1985 Legislative Session: 3rd Session, 33rd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 4, 1985

Morning Sitting

[ Page

6407 ]

CONTENTS

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

On vote 30: minister's office –– 6407

Hon. Mr. Curtis

Mr. Stupich

Family Law Reform Amendments Act, 1985 (Bill 34). Hon. Mr. Smith

Introduction and first reading –– 6411

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

On vote 30: minister's office –– 6411

Mr. Lea

Mr. Howard

Mr. Davis

Mr. Stupich

TUESDAY, JUNE 4, 1985

The House met at 10:04 a.m.

Prayers.

Orders of the Day

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

ESTIMATES: MINISTRY OF FINANCE

On vote 30: minister's office, $189,239.

HON. MR. CURTIS: Good morning. For the benefit of committee

members, I would like to make a few introductory remarks in support of

the 1985-86 estimates for the Ministry of Finance.

Joining me on the floor of the chamber in a few moments will be the

deputy minister, Dr. David Emerson, assistant deputy minister Hugh

Ferguson and the estimates coordinator, Mr. van Iersel. Other officials

are standing by in this building in order that if committee members

have questions that might be somewhat difficult to answer immediately,

they will be able to provide me with the appropriate answers.

The 1985-86 estimates for the Ministry of Finance comprise four

votes: the one which is before us now, vote 30, and then the subsequent

votes providing for the operation of the six ministry divisions

including the Purchasing Commission and funding for the B.C. Assessment

Authority and appeal boards; the third vote providing a grant to the

Provincial Capital Commission in the greater Victoria area to assist in

financing their operating costs; and finally, the vote to provide for

the operation of the office of the commissioner of the compensation

stabilization program.

Mr. Chairman, I should observe that while I also have been assigned

responsibility for the commissioner of critical industries, that

funding is contained in legislation which is still before this House. I

will attempt, within the limits of debate, to deal with that topic.

Proposed total spending for these four votes amounts to $58.7

million. That is down $0.4 million from the comparable estimates for

1984-1985. Notwithstanding this decrease, it might be noted by the

committee that the ministry has been able to accommodate the transfer

of the computer systems purchasing function from the B.C. Systems Corp.

and has been able to allocate over $600,000 for a new public sector

purchasing policy. Excluding these items, the decrease in spending

would have been 3 percent.

The Ministry of Finance has been able to reduce its expenditure requirements

through continued emphasis on increasing productivity. Examples of recent ministry

initiatives include: work simplification and productivity improvement projects

— for example, forms reduction in the office of the comptroller-general and

forms redesigned for the revenue division; further reliance on computer and

office automation technology — examples there would include further reliance

on microcomputers throughout the ministry and the purchase of automated mail-opening

equipment for the revenue division; and consolidation of organizations and offices

— as an example, consolidation of consumer tax offices with other offices in

the various parts of the province.

While ministry spending has been reduced somewhat this year over

last, all essential services are being maintained. I might cite the

B.C. Assessment Authority as an example, where, although the provincial

grant is down 15 percent from last year, increased efficiencies have

ensured that there will be no increase in the property tax rates for

funding of the Authority's operating costs. There is a real saving not

only to the provincial Crown but to the citizens of British Columbia,

who support that Authority through their property tax bills.

The ministry's 1985-1986 budget was not easily achieved. Conscious

shifts of the ministry's limited resources had to be made. This

includes a fairly dramatic move of resources to the Purchasing

Commission, which has been assigned one of the several major

initiatives for the overall economic renewal in the province, becoming

more proactive rather than simply taking orders and filling them. Other

areas, primarily administrative and central support services, have had

to make some sacrifices. The ministry continues, in my view, Mr.

Chairman, however, to do more with less.

A key responsibility for the ministry, naturally, is revenue

collection. I should observe at this point the appointment, which took

effect yesterday, of Philip Halkett — who is known to a number of

members of this Legislature, having served as director of taxation and

intergovernmental affairs within the ministry — to assistant deputy

minister of revenue. He succeeds Keith Lightbody, who was honoured last

Thursday evening at a reception which was very well attended, Mr.

Lightbody concluding 31-plus years of service to the people of British

Columbia. I would not want my opening remarks to conclude without

paying tribute to Mr. Lightbody on his retirement and to wish Mr.

Halkett well as he takes on new duties.

I was speaking about revenue collection. In response to continually

increasing demands and to preserve the integrity and the equity of the

tax system, we've also been shifting our funding assignments to this

area. Considerable effort is being applied in automating revenue

systems, and there are continuing programs for improving communication

between the taxpayer and the ministry. Also, as was discussed and

announced in the budget, penalties for wilful non-compliance have been

introduced. There is an amnesty period which continues until June 30.

The continuing objective for the ministry on behalf of the province and

on behalf of all taxpayers is to efficiently collect all taxes due, but

to do so in a manner which is sensitive, which is sympathetic where

appropriate, and which preserves equity with least disruption to the

tax-paying public and with every effort being made to avoid

misunderstanding. This is a major and I trust will be a continuing

priority for the ministry.

Mr. Chairman, there may be other points that members will want me to

elaborate on, but in effect that is the

summary of the 1985-86

estimates for the Ministry of Finance. I look forward to attempting to

answer questions posed by the committee.

MR. STUPICH: Mr. Chairman, it's been a long time coming.

We've moved up to the starting-gate almost every day for some two

weeks, but finally we've arrived at the discussion of the Ministry of

Finance estimates.

I'd like to just mention briefly the minister's comment about the

reduction in ministry expenditures. I've said it in the House before

and I certainly don't mean anything personal by it: the old phrase that

figures don't lie but liars figure. Mr. Chairman. I'm not suggesting

that the minister is

[ Page 6408 ]

lying in the slightest, but when I look at the

estimates of the fiscal year March 31, 1986, I read them a little

differently from what the minister does. The estimates for the year

1984-85 totalled $8.39 billion, but included in that was an amount of

$470 million to be given to the B.C. Railway Company which was not

ministry spending on services in the province of British Columbia. It

was a historic debt repayment; it was described that way. So really it

wasn't part of the ministry spending at all. If you take that from the

$8.39 billion, you come up with a figure of $7.92 billion. Those were

the original estimates.

Now the minister chooses to refer to the revised estimates, and to

compare those with the estimates for the year 1985-86; something like

Finance minister Wilson, who plucked a figure out of the air and said

what the deficit would have been had he not taken certain measures, and

then showed that he was able to effect a reduction in the deficit, a

figure below that which he said it would have been had he not done

certain things. Well, the minister is playing the same kind of game

here. He is saying that, comparing the estimates for 1985-86 with

revised estimates for 1984-85, our total spending is up only 3 percent.

And the minister said the ministry expenditures have been kept down.

[10:15]

But we have to compare apples with apples. In this instance, we can

compare the original estimates for 1984-85 with the original estimates

for 1985-86. We don't have revised estimates for 1985-86 yet, so we

can't do that comparison. Comparing that, and looking at the figure

that I have of actual ministry estimates for 1984-85 of $7.92 billion,

we now have ministry expenditure estimates for 1985-86 totalling $9.056

billion, an increase in spending of 14 percent. Now that's what the

estimates are — comparing one year to the next. The minister is

actually proposing to spend 14 percent more, rather than 3 percent

more. While it is true there are some reductions in some ministries —

for example, Education is down about 5 percent — the total overall

picture is a 14 percent increase.

But that wasn't what I wanted to talk about in my opening remarks. I

thought that would just give the deputy something to think about,

perhaps, while I am referring to a couple of comments that the minister

made in this session earlier. When we were discussing Bill 32, the

Compensation Stabilization Amendment Act, 1985, the minister used the

phrase: "proven record of success." I have to ask: on what criteria do

we say B.C. has been successful? When I look at this particular

minister's record in office, B.C. has had an unbroken string of revenue

surpluses.

I have gone back, even into a book I got from the library that takes

budget speeches from 1950 to 1959, and I have been unable to come up

with a single budget — it's been an exhausting research; maybe not

exhaustive, I might have missed something — in 35 years of the history

of the province of British Columbia that was a deficit budget, until

this particular minister had the honour, shall I say, or the misfortune

to introduce the first deficit budget in the history of British

Columbia since sometime before 1950, and it was a large deficit itself.

That was the budget in July 1983. Now that's quite a record for a

Social Credit cabinet minister. Is that part of the proven record of

success, that he has been able to bring in deficit budgets for the

first time in some 35 years?

