1988 Legislative Session: 2nd Session, 34th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 10, 1988

Morning Sitting

[ Page

4351 ]

CONTENTS

Routine Proceedings

Vancouver Charter Amendment Act, 1988 (Bill PR403). Mr. Mowat

Introduction and first reading –– 4351

Vancouver Charter Amendment Act (No. 2), 1988 (Bill PR405). Mr. Mowat

Introduction and first reading –– 4351

Special Accounts Appropriation and Control Act (Bill 18). Committee stage.

(Hon. Mr. Couvelier) –– 4351

Mr. Stupich

Mr. Cashore

Ms. Edwards

Hon. Mr. Strachan

Ms. Smallwood

Mr. Miller

Budget Stabilization Fund Act (Bill 14). Committee stage. (Hon. Mr. Couvelier)

–– 4361

Mr. Stupich

Mr. Williams

Ms. Marzari

Appendix –– 4363

The House met at 10:07 a.m.

Prayers.

MR. MOWAT :

It is my pleasure today to introduce Mr. Don Shwery. Mr. Shwery is a

member of many organizations. He is with Vanex Resources Ltd., in

investor relations, and is also a director of the Gordie Howe disabled

athletic foundation.

Also in the House today we have Mr.

Stuart Brazier, marketing manager of North American Professional

Technologies of British Columbia Ltd., a very dynamic company. I would

ask the House to make them welcome.

HON. MR. COUVELIER :

All of us from time to time take pride in introducing constituents and

others who visit us periodically. I'd like the House to recognize the

presence in the gallery this morning of two particularly dear friends

of mine who have come to observe me in my time of travail: Mr. Reg

Mylrea and Mr. Paddy Palmer from Greater Victoria.

Introduction of Bills

VANCOUVER CHARTER AMENDMENT ACT, 1988

Mr. Mowat presented a bill intituled Vancouver Charter Amendment Act, 1988.

MR. MOWAT :

This private member's bill amends the Vancouver Charter in a number of

aspects. It will give the city of Vancouver power to construct and

maintain dikes and fund such projects through local improvement levels.

It will make clear that the city can recover the costs incurred in

demolishing unsafe buildings, and will enable city council to require

off-street parking when the use of the building changes.

The

bill will also amend the existing fines and penalty

section of the

charter to provide council with the power, if it chooses to exercise

it, to impose fines to a maximum of $10,000 for breaching a bylaw

regulating the use of properties. An example would be illegal suites.

The city council feels that higher maximum fees may be necessary in the

case of illegal use of property because of revenue derived from its

illegal use, thus providing a significant deterrent to property owners.

All other offences would carry a maximum fine of $2,000 as provided by

the Offence Act.

A number of changes are made with respect

to the Board of Parks and Recreation, including the right to enforce

its bylaws by injunction.

This bill will make the downtown campus of Simon Fraser University exempt from real property taxation.

number of amendments are proposed which deal with family suites. These

changes would enable council to permit family suites in all areas,

including single-family districts. As well, the power to relax

provisions of the zoning bylaws in this respect would be broadened. To

deal with the growing concerns over illegal suites in the city of

Vancouver, the council would be provided with the authority to permit

retention of one or more phase-outs of the suites for a limited period

of time. This would be conditional and provide that the owner would not

lose the cost of upgrading the suite.

Finally, this bill amends a number of sections of the Municipal Act to reflect

changes made over the years to the act but not included in the Vancouver Charter

itself.

Bill

PR403 introduced, read a first time and referred to the Select Standing

Committee on Standing Orders, Private Bills and Members' Services.

VANCOUVER CHARTER

AMENDMENT ACT (No. 2), 1988

Mr. Mowat presented a bill intituled Vancouver Charter Amendment Act (No. 2),

MR. MOWAT :

Mr. Speaker, this bill amends

section 333 of the Vancouver Charter to

provide the Vancouver city council with the power to impose fines to a

maximum of $10,000 for breach of all bylaws, and increases the maximum

for continuing offences from $50 to $200 per day. I find the imposition

of a maximum fine of $10,000 for any breach of the city bylaw to be

rather harsh. Under this amendment a person who fails to purchase a dog

licence will face a maximum fine of $10,000.

I would

suggest that when this bill goes to committee, a rather significant

amendment should be carefully examined. I believe that we as

legislators would not want to impose unduly harsh penalties on our

citizens for what amounts, in many cases, to a simple human error of

forgetfulness.

