 7 percent. I'm reading from Hansard ,

April 8, 1976, page 755. The Minister of Finance said: "I announce that

tax increases were necessary to raise the revenue needed to carry on

the government services and programs in the coming year." There is

plenty of evidence before us right now that the government has found it

necessary to reduce the level of government services in order to

proceed with this particular plank in its election program. Evidence

has been introduced in question period over and over again about

cutbacks in government services.

A constituent of mine who

works for the school board in Nanaimo said she was certainly going to

be pleased every time she spent a dollar to know that she was saving a

penny and that the cost of that was that four people in her department

would be unemployed starting July 1. One of the ways in which the

government has saved money has been to cut back on its level of support

for school boards and to insist that school boards stay within a 5

percent increase in their budget. Isn't that great? This person could

save one penny on the dollar at the expense of knowing that four of the

people would no longer be working with her when this policy came into

effect.

There has been some casual mention occasionally of

hospitals, and the Minister of Health (Hon. Mr. McClelland) will deny

there has been any cutback, and he's right.

[ Page 99 ]

There

hasn't been a cutback. But I think the Minister of Health would also

agree that if we take into account the extra $25 million that this

government was obliged to throw into the pot because of the reaction

from the community, the total for hospital grants in the budget before

us is $674,178,588 — a very impressive total for hospital grants.

But

let's look at the figure two years ago. Two years ago it was

$615,621,231. Over a period of two years, in spite of all the salary

increases in two years — increases, I suppose, in the neighbourhood of

16 percent — in spite of the increases in their hydro bills in. that

same period, which must have exceeded 20 percent, in spite of the

increase in cost of all the supplies that they buy, many of which come

from outside of Canada and cost a good deal more because of the

devaluation of the Canadian dollar, to say nothing of the increase in

prices, and in spite of the fact that the minister talks about

increasing the number of hospital beds that are out there waiting to

get these grants per beds, there has been an increase in the amount of

money available for hospital grants of only 9 percent in two years —

4.5 percent per year on the average.

In order to find the

money to put out this one particular election plank, the government has

been obliged to severely cut back on the level of services in

hospitals, and there have been reports of staff cutbacks. The minister

will again deny that there have been any cutbacks that he's imposed.

Well, of course he hasn't. He's simply said: "You have to get along

with less money." Bum the hospital down and you can get along with less

money. Shut the hospital down and it won't cost you nearly as much. You

can do anything you want as long as you don't hire people to service

patients in the hospital. Great stuff, Mr. Speaker, all necessary in

order to support this particular election plank.

School

boards, hospitals and municipalities have all been obliged to live

within this mythical 5 percent that the government claims it is living

within. We know that — and we'll come to that later on — if we take

into account the 5 per cent increase in estimates and add to that the

$240 million that will be spent through revenue appropriation bills and

add to that, as I've said before, the $200 million average overrun that

this government experiences, we're looking not at an increase of 5

percent, not even of 12.5 percent, but an increase closer to 20 percent

by the end of the year. As I've said before, by the end of the fiscal

year 1979-80 this government will have spent $5 billion, which is

significantly more than it spent last year, much more than the 5

percent increase. Nevertheless, the hospitals have to live within 5

percent, the school boards have to, and many other government services

that I intend to detail later on in this debate are going to have to

live within the 5 percent, that imaginary figure that the government

claims it is living within.

When I look at some of the items

that the government has cut back on, Mr. Speaker, I wonder at the

wisdom of advancing this particular reduction in tax, other than as an

election gimmick; and, of course, that makes me wonder just how long

it's going to last. I notice, with respect to one of the changes, the

minister has said it's a permanent reduction. I've just forgotten which

one it is. With respect to the sales tax he's not given any indication

of permanency. In any case, looking at the latest information that we

have available — and that is the comptroller-general's report, interim

financial statements for the ten months ended January 31, 1979 — and

looking at some of the departments that are being.... Well, they're not

even spending the money that was allotted to them.

I will

speak at greater length about some of them, but at the moment I'd like

to talk about health. I've already mentioned the cutback in hospital

programs. They're obviously going to be underspent in The Medical

Services Commission, where obviously pressure has been put on the

department to cut back on spending, because in nine months they had

spent $173 million out of a $212 million allotment.

Human

Resources — $64 million for administration and community service voted

by the Legislature and only $46 million spent in ten months. Obviously

they cut back on community services so that they could save money for

their election program. Services to families and children — $71.7

million voted by the Legislature and only $48 million spent in ten

months. They obviously cut back there, scrounging money from that

branch in order to finance their election program. Community projects —

$27 million voted and $19 million spent in ten months. GAIN program —

there was never a program that was more inappropriately named than that

one. They changed the name from Mincome to GAIN and then started

chiseling on the people that were in receipt of that program — $278

million voted by the Legislature and in ten months they've spent only

$254 million, because they were able to cut back as the federal

government made more money available. Those are the kinds of cuts they

made in people programs, Mr. Speaker.

But they were not just

made in people programs. Look at some of the other programs where they

have cut back. This is also one that I'll mention later on —

reforestation. The minister spoke yesterday about money spent on

reforestation — $19.8 million voted. but only $14.8 million spent. This

is the same amount as was voted the previous year. We don't know how

much was spent, but in ten months — and reforestation is not done to

any great extent in February and March — in four months they were $5

million short of the amount provided for reforestation. Surely that's a

program that should go ahead if they were really going to do something

other than try to chisel more money for their election program. That

inventory program is so important in determining how much shall be cut

and where it shall be cut.

There's $6.3 million voted by the

Legislature. The Minister of Forests wanted to go ahead with that. He

asked for and got $6.3 million, but some reason or other he spent

little more than half of that: $3.5 million in the first ten months.

Those are important programs for the development of our economy. The

minister talks about how this is going to help the economy.

There's

one area where they have gone overboard, and again it's part of the

election program: $157 million voted for highway construction. This is

one area where they really went over: over $200 was million spent in

the first ten months. We'll have to wait and see how much will be spent

in the next two months.

Another program that should be supported, because it is doing something for

the future, they have chiseled money out of so that they can have it for an

election program: in excess of $2 million was voted for the Salmonid Enhancement

Program, but less than $1 million was spent in ten months. They paid lip service

to the program but not dollars.

[ Page 100 ]

Recreation

facilities grants — and there's a provision in a later bill — amounted

to $7 million voted by the Legislature. We like the program; after all,

the NDP started it. But $7 million wasn't nearly enough — $3.6 million

was spent in the first ten months.

Obviously they've been

chiseling money out of every branch and out of every program that they

possibly could to come up with the kind of election program they hoped

would get them re-elected. One of the ways in which they have proceeded

with that program was to cut back on sales tax revenue. That meant they

had to cut back on all kinds of other excellent programs.

From

the kind of cutbacks that I've detailed — and other members may speak

about other cutbacks of which they are personally aware — it's obvious

that the government needed that revenue to maintain the current level

of expenditure, the current level of services and programs, but decided

not to do it because they thought it would be better campaigning not to

do it.

The minister tells us today how important this is

going to be for the economy and how good it is going to be for the

economy. Well, in 1976 he didn't feel that way. He said: "One argument

that one hears against the use of the sales tax is that it is

regressive. But I should point out that this argument is materially

reduced when applied to the social services tax in this province

because of the exemptions which are allowed." There have been more

allowed since, as well as the ones proposed today. He also said: "These

include food, drugs, children's clothing and footwear, used clothing

and footwear, school supplies and reading materials."

In a

speech at an earlier date, he mentioned that there's no tax on

children's clothing or footwear, no tax on drugs — some drugs — no tax

on rent or mortgage payments, no tax on school supplies and reading

materials, no tax on any service, such as repairs, insurance or labour

charges, no tax on holiday travel or airline tickets, no tax on

cablevision. So he didn't think it was all that bad a tax at all. Yet

today he's telling us that this reduction of 1 point is going to have

such a tremendous effect on the economy that it's necessary at this

time. I agree that it is important to do something for the economy, but

I question whether this is the best thing that could have been done.

This

is something that I will ask about in committee stage, but I'll just

raise the question now so the minister has been forewarned. Speaking on

March 13, he said: "Our Treasury Board gave lots of encouragement to

our research staff to raise their sights, and after exhaustive analysis

were persuaded..." to go ahead with this tax increase. I'm going to ask

the minister during committee stage whether Treasury Board was asked to

do that same kind of exhaustive analysis and research into the effects

of the reduction in the sales tax from 5 percent to 4 percent.

The

minister said today that it's going to save the average person about

$70. What the minister didn't really dwell on is that it's going to

save some other people in the community, or some other taxpayers in the

community, a lot of money as well. If the total reduction is $133

million, then it seems likely — and I do have a question on the order

paper that I will be able to speak more definitively about later on —

that on the basis of the figures that the minister gave us on April 8,

1976, the business sector will be saving something like $63 million out

of that $133 million. I think that must be substantially more than this

particular party opposite got from the commercial sector during the

campaign.