Or beyond that, in every year since this minister has been Minister

of Finance, every set of public accounts tabled in this Legislature has

shown that in that particular year there was a deficit in the

consolidated revenue fund for that year. Again, with the exception of

the year 1976, which was produced by his predecessor as Minister of

Finance, the Hon. Evan Wolfe, it was the only time that we have had

deficit public accounts figures. Going back, I could read the tables in

here showing, year after year, what the revenue surplus.... They were

talking then about $3 million, $5 million and $7 million; we have to

put another zero or two at the end of it now to be meaningful.

Nevertheless, I might have missed something, Mr. Chairman; I'm not

doing it deliberately. But I do say that this minister has a singular

record of success, in the past 35 years, in achieving deficits and in

producing deficit budgets; that's something to be said for him.

Just looking at the figures a little bit, going back in more recent

history, under the NDP regime.... There was a lot said about that. I'm

missing the hon. member for Omineca (Mr. Kempf); I'm sure he'll want to

get in on this discussion. When the NDP were in office, there was a

period of four years when we tabled public accounts; we didn't table

them for 1976. Nevertheless, including those, there was a revenue

surplus over that four-year period of $207 million, including the $166

million deficit that the Socreds manufactured on March 31, 1976; it

wasn't there until that day. Even with that, there was a total revenue

surplus in that period of $207 million. Since this minister has been

Minister of Finance, including the year 1985, which is an estimated

figure, although a revised estimate, we have an accumulated deficit in

the revenue surplus accounts year by year of $3.663 billion. I have the

figures for other years as well.

This discussion came up again in this session when the minister was closing

second reading of Bill 17, British Columbia Transit Amendment Act, when he talked

about the gross debt, the net debt and the per capita debt, and the comparison

between the provincial and the federal debt. I think one of the figures he used

— and maybe this is something else that he might want to have someone check

.... The quotation is from Hansard, May 15, 1985, page 6146, where the minister

said: "If the debt of commercial Crown corporations in the province of

British Columbia is excluded, and in many jurisdictions that is the accepted

practice, then the province's net debt per capita is $2, 518...... With

a population of some 2.7 million, it means that our debt, apart from Crown corporations,

would be $6.8 billion at that date. I think there is a mistake in figures there.

I leave that to the minister to check.

He went on to say that this is the second lowest among all the

provinces of Canada. He might say that that is one of the criteria he

uses when he says there has been a proven record of success on the part

of this administration. I will go on at some length to explain that

having the second lowest net debt per capita in the whole of Canada —

leaving aside Crown corporations — is not proof of success; what have

we done for the people of Canada? Surely that's what government is here

for. We could do nothing and hope that the debt would be wiped out, and

that would not be success if our people are suffering in the meantime.

Total debt at the end of 1984: I think the figure is something like

$16 billion. We have to include the Crown corporations. The

auditor-general has been urging that we do that. But even if we look

just at net debt for a moment, the government has artificially moved

the goalposts to keep down the net debt. That may not have been the

only reason, but they have established, since being returned to office

[ Page

6409 ]

December 1975, 12 new entities, each one set up to serve a particular purpose,

but each one building up a debt that previously would have been recorded in

public accounts. So instead of some $3.6 billion, the net debt would be $1.7

billion higher, because at the end of March 1984 these various new entities

established by the government for the purpose of borrowing had borrowed a total

of $1.7 billion. I can read the whole list.

Not only have they set up 12 new Crown entities to borrow $1.7

billion; you will recall, Mr. Chairman, that they sold three new B.C.

ferries — I believe payment was complete by the NDP administration —

for a total of $48.4 million and committed themselves to buying them

back over a period of 18 years for $104.6 million. Fiscal

mismanagement, Mr. Chairman. Not only that, but I like to keep

reminding people that there was a guarantee in that agreement that the

people who bought the ferries and are selling them back to us would

experience no risk in the event there was any change at all in federal

income tax law that would retroactively close the tax loophole that

they were taking advantage of when they were investing, if you like, in

our B.C. ferries. They set up 12 new corporations, sold our B.C.

ferries and piled up a total direct and guaranteed debt of $16.7

billion by the end of December 1984.

When they arrived in office there was a debt, including the Crown

corporations, of $4.4 billion. When this minister took over, it had

increased to $7.6 billion, an increase of 7-fold. But during his term

of office so far it has gone up 2.2-fold to a total of $16.8 billion.

Now even that is not a proven record of failure; it's what happens

after that and what it means.

I'd like to talk just a little bit about the extent to which we have

increased our borrowing from abroad and the cost of it. At the end of

March 1972 total borrowing from abroad was $253 million — a quarter of

a billion dollars — on which we were paying an average of 7 percent

interest. When the NDP went out of office, total borrowing from abroad

was just under $500 million, and still the average interest being paid

on that was 7 percent. When this minister took over it had increased.

It was up to $1.6 billion, a threefold increase. But since he has been

in office as Minister of Finance the figure has gone from $1.6 billion

up to $4.2 billion by the end of March 1984, and the average interest

being paid on that is not 7 percent but 12.26 percent. It's costing us

in excess of $500 million a year to pay interest to foreigners on debt

that we owe them.

If I may, I'd like to quote from a previous Minister of Finance to

see what he had to say about that. I'm going back a few years,

admittedly, Mr. Chairman, back to the 1950 budget of the Hon. Herbert

Anscomb. It's going a long way back, but listen to it, because it's

good advice:

"Since assuming office I have contended consistently that,

if at all possible, provincial borrowing should be restricted to the domestic

market, because a province has no jurisdiction over currency, credit and trade.

Further, because the domestic market should generally provide the best gauge

concerning the worth and credit rating of any provincial or municipal security,

borrow at home."

Speaking earlier, the minister said — I quoted part of it; I'll refer to

a little more of it now — that the net debt per capita federally is much higher

than in British Columbia. But there is another real difference. The debt that

the federal government owes is owing to Canadians. We owe it to ourselves. It's

all part of the family, kept within our own borders. It's another item in

the budget. sure; it costs money, sure, and we have to raise taxes. But we raise

taxes from our people to give to our own people, and it circulates. The debt

that the provincial government owes, especially since this minister took office,

to a greater and greater degree is foreign debt. We are having to ship money,

goods or whatever out of the province, out of the country, to pay foreigners

for money that we're borrowing front them. That makes the debt that the

provincial government owes much more of a burden on Canadians than the debt

that the federal government owes to Canadians. It's circulating within our

economy. Not that I'm excusing it or saying that it's a good thing,

but it's not as bad to be borrowing from our own people, circulating it

in our own communities, as it is to be borrowing from foreigners.

Beyond the extent to which we have piled up debt, there have been

the tremendous tax increases since this government took over. You

recall, Mr. Chairman, that the provincial income tax was 30.5 percent

of the federal rate when this government took office. It’s now up to 44

percent. There were some transfers in there, but in addition some extra

levies were imposed by this government. Sales tax rate: up 40 percent,

from 5 percent to 7 percent. There was a fluctuation. In anticipation

of an election the rate was reduced, never to be increased again; when

the election was over, the rate was increased. Water resource revenue:

$8.5 million when this government arrived in office, up to S 189

million — a 22-fold increase in that item. How many mines have closed

in British Columbia because of that extra impost? But remember too that

even the poorest of our people, when they come to pay their light bill,

are paying part of that water resource revenue. It's just another way

of getting more money from people who in many instances can little

afford that extra impost.

Acute care in hospitals: whether or not it should be done, the facts

are that the rate was $1 a day when this government arrived, and it's

now $8.50 a day, an increase of 750 percent. Medical premiums: up from

$5 a month for a single to $17, a 3.4-fold increase. Married couples,

up from $12.50 a month to $32, a 2.6-fold increase. All that debt, all

those tax increases, and what have they got to show for it, Mr.

Chairman?

[10:30]

I'd like to digress for a moment to talk about what happened during

the three years when the NDP were in office. There might be some

question about this; there can't be any argument. The figures come

straight out of public accounts. When we arrived in office, total

government assets were $2.7 billion. By the time we left they were S4

billion, an increase of $1.3 billion. Capital surplus had gone up from

$1.7 billion to $2.4 billion, a $700 million increase. During our time

in office, we advanced to Crown corporations an extra S86 million, up

from $186 million to $271 million. We put into special purpose funds —

what W.A.C. Bennett used to call rainy day funds — available money that

has since been used up by the present administration. There was $350

million in those funds, in cash and investments, when we arrived in

office: $552 million was there when we left office, in cash and in

investments. That was an extra $201 million in cash and investments in

special purpose funds available for this government to use, as it

certainly did, when it arrived in office.