Bill PR405 introduced, read a first time and

referred to the Select Standing Committee on Standing Orders, Private

Bills and Members' Services.

MR. ROSE : I have a mild

concern about the way that the bill was introduced. Not that I have any

argument with the argument, but I don't think it is fitting to put an

argument in the explanation of a bill. I think the bill is introduced

and described, but the hon. member took a position on the bill at first

reading, which is a bit unusual. Perhaps we should leave the arguments

to a later stage in the bill. The purpose of this practice

recommendation is to merely describe what's in the bill, briefly, with

a simple explanation, rather than argue for it. As I say, my concern is

a rather mild one, but I think we should try and observe it.

HON. MR. STRACHAN :

I have a tendency to agree with my hon. colleague. Private bills are,

of course, by practice, sent to a separate committee, a committee other

than this assembly. Editorial comments or arguments in an explanation

of a bill could be considered to offend the rule of anticipation. The

member's comment is well taken.

MR. SPEAKER : I thank the two House Leaders for their very learned comments.

Orders of the Day

HON. MR. STRACHAN : Mr. Speaker, I call committee on Bill 18.

SPECIAL ACCOUNTS APPROPRIATION

AND CONTROL ACT

(continued)

The House in committee on Bill 18; Mr. Pelton in the chair.

[10:15]

section 4.

[ Page 4352 ]

HON. MR. COUVELIER :

Mr. Chairman, we had some extensive questions on this bill, and after

some discussions with the hon. first member for Nanaimo (Mr. Stupich)

it was agreed, I believe, that in order to put on the record certain

factual information, it would be useful that I read into the record a

reply to a number of queries put to us. With the House's permission,

may I make those comments now?

During our debate on

section

4 of Bill 18, Special Accounts Appropriation and Control Act, the hon.

first member for Nanaimo raised a number of questions on which I was

unable to satisfy him at that time. I should like to take this

opportunity to provide information to the committee in an attempt to

clarify the matter and provide information for the benefit of all

members.

Bill 18, Special Accounts Appropriation and

Control Act, deals with changes to special accounts and special funds.

Special accounts are part of the general fund which together with the

special funds forms the consolidated revenue fund. Special funds,

formerly special purpose funds, were established over a period of years

to carry out specific programs and were provided with separate

investments. The interest on the investments, and the principal in some

cases, was used for program purposes. In 1982, under the Special

Appropriations Act, most special funds were converted to special

accounts. Their net assets were returned to the general fund. The

special accounts became part of the general fund.

The Crown

land account was one of the special funds converted to a special

account in 1982. This meant that the net assets of the Crown land fund

were transferred to the general fund at that time. I would refer hon.

members to the Public Accounts for 1982-83. The difference between a

special account and a special fund is that a special account does not

have a separate balance sheet of assets and liabilities. To repeat,

since 1982-83 the Crown land account has had no separate balance sheet.

What

is termed the opening balance on page 210 of the '88-89 estimates is,

in effect, the balance of spending authority and was set in 1982 equal

to the equity — that is, assets minus liabilities — as it existed

when the '82 legislation was passed. Thus, at any year-end this balance

represents unused statutory spending authority. This balance changes

annually by the amount of net receipts of or net spending from the

account for the year. Since the Crown land account ceased to be a fund,

it has been operated in exactly the same way as before. The difference

is that it does not have assets or liabilities separate from those of

the general fund.

I would now like to address the effects

of Bill 18,

section 4, on the Crown land account. The balance of unused

spending authority of the Crown land account on April 1, 1988, was

$235,799,777, as shown on page 210 of those estimates. The significance

of that amount is that spending up to that amount can occur without any

vote by the Legislature, as the balance represents statutory spending

authority.

The 1986 report of the auditor-general

recommended that this spending authority be eliminated, and any

authorization for spending out of the Crown land account should be

voted — not statutory. Bill 18,

section 4, allows the Lieutenant

Governor-in-Council to transfer any amount of the balance in the Crown

lands special account to the general fund. The government proposes to

reduce the balance — that is, spending authority — by an

amount of $222,021,777. This will limit the spending authority of the

Crown land account to $50 million after the expected 1988-89 receipts

and spending transactions.

This action goes a long way

towards meeting the recommendation of the auditor-general. The effect

of this transfer of spending authority is to reduce the limit for

future statutory net spending from the Crown land account to a

cumulative limit of $50 million. Reducing the spending authority does

not cause any transfer of assets and liabilities, because these assets

and liabilities are already part of the general fund.