Perhaps this was one of the promises they made to

some of those people. You made all kinds of plans for expansion in the

economy. "Re-elect us and we'll drop the sales tax by 1 point." I don't

know that that happened, but I have said from the beginning that this

was an election bill. I'm wondering whether in raising finances from

the business sector they discussed with the business sector the

possibility of their expansion happening at the same time as the sales

tax was going to be reduced by 1 point. Again, I'm wondering just how

long this 1 point reduction is going to last.

I've been

quoting the minister. I'm now going to quote from my own remarks,

because I suspect that if I don't, someone else will. Everything I said

about the sales tax at that time about increasing it by 2 points I

still believe. I still believe it was a very bad economic move — smart

politics maybe, but a very bad economic move to increase the sales tax

in 1976 by 2 points. I still believe that it was done entirely for

political reasons; I still believe that it was done contrary to the

advice that that minister got from the experts in his own ministry. But

in spite of all that we have to go along with the government in

reducing the sales tax from 5 percent to 4 percent.

There is another point that I used in my presentation in April 1976, and I'm going to use it again. I quote from my own speech:

Figures

from Manitoba that I don't have to hand at the moment, but where a

study was done where the sales tax rate is the same as is proposed here

for the province of British Columbia" — at that time we were going up

from 5 percent to 7 percent — "and where the exemptions are similar,

would indicate that for a family of four with a salary of $10,000,

roughly 1.5 percent of the income is paid out in tax,

whereas when you

get up to the $20,000 range, you raise the proportion of your income

that is paid in this sales tax method of paying taxes.

Because

the tax does work a hardship on low-income people, we're going to

support the reduction from 5 percent to 4 percent; we're going to

support it. We're very concerned that the government has done this as a

way of financing its attempt to get re-elected. There can be no other

explanation for them doing it at the time in view of the arguments

advanced by the Minister of Finance when he proposed the increase by 2

percent just three years ago. In view of the evidence of the cutbacks

in government services and expenditures in very important programs,

just five or six of which I mentioned, we feel that the tax does bear

more heavily on the low-income people. Reduction is one way of getting

some relief — not enough compared to the high-income people — for the

people who have been suffering the very rapid increase in the cost of

living, the very high inflation rate in the province of British

Columbia that this government has aided and abetted rather than

opposed. Because it's one way of getting some relief for those people,

we will vote for this legislation as much as we're opposed to the

cutbacks that are being imposed due to this reduction in revenue.

MR. MUSSALLEM:

Mr. Speaker, I have the honour to address you, sir, and to marvel at

the remarks of the member for Nanaimo. Without doubt he's a man of

figures, a chartered accountant in his own right, and a man of ability.

But what happens to him when he gets behind a microphone in this House

I do not understand. Talking to

[ Page 101 ]

him

in the halls he is a man of logic and knowledge, but coming into this

House he speaks out of both sides of his mouth at the same time. I

can't understand that. He says you should not reduce the taxes at this

time but that it's a good thing to reduce them. Now that's talking out

of both sides of the mouth at the same time.

I cannot help

but remember a time a short while ago — just a mere three years ago —

when this government found it necessary to increase the social services

tax by an additional 2 percent. How that same party on my right

hollered and howled: "What you're doing to the poor people!" What we

were doing to the poor people at that time was paying the debts that

were incurred by them. I'm not, at this time, attempting a fight or to

blame the previous administration, but why bring it up? Why make it

necessary for me to draw to their attention the facts? Through three

years of total incompetence debts piled up on debts, and it was

necessary for us to pay those bills. We had to borrow $261 million

outside the government to pay their debts, and we're paying $26 million

in interest today.

I say to my honourable friend that we are

reducing for every family in British Columbia an additional $70. Would

he not commend the government on that? Would he not say that is the

right direction to go? Would he not say this is a proper way of

government? No, he doesn't say that. He says we did it just before the

election. Is he implying we should wait till the election is over? He

suggests also that our numbers in government were reduced because we

did certain things in government, and the people said to us we almost

threw you out. But you notice the people did not throw us out; they put

us back. That is the anomaly of government when you have a big

majority. The people say: "They're too strong; you have too many

people." Then it is the reaction of the democratic system that

our numbers are reduced a little. That happened; it's proper, and it's

good government. But do you hear this? No, you hear nothing about it.

You merely hear my honourable friend say it's not the right time to

take it off. I say to him today the right time to take off taxes is at

any time you can get them off, and we are doing just exactly that. We

will continue to do that. He said the minister didn't have to take a

little thing like vitamins off. But I respect him for it. Vitamins are

a great help to people who do not eat a square meal every day, and

there are millions, especially in the cities, who need vitamins. They

are very important to their lifestyles. The minister took the tax off.

It's a great idea, and I commend him for what he's doing.

[Mr. Rogers in the chair.]

These things are good

government. It is the policy of the NDP to kick everything in the face,

and to stay there and stand up and say: "We're going to support the

bill." If he's going to support the bill why doesn't he sit down and

say nothing? We recognize the doubletalk. It doesn't mean a thing; it

doesn't do him credit, and it's a waste of the time of this House. To

add insult to injury, my friend says we cut back in health. Where?

Pray, tell me where.

MR. COCKE: In Maple Ridge.

MR. MUSSALLEM: No cutback in Maple Ridge; none whatever.

MR. COCKE: Fourteen beds.

MR. MUSSALLEM:

Fourteen beds? None whatever. That is where they lie. I'll tell my hon.

friend they laid off three or four people, but I got wind of the fact

that the board was contemplating the hiring of an assistant

administrator for Maple Ridge Hospital. I took it on myself — I should

not have done it — and I said: "I've no business in your hospital, and

do not listen to what I'm telling you because I've no authority. But

let me tell you, Mr. Chairman of the hospital board, if you hire an

assistant administrator before you put back those people that you

fired, you're going to hear from me." I have the right to do that; I'm

an MLA. I said to him: "I want those ordinary people hired back." I

said: "I want no brass up there; I want people in jobs." I'm just

telling you that; you brought it up, or I'd never have said it. This

party is for the little people.

MR. COCKE: How many beds did they close?

MR. MUSSALLEM: They did not close any beds.

MR. COCKE: Fourteen.

MR. MUSSALLEM:

My friend there is talking through his hat, if he had a hat; but it's

coming out of the top of his head in steam. The fact is that at this

time of the year all hospitals reduce their beds. They reduce the beds

by 12. Now it wasn't necessary. The government is still paying them....

Interjection.

MR. MUSSALLEM:

Keep quiet. The government is still paying for the full complement of

beds, but that is a 106-bed hospital. They had 115 beds because they

utilized the halls, and it was brought down to 103 beds. But even then

at the greatest occupancy during that time that our friend refers to,

only the highest habitation of the hospital was 87 beds. They didn't

close the beds at all, but they did fire three people, and that maybe

out of necessity. The Minister of Health (Hon. Mr. McClelland) wasn't

in favour of it; neither was I, but I'd nothing to do with it. But I

did tell them: "Don't you ever hire an assistant administrator until

you've hired back these people."I think that was a fair statement.

Cut

back on hospitals? Swallow those words. We've cut back on no hospitals.

There never has been a better hospital system than now. When the NDP

were in office they did not develop a single bed. They continued to

build the hospital at New Westminster, which we had started in our

previous administration. Not a single bed was added to their entire

regime.

We are building hospitals. We're doing today the St.

Paul's Hospital, Vancouver General and the Children's Hospital. We are

for people. But you people say that we're not for hospitals. What

trash! What rubbish!

DEPUTY SPEAKER: Order, please.

This is second reading of Bill 3, the Social Services Tax Amendment

Act. The debate would appear to be more in line with the estimates of

the minister. Perhaps you could find a way of getting it in order.

MR. MUSSALLEM: Thank you. I bow to your wishes, but I do not know of any other word for "rubbish" except "rubbish."

[ Page 102 ]

Have

we cut back on community services? I do not know the community services

in all British Columbia, but I know of them in my constituency. In my

constituency in Maple Ridge, Mission and Pitt Meadows they were

increased by more than 10 percent.

Why do we in this chamber

talk out of both sides of our mouths at the same time? Again, what a

great project; what a great thing the minister did with GAIN. The only

province that looks after its people is British Columbia. Yet we're

complaining about GAIN. This opposition should take note of what

they're doing. This opposition should say, "Yes, gentlemen, you have a

good bill, we support it," instead of talking out of both sides of

their mouth at the same time, especially by intelligent men. That's

what I can't understand. Let us get together and support good

legislation. Let us not talk just for the sake of talking.

MR. MACDONALD:

This bill is one of the budgetary measures brought in to accompany the

budget that the minister brought down last week, to reduce the sales

tax from 5 percent to 4 percent. It somehow makes the hon. members

think that perhaps it is an election budget. But the minister is

offering us a paradox today; and the member for Dewdney who's just

taken his place missed the whole point of what was said by the hon.

member for Nanaimo (Mr. Stupich). The paradox the minister offers us is

this: in 1976 he said that increasing the sales tax by 2 percentage

points would not depress the economy. In 1979, the same minister says

that reducing the sales tax by 1 percent will stimulate the economy.

wonder whether this is the kind of financial wizardry that we ought to

be expecting in the Minister of Finance. There's something wrong when

the minister offers us that kind of paradox.