[Mr. Ree in the chair.]

[ Page 6410 ]

A Westcoast Transmission investment of some $30 million. Grants to

Crown corporations, $299 million. The revenue surplus did decrease: $99

million when we arrived in office, a $261 million deficit when we left.

But as I said earlier, Mr. Chairman, all of that happened on March 31,

1976. I'm going right up to that period. The net increase during our

term in office was $256 million.

But beyond that, we had something to show for it. What does this

government have to show for it, Mr. Chairman'? Northeast coal: $1.2

billion in public funds and all we have to show for it is a hole in the

wrong place. B.C. Place: an investment of $267 million, which at an

interest rate of 11 percent — that's a guess, I know, but it must be

close to the actual — is costing the people of British Columbia $80,534

a day in interest alone. I'm not saying it’s a good thing or a bad

thing, Mr. Chairman; I'm simply showing that it's one of the legacies

of what this minister has accomplished with his record debt, his string

of deficits, his record tax increases. One of the things we have to

show is a monument in Vancouver that is costing in excess of $80,000 a

day in interest to service the debt. The debt is not in B.C. Place;

it's in BCBC. Nevertheless, it's a debt.

Expo 86: what will be the deficit, Mr. Chairman? Who knows'? We hope

it won't be, but the speculation is $300 million, $400 million, $700

million. The jury is still out. One day we'll know how much it's

costing us for that.

The Coquihalla Highway. Again, the jury is still out on that. We

don't know what that's going to cost by the time it's finished — $400

million for a start. What are we going to have when we're finished? One

of the things we'll have — again, maybe my research has not been

exhaustive enough — is the only toll highway in the whole of Canada.

Maybe that will be a tourist attraction.

ALRT is a $1.5 billion investment so far. How much further? To what

extent will it be a success? To what extent will it be a failure? One

more monument. But what does it do for the people of British Columbia'?

We have given away investments that were there when this government

arrived in office: Canadian Cellulose, Kootenay Forest Products,

Plateau Mills, Westcoast Transmission, gas and oil leases; a total

investment of less than $36 million, appraised at $169 million at the

time they were given away; producing revenue that was available to the

Crown; a net gain in a three-year period of $133 million. That was a

record of success, Mr. Chairman. It was given away by this government

in what was in part an attempt to teach people something about the

stock-market. The Premier went around urging people to buy these shares

and learn something about the stock-market. Many of them learned to

their sorrow.

What do we have? We have an educational system that is in shambles.

Total expenditures are up 14 percent; they are down in education by 1

percent — I think I earlier said 4 to 5 percent; but they're actually

down by 1 percent. Our education system is in shambles, and it has been

criticized by every other government that has had anything at all to

say about it.

Health care. The word coming out of the hospitals is that beds and

wings are going to be closed because they are denied the money to

provide elective surgery. When does elective become acute? I know each

one of us could talk about what's happening to the hospitals in our own

districts. Health care is in shambles.

Human Resources. There has been no change in the maximum GAIN

payment since the Socreds won the election in December 1975. It has

never been changed, except to change the name of the program. It was

Mincome then; it's now GAIN — no more money, just a shorter name. There

have been no increases in the allowance for those on social assistance

in the past three years, although there have been some reductions, in

spite of continuing, though not large, increases in the cost of living.

Bankruptcies. We have been setting individual and business records

in British Columbia year after year, and it's still happening. We can

talk about our great record of having a debt that is lower than the

federal debt per capita. But look at this record of failure. Is it

worth saying that we have kept our debt figures down, if this is all we

have to show on the positive side of the ledger?

Unemployment is at record heights. We rank with the worst provinces

in Canada. The minister talked about our debt being the second-lowest

in Canada. But when we look at unemployment and see that we're the

second highest, is it really a measure of success to say that we've

kept debt down?

Reforestation. Well, we don't have to say much more about that,

other than the word, to prove the government's dismal record. The

Minister of Forests (Hon. Mr. Waterland) has been quoted — maybe

incorrectly; there'll be time to get into that later — that he regards

the forest industry as a sunset industry.

I'm going to go back in history here too, Mr. Chairman. There's

something about those who don't learn from history being doomed to

relive it over again — and we're doing that now. Again, I'm quoting

from a speech by Hon. Herbert Anscomb, going back to 1950: "I do want

to say, however, with all the force I can command" — I wish I could

hear the Minister of Finance saying that today — "that we have not and

are not spending enough on the development of our basic industries:

that is, forestry, agriculture, mining and fishing." That was good

advice 35 years ago. What have we done since? Nothing, except attempt

to justify an incredibly poor performance.

The government can say that it has held the debt down. Down below

what? What would it have been had they not interfered with the economy

in the way they did, and had let the economy of B.C. recover to the

extent that it has recovered in other provinces'? The debt might well

have been less. Apart from this record of debt, I'm looking at what

they have denied the people of British Columbia in the way of

opportunities to work; and what they have denied the people of British

Columbia in the way of opportunities to have the kind of care they have

every reason to expect from government, which people are getting in

other provinces but not in British Columbia — all in the name of

keeping down debt. Has it proven a success, Mr. Chairman? It hasn't.

Their debts have never been larger. It's a record string of unbroken

deficits that has not been equalled, in my research — deficits

predicted in the budget; deficits experienced in public accounts.

By every measure of which I'm aware, the minister has not proven

this government's record of success. He has proven this government's

record of abject failure to handle the fiscal situation in the province

of British Columbia. He'll go down in history as the first one to bring

back deficits to B.C. in 55 years, and as the best at denying services

to the people of British Columbia — services that they should have;

services that we can afford in this richest of all provinces. We have

the resources; we have the people; we have the energy. All we need is a

government that wants to work on behalf of

[ Page

6411 ]

the people of British Columbia, rather than bring up phony figures as to how they're controlling the deficit.

The House resumed; Mr. Strachan in the chair.

The committee, having reported progress, was granted leave to sit again.

Introduction of Bills

FAMILY LAW REFORM AMENDMENTS ACT, 1985

Hon. Mr. Smith presented a message from His Honour the Lieutenant-Governor:

a bill intituled Family Law Reform Amendments Act, 1985.

HON. MR. SMITH: This bill will complement the amendments that

we've already made in the field of family law and the amendment we

introduced in the Charter of Rights Amendments Act, 1985. This

legislation, first of all, deals with measures that will stop child

abduction across provincial and international borders and assist in the

location of children who have been hidden to avoid enforcement of child

custody orders. It will assist the court in locating children. It will

strengthen the powers of the court, as well, to make garnisheeing

orders, orders for the seizure of property, for the imprisonment of

persons who defy court orders to pay maintenance and other orders which

will assist in the payment of maintenance to economically dependent

spouses and children.

It will facilitate the automatic enforcement of maintenance orders

by allowing, by court order, public officials to have access to public

record information on a strictly confidential basis, which will assist

in the finding of the assets and the whereabouts of persons who are

defaulting in the payments of their maintenance obligations. It will

also revise the reciprocal enforcement of maintenance orders programs,

which facilitates the making of maintenance orders where one spouse is

outside of British Columbia.

It will, as well, abolish certain obsolete civil legal actions,

whereby a person could sue for monetary compensation for seduction, for

harbouring and for breach of promise. Those are proposed to be

eliminated

Interjection.

HON. MR. SMITH: The measures are not retrospective, Mr. Speaker. I commend this bill for your consideration.

Bill 34 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.

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

ESTIMATES: MINISTRY OF FINANCE

(continued)

On vote 30: minister's office, $189,239.

[10:45]

MR. LEA: Mr. Chairman, we were waiting around in this country and this

province for the federal budget. There was the rumour out that we believed that

whatever the Finance minister's speech said, it would have some effect on

the economy.

AN HON. MEMBER: For B.C.

MR. LEA: For B.C. and for the rest of Canada. In other words,

when the federal minister and the federal government bring down their

budget, people look to that for signs. They say: "Which way is the

government going to go? How does the government feel about the economy?