In

summary,

section 4 limits the future statutory spending authority of the Crown land account. This limit — to be set by the Lieutenant-Governor-in-Council —

will be $50 million plus any net receipts of the account. It does not

limit the activities to be carried on by the Crown land account, but it

does mean the Legislature will be required to vote approval for net

spending above the $50 million limit, thereby increasing the

Legislature's control over spending from the account.

Similarly,

the statutory spending authority of the small business forest

enterprise account will be reduced by legislation to be introduced at

this session. This is being done to eliminate the spending authority in

excess of that required for the proper operation of the account.

should now like to make some remarks concerning the farm income

assurance fund. Unlike the Crown land account, the farm income

assurance fund is one of the special funds to be converted to a special

account under Bill 18. Through the operations of the farm income

insurance program, premiums are paid into the fund on an equal basis by

farmers and the government. Indemnities are paid from the fund to

producers. At present, the balance of the fund — $22.3 million —

consists of accumulated premiums which have yet to be paid out as

indemnities, $12.6 million plus $9.7 million remaining from $11 million

in advances made to cover the fund in '79-80 and '82-83.

The

advances to the fund were recorded as expenditures made from voted

appropriations of the Ministry of Agriculture. These advances were made

to cover the net write-offs of discontinued programs under FII. Upon

the passage of Bill 18, the farm income assurance fund will become a

special account within the general fund. The net assets of the farm

income assurance fund will be transferred to the general fund. Revenue

received by the account will be recorded as general fund revenue, and

expenditures made will be recorded as general fund statutory

expenditures, rather than voted expenditures.

In order to

repay the advances, the revenue of the account must exceed expenditures

for a sufficient period until the balance on the account exceeds per

program requirements. This will mean that the general fund has received

more revenue than it has paid out in expenditure. At that future date,

the balance on the account will be reduced by the amount of the

advances. This will, in effect, repay the earlier advances.

should now like to make some general comments on the effect of Bill 18

on special funds and special accounts. The main purpose of Bill 18 is

to convert existing special funds into special accounts. The purposes

for which the funds were established are unchanged by this conversion.

After enactment of Bill 18, all existing special funds will have been

converted to special accounts with the exception of the resource

revenue stabilization fund, which will be eliminated. The two new

special funds to be established by the Budget Stabilization Rind Act

and the Privatization Benefits Fund Act will be the only special funds.

I should now like to explain the effect that various transactions of special accounts have on the general fund as

[ Page

4353 ]

shown in the public accounts. Each special account can have any combination

of revenue expenditure and financing transactions.

Examples

of financing transactions are the granting of a loan or the repayment

of a loan. Financing transactions do not affect the government's

budgetary deficit. Revenue may increase the balance of spending

authority of a special account. It will also be recorded as general

fund revenue, will increase cash or other assets and will increase the

net equity of the province. Expenditure may decrease the balance of the

spending authority of a special account. It will also be recorded as

general fund expenditure, will decrease cash or other assets, and will

decrease the net equity of the province.

A financing

transaction receipt such as a loan repayment may increase the balance

of the spending authority of a special account. It will not be recorded

as general fund revenue and will have no effect on the net equity of

the province

A financing transaction disbursement, such as

the issue ance of a new loan, may decrease the balance of the spending

authority of a special account. It will not be recorded as general fund

expenditure and will again have no effect on the net equity of the

province.

Financing transactions generally change the

nature of assets and liabilities. An example of this is converting a

loan receivable to cash when the loan is repaid. This does not affect

the annual deficit or the net equity of the province. The reduction of

spending authority within a special account does not involve any

transfer of cash or assets, nor does it change the nature of any assets.

I trust that this information has been of value to the members. Thank you for allowing me to put that in the record.

MR. STUPICH : I appreciate the minister's explanation, and I am pleased that it is now in Hansard .

I also appreciate the opportunity that he made available for me to meet

with his two staff members to discuss this at some length. I'm sure

students of something or other will read that particular portion of Hansard with a great deal of interest, and not too many of them will be very much enlightened.

I'd like to comment a little on the minister's remarks, in language

that I think, Mr. Chairman, you and I will under stand at least. When W.A. C.

Bennett left office — the figures may not be exact; I'm going by memory — there was some $357 million in cash and investments as the assets of various

special and perpetual funds. On the other side it has been argued with me that

there were no liabilities, and that's true, but there were statutory obligations

to spend that total amount of money on the various programs that were all passed

by legislation in this House. There was no net equity, because there was balance.