The

Legislature wasn't called into session this year, Mr. Speaker, until

late in March, and then the first budget was introduced on April 2, and

the election was called on April 3 at 6 o'clock in the evening. The

minister then sent out instructions to all of the retailers and

businesses of the province of British Columbia that the sales tax

should be immediately reduced to 4 percent. He was acting contrary to

law.

Now I know this is a retroactive bill. Sometimes you do

have retroactive fiscal legislation, but it should be avoided wherever

possible and used only in extreme circumstances, and not for

circumstances where an election is to be called, not for circumstances

where the government, distrusting and almost having a contempt for

parliamentary procedures in this province, fails to call the

Legislature in January, the traditional month, when this bill could

have been introduced and passed so that there would be no reason for

the law to be broken over a period from April 2 to the time this bill

finally becomes law.

With this retroactive legislation,

purely for political purposes, the Minister of Finance has, for the

past two months, been engaged in illegal activity. He was enjoined by

the statutes of this province to collect 5 percent into the public

treasury. Instead of that, with no statutory authority whatsoever,

except when this bill is finally passed, he collected only the 4

percent. Now that's bad finance; it's bad for democracy.

HON. MR. WOLFE: How would you do it?

MR. MACDONALD:

I would do it by calling.... If you wanted to make this reduction

effective April 1, I would have called the Legislature well before that

period of time. I would have passed the legislation and had the budget

debated. I would not wrap up fiscal policy and bad law in terms of

political opportunities for the government when calling an election.

You know, I really think there has been contempt shown in this. Over

the last three or four years we have seen a contempt for the

parliamentary process and fiscal control in this province of British

Columbia. I say the traditional time to call parliament has got to be

long weeks, and maybe a month and a half, prior to the introduction of

the budget and the end of the fiscal year. So we have brought in this

section 4 with retroactive tax legislation to legalize what the

Minister of Finance has been doing illegally ever since April 2.

think this is supposed to be a government of businessmen, sound people

who took over from the previous administration, but when I look at the

kind of paradoxical arguments residing in that Minister of Finance, and

when I look at the increasing necessity for this government, this

makeshift-policy government, to fall back on retroactive tax

legislation, I say that there is harm being done to the democratic and

parliamentary process in the province of British Columbia.

MR. BRUMMET:

Mr. Speaker, I think you will recognize that being a new member I

am entirely confused at this point. I did hear the member for Nanaimo

(Mr. Stupich) get up and say this is a wonderful move, or words to that

effect, and that he can't speak against it, and then he spent

considerable time speaking against it, as I interpreted it. Or perhaps

he was not speaking against it, but I did hear another fine example of

statistical wizardry which left me thoroughly confused because he seems

to be able to pick little examples.... If it doesn't work out of this

budget or out of this bill, then, it seems to me, he takes previous

ones and creates some sort of an illusion that something is wrong

throughout.

We've seen any number of examples here in this

debate of taking an isolated example, and I suspect that their research

department, Mr. Speaker, must be very busy looking for isolated

examples. Then they take these isolated examples and try, by some sort

of illusion or statistical wizardry, to imply that this is some sort of

government policy or standard procedure.

I know I come

recently and, perhaps, am more familiar with the school system where,

time and again, one, two or very few pupils misbehaved or did something

wrong. Some critics would like to make that example into an issue by

saying that all teenagers are horrible monsters because of a couple.

Those are the kind of illusions that bothered me at that point and are

bothering me again here. As the member for Dewdney (Mr. Mussallem)

mentioned, we seem to have two points of view expressed at the same

time.

The second member for Vancouver East (Mr. Macdonald),

I believe, mentioned that the Minister of Finance had, in the budget of

1976, mentioned that the increase in tax won't depress the economy. We

have here a budget, and budgets over the last two or three years, that

absolutely prove that he was correct. It did not depress the economy.

It seemed to stimulate the economy so that surpluses were accumulated

through increased revenues; this government then was able to create

more services for people.

[ Page

103 ]

Somewhere, I am sure, in a province this large, Mr. Speaker, or an economy

this great, there must be some cutbacks somewhere. I know in the election campaign

it was interjected into our riding that there were cutbacks in hospital operations

and so on. I took the liberty of checking with the Fort St. John hospital administration

and found that there were no cutbacks. As a matter of fact the increase, I think,

was something in the nature of 47.8 percent in operating expenditures in three

years. Rather than looking at an isolated example, I checked with the Fort Nelson

situation, and there apparently were no cutbacks — many improvements, but no

cutbacks — and an increase in their operating costs of something in the neighbourhood

of 58 percent. So I am not quite sure where these figures on cutbacks come from.

I'd

also like to question the business of what is wrong with the financial

policies of this government. It seems to be implied by the opposition

that something was wrong in applying the principles of good management,

in getting onto a cash basis. To me, with my simple school arithmetic,

it used to work out to something like this: if you built a project for

$100 million, if you paid cash for it, you got the project for $100

million. But if you borrowed that money and amortized it over a period

of time, generally, with present interest rates, you paid back more

than double over a period of time, so the same facility then cost over

$200 million. Now I'm not an accountant, but my simple school

arithmetic used to tell me this, and I am not so sure that it works any

more after hearing some of the comments here.

So I think

that in any situation where debt becomes a problem, in any family

situation where they get themselves into a bad situation, either a

counselor or a social worker will approach them and suggest that they

tighten their belts, that they cut back somewhat, that they get on to a

cash basis, and that that will get them better results in the long run

and certainly improve their standard of living. Here we are being

counseled by the opposition not to apply these same principles of good

management to government.

However, not to prolong this, Mr.

Speaker, I think that the people will certainly recognize this illusion

that is being created. They will recognize the truth, and as they get

more benefits from good financial management, as they appreciate it....

And certainly anybody that I've talked to appreciated the cut from 5

percent to 4 percent. They did not like the 7 percent, but they know

that when an ill is there it takes surgery. So they did accept that,

and now they are very happy that the cure was that effective and is

continuing to be effective. So I'm certainly hoping that the people

will be able to tell the difference between good management and facts

as compared to illusions.

MR. COCKE: Mr. Speaker, I think I can do no better in describing the

former speaker's situation than he described it himself. He described himself

as entirely confused; he described himself twice as entirely confused. He should

know; he is an expert on that particular area. One area in which he isn't

an expert, Mr. Speaker, is obviously numbers. I don't know how a person

walks up the ladder — or climbs — to be a principal of a school and does not

understand that playing politics with a taxing process is not good business,

and therefore the opposition should bring out that particular argument. If the

member found some of his school students doing the same, I am sure that he would

resort to any kind of punishment that was at his disposal.

However,

this entirely confused member has come into the House, given us a

marvelous speech in terms of how we should be marching onward and

upward with these great financial wizards, these managers of our

economy who practically broke the province so that it would be

irreparable. Talk about stimulation, Mr. Speaker. The only thing

they've done is stimulate their own coffers. But they've wrecked the

economy of our province.

Furthermore that member was talking

about the borrowing of $100 million, and obviously he was referring to

the Minister of Health's (Hon. Mr. McClelland'

s) suggestion that there

was $100 million being spent a year on hospitals. And he said that he

would be reluctant to borrow that money. After all, you'd have to pay

$200 million back. Isn't that right, Mr. Member?

The fact is

that it is all borrowed money, every nickel of it, borrowed on behalf

of the government and on behalf of the municipalities that share the

loan and also share the repayment. So I guess, Mr. Speaker, the

Minister of Health is costing us a couple of hundred million dollars.

Will that member therefore rethink the party that he's joined?

MR. BRUMMET: No way.

MR. COCKE: Of course not. You're still entirely confused and I expect you will be three or four years from now.

would like to say to the member for Dewdney (Mr. Mussallem) that

hospital buildings are not the point that we're discussing here. We are

discussing the cutbacks in hospital services and the cutbacks in

community services. They're very real; and if they're not in his

constituency, they are in mine and virtually every other constituency

in the province.

MR. MITCHELL: I agree one hundred

percent with the member for Nanaimo (Mr. Stupich) in his intellectual

analysis of the budget. But there is one part of this budget that, when

I read it, turned me back to 1951. When I read

section 1(2) the ghost

of the man who was sitting beside me at that time, Mr. Tom Uphill,

literally jumped up in his seat and asked why we were continuing this

punitive action, something that went out in the days of prohibition,

why we still charge exorbitantly for liquor, and why we should still

have the enormous markup on liquor. Why do we continue this 7 percent

on the liquor industry today?

I say this: if you cannot see

your way clear to taking the 7 percent and putting liquor in the same

category as any other product, you can remember that beer is the

workingman's beverage. I ask you, Mr. Minister — through you, Mr.

Speaker — that at least we bring beer, the workingman's drink, down

into the same category as any other product we have in British Columbia.

can see no need for the continuation of it. I say, as a policeman, that

I realize the dangers and abuse of alcohol in the family, in the

community and in the driving public. But also, Mr. Speaker, I cannot

see how we can continue this attitude that liquor is something evil in

itself. It is the abuse of liquor. Let us recognize liquor for what it

is, not as something that we continue to gouge the public for, as

another method of increasing revenue. The markup by the Liquor Board,

as I said before, is enormous. And I ask you, Mr. Minister — through

you, Mr. Speaker — that that

section be taken out, and if not, that you

see your way clear

[ Page 104 ]

to removing the workingman's beverage — beer — from this section.