What are the problems with the economy, and how do they see their

government dealing with those problems?" That is something we do not

see in this province. I have yet to hear this Minister of Finance talk

about the economy of British Columbia. I have yet to hear him talk

about his view or his government's view of the problems we have and the

way we can deal with those problems and a vision of the future. Not

yet. Not once have I heard this minister ever venture into that area of

discussion. He brings in his budget; he talks about numbers. He's a

number cruncher. I have to say. In all honesty, that I just heard a

number-crunching speech from the opposition. Where is the vision there?

What would they do, and what's the government going to do?

First of all, it's like dealing with a personal problem. We do have

problems in this province in the economy — not all the government's

making. One of the real problems, Mr. Chairman, is that in this

province governments and political parties for years try to let the

people believe in some way that we have control of our economy as a

province in a nationstate. They try to pretend and let people think

that we have all of the levers to deal with the economic problems. They

let them think that somehow or other we have control of interest rates,

money supply, tariffs, duties and freight rates and that we are in

control of our own house as a province in a nationstate. When are we

going to be a little bit more honest and say: "Here are the levers we

have as a province in the economy, and let's be judged by how we deal

with those levers"? If we judge this government by the levers that they

have available to them. we can only do it by trying to dig it out

ourselves, because we don't hear anything from the government or this

minister talking about how they've dealt with the levers available to

them.

Now, Mr. Chairman, it seems incredible to me, with the problems we

have in our basic industries of forestry, mining and fishing, that we

wouldn't get something out of the government dealing with those

problems. As I said earlier, it just seems to me that \when dealing

with our own personal lives, the first thing you have to do when you

have a problem is admit you have the problem. Once you at least admit

it — "I have a problem — then you can get down to dealing with the

problem. It's the same in the collective. In this province we'd better

start being a little bit more honest about the problems we have.

Now I'd just like to point out an area that is a signal, an example

of the kind of problems we have in terms of investment in this

province. Recently I was at the opening of a new grain elevator in

Prince Rupert — approximately a $500 million project. The grain

elevator is needed. It's a good project, in that we have to have a more

efficient transportation system in the movement of grain; we have to

have that new grain elevator to be competitive against competing

jurisdictions and competing ports. But the fact of the matter is that

the new grain elevator, which is much more automated than the old,

employs 25 people. The old grain elevator, which

[ Page 6412 ]

was old and not as efficient, employed 125 people.

That story is repeated every day as we see new investments going into

our basic heavy industries in this province.

On a broader scale, we are turning out more forest products by about

10 percent than we were in 1979 — a higher volume output of forest

products, at a lower price. But 25 percent fewer people are turning out

those forest products.

More investment. The investment that's going into the heavy

industries in this province and in other jurisdictions is not something

that creates employment. It does the opposite: it creates unemployment.

That is not to say we shouldn't make those investments, because we have

to make those investments to make ourselves more efficient in the

international marketplace. But we can't put our heads in the sand and

pretend that it's an employment-creator.

In the last ten years every new job in this province has been

created by small business. There has been a net loss in the heavy

industries: the jobs that were created in the seventies have been lost

in the eighties. The employment-creator of the future will be in the

small business sector. The employment in the future will be worker

cooperatives, community cooperatives, small scale, shorter runs. Do we

hear this government talking about that and starting to take us in the

direction that would lead to employment-creation'? Not one bit. I

haven't heard the Minister of Finance talk about economics in the 13

years he's been in this House. Not once has he stood up and talked

about the economic problems of this province. Not once has he stood up

and talked about the direction that his government is going to take us

to deal with those problems.

Mining. We have a problem. Copper. We have new competition coming in

from places like Zaire and Chile that are putting copper in the

international marketplace at prices we can't meet. They're doing it at

below their own production costs in many cases, for exchange money. At

the same time, we're seeing the uses for copper go down through fibre

optics and other technological breakthroughs. It's happening all around

us. Everybody out there in the workplace and in the economy sees and

knows and feels it happening. The only place I can find where nobody

seems to know is in the government of British Columbia.

Yes, Mr. Chairman, we have problems in this province. Let's admit

it. Then we can get to work cooperatively and in partnership, as the

government likes to say, and start dealing with it.

AN HON. MEMBER: That one's not flying. That's why Bill went to Korea.

MR. LEA: It is not flying. You're not down to below 25

percent in the polls when something's flying. That's where Social

Credit is now, according to the latest Decima poll, taken in March.

AN HON. MEMBER: How are you doing?

MR. LEA: How are we doing in the United Party? I'd say that

if you took a poll today, we wouldn't come up half a percent. When you

look at those figures, though, and you see the latest Decima poll,

which says 48 percent of the people in this province are strongly

dissatisfied with the people who run our province.... When you say,

"How would you vote tomorrow," and less than 25 percent say they would

vote for the Social Credit, you would think the official opposition

would be doing well. But that's not the case. They are below 33 percent

in the polls.

AN HON. MEMBER: You're wrong there.

MR. LEA: I'm not wrong on that one. You can't take my advice

on what they are and then not take it on what you are. The people are

not very satisfied with either the official opposition or the

government, because neither is dealing with the problems in this

province. The government doesn't even like to talk about it, and the

official opposition think they'll get in by saying nothing about the

problems. I would say at the moment it's pretty much split. I don't

think they hate either, actually. What they're doing is looking at both

major political parties and saying: "We don't see them dealing with the

reality of the 1980s." Just because the government is 150 years out of

date doesn't mean they feel good, because the NDP is 50 years out of

date.

AN HON. MEMBER: Pick your poison.

MR. LEA: Pick your poison; that's right. Neither is dealing with the problems in this province.

We talk about investment, and we have to take a look at where we

could invest with the biggest return in the future. I don't think

anybody in his right mind would deny that one of the best social and

economic investments we can make in this province is in education. If

these old industries that are not serving us and are not going to take

us into the future are not going to be the employment-generators, what

kind of economy can we look at? If the old mass economy, the old

smokestack economy, is not the economy that's going to take us into the

future, then what is? Well, I think we have to take a look at what they

call the information economy. That economy is going to call for more

skills and more knowledge, people more educated in the sciences, in

business and generally. Any investment in education today — in a good

general education and some specifics like sciences and business — is

the tool that's going to take us into our economic future. This

government is going exactly the opposite way.

Mr. Chairman, when we look over our history we see that the old

economy that served us — and we have to say it served us fairly well —

is no longer the economy that will serve us and take us into the

future. That is not to say that the forest industry isn't going to be

one of the prime important parts of our economy — or the fishing and

mining industries. They are. But the new technology applied to those

industries to make us competitive in the world is going to do away with

jobs.

I heard in this morning's debate about reforestation as one of the

areas we have to apply ourselves to, It's another area cut down by this

government, along with education. But reforestation, although it has to

be done, had better not be viewed as the end-all either, because the

new timber that is going to come along from reforestation is not going

to be the same kind of timber as the old. It's going to have a

different strength. It's going to have a different cellulose content.

In 80 years, after it's ready to harvest, it won't be the size that the

old first-stand is. It's not going to have the same kind of wealth

possibility as the old stand, and we have to take that into

consideration.

Mr. Chairman, if for once in this House the members of this assembly

could forget whether they're going to be in power or not, if for once

in this House we could stand up as

[ Page

6413 ]

individuals representing the people of this

province and talk with each other — not against each other or to each

other, but with one another as concerned British Columbians —

forgetting the political parties that we belong to and remembering that

we are first of all British Columbians in this Legislature, and deal

with the problems we have.... I know from talking personally with

people off this stage, from both sides of the House, that they worry,

that they're not sure exactly what direction we should go in, and that

we could talk together, Mr. Chairman. In this Legislature, if we would

for once share some ideas, share some thoughts, share the problems,

then maybe the people out in this province would once and for all look

towards us once again and have some respect for us as an assembly.

Because I can tell you right now that there is no respect for us, and

that's the only way we'll get it.

[11:00]

MR. CHAIRMAN: Thank you, Mr. Member. Members might be

cautioned that we are in the debate of the Minister of Finance and his

estimates, and broad-ranging philosophical debates might be more

appropriate in throne speech or budget debate.