The statutory obligations to spend the money on the legislative purposes of

those funds were sitting there and the assets were there as well.

During the profligate spending years of the Bill Bennett administration, we

not only spent all of our general account assets, but we started borrowing money

as well. When the NDP administration left office, that figure had been increased

by just over $200 million, so at that time we were dealing with $571 million,

as I recall — cash and investment sitting on one side and statutory obligations

to spend them for specific purposes, as outlined in the legislation. The money

was there, and the statutes were there, saying what the money was going to be

spent for.

Then,

when the government, as I say, blew all of its assets and started

borrowing money for general account purposes, there would have been no

point — and I agree — in keeping that money intact. It might

as well be rolled into the general account, as was done. I think that

happened in '78-79 and then in '81-82 we completed the picture.

When I was arguing last week and saying that there really was an obligation

to spend the money on the purposes of these funds, I was trying to shut the

barn door ten years after the horse had escaped. It happened without my seeing

it ten years go –– I realize now that there is no obligation on the

government to spend the money, but there is the authority to spend it for the

purposes outlined in these funds, and that's all there is now. The government

now, in this particular section, is saying that it can at any time take any

of the funds that have arisen from the disposal of Crown lands or any of the

other sources of revenue for this fund and use them for any purpose of government,

not just for the purposes of the legislation that was established when this

fund was established.

I'm

sorry that it has happened this way. I regret that the Social Credit

government did blow our assets to the extent that they have had to, in

effect, wipe out the funds totally. They mean very little now. The

statutory authority is still here to spend them, but the government is

taking unto itself.... Legislative counsel may at any time change the

amount that is in the statutory authority as well. Really, they don't

mean much anymore, and I wonder why we bother with the whole process.

Why not wipe out everything and just include it in the public accounts

of the province and do these things if we choose to or not do them as

we choose to? It's too late to argue against

section 4; the damage was

done ten years ago.

[10:30]

MR. CASHORE : I've been reading over the Hansard

from the discussion of the committee on May 3 on this topic and I found

completely unsatisfactory the answers that the minister was giving to

the very legitimate queries and requests for comments that we were

making at that time. Having read his statement this morning, I do

appreciate that he minister.... It seems to me, if I'm to distil

anything from it and try to put it into a concise statement, that the

minister is saying that the authorization for spending authority is

being reduced by $226 million. To go back to a statement made during

the debate on May 3, he said that if there was a need, we would address

it at that time, and therefore it's not necessary to have this kind of

spending authority.

When we look at the footnote put in

place by this government describing the purpose of the fund, one of the

statements there was the acquisition of social housing sites. The

minister went on to point out somewhat ambiguously.... If you read Hansard

you will find that his answers were not clear, but they did follow a

progression from saying that this money was paying for the social

housing program to where he finally ended up saying that it was for he

acquisition of the sites for social housing. He tied that into the

1,900-some-odd units per year being built.

The comments I

have to make are on one point and one point alone, and that is on the

issue of whether there is a need and whether this amount of spending

authority should be reduced as the minister is suggesting. I noted in

the debate at time that the minister became very upset with some

comments I was making and was saying: "What are the

[ Page 4354 ]

specific

questions that you're asking?" I just want to say that I am not asking

the minister a question at this time. I am making some valid points as

part of this debate because I think they should be placed on the

record. We'll let the public judge whether a need exists at this time

for the acquisition of Crown land for housing.

The basis of

my thesis is that there is a severe housing shortage in British

Columbia and that a need does indeed exist, a need that has not been

addressed in any meaningful way, and that the paltry 1,900 units per

year going into social housing is simply inadequate by any definition

whatsoever. I have in my possession a document prepared by Prof. David

Hulchanski, an associate professor at the School of Community and

Regional Planning at UBC. I would like to place in the record some

statistics on the housing crisis in Vancouver.

The first

points I would like to make have to do with rental stock by type in the

city of Vancouver. This is an estimation coming from David Hulchanski's

department at UBC. At the present time in Vancouver there are 16,000

social housing units, 64,800 private rental apartments and townhouses,

15,500 rooming houses, 4,800 housekeeping units and 25,000 second

suites in single-family dwellings — in other words, 25,000 illegal

suites. They don't have a figure for condominiums for rent, but that is

also understandably a part of that housing picture.

The

last figure I mentioned, the 25,000 second suites, should be noted

especially with regard to the private member's bill introduced earlier.