DEPUTY SPEAKER:

Just before recognizing the next member standing, I would like to point

out to the member that you may also wish to bring this up in committee

stage because the line of debate you followed is in order in committee

and I would allow it in the House in general.

MR. LEGGATT:

I would just like to briefly support the point that was made by the

member for Vancouver East (Mr. Macdonald) earlier concerning the effect

on the parliamentary process this procedure has had in announcing a

budget in the House, making it effective in terms of the amount that is

collected out there through all of the trades people and all of the

people paying sales tax in the hopes that that government might be

returned to make the legislation effective.

Now the point

the hon. member for Vancouver East was making and the one I wish to

support is that that's an extremely destructive process in terms of the

parliamentary tradition of most of the Legislatures in the Commonwealth.

Imagine

what the Minister of Finance would have said had the last Prime

Minister of Canada announced that all manufacturers' tax would be

eliminated in the event that the federal government was returned, and

said, "We'll make it effective as of today so you don't have to pay any

manufacturers' tax," and subsequently a different government was

elected, a Conservative government which said: "That is not our policy,

and therefore all of you people who failed to pay that tax during the

election period are now going to have to pay that tax." That would be

bad management, that would be chaos and that would be irresponsible,

and I think the Minister of Finance would have been one of the first to

say it was irresponsible.

Yet the principle, Mr. Speaker, is

exactly the same. It attempts to tie the hands completely of any

subsequent government and bribe the electorate, in effect, during that

campaign to give them a kind of no option. Now it seems to me that if

this government wants to continue to argue that it's the responsible,

efficient people who know how to run the affairs of this province,

they'd better have a look at what they did in this last election:

announcing a sales tax reduction which took the risk of being defeated

in a subsequent parliament and which would have left business in chaos

all over this province. No small businessman would have known where he

stood.

It seems to me that principle is one that, whichever

government runs this province in the future, they should re-examine as

a bad principle of government.

MR. SKELLY: I will be

very brief. I just would like to propose a few constructive comments to

the minister. I support in general, as well as the rest of my caucus,

the reduction in sales tax. We have suffered for too long under the

previous Social Credit government increases of up to 7 percent. This is

a welcome relief, although it brings the average sales tax over their

period of office down to a little more than 5 percent and possibly

closer to 6 percent. So it is, I would say, a move in the right

direction.

But I think it is open to criticism on a political basis because of the way

that the tax has been reduced. You increased it to 7, just obviously picking

a figure out of the air. You didn't have to justify it based on paying off

debts, because you created new debt-creating companies such as the B.C. Buildings

Corporation, which in the last two or three years has increased the debt guaranteed

by the province to something like an additional $161 million. You've been

creating debt at a greater rate than any previous government in the province.

So that increase in sales tax wasn't required to pay off any debts that

had been incurred under a previous government. It was simply to punish the people

in a political way for electing an NDP government between 1972 and 1975. We

feel that it is a justifiable criticism that lowering the sales tax to 4 percent

is done on a political basis as well in order to show or attempt to demonstrate

that you're better financial managers, which, of course, you aren't,

as Erma Morrison will point out to you if you ever read her statements.

But

I question — and I'm doing this in a constructive way, Mr. Minister —

why the government does not use taxes such as the sales tax to

influence policy directions and influence the direction of the economy

and the province. Now you do it in some ways. I welcome, in spite of

what the member for Dewdney (Mr. Mussallem) says, the deletion of tax

from vitamins, dietary supplements and diabetic and ostomy supplies. We

welcome that, and that is the way of influencing policy in the

direction that the government intends to go.

But I wonder

why there are no sales tax reductions or elimination altogether of

taxes on building materials in order to stimulate a sector of the

economy which has been suffering for the past two or three years under

Social Credit government. The real problem there is that building

permits are down, construction activity is down and a large part of the

construction labour force in the province of British Columbia is out of

work.

I'm wondering why the minister, instead of doing a

blanket reduction across the board, doesn't direct tax reductions in

order to accomplish certain desirable economic and social ends, such as

putting a construction work force to work in the province of British

Columbia by reducing taxation on building materials and building

supplies.

I was interested in an

article in the paper this

morning where Farmer Construction Co. was buying a firm in Seattle, and

in the reasons president Wayne Farmer gave to justify the purchase:

"President Wayne Farmer said his construction company wanted to expand

in a fast-growing economy, and that meant Alberta or Washington state.

The Seattle purchase was favoured because it was closer to Victoria."

The

implication in his statement is that our economy is not growing fast

enough to sustain the requirements of Farmer Construction Co., and the

unemployment in the construction labour force is another indicator of

that. So why did the minister not follow up on these problems and

create specific tax reductions which would have encouraged that sector

of the economy?

I've asked the minister before about

reducing sales tax on alternative energy systems such as solar systems,

solar panels, that type of thing, and also on energy-conservation

systems. Now the federal government has recognized the need to do this

and to encourage consumers of energy equipment and alternative energy

equipment to direct their expenses in ways that aren't as costly to the

government and to the public as the massive centralized Hydro type of

delivery of energy. Why has the minister chosen to reduce

[ Page

105 ]

sales tax in a general way, rather than to do it in specific ways which encourage

the development of the economy along the lines which reflect government policy

and also the needs of the province?

DEPUTY SPEAKER: The Minister of Finance closes the debate.

HON. MR. WOLFE:

As is the traditional case, we have here a bill that we can all agree

on. Nevertheless, we always find in agreeing with it exceptions made to

what the government has done in one area or another.

MR. SKELLY: Constructive.

HON. MR. WOLFE:

Not all constructive, Mr. Member. I think I could just cover two or

three of the points which have been raised. This is a bill which, after

all, is a constructive effort by the government to affect the most

number of people in British Columbia with a tax reduction — as I said

earlier, to pass on the benefits of what this administration has

attempted to do.

Two members across the way referred to the

fact that this legislation is retroactive, that it was injected

previous to election, that this was an abuse of the parliamentary

process. Let me just deal with those points. I'd ask any member to

refer to a previous tax change, either indirect sales tax federally or

sales tax provincially, which was not effective the night a budget was

introduced. In the history of British Columbia, I'm advised, this is

certainly the case. Would the members who criticized this advocate a

pre-announcement that a tax is going to be effectively reduced 30 days

from now, or 60 days from now'? I certainly wouldn't agree with such a

policy. It would throw your economy into complete disruption. You'd

have a tremendous escalation in one period of time and then a

depression following. So I don't agree with the suggestion that a

budget change of this nature should not be effective the night that

it's introduced.

Now suggestion two, Mr. Speaker. Criticism

was made about the fact that this budget change was made in advance of

an election. This throws the economy into disruption. They don't know

what's going to happen. What I say to this is that it makes clear what

this government's intentions are, given election. I think that's

putting our record and our policies out in front where they should be,

not held in abeyance until after. I think the mere fact that this point

has been raised, Mr. Speaker, raises the serious question: had the NDP

been returned to office as government in this province, would they have

increased this tax which we reduced on April 2? It sort of sounds to me

that they would have raised the tax. They show a lot of concern. They

are saying that if they had reached office, this would have been unfair

because they would have had to stay with it. So in any event, I think

we should ask ourselves that question. Would they have raised the tax

after an election period?

Now the member for Nanaimo (Mr. Stupich) went through his usual

litany of problems associated with sales tax. We didn't need to raise

the tax three years ago. Need I say more than the fact that we would

have had substantial debt? We estimate that had the tax increases not

been invoked at that period of time, the alternative was some direct

debt of over $1 billion. The opposition members laugh at this, They

seem to have a great appetite for debt. That's one of the basic

differences between our philosophy and theirs in terms of public

administration.

We're

not in favour of increasing public debt. There was no alternative to

those sales tax increases. They know, despite their prattling across

the way. that we would have had a direct debt of over $1 billion today

— not $261 million — had those tax increases, which were fundamentally

necessary, not been invoked.

He also referred to the

restrictions in our budget, accompanying the sales tax decrease, in the

areas of hospitals. If the member will examine the budget, the

estimates for the coming year, he will see that the appropriation for

hospitals, taking into consideration the $25 million allocated to

hospital stabilization of their budgets, increases the amount allocated

to hospitals by 11 percent, a substantial increase over previous

periods of time in terms of the money which is being allocated to

hospitals. So although we are making substantial tax cuts, this has

been done also with due attention to the social service needs, with

special attention to health.

I think he also referred to the

fact we had not indicated whether such a tax decrease from 5 percent to

4 percent was permanent. I refer the member once again to the budget

speech, on page 46, where clearly we indicate that this tax change is

permanent.

The member for Nanaimo seems to complain about

the fact that there are indicated over expenditure. but in the

ten-month report he read off a list of ministries which were

underspent. I wish he would make up his mind. He doesn't seem to like

overruns or over expenditure — they invented the word — yet he

complains about under-expenditures in certain ministries. We don't

believe in spending money where it's not fundamentally required. In

terms of the Health ministry, which is one of those he mentioned, I

think you'll find that the expenditures in that ministry, come the end

of the 12-month period, will be at least equal to the original budgeted

amount.