MR. HOWARD: Just a few moments of your time, Mr. Chairman and

the committee. I think we should be extremely grateful to the member

for Nanaimo (Mr. Stupich), who, as a result of perusing

government-produced documents and documentation, revealed that the

first deficit incurred by a government in this province for many

decades, I believe he said, was that incurred in the first budget of

Mr. Curtis. That's very revealing. That came about, I think, because in

that first budget introduced by this Finance minister, he embarked upon

a program of spending public money as if it was water coming out of a

ruptured tank. His first budget increased public expenditures in this

province by 20 percent over the year before. His second budget

increased government expenses and expenditures by another 20 percent

over that year. So in a two-year period, in the first two budgets of

the minister who now still holds the position of Minister of Finance,

he increased government expenditures of taxpayers' money by 40 percent.

[Mr. Strachan in the chair.]

Is there any wonder, with that kind of lavish extravagance,

irresponsible squandering of public money, that we're in difficulty in

this province, both economically and fiscally? He was operating as if

there were no tomorrow so far as the public funds were concerned. He

doesn't suffer the consequences. Mr. Chairman; it's the general public

that is suffering the consequences of that totally irresponsible fiscal

mismanagement by this minister, particularly almost exclusively, but by

this government as well.

Now we're in a horrendous deficit position, so much so that even the

government seeks to hide — or the Minister of Finance in the

preparation of the estimates book seeks to hide — within the estimates

book the vote covering interest on the public debt. In 1984 estimates

the amount budgeted for interest on the direct public debt was included

right along with the Minister of Finance's office expenditures, the

Provincial Capital Commission and all the others. It was a normal part

of the Ministry of Finance operations. In this year's budget it isn't

in there. It's listed in the back of the book in something called

"other expenditures." It's there, but it is extracted from the

functions of the Ministry of Finance directly, so that if anybody looks

in the estimates book to see what the amount of money allocated for the

operation of the Ministry of Finance is, they don't find the $384

million that we're spending this year on debt. The government is

ashamed of that figure. If it were a bit more ashamed, maybe it would

step out of the way and we could test our relative support with the

general public — over that and other matters.

I want to deal also, very briefly, with the treasury bill operation

of the provincial government. The province's treasury bill operation,

Mr. Chairman, is costing this province jobs. It's costing workers and

people in this province the opportunity to earn a living. The very

simple process is that when the government borrows each week its $60

million, as I understand it is now, in order to pay off $60 million

that it borrowed 91 days ago — I believe they are three-month treasury

bills — it drains the interest on those treasury bills from the

taxpayers. It levies taxes, takes purchasing power away from citizens

in this province and then pays the interest on the treasury bill

program, every week — I believe it's Wednesdays. Every week that

process goes on. Because the consuming public or the average citizen

has less money in their pocket to spend, they thereby impair the

prospects of other people working and providing services or goods for

the money that the taxpayer ordinarily would have to spend.

That might not be so bad, Mr. Chairman, in some sense, if the

average citizen had an opportunity to invest some of his savings in

provincial treasury bills. You could then sort of rationally argue that

if citizens had the opportunity — those who would have some spare

disposable income — to invest and if they invested it in T-bills, at

least the taxes that they pay in order to support the interest for the

treasury bill program and the other debt program would be coming back

to them as interest payments on their own investment. Here you could

rationally argue that that would be somewhat helpful. But the

government doesn't do that even. In fact, its policy and approach

prevents the average citizen in this province from getting his hands on

a treasury bill. When they're offered to the market there is a list of

selected investors which includes chartered banks, financial

institutions, credit unions and anybody else who can get on the list.

But there's a $2 million minimum bid, so if you want to try treasury

bills, even if you're on the list, your bid has to be in the $2 million

range. And the segments....

AN HON. MEMBER: Well, that's easy.

MR. HOWARD: No. I don't know anybody myself personally who

could dig up the $2 million and say: "Yeah, I'd like to bid on some

treasury bills." There may be some people around; the average citizen

doesn't fall in that category. But you can bid on the treasury bills in

segments of $25,000. So the minimum treasury bill is $25,000. The

average citizen can't get in on the $2 million minimum bid; the average

citizen probably couldn't get in on the $25,000 minimum on the

secondary market, because that's a fair chunk of money for the average

citizen to find for investment purposes.

So the whole process of this T-bill operation of the Minister sucks

money out in the form of taxation from average citizens and redirects

it into banks and financial institutions who buy the treasury bills. It

is lost money as far as the consumers are concerned and lost jobs as

far as the economy is concerned. That's how blind and dumb this

government is

[ Page 6414 ]

with respect to dealing with economic matters in

the province. At least you can argue that the federal government

permits and allows their structure of treasury bills so that people can

buy them in $1,000 lumps, I understand, on the secondary market, even

if you can't get them directly. But that hurts our economy, as does the

interest that we have to pay on the provincial debt — which is hidden

in the back of the estimates book.

Mr. Chairman, when it comes to interest payments and debt payments,

the figures are so massive that they become relatively incomprehensible

to the average person. When you toss around billions and hundreds of

millions and hundreds of billions of dollars, it's beyond the average

person's concept — that quantity of money.

So, Mr. Chairman, what I'd like to do is engage in a little

adventure with you — with the Chair, that is — relating to the direct

provincial debt. Mr. Chairman, I can't tell you what the adventure is

at this moment, but I want to start it right this very second. [Pause.]

MR. CHAIRMAN: If the member is finished speaking....

MR. HOWARD: Well, Mr. Chairman, you have engaged in the

adventure. The length of time that that silence lasted was some 25

seconds. It will be interesting.... My quick calculations are not able

to produce the total figure; maybe my colleague for Nanaimo will. We

spend, as interest on the public debt, $12 a second, every second of

every day of the year, just paying interest on the public debt. If you

multiply 25 times 12, you get $300 having been expended in that

25-second period on interest on the public debt. I just used that as a

device to indicate how enormous it is. Now $12 a second, by my

calculation, is $730 a minute and $43,847 a year; and the amount of

money just escalates astronomically. That's partially why we're in

trouble in this province economically.

MR. STUPICH: It's $437 million, not thousand, a year.

MR. HOWARD: Not on T-bills; on direct debt. And the member

for Shuswap-Revelstoke (Mr. Michael) is giggling about it. To him it's

a joke. He enjoys the prospect that we're squandering $12 a second on

interest on the public debt because of mismanagement of his own

government. Fiscal bloody irresponsibility, and he laughs about it.

MR. CHAIRMAN: Order, please.

MR. HOWARD: He sits there and giggles.

Interjections.

MR. CHAIRMAN: Order, please.

MR. HOWARD: And the member next to him is giggling and chortling and enjoying himself.

MR. CHAIRMAN: Order, please. All hon. members will come to

order. The member for Skeena is reminded that a hallmark of

parliamentary debate is proper and temperate language. Please continue.

MR. HOWARD: One's emotions get carried away when one...

MR. CHAIRMAN: Please proceed. The estimates.

MR. HOWARD: ...sees such puerile, childish action by the member for Surrey and the member for Shuswap-Revelstoke.

MR. CHAIRMAN: Order! That's a personal reference and will be withdrawn. The member will withdraw any personal reference to another member.

MR. HOWARD: I didn't make any personal reference.

MR. CHAIRMAN: Yes, hon. member. You will withdraw the personal reference to another member.

MR. HOWARD: If there was one that is perceived, which I don't perceive, I'll certainly withdraw.

MR. CHAIRMAN: Thank you. It's withdrawn. Continue on vote 30.

MR. HOWARD: I think you should also ask the member for

Shuswap-Revelstoke to withdraw his giggling and smirking at the fact

that the people of this province are paying $12 a second on the public

debt, just to service it.

MR. CHAIRMAN: The committee was called to order. The member continues on vote 30.

MR. HOWARD: Now he's silent and subdued. Stop your foolishness.

Anyhow, I just wanted to make that point, Mr. Chairman. I may have

said something that offended you, sir; I think it was quite appropriate

to the people to whom it was directed.

HON. MR. CURTIS: Mr. Chairman, I want to respond to some of

the comments which have been made this morning, before there is the

claim that I have not attempted to make such a response. I was on my

feet just as the member for Skeena was recognized, and so be it.

The member for Nanaimo (Mr. Stupich) has talked in the same general

terms previously when acting as critic for the Ministry of Finance

estimates, the minister's office. I have with me the Hansard

for 1984. Actually in calendar '84 we did two sets of estimates just a

few weeks apart: at the end of January and towards the end of March.

The member for Nanaimo and I exchanged views at that time, as I recall,

on a host of topics, including the leasing of three ferries. I don't

propose to revisit that.