I said earlier this is a bill on which we'll all

agree, I'm sure. I don't think much more needs to be added, except to

say that this is the most direct way, in sales tax, whereby we can pass

on the benefits to every person in this province. Therefore I'm happy

to move second reading of Bill 3.

[Mr. Speaker in the chair.]

Motion approved unanimously on a division.

Bill

3, Social Services Tax Amendment Act, 1979, read a second time and

referred to a Committee of the Whole House for consideration at the

next sitting of the House after today.

HON. MR. GARDOM: Second reading of Bill 4, Mr. Speaker.

INCOME TAX AMENDMENT ACT, 1979

HON. MR. WOLFF:

Hon. members will recall that. as announced in my budget speech, there

are a number of important changes proposed to the Income Tax Act this

year. The first such change is the proposal to reduce the rate of

personal income tax from 46 to 44 percent effective July 1, 1979. Hon.

members will note the change in the legislation is to a rate of 45

percent for the full 1979 year,

[ Page 106 ]

which

is equivalent to a rate of 44 percent for one half the year. The change

in rate is expressed as an applicable annual rate, as required by the

tax collection agreement covering the collection of the provincial

income tax by the federal government. The proposed 44 percent British

Columbia rate means that the province will have the second lowest

personal income tax rate in Canada. It will mean a tax saving for all

British Columbians who pay personal income tax.

The second

change is to the annual allowable renter's tax credit effective January

1, 1979. In the past this tax credit was $100 for renters with no

taxable income, and $100 less percent of their taxable income for those

with taxable incomes up to $10,000. It is proposed to increase the

amount of the credit by $50 to $150 and to increase the 1 percent to

1.5 percent, so that renters with no taxable income will receive a $150

tax credit, and those with taxable incomes up to $10,000 will receive

$150 less 1.5 percent of their taxable income.

Mr. Speaker,

in addition to the sharing of the present dividend tax credit with the

federal government, the third change is the proposed 5 percent dividend

tax credit for British Columbians receiving dividends from any public

corporation whose head office and central management are located in the

province. This measure will encourage investment in such British

Columbia companies and thereby encourage companies to locate and stay

in the province. This amendment is to be effective on proclamation, as

it requires federal agreement to administer.

The fourth

change will allow an income tax credit for contributions to candidates

and recognized political parties in the provincial field. The

provisions for the proposed credit are similar to those of the federal

government and the provinces of Alberta and Ontario. The credit

available from April 2, 1979, will be 75 percent of the amount donated

up to $100; then, if the amount donated exceeds $100, $75 plus 50

percent of the amount donated exceeding $100 up to $550; and if the

amount donated exceeds $550, $300 plus 33-1/3 percent of the amount

donated exceeding $550 to a maximum credit available of $500. To obtain

the tax credit it will be necessary for the contribution to have been

by cash, or a negotiable instrument such as a cheque. The contributor

must file a receipt for the contribution with his income tax return.

The receipt will be required to have been issued by an official of a

recognized political party, or by the agent of a candidate. It must be

numbered to show the name of the party or candidate, the date of issue,

the name of the person making the contribution, the amount of the

contribution and the signature of an official of the recognized

political party or agent of the candidate.

The fifth change

to be effective January 1, 1979, will reduce substantially the income

tax payable for an estimated 65,000 individuals whose income is just

over $1,715, the present exemption for taxable incomes. Where the

taxable income of an individual does not exceed $2,730 for the 1979

taxation year, or an amount prescribed for a subsequent year, the tax

payable by an individual shall not exceed the tax payable under the

federal Act. In 1979 taxable incomes up to $1,770 will pay no tax.

Using the 1978 tax rates for incomes between $1,770 and $2,730 the

amendment will mean an individual with $1,775 taxable income will pay

$10 instead of the $96.70 now payable; $2,045 taxable income will pay

$56 instead of $117.80 now payable, and $2,445 taxable income will pay

$124 instead of $149.10 now payable.

The cost of these

proposed amendments is estimated to be $65.5 million. In addition,

there are five minor amendments requested by the federal government.

These are proposed as it is a condition of the agreement under which

the federal government administers our Income Tax Act that the regular

provisions of our Act be compatible with theirs. The first federally

requested amendment deletes the exclusion of the Northwest Territories

from the definition of "province." This is necessary as the Northwest

Territories now imposes its own income tax and so is in the same

position and will be accorded the same treatment under the Income Tax

Act as other provinces which levy an income tax.

The second

federally requested amendment amends the

section on foreign tax credit

allowed. This is to ensure the credit is not inappropriately increased

due to its base being incorrectly affected by the 1978 federal sales

tax reduction program.

The third amendment requested by the

federal government ensures that the same foreign non-business income

tax deduction allowed individuals also applies to corporations.

These first three federally requested changes have effect from January 1, 1978.

The

fourth federally requested amendment aligns the provincial Income Tax

Act with a change made to the federal Act. This adds payments from

registered retirement income funds to the list of kinds of income from

which the payer shall deduct and remit tax. This amendment is to be

effective from June 30, 1978.

The last amendment requested

by the federal government changes the present requirement that an

official of Revenue Canada swearing an affidavit regarding a notice

being sent for information has charge of the appropriate records. This

change is needed as regional taxation centres are being set up, and the

records will be there rather than at the district offices where the

information requests are being sworn. This amendment is to have effect

from January 1, 1979.

Mr. Speaker, I move second reading.

MR. STUPICH:

Mr. Speaker, although it's second reading, the minister has gone

through the bill

section by section, and it would be very difficult to

deal with it otherwise, due to the nature of the bill. It's a tax

reduction — and really, in general that's all you can say without being

specific — and therefore everybody should support tax reduction, which

is returning to the people some of the additional taxes that this

government levied against them in 1976.

I'll work backwards

through it, since the minister worked forward, not dealing with the

sections from

section 6 to

section 9 inclusive. There can be little

argument about those.

The hon. member for Skeena (Mr.

Howard) is in his seat, and I think I'll leave a discussion of the

general principles of this legislation, as they refer to

section 5, to

that particular member.

Although, as I said, we support the

general principle of reducing taxes, when we realize that this bill, as

the minister has said, is going to cost the treasury something like

$68.5 million and start to think for a moment just what that might have

done for hospital care, what it might have

[ Page 107 ]

done

for the elderly citizens in the province and what it might have done

for the Pharmacare program, what it might even have done for

reforestation.... With some of those things, one wonders at the

specific changes that are being recommended.

For example,

Mr. Speaker,

section 4 talks about the dividend tax credit. There

already is a dividend tax credit federally. This brings in another

credit to those who earn the money, not by the sweat of their brow or

any other productive way, but rather by simply sitting back and

receiving return from investment. Yet they are getting special

treatment. It would seem to me that it should be the other way around,

if anything. If anybody is going to get special treatment it should be

those who work for their money, rather than those who simply sit back

and collect it. So I can't, myself, agree with

section 4. That would

give special treatment to those who already have special treatment.

Section

3 is returning to the low-income people, in particular, more of the

money that this government has taken away from them, and there can be

little argument about that, although there is some question about the

calculations. I think I heard the minister say that this would provide

that a person who has a taxable income of $10,000 would take 1.5

percent of $150 and would get the balance as a credit. As I work it

out, Mr. Speaker, that works out to exactly nil. I'm not sure what he

was doing with that particular calculation. He's right: $150 minus 1.5

percent of $10,000 is nil.

HON. MR. WOLFE: That's right.

MR. STUPICH: So that's the credit he gets. Now why he threw that in I don't know.

HON. MR. WOLFE: Just to explain it.

MR. STUPICH:

section 2 we have the reduction in the personal income tax again. It

was this particular administration that in 1976 increased the personal

income tax by 2 points. They are now proposing to reduce it. I could

make the same arguments that I did in 1976 against the increase in the

income tax at that particular point in time. I think there is one other

argument that I could make in this respect, and that is that while it

is going to help the low-income people, because they are getting their

reduction of 2 points in their income tax, the people who don't really

need that kind of help at this time when our hospitals are suffering

due to lack of funds will get that same kind of assistance. On those

grounds I find it very difficult to support this particular tax

reduction.

I would far rather, Mr. Speaker, that the

government had done something such as was done in the province of

Saskatchewan by the NDP administration, and in the province of Manitoba

by the NDP administration: reduced the tax for the low-income earners

and increased income tax for the high-income earners. That would have

leveled things out, and that is the principle that I would like to have

seen if you were making changes in the personal rate of income tax.

However,

Mr. Speaker, as I've said, it's tax reduction it's returning to people

some of the money that this government has taken away from them. We

will support it.

MR. HOWARD: Mr. Speaker, one of the

principal points in the bill that I would like to mention and refer to

in some detail is the 5 percent proposal for a credit on tax payable

from income received as dividends from companies whose head office and

central management is in the province. In order to understand what the

implication of this is, I need to make some reference to the federal

dividend tax credit system that is in existence now and has been in

existence for quite a long period of time, except with respect to a

percentage change of it. At the moment, under the federal Income Tax

Act — I am sure many hon. members know this, having worked out their

own income tax returns or having included such income in their tax

returns — a person is required to elevate his or her dividend income by

50 percent and include that elevated amount, or 150 percent of the

amount of the dividend income, as income under the federal tax law. In

other words, if a person had, say, $100 of dividend income, they'd

increase that by 50 percent and include $150 in the income for tax

purposes. Then, on the other side of the ledger, when it comes time to

take the dividend tax credit, they are allowed to deduct 25 percent of

the $150 which they declares income from their tax payable. The example

$100 grossing it up to $150 for income purposes, reducing the tax by 25

percent of the $150, means that the person deducts from their tax

$37.50 on the credit side when filling out the income tax form.

we take an example in this particular year of somebody in the position

of having $21,000 or $12,000 of taxable income means, then that person,

if they had $100 in income from dividends, would pay a combined federal

and provincial tax of something in the neighbourhood of $6.50 on $100

of actual income, which is a 6 percent tax load, compared with the

normal taxation level of somebody in a $22,000 bracket of a combined

position of about 40 percent. Instead of paying 40 percent tax on

income received from dividends, the individual pays a 6 percent tax as

a result of the federal dividend tax credit.

If we now take

what I think to be the force of this bill, a person is now proposed to

be able to take a 5 percent credit towards provincial tax payable, if I

understand what the bill says. The minister nods, indicating that

that's accurate. That being the case, taking the $150 position again as

the grossed-up amount the person has to put in his income, it gives him

an additional credit of $7.50 at the provincial level, or 5 percent of

$150. He was already required to pay only 6.5 percent or $6.50 or

thereabouts on the $100 income to start with. Now he's going to get a 5

percent provincial credit on top of that, which is $7.50, and the

province is now going to pay him a little bit extra in addition to the

$100 he received in dividends. He pays no tax on it, and under this

proposal he gets a handout in addition to that. That's the force of

what this particular proposal is all about.

Under the

federal structure, for that amount of taxable income up to $18,000 a

year, the dividend tax credit at the federal level is at the break-even

point. In other words, basically speaking, no matter what amount of

dividends the individual receives, he gets to keep 100 percent of it:

no tax whatever up to the $18,000 level. Now they are going to add a 5

percent credit on top of that, meaning that the people in B.C. are

going to dig into their pockets and provide these people who have

dividend income with a credit, with a bonus. I think that is not a very

sensible way to approach it.

[ Page 108 ]

The

minister has indicated that this proposal of the 5 percent tax credit

will help investment in B.C., as I understood him to say. It will

attract people to invest money in British Columbia. The force of what

he is saying is that people will put money into British Columbia, and

that will help to develop companies. It will provide them with equity

to expand their operation or get started in business, and so on. I

think that is patently misleading.

The attraction here is to

invest money in companies that are already paying dividends, but

companies that are already paying dividends are companies that are well

established and have an earning and income record, not new companies

being started, not the so-called risk ventures, not the so-called

mining companies that are out to float loans or to receive equity money

to develop a mining property. They don't pay dividends. There is no

attraction in this for people to invest money in those ventures. There

is only an attraction to put money into things like B.C. Telephone that

are already in existence. There's no attraction under this to put money

into things like the B.C. Resources Investment Corporation, which is

not paying a dividend and which doesn't plan to pay a dividend until

somewhat close to the next provincial election, so that that can be

dragged out as being an asset on the ledger side of things as far as

the government is concerned.

I think it's patently

misleading for the minister to leave the impression that by having this

tax credit here it will help investment in B.C. It may help and it may

attract people to go to the stock market and buy shares of companies

that are already paying dividends, but that doesn't add anything at all

to the companies' cash flow themselves.

It's merely a

transaction in shares that already are out there on the market, and the

money just changes hands between two other individuals and has nothing

whatever to do with the particular company itself.

The

minister also said the other reason was that this will help companies

to locate in B.C., as I understood what he said. If that is so, why is

it so? Why would a company want to locate in British Columbia? Because

the shareholders of that company are to receive a 5 percent credit

against their provincial tax payable. There is no attraction to the

company on the surface of it, except what it will do — and I think this

is probably what was in the back of the minister's mind. What it will

do is permit the taxpayers in British Columbia to subsidize

corporations, because corporations within which people will be

attracted to invest money won't have to pay out so much in dividends.

Why? Because the individual will get a tax credit. What he doesn't get

in dividends he might reasonably expect to earn from a company; he'll

get it as a gift from the taxpayers. He's going to get $7.50 on top of

the $100 he's already going to get tax-free. The people of B.C. are

going to dig into their pockets on this 5 percent credit on a $100

dividend and give him another $7.50. A company that will look at that

and say: "Why should we have to pay out extra dividends to our

shareholders when they're going to get the dividends by way of a tax

credit?" If what the minister means by attracting companies to locate

in B.C. is that taxpayers here are going to give them a subsidy to

locate here so that they can keep more retained earnings in their

pockets and not pay them out in dividends, then I think that's a pretty

poor way to go about it. I doubt very much that I could find any

element of support for the dividend tax credit that's available here.

It means nothing further than a subsidy from one group of taxpayers in

British Columbia, namely those in the lower income brackets who don't

have the money to invest in shares, who don't have the funds to invest

in corporations, and who don't have the money to buy shares in order to

earn dividends. It will be a subsidy from a group who can least afford

it to a group who can afford it.

For a long time I've tried

to understand Social Credit monetary theory and perhaps this is the

best explanation we've had of it so far. But on that basis alone, I

couldn't myself give any endorsement to that particular provision. When

it gets into committee perhaps we can deal with it in a bit more

detail, and perhaps the minister will have an opportunity to show where

the reasoning behind this is really correct.

There's another

feature about it, and without transgressing the rules I would point out

that even if it does become law it all rests on what a particular

section of the federal Income Tax Act says. I think that's poor

legislating. I think it's a rather loose way to draft legislation to

say that this provincial Legislature is going to pass a law which

depends on the vagaries of what the federal parliament may do with

respect to the Income Tax Act. If you're going to do something, do it

directly. Don't hinge it upon what may or may not be in a particular

section of the federal Income Tax Act at any given time in the future.

also want to object very briefly to the provisions of the bill that

relate to a tax credit provision for contributions to candidates and

political parties, not on the basis that we are opposed to that

concept, because even though Social Credit had no direct members in the

Parliament of Canada when the federal legislation was passed, we all

know that it did pass unanimously, and it's in place at the federal

level. But the reason for objecting to it in this fashion is that this

is piecemeal and touches upon only one aspect of election expenses,

touches upon only one part of the whole question of funding political

parties and candidates. The minister would be well advised to leave out

that

section 5, have the Legislature appoint or refer to one of our

committees the whole subject matter of election expenses and come back

with a proposal that will encompass the broad range of electoral reform

at the financial level, including such things as a full disclosure, as

is required in other jurisdictions.

There should be a full

disclosure of sources of income, a limitation upon the amount of money

that can be expended in the conduct of an election in order to put some

sense and some balance in place with respect to the quantity and the

intensity of propagandizing that goes on. It would also save candidates

— and I'm sure there are some of them on the opposite side as well who

have difficulty from time to time wondering about whether or not

they're going to have enough money to get through the election

campaign. To include within an all-embracing piece of legislation that

question of a limitation of expenditures, such as takes place in other

jurisdictions, works wonders to preserve and to develop the concept of

democracy at election time.

We should include within such a

piece of legislation the aspect — because there is a limitation of

expenditures — of having the public purse assist in the financing of

electoral campaigns, in order to place an equitability in it, because

we know — and I'm sure the general public does — that at election time

the most insidious aspect of electoral campaigning is funds that are

contributed which, are not disclosed. We know that one who has a secret

source of income — and it's secret now because it's not required to be

[ Page 109 ]

disclosed

under our electoral law — is more likely to be beholden to that source

of funds than is otherwise the case. And I know that many hon. members

in their purity will say: "Oh, no, that doesn't apply to me; I don't

know where my money comes from" — or whatever their excuse is. But we

know in our hearts that where your treasure lies, there lies your heart

also. And the necessity of having a full range of disclosure of source

of income, a limitation upon expenditures, assistance toward the cost

of election campaigns from public funds, as is done in other

jurisdictions, and a full range of developing law on that kind of basis

is more appropriate to what we should be trying to do in this province

than this simple piece of legislation here.

As much as we

endorse the concept of what's contained within a tax credit for

contributions to political parties, as much as that is a valuable

factor, so long as the other parts of that package are left in abeyance

and are not dealt with, then this Legislature should not pass this

particular piece. It should be a whole package, and the only way to

accomplish that, I submit, is to refer the subject matter — or a

drafted piece of legislation, if you so desire — to a committee of the

House representing all parties and all interests and people in this

province so we can come back into the Legislature at a subsequent

session with something decent and something honourable, not piecemeal.

MR. STRACHAN:

Mr. Speaker, the member for Nanaimo (Mr. Stupich) once again endorsed

the bill, endorsed our policy and once again — with the repetition

we've been hearing for the past couple of sessions — presented the same

old argument with respect to services. Interestingly one of the items

was reforestation. With the greatest sincerity, respect and empathy, I

would suggest once again a trip to the ophthalmologist. We have, in

fact, presented in our budget quite a handsome item with respect to

reforestation.