[11:15]

The question of debt, Mr. Chairman. I think it's important to

clarify just a little bit there, because figures can be tossed around.

The member for Nanaimo questioned the figure of, as I recall, $2,518

per capita, which was provided at an earlier date. That figure of

$2,518 includes both direct debt per capita, which is $1,124, and debt

for social capital — or, if you will, non-commercial debt — of $1,394

per capita; so it's not just direct debt. The debt of commercial Crown

corporations — particularly Hydro, but not exclusively — is expected to

be $3,213 per capita at the end of this fiscal year.

Mr. Chairman, the point to be made again, and it has been shown in a

number of documents, is that at March 31, 1983 — and I'll speak about

1983 in just a moment — the noncommercial debt per capita, $1,584, was

the second lowest of

[ Page

6415 ]

all the provinces. If there is some suggestion or

some suspicion that I'm being selective about March 31, 1983, that is

not the case, because to the extent that I am able, we cannot get the

debt per capita figures for some other provinces for 1984 and 1985. Our

numbers are up to date, but we can't get them for some other provinces.

The member for Prince Rupert (Mr. Lea), who is not in the chamber now....

MR. COCKE: He's not interested.

HON. MR. CURTIS: I won't draw that conclusion. The member for

Prince Rupert came in and made a stirring speech about the economy and

what should happen, and the kind of reasoned debate we should have in

this chamber about our economic past, present and future. He said, and

I paraphrase pretty closely, I think: "Not once in 13 years in this

House have I heard the minister" — referring to me, Mr. Chairman —

"speak about the economy." I don't know where that member has been.

Every budget speech deals with the economy — past, present and future.

I have answered a host of questions over time with respect to the

economy of British Columbia, its ills and its health. While I wouldn't

expect the member for Prince Rupert to know that I do travel the

province widely, I can assure him, should he be listening in his office

or should anyone care to tell him, that I have traveled this province

extensively time after time after time, not only speaking about the

economy but, more importantly, listening to views about the economy. I

make no apology whatsoever for what that member for Prince Rupert

perceives to be my lack of comment on the economy.

Even associated with the budget of March 14, 1985, we produced a

paper which I have referred to often called, would the member for

Prince Rupert believe...? I can't imagine a title that has the word

"economy" in it. The member says we don't talk about the economy of

British Columbia. This is titled "The Economy in a Changing World"

— March 1985. I commend it to members who have not read it: 15 pages,

ten graphs, dealing exclusively with British Columbia's economic

situation, retrospectively and looking ahead.

It's a document which has had not too many complimentary remarks from the

other side in this House — because, after all, that's not what opposition

is all about — but which I can assure the Chair has had a great deal of constructive

comment from as far away as Ottawa, Toronto, London, New York, Tokyo and Singapore.

They're not saying: "Mr. Minister of Finance, you're a great guy."

They're simply saying: "Your people have put together one of the finest

analyses of a provincial economy" — or, if you will, a state economy "that

we have seen in a good long time."

Interjection.

HON. MR. CURTIS: No, some of it, Mr. Member, is not good

news. I expect that we're going to have better news over the next two

to three years. Certainly we see early signs of the recovery for which

all of us yearn.

AN HON. MEMBER: If there is an early election.

HON. MR. CURTIS: I'm not speaking about elections, Mr. Member; I'm

speaking about the kind of consultation that I have undertaken and that others

have undertaken. The tax tour last year was not just a quick rush in and rush

out of a community, but rather listening, probing, questioning, identifying

and working with individuals who said: "This is what government should

or should not do in terms of the economy of British Columbia.

MR. WILLIAMS: What are the early signs of recovery?

HON. MR. CURTIS: Mr. Member, come with me. Come with me on a little trip. Let's head out to a few communities.

Interjection.

HON. MR. CURTIS: No, no, no, no, no. I'm speaking about within British Columbia.

Interjections.

MR. CHAIRMAN: Order, please. Every member will have an opportunity to speak in Committee of Supply.

HON. MR. CURTIS: Mr. Chairman, the second member for

Vancouver East said: "What are the early signs?" I don't think he

really wants to see them, because that would be contrary to his

political purposes, but I assure you, Mr. Member, that they are there.

In Penticton last Friday, individuals came to me and said: "You know,

it's starting to happen." People in Vancouver, the Saanich Peninsula,

the central interior have said: "We feel a little better now than we

did a year ago, or six months ago." Activity is starting, Mr. Member.

As I say, it just may not suit your.... I wouldn't want to make the

accusation that it may not suit his political purposes; I would not

accuse him of that, as an honourable member.

Mr. Chairman, I don't know if other members will want to refer to a couple of things, but when we're talking about deficits....

Interjection.

HON. MR. CURTIS: Selective again, Mr. Chairman.

I want to speak about deficit reporting, matters concerning the

deficit. I'm pleased that the only significant criticism the

auditor-general for British Columbia has been able to make is that

staff which she needs or wishes to have has not been made available to

her. I'll answer any questions about that. At least we did not have a

headline such as that which appeared in the Times-Colonist on

December 29, 1984, which says: "Manitoba's Deficit Higher Than NDP

Claims — Auditor." It then quotes at length: "The NDP government and

the provincial auditor, William Ziprick, who said Friday the NDP

government has not been presenting Manitoba's deficit in a fair or

realistic fashion...."

MR. CHAIRMAN: Order, please. We are in the estimates of the province of British Columbia, and administrative actions of the ministry.

HON. MR. CURTIS: Mr. Chairman, I take your admonition, with

the exception that it was referenced very early in the discussion on

estimates that perhaps the deficit or debt numbers were not precisely

as they should be. The member for Skeena (Mr. Howard) said that the

debt numbers are hidden in the back of the estimates. Well, they're not

hidden, Mr. Member. They're in a different part of the book, but

[ Page 6416 ]

they're in the book. So the use of the word "hidden" is just a little distressing, Mr. Chairman.

Mr. Chairman, the T-bill question raised by the member for Skeena is

valid, and that's one I will review. I trust he would at least

acknowledge that a number of British Columbians — average small

investing British Columbians — were able to participate in the British

Columbia Railway preferred share issue at $25 a share. Indeed, from

time to time with provincial bonds which are issued we find strong to

good retail interest in our provincial issues, which is a minimum of

$1,000. So while the point that he makes about the T-bill minimum may

well be valid, it is not a conscious ministry-wide policy, in terms of

debt instruments, to shut out the average British Columbian. There was

very heavy takeup by British Columbia citizens on the B.C. Rail

preferred share issue at, as I say, $25 per share.

MR. DAVIS: The Minister of Finance is on the hot-seat, and

understandably so. In an economy like ours, which is highly trade

dependent, and in a world in which recession has been a problem for

several years, we're bound to have our own difficulties here in British

Columbia. One of our major difficulties, of course, is the fact that

many of our costs are resistant to downward adjustment. In good times

we are prompt to increase our charges, whether for labour, capital or

other purposes, but in difficult times the resistance is there. We have

great difficulty reducing our labour costs. Interest costs tend to

stabilize. Capital is much more difficult to attract in a part of the

world where the citizens don't save enough, or at least don't save

enough for the development of their own industry.

Several of the members have complained about perspective or

sufficient concern about the economy. I think we're all concerned with

the state of the economy; I know that the Minister of Finance is. One

of my criticisms of the budget as it has been presented, not simply

this year but throughout recent years, is that the minister doesn't

give us in his published material an estimate of gross provincial

product. This was the first item, as I recall, in federal budgets. It's

a major item in all national presentations in Canada and other

countries. Unless we know what the government's estimate of gross

provincial product is, we really can't assess its taxation and its

expenditures relative to total activity in the province.

Current gross provincial product is perhaps in the order of $46

billion or $47 billion. The prospective budget is of the order of $9

billion. Expenditures by the provincial government in British Columbia

are therefore 18, 19 or 20 percent of the total activity of all our

citizens in industry and otherwise. That's a very high figure. It's a

record figure for British Columbia. In 1970 the provincial expenditure

budget, which was roughly in balance with income, was of the order of

12 percent. During the NDP years it rose as high as 18 percent. In the

more affluent late 1970s — at least, when employment was higher and

industry was expanding at a considerable rate — the figure fell to as

low as 16 percent. But currently it is of the order of 19 percent of

gross provincial product. If you add federal spending and municipal

spending, total government expenditures in British Columbia must be

upwards of 45 percent — in the 45- 46- 47-percent range.