Again we hear the item about the school

budgets being slashed. Mr. Speaker, I would humbly submit to the member

for Nanaimo that he in fact read the Public Schools Act; it's obvious

to me that he has not. It would take an amendment to the Public Schools

Act to change any process of school board budgeting. Local school

boards — the locally elected people of any school district — do in fact

set their own budget. And I would submit to you, sir, and to the hon.

member for Nanaimo that some knowledge of the Public Schools Act would

enlighten him in that area.

The member for Nanaimo, Mr.

Speaker, spoke to the fact that this bill does not in fact do that much

for the poor. I would submit again, and particularly to someone who is

supposedly credentialed in the field of accounting, that any bill that

is based on a percentage of your income does. In fact, tax the

wealthier people more highly than the poorer people, because that's the

way percentages work.

This bill speaks very well for B.C.;

it speaks very well for the development that we're trying to encourage

in this wonderful province. I was amazed when I heard the member for

Skeena (Mr. Howard), an area that is quite dependent upon equity

capital investment in the mining industry — there has been much money

invested in that area to the benefit of his constituents — speak

against that. I wonder if the constituents in Skeena are aware of his

feeling that we should not, in fact, encourage investment, particularly

in the resource area of his constituency.

The member for

Skeena, sir, would seem to have little faith in investment capital.

People will invest in new companies, and that's been demonstrated time

and time again to many of us living in the north. I found it hard to

accept the fact that this would not encourage location in B.C.

Obviously, Mr. Speaker. any bill such as that which does, in fact,

encourage the growth of British Columbia companies is going to

encourage other companies to invest in our great province.

With

respect to the comments made on the election portion of this bill, the

member spoke of ''insidious forms and secret sources of money" for

elections. I'm sure he knows more about these insidious forms and

secret sources than I do, because I'm not aware of any of them. If he

is, then I would question how he found out about these. I personally

did not have any advantage of secret sources or insidious forms of help

from anybody. I also didn't have the advantage of the B.C. Federation

of Labour or the BCTF campaigning on my behalf.

MR. LEVI:

I just wanted to say a couple of things in respect to what the previous

member has stated, Mr. Speaker, on the issue of secret campaign funds.

He puts a lot of emphasis on the word "secret." We don't really have in

this country, to any great extent, the kind of disclosure that is

needed to understand where funds come from.

I would tell the

member, Mr. Speaker, that last year I raised in this House a matter

which dealt with the disbursement of money by a very large company in

this province, MacMillan Bloedel, who were forced to disclose, under

the provisions of the Securities Exchange Commission in the United

States, because they were seeking to raise, funds there, that they in

fact paid out $3.5 million — this is an admission which is now

contained in their form 10K declaration — in unauthorized payments to

what is referred to as "offshore countries." They were quick to say in

their press release that this wasn't done in Canada.

I think

it should be understood that there are a number of things which take

place with very large companies in respect to making money available in

unauthorized ways. The member should be aware that in the United States

there are, every day, charges being laid, court cases being carried on,

where bribes and unauthorized payments.... I think one has to say that

to refer to them as "unauthorized payments" is somewhat of a pleasant

euphemism for bribes.

It is the practice of large

corporations to do this. It has been for some time. It has been the

practice of large corporations, and even some small corporations, to

make money available in elections. There is now provision in the

federal legislation that this kind of information has to be revealed.

we are going to have, in fact, a retroactive fulfillment of a campaign

promise that you can get similar financial benefits if you make

political contributions, as is now available to those political parties

that qualify under the federal Act, as is envisioned in this Act, then

we must be very frank with the people of this province and talk very

seriously about the issues of disclosure. The history of this province

in the time I have been in the House.... And many other members, going

up to 20 years, can recall the debate with the Social Credit government

in the Al Williamson case, and where did the money come from, and Einar

Gunderson's secret funds.

[ Page 110 ]

would remind our friends across the way who are new — and I'm very

impressed with some of them — that I think that what's important is

that they should go to the library and get out some of the books that

are available. We have all too few books on the history of politics in

British Columbia, but go get, by all means, Paddy Sherman's book. It's

called Bennett . You can get Dr. Pat's book, Politics in Paradise .

Parenthetically one could say that it's not quite the same paradise he

had in mind. And you could get other books which do make mention of the

fact that for years it has been the practice, unfortunately, in this

province for secret arrangements to be made for campaign contributions.

It's long overdue, Mr. Speaker, in this province that we have full

disclosure in an open and frank way.

Just in closing, to the

previous member who spoke, this party has been on record for many years

that we are quite prepared to make our books in our party available for

public scrutiny if the government is prepared to do the same thing.

That has been on the record for a number of years, and we have yet to

get some agreement about this.

There is the member for North

Okanagan (Mrs. Jordan), who has sat in this House for 113 years, and

she knows what I am talking about. She knows what I am talking about

when we talk about unauthorized payments and secret payments. So it is

only my intent, Mr. Speaker, to get up this afternoon to disabuse the

member for Prince George South that all is not pleasant in British

Columbia when it comes to the problem of where the campaign funds come

from.

There are some very serious questions to be asked. If

that minister wants to be forthright and frank with the public, he

would do something about the question of full disclosure — not just a

rather cynical attempt to fulfill a political promise.

MR. SPEAKER: The minister closes the debate.

HON. MR. WOLFE:

Mr. Speaker, the last member who spoke can't resist trotting out the

old red herrings and allegations and suspicions of what goes on. I

would suggest that what he refers to as a political promise, and he

well knows it, was of benefit to all political candidates who ran in

this province, and probably more so to the opposition candidates who

ran than with to the government. I think they should stand up and thank

this government for introducing such an amendment as this. I think this

is clearly indicated with the type of campaign we saw them run in the

recent election. There was far more advertising than we ever saw the

NDP run in previous history, Mr. Speaker. Furthermore, despite all of

these allegations being made, which is typical of the members opposite,

I want to remind them that we have a commission report which has been

tabled in this House which deals with a great many of these matters. We

are simply moving very expeditiously to provide an opportunity for some

tax benefit in terms of the very expensive matter of running political

campaigns. So we shall just ignore what the member said, because we are

so used to it.

I know that we will deal more in detail with

some of these sections in committee, but I respect the comments of the

member for Skeena (Mr. Howard), who has done a lot of study of the

matter of dividend tax credit. I welcome his observations there. I

didn't follow some of them, but I am prepared to certainly look at

them. I just want to remind him of two or three things. The 5 percent

dividend tax credit, he intimates, would not be attractive to new

enterprise. It would only be of benefit to a person who would invest in

B.C. Telephone or long-standing existing public corporations. I would

disagree with this. I think it would have equal incentive to enterprise

locating in British Columbia. We are trying to get away from the

branch-plant economy, the concentration of such industrial power in

other parts of this country, and that has been the accent of this

government in national meetings of several descriptions. So I think

that to all types of enterprises this incentive should encourage

dividend payment, should encourage an accent on dividend payments

within the province. After all, our Premier has stated on several

occasions that there is too much of a concentration, not on invested

capital investment, but on loan capital. We are trying to attract more

interest in individuals in this province investing, by way of equity,

which is demonstrated by the resource corporation enterprise, and so

on. So I think that I would disagree with your concern there. This

would in fact encourage dividend payments within the province. I might

say that the very same amendment that we have introduced here in terms

of the dividend tax credit has been also introduced in the province of

Quebec in their last budget.

You would ask why companies

would locate in British Columbia. Why would they have any incentive to

locate in British Columbia resulting from this? Well, the mere fact

that there is an incentive for them to pay dividends in this province

should increase the value of their shares. This is of interest to any

enterprise to locate where their enterprise becomes more valuable.

You

were concerned, I think, about the fact that we depend on federal

legislation and the federal government cooperating in such a venture. I

think it is obvious that it requires agreement under the tax collection

agreement, which has been the avenue used on many previous occasions

for provincial ventures. I say that we must use, as we do now, their

collective tax form to incorporate the tax deduction on the face of it.

It is quite a common procedure to introduce a measure of this kind,

subject to that agreement being consummate. I can say that they have

some concern over it in terms of the provincial aspects of it, and we

are still under negotiations on that matter.

Aside from one

or two detailed amendments to this bill, I think there is basic support

for the reduction in this rate as evidenced in this bill. As I have

said in the previous legislation covering the sales tax regulation,

this has been made possible by the fact that we have been able to

provide responsible management to public funds in this province.

Therefore I'm very happy to move second reading.

Motion approved unanimously on a division.

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

Bill

4, Income Tax Amendment Act, 1979, read a second time and referred to a

Committee of the Whole House for consideration at the next sitting of

the House after today.

HON. MR. GARDOM: Second reading of Bill 5, Corporation Capital Tax Amendment Act, 1979.

[ Page

111 ]

CORPORATION CAPITAL TAX

AMENDMENT ACT, 1979

HON. MR. WOLFE: The government

fully recognizes the benefits to the province from the existence of

small business. Our policy, therefore, is to encourage such business so

that they are able to provide these benefits. In line with this policy,

the exemption last year below which companies pay no tax was raised

from $100,000 to $500,000.