[11:30]

In other words, getting on to half or close to half of all the

activity generated in this part of Canada is as a direct result of

government spending. Admittedly, most of that spending is on people

programs — health, education and social assistance support. Perhaps

three-quarters of all that expenditure is in that area of payments

directly to people, but that is a sizeable item in respect to other

direct activities by government.

Back to the provincial percentages. If we're spending 19 percent of

our gross provincial product, we're only taxing at about a 17 percent

rate. We're running a deficit. Personally, I don't like deficits, but

in present circumstances deficits seem to be inevitable if we're going

to maintain the people programs, come anywhere near maintaining

educational outlays, expand our health care outlays and look after the

increased numbers of unemployed. We're going to have a deficit, and

that deficit is of the order of 2 percent of our gross provincial

product. In other words, as a provincial government we are pumping 2

percent more into the economy than we are taking out of it. The

provincial budget, to that extent, tends to stimulate.

Now the New Democratic Party over the years has talked really out of

both sides of its mouth. It's opposed to restraint in each area

individually. It's opposed to restraint in education; it's opposed to

some levelling off in health care costs; it's opposed to any tightening

up in the administration of social assistance. In other words, it would

presumably spend more in that very sizeable area of provincial outlay.

Yet today we hear the attack principally in the area of debt. Why the

deficit? Why is the deficit so large? Why has the deficit of the last

several years been of this order of magnitude?

Presumably, they would have had a lesser deficit had they been in

power, and I doubt that very much. They are more inclined to

Keynesianism — if I can describe it in that fashion — than Social

Credit is, at least in the principles of the party. I think — to

paraphrase Disraeli when he said, "We're all socialists now," when

universal manhood suffrage was brought in in the United Kingdom in the

1880s — we're all Keynesians now. We're all prepared to spend more than

we can tax back as income to government. It's been impossible to

balance the budget with industry ceasing to expand, with many

industries economizing and with new plants and equipment enabling many

firms to maintain their output with a lower payroll. This has been a

difficult period.

In theory, at least, I would much prefer that governments turn the

tap on and off only in the area of financing or helping to finance

capital projects, and maintain their people programs — health,

education, welfare, and so on — on a slowly ascending curve; that those

expenditures be more or less sacred; and that in good times governments

cut back on their capital programs, and in more difficult times — call

it periods of restraint — spend more in areas such as construction, to

maintain some level of activity in construction and related industries

in the province or in the nation.

There's an impression abroad in this province that the so-called

megaprojects have cost a great deal of money and have been major items

in the budget of the province. They are certainly large projects, and

perhaps in some ways too lumpy. But the total expenditure in any one

year on the megaprojects — I'm talking about year by year, rather than

the sum total of these big investments — has never exceeded 7 percent

of the provincial budget. The people programs — health, education and

social security — totalled have been upwards of 75 percent. So the

megaprojects, big as they may have been individually, have been

one-tenth or less of the scale of the people programs.

[ Page

6417 ]

(Mr. Ree in the chair.]

One can argue whether the economics of particular projects are as

favourable as alternate projects might have been, but certainly they

haven't been overwhelmingly large. They haven't been massive items, at

least seen in the context of the budget of British Columbia, I think

that they have ensured the survival of quite a few of our engineering

firms in this province. They have put people to work. They have

maintained the income of a number of people who had been accustomed to

earning exceptional salaries and wages. While admittedly it hasn't kept

all of the construction labour force employed, it has at least provided

a floor for many companies based in B.C., which hopefully will continue

to operate in this province very effectively.

On the taxation side, on the income side of government, the Minister

of Finance really has nowhere to go. We levy what are among the highest

tax rates on business in many categories in Canada. The minister is to

be complimented for his tour around the province: the fact that he has

listened to many submissions; that he's made a number of changes in

detail. Hopefully, our tax rates will tend to drift downward. But

British Columbia still remains an expensive place in which to start up

a business. If you look at neighbouring Alberta, with its oil and other

incomes and its relatively low business taxes, we've got tough

competition on our doorstep, so to speak, from Alberta. Tax rates in

Washington and Oregon states are also lower than in B.C. So the

minister can't increase taxes. He's been reducing some. His hands are

tied in that area — the area where he might increase income. I think

the opposition will be hard put to find instances where he could have

increased the inflow of money to the provincial government over the

last year or two, and perhaps for several years to come.

On the outgo side, as I've said, the money is spent mostly on the

people programs, which are so dear to the hearts of many British

Columbians and certainly to the NDP. They wouldn't have cut those

programs, restrained those programs or redefined those programs to the

extent the government has. They would not have increased income to the

government, and they would in all likelihood have increased outgo. They

would in all probability have reported higher budget deficits — perhaps

substantially higher budget deficits than the present Minister of

Finance has reported.

So those, Mr. Chairman, are my principal comments right now. I would

like to urge again that the Minister of Finance, every time he produces

a budget, give us an estimate of the current gross provincial product,

so that we can orient ourselves, and see how much of the substance of

the province the provincial government is taking and how much its

spending impacts on the total activity of B.C. That I would urge him to

do. I don't really know why this has not been done. Otherwise, I think

he had to be a Keynesian willy-nilly. Until we get our house in such

order that our people programs, which are the bulk of the expenditures

of the province, are well below any projected total income of the

provincial treasury, we'll not be fortunate enough to be able to turn

capital projects on and off and stimulate the economy at the right

time, hold it back at others, as we should be able to do under a

well-managed budget.

MR. HOWARD: Mr. Chairman, I'd like to revert to the latter

comments of the Minister of Finance, with respect to treasury bills'

functions. Before I do, though, I'd like to tell how much I enjoyed

listening to the member for North Vancouver–Seymour, as I always do. On

an earlier occasion in this session, he stood up in the House and

classified himself and all others on the government side as supporters

of supplyside economics. Now he says he 's in support of the Keynesian

concept. I suppose, Mr. Chairman, if you don't have any sort of real

fundamental economic philosophy about anything, you can be anything you

want at the moment, depending on what's going. That just proves that

speaking out of each side of the mouth is fairly easy for members on

the other side.

The Minister of Finance mentioned the B.C. Rail preferred shares

issue and said that that exhibited some degree of support for the

provincial governmentos position economically or fiscally.

Interjection.

MR. HOWARD: Then I misunderstood. But he did draw the

comparison and said that average citizens had an opportunity to invest

in that and many of them did.

I'd like to put on the record that there's a vast difference between

a preferred share issue selling at $25 par value, when you can buy 100

shares as a board lot. That's $2,500 when the minimum position on

provincial treasury bills is $25,000. There's quite a spread there.

The other thing was that I don't think that one should draw the two

of them together for comparative purposes, because the B.C. Rail

preferred share issue had available to it the federal dividend tax

credit. In addition to being fully endorsed by the provincial

government as to the payment of those dividends under the federal

dividend tax credit provision. That was the attraction. The 9 1/4

percent on the B.C. Rail preferred — I believe it was 9 1/4 — was by

rough calculation the equivalent of 13 percent or 14 percent on a

debt-bearing instrument such as a treasury bill. So that was a

tremendous attraction to people, and the dividend tax credit provision

is also a little bit more friendly to the taxpayers who are in higher

income tax brackets as well. I might add that the Manitoba government

likewise embarked upon that program and issued a similar preferred

share, Manitoba Properties Ltd., which had the same tax capacities to

it, and it was equally subscribed as was the one in British Columbia —

both guaranteed by the province, both the same tax advantage, different

political complexions of the government — so perhaps the Manitoba

government isn't doing things quite so badly after all.

MR. STUPICH: Just some comments on what the hon. member for

Skeena and the hon. member for North Vancouver–Seymour had to say in

this discussion. The hon. member for Skeena did raise the question of

whether or not the government and/or the opposition had anything at all

to say about where we go from here — what we would do — and I agree

with the minister that both sides have been talking about that, perhaps

not forcefully enough for that particular member to have heard us.

I made a point of drawing attention to the debt not because debt of

itself in our opinion is inherently bad. It is a fact that under this

administration the debt of the province has increased by $12.3 billion,

but it is also a fact, as I pointed out, that unemployment has never

been worse, that our educational system is in a shambles and that our

health care delivery system is being destroyed. These are the facts of

life as

[ Page 6418 ]

well. Along with borrowing all that money, we have

destroyed the economy and we're hurting all of the delivery of people

services.

What have we done with the $12.3 billion? We've built monuments. Now

monuments of themselves are not bad, either — not necessarily bad. We

can still admire the Great Wall of China and the Taj Mahal, and people

still journey to Egypt to see the Sphinx. Monuments are great if you

can afford them. But this particular time in the economy of British

Columbia is not the time to be building monuments. We should be using

that money — borrow it if we will — to do something positive for the

economy of British Columbia and to produce something for the people of

British Columbia. That's where we've failed. We can't afford monuments

in bad times. We can be doing that in good times, but in bad times

there are other things we should be doing.

[11:45]

Just speaking a moment about unemployment.... Really, this brings it

home — the differences among the provinces. There was a tragedy in

Ontario recently, where a tornado destroyed a lot of property and

people, with really a tremendous swath of destruction. But the

interesting thing to come out of that to me was when I heard of the

minister responsible for looking into the situation and bringing to

cabinet a plan for dealing with the human tragedy. The recognition was

there that unfortunately the construction industry in Ontario was so

busy before that happening that they would have to look elsewhere for

companies and individuals to do the work of reconstruction. The people

in Ontario didn't have time to do it; they were too busy doing what

they were doing already.

In British Columbia, Mr. Chairman, if the whole of Vancouver were

destroyed we could bring unemployed construction workers in from all

over the province. We would not have to took elsewhere for people to

work in B.C., regardless of the size of the tragedy. That shows you

what's happening in one province as compared with another. The

difference is that we have the Social Credit administration in office

in the province of British Columbia. In Ontario they had, of all

things, a Conservative government — the namesake of the member for

North Vancouver–Seymour (Mr. Davis) was the Premier — but at least they

were doing something positive for the people of Ontario, which we have

not been doing in British Columbia. And what have we not been doing?

Mr. Chairman, we have what we need here. The hon. member for North

Vancouver–Seymour said "levers." We have the levers available. We have

the resources.

We have abandoned almost completely our husbandry of forestry. We're

not doing anything positive about it. If we could call it Expo No. 2,

or if we could call it B.C. Place B, or if we could call it Tumbler

Ridge — anything at all — then we could borrow millions and even

billions of dollars to do what we should be doing with our most

important natural resource. We're not doing it, Mr. Chairman. That's

what we should be spending the money on instead of on monuments to

Social Credit.

Mining. Mr. Chairman, you've been around B.C. long enough to know

that in all of the time that the NDP was in government — over three

years — there was not one single mine in British Columbia that closed.

But from the time we left office the record of numbers of mines closing

has gone on year after year. Every year there have been a number of

mines close in this province.

Fishing. I've argued ever since I entered the Legislature in the

spring of 1964 that it's not enough to say fishing is a federal

problem. We should be doing more here. The federal government isn't

doing enough for our fisheries; we have to get involved ourselves.

We're not doing it. Why don't we spend some money on that resource, Mr.

Chairman, rather than on continuing to build monuments that are costing

us money and producing nothing?

Agriculture. Significant steps forward were made when the NDP were in office.

HON. MR. CURTIS: Mr. Chairman, on a point of order, I seek

your guidance. The member is becoming quite specific about activities

which are the responsibility of other ministries. He has referred to

forests, mining, and he's now about to speak about agriculture. I

recognize that the Ministry of Finance covers a fairly wide range of

topics, but I wonder if those relate to the vote 30 that is before us

at this time.

MR. CHAIRMAN: It is a point well taken. In estimates we

should deal with the administrative functions of the ministry and not

get into the broad philosophical debate which is more the purview of a

budget or a throne speech.

MR. STUPICH: Mr. Chairman, if I may just discuss the point of

order in my own time, may I say that the only time we can engage in any

discussion with the Minister of Finance on the extent to which this

particular administration has built up a non-productive debt in the

province of British Columbia is in estimates. We can talk about it in

the budget debate. One of us may speak, and a couple of weeks later the

Minister of Finance. Well, he's had his shot. The only time we can

discuss it with him and try to find out why he's borrowing money, or

allowing it to be borrowed, or pouring it into nonproductive

megaprojects, non-productive monuments, is here in the discussion of

estimates. I've finished with that particular

part in any case; not

with the levers available but the resources. The way in which we have

abandoned our resources surely has to be to some extent the Minister of

Finance's responsibility, since he's the one who is responsible for

raising the money and has some influence on his colleagues when it

comes to spending it.

I won't talk about whether or not the minister should be spending

money on training people, on education, on doing things that will give

them some hope, because that's somebody else's responsibility. But if I

could talk about it, then I would say that I think it's much more

important that we devote our resources to building up training

programs, educational programs for our people, than it is to produce a

B.C. Place where a few of them might exercise. We should have B.C.

Place, but we should have it when we can afford it, not when we have it

at the expense of education, health services and decent allowances for

people on social assistance.

I said before that we have the resources, the people, the energy.

It's not the minister's responsibility to build a natural gas pipeline

to Vancouver Island, but I would suggest that in today's economy it's

not B.C.'s responsibility to go out and borrow money for that. While it

wasn't the minister who said that.... I believe it was the Premier who

said we'll borrow the money ourselves and get this rolling. I would

urge that the Minister of Finance not proceed to borrow more to add

more to this total public debt, unless the economy improves to the

point where that can be financed out of revenue rather than

[ Page 6419 ]

taking it further from the education system and from the health system.

Finance. This certainly is the minister's responsibility. We can

borrow millions of dollars to bail out the Canadian Commercial Bank. I

said at the time that I supported what the minister had done in this,

and I still do, He said that it was to protect the depositors. To

protect a relative handful of people who had made deposits in that bank

at the expense of the thousands of people all over British Columbia who

are lining up at food-bank lineups, at the expense of people who are

being hurt because of what's happened to the education system and at

the expense of people who are being hurt because hospital beds are

being closed was not necessary. They should not have been cut back.

Nevertheless, we're saving millions of dollars in all those programs

and putting it to help a relatively small handful of people.

I agreed at the time, and I still agree, that what was done with

respect to the Canadian Commercial Bank had to be done so that people

would continue to have faith in our finance system. But, Mr. Chairman,

how long can people continue to have faith in a financial organization,

which in British Columbia, with everything that we've had — and I've

gone through the litany.... We have the resources, we have the people,

we have the education, we have the energy, we have all these things,

and the one thing that holds us up from doing everything we should be

able to do for the people of British Columbia is our inability to

finance it.

Mr. Chairman, we can finance it when we want to bail out the

Canadian Commercial Bank. We can finance it when we want to build

megaprojects, one after another. But we do not seem to be able to

finance it when it comes to looking after the needs of the people of

our province. That's my criticism. In criticizing, in saying what we're

not doing, I am, in effect, saying what we, the official opposition,

would be doing if we had the opportunity — or, if you like, will be

doing when we have the opportunity.

HON. MR. CURTIS: Mr. Chairman, with respect to the Canadian Commercial

Bank, the member for Nanaimo has characterized this as "relatively few

depositors." I would correct him on one point, incidentally, and perhaps

he did not intend to say it. We did not borrow in order to "bail out."

The money was advanced from consolidated revenue.

Interjections.

HON. MR. CURTIS: No, but to be perfectly straightforward

about it.... I wonder if the member really.... He has obliquely

criticized my actions on that weekend with respect to the Canadian

Commercial Bank. But he has said twice: "And yet I agree with you." The

member has to admit that the ramifications of that regrettable and very

touchy weekend were more than just a few depositors, more than just a

large number of depositors, but a very significant number of British

Columbians. I'm not making too much of it, Mr. Member, but when I saw

the exposure of the retail banking system in this province, I knew I

had to act. That's not something you take to a cabinet meeting, because

there isn't one available at that time of day — or through that

particular period.

The member for Skeena (Mr. Howard) spoke earlier about the first two years

of my time as Minister of Finance. He mentioned the increases of 20 percent

in each year: expenditure, 17.3 percent in 1980-81; 16.2 percent in 1981-82.

I believe the member took that and converted it into 40 percent. When one is

talking about expenditure growth through that period, I think, if one is going

to be completely accurate, one should also note that inflation was at a rate

of over 14 percent in 1981 and 10 percent in 1982, and factor those two inflation

rates against the expenditure increases of 17.3 percent in 1980-81 and 16.2

percent in 1981-82 — we're not talking about flat dollars.

The House resumed: Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 11:58 a.m.

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