This year it is proposed to raise

the $500,000 exemption to $1 million. The notch provision, which

applied to companies whose capital was between $500,000 and $600,000,

is to be raised to between $1 million and $1,250,000. This proposed

scale will mean, for example, tax of $197.50 for companies with

$1,010,000 taxable capital. The tax will rise about $240 for each

additional $25,000 taxable capital to $2,356 for companies with

$1,240,000 taxable capital.

The increased exemption and

notch provision is estimated to cost $4 million for a full year. It

will be effective April 1, 1979. This new exemption will mean an

additional 300 companies will not be liable to the tax.

Mr. Speaker, I am happy to move second reading of Bill 5.

MR. STUPICH:

Mr. Speaker, once again it's a tax reduction and we're going to support

it — but with this word of advice, maybe. We're asking the minister,

now that the election is over and there is no need to come up with

hasty legislation in an attempt to win votes, if he would have his

department analyze and look into the definition of taxable capital.

It's

unfortunate that included in capital right now is a lot of financing

that really isn't part of capital. I look on capital as being the

shareholder equity part of the balance sheet and, perhaps, even some

long-term financing. But there is some really short-term financing that

is now included in the definition of capital and is taxed. I would

think that, rather than having exemptions across the board, we should

start looking at the definition of taxable capital and make some

changes there that would also benefit, in particular, small industries

or small corporations, and not have any particular effect on the large

businesses.

It's legislation that has been amended with

almost monotonous regularity, and yet each time that we increase the

exemption we're fortunate that more money comes in. So it's a good kind

of legislation — you can keep on reducing it and still generate more

money as time goes on. But I would like the minister to undertake to

look into the possibility of changing the definition of taxable capital.

HON. MR. WOLFE:

The member for Nanaimo raised a point about the definition of taxable

capital. I can only say this to that question, as this is a matter

which receives a lot of comment and attention by people who are

involved and have to pay this tax: it is a sizeable consideration in

terms of the basis of computing the assessment for capital. Our present

estimated revenue from this tax in the coming year is some $42 million.

Were we to exempt capital based on inventories on which there was

short-term borrowing, it would probably affect that revenue by about 50

percent.

I quite recognize the point you have made; we are looking at it. In this bill

we have made a substantial ill decrease in the impact of this tax on 300 small

companies, which is, we feel, the important area to draw attention to. This

makes 16,000 companies in the last year and a half.

might also point out — and the member is aware of it, Mr. Speaker —

that the former government, meaning the NDP government, introduced the

bill which incorporated this method of assessing capital, including

inventories taxable, and in effect taxed small business as well.

What

we have proposed today, Mr. Speaker, with the introduction of this

further amendment is largely a tax on larger business. Once again I

move second reading of Bill 5.

Motion approved unanimously on a division.

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

Bill

5, Corporation Capital Tax Amendment Act, 1979, read a second time and

referred to a Committee of the Whole House for consideration at the

next sitting of the House after today.

HON. MR. GARDOM: Second reading of Bill 6, Mr. Speaker.

PARI MUTUAL BETTING TAX

AMENDMENT ACT, 1979

HON. MR. WOLFE: Hon. members are

aware that the tax reductions and revenue measures proposed in my

budget for the 1979-80 year were those which would be the most helpful

to the British Columbia economy. Last year the parimutual betting tax

for provincial revenue purposes was reduced one-half of 1 percent,

which will be used to provide a breeders' incentive fund to improve the

quality of horses being raced. This will improve the quality of racing

itself, but it is not accomplished in only a one-year period. The

industry is having a difficult time and does employ a large number of

people in the province.

Therefore in accordance with a

policy stated in the budget speech, and to encourage this industry, a

further reduction in the rate of tax is proposed. This would reduce the

tax for provincial revenue purposes from the present rate of 6.5

percent to 5.5 percent. This change will mean that persons betting at

the tracks who pick the winning horses will receive larger winnings.

This is because the total amount of the bets to be distributed to the

winners will be reduced by only 5.5 percent tax, not 6.5 percent as in

the past. The rate change will result in an annual loss of revenue to

the government of an estimated $1.3 million. The proposed amendment is

to be effective from midnight April 2, 1979.

Mr. Speaker, I move second reading.

MRS. WALLACE:

I'm somewhat surprised to hear the minister's remarks as he introduces

this particular bill. I can't really believe that he lacks the

knowledge, as is apparently the case, about what has been happening

with parimutual betting. For example, he has said, and the budget says,

that this is the second decrease. He has led us to believe that this is

the second time that the total tax has been reduced. That is just not

true. This bill will be the first time since 1971 or 1972 that the

total take out has been

[ Page 112 ]

reduced.

It will not be legally effective until this bill is passed, even though

we are again involved in retroactive legislation.

[Mr. Rogers in the chair.]

think the minister should be very relieved to learn that we in the

opposition are going to support this. I hate to think what would happen

should the bill be defeated after that reduction having been made since

April 2.

The statement that this is going to result in a

reduction in income to the government again indicates the minister's

lack of knowledge. Certainly in every other jurisdiction where the

total take out has been reduced and the purses have been increased, and

certainly in 1972 when that happened here in British Columbia, the

increases were in fact phenomenal.

In 1972 we reduced the

tax rate here in British Columbia. In that year alone, the average

handle increased by 38.7 percent, the attendance increased by 24.3

percent; after three years the daily average handle had increased 116

percent and the attendance 38 percent. Certainly to get up and indicate

that this particular bill is going to reduce income shows me that the

minister is not familiar with the particular piece of legislation he's

dealing with.

I would also like to point out to you that

what the minister has said today is incorporated in the budget speech

and is quite evidently an incorrect statement. To say, in the first

place, that this is the second reduction.... It is not the second

reduction; this is the first.

HON. MR. WOLFE: It is so.

MRS. WALLACE:

No, Mr. Minister. What you did last time was to return to the horse

breeder a portion of what the province was taking out already. It did

not reduce the tax. This is the first reduction in the tax. To say in

the budget that it reduced the tax is incorrect.

The other

statement in the budget indicates that this makes British Columbia's

parimutual rate the second lowest in Canada. That too is not true. In

the Maritimes the rate is 3.5 percent to 4.25 percent; in Manitoba it's

5 percent; in Saskatchewan there is none; and in Alberta it's 2.5

percent. Certainly it would appear that the statement that we're the

second lowest province is also somewhat misleading, to say the least.

I'm

concerned that the government has come part way in bringing into effect

a program that has been requested for years and years by the horse

breeders, the Jockey Club, the race track association, and many of the

people interested in thoroughbred racing. The government has failed to

see that the whole package that that industry was requesting was the

package that was required to make this thing viable — both from the

point of view of the racing industry and from the point of view of

returns to the province — because halfway measures are not going to

accomplish that.

While this is some step in the right

direction and for that reason we are prepared to support it — it

certainly isn't a sufficient move that will provide the complete kind

of benefits that should be going to the racing industry and that would

provide for an ample return to the province as a result of that change.

And that, I think, is historically proven in every jurisdiction where

they have taken steps to reduce the take and where they have allowed

Sunday racing, which was something else that the people involved in the

racing industry were asking for.

HON. MR. WOLFE: Are you advocating that?

MRS. WALLACE:

I would have no objection to Sunday racing. It certainly would have to

be done in consent and in conjunction with the city of Vancouver and

the PNE association, but it's something that should be looked at. Every

other sport is allowed to take place on Sunday: we go to ball games, we

go to hockey games, we go to football games. Racing is a form of sport,

so it seems to me that there is a bit of a penalty placed against those

people who enjoy racing. Certainly it's taking a lot of money out of

B.C., because the people who are following those races are going south

of the border to do their betting, to place their bets and to watch the

horses. They're going south of the border on Sundays, and it's

something that we should be looking at, Mr. Minister.

would just like to read briefly from one of the many letters.... Well,

this one is addressed to you, Mr. Minister, but there are many, many

letters that have come to all MLAs regarding pari-mutual betting. This

letter reads in part — the person writing is from Surrey, incidentally

— as follows:

"I was shocked and disappointed

to hear over the news today that while you may do something for the

industry in your next budget, you would not consider reducing the

government's take out from 6.5 to 3.5. There is no way this industry

can survive unless you implement a complete program. The breeders are

in desperate need of additional moneys. After all, this money is the

money that we in the industry generate."

And that should be clear to you in the cabinet, that money is generated by the racing industry.

"The thoroughbred racing industry employs up to

3,000, many with limited skills to say the least, and without these

jobs a good number would be collecting unemployment benefits or be on

the welfare rolls." So this is a large employer of people, Mr.

Speaker, and it is threatened.

The costs involved have been

skyrocketing. It costs something like $6,000 a year to keep a horse at

the track for a year. It costs something like $4,500 to bring a

thoroughbred racer to the three-year-old level, and yet those same race

horses are selling at something like $3,000. So the industry is in

trouble, and I don't think we need kid ourselves into believing that

they are simply making idle threats when they talk about the

possibility of not racing at Exhibition Park any more and closing down

that track. They are very concerned.

This is a partial step,

and it may help. It may keep the industry alive, but it certainly isn't

the total answer, because it's the total picture, the total request,

the further reduction by another 1 percent of that parimutual tax, and

allowing longer hours, more racing.... Tho