I understand that through the Vancouver Charter, the process of looking

at illegal suites is being altered in a way that could exacerbate the

housing crisis, especially for low-income people, because when some of

those regulations come into effect on the so-called illegal suites, we

are going to find that people will literally be out on the streets.

From

those figures on rental stock by type, I go on now to private-sector

rental starts in the city of Vancouver. This data comes from CMHC. In

1984 there were 846 units; in 1985 there were 275; in 1986 there were

88; and in 1987 the figure increased again to 463. The story there is

that the private sector, which the government refers to as the market

sector that will provide as the need is there, is simply not providing

for the need. The number of private sector housing units coming

available to low-income renters is simply inadequate.

We go

on then to look at the co-op and non-profit housing starts in the city

of Vancouver from the BCHMC data. We find that in 1984 there were 861

units; in 1985 it increased to 1,405 units; in 1986 it decreased to 795

units; and in 1987 there were a paltry 438 units.

Mr.

Chairman, we now move on to a phenomenon that's seriously affecting the

available rental stock in the city of Vancouver. This is the

conversions of apartments into condominiums. As we know, low-income

people by and large are not in a position to afford to purchase their

condominium. But as these are being sold, that is affecting the

available rental accommodation. In 1983 there were 166 units converted

from rental to condo; in 1984 there were 125; in 1985 there were 67

units; and in 1986, 264 units.

Now we go on to the numbers

of people on social housing waiting-lists as of January 31, 1988. Mr.

Chairman, this is a very sad story. This is a story of the people who

are most seriously affected by the housing accommodation situation:

low-income people. At the present time, there are 3,768 households on

waiting-lists for private non-profit rental housing societies. There

are 4,210 households waiting for public non-profit corporations. There

are 9,290 households waiting for co-op housing resource groups. That's

a total of 17,268 households on waiting-lists in the Vancouver area.

now go to the October 1987 data with regard to apartment vacancy rates

in the Vancouver area. At that time there was a 1.2 percent vacancy

rate in the city of Vancouver, or 640 units. In Burnaby there was a 0.6

percent rate; in New Westminster it was 1.5 percent; in the city of

North Vancouver it was 0.5 percent.

MR. CHAIRMAN :

Hon. member, may I interrupt for just a moment please. I've let you go

on to some extent, but with due deference to all hon. members, I would

like to bring to your attention that it seems to me that we're falling

into the same pattern as we were the last time we dealt with this

particular bill, in that our discussions are now ranging into areas

which would be much better dealt with under the estimates of other

ministries.

In second reading of this bill, we did agree on

the principle involved therein. Now, of course, we're dealing with it

clause by clause or

article by article. I would just suggest to hon.

members that the debate is becoming somewhat involved with what I think

would be much better dealt with under the estimates of other

ministries. Having cautioned the member in that regard — and I will ask Hansard not to take away his time that I've taken up — I'll ask you to proceed, please.

MR. CASHORE :

Mr. Chairman, my remarks deal specifically with an item that is

fundamental to this bill. It is the footnote to the Crown land account,

which is referred to in Bill 18. Specifically I'm talking about the

acquisition of social housing sites. I'm placing on the record

statistical data to indicate the need that exists for social housing

sites in this province.

HON. MR. STRACHAN : Mr.

Chairman, I appreciate the member's genuine concern with social housing

in the province of British Columbia. However, he had a good

opportunity, during the minister's estimates, to canvass that subject,

and I believe he canvassed it quite well, to the best of his ability,

and made his points well known. I believe he had the opportunity during

second reading of Bill 18 to further canvass and present his concern

with respect to social housing.

However, we are now on

section 4 of Bill 18. Our standing orders advise us to be relevant and

specific to the

section in itself — not to the bill, but to the

section. The operative word in

section 4 is that the L-G-in-C may

"transfer" any amount in the balance. So we're dealing with the process

of transferring — not how the funds are disbursed or what

direction they should or should not take, but in fact, with the

principle of transfer. That's all we should we concern ourselves with.

MR. CHAIRMAN : Your sage advice is always well received and appreciated. Will the member continue on that basis, please.

MR. CASHORE : If the Minister of Environment and government House Leader would read Hansard

from the discussion so far on

section 4 of this bill, he would find

that the minister stated that as need arises this could be reviewed. I

am speaking to the issue of need which has been discussed both by the

minister and me during the debate up to this time.

[ Page 4355 ]

The

point is very clear that there is a very serious situation with regard

to vacancy rates, and those vacancy rates impact most directly on low

income people. There is another point that I think has to be referred

to in the context of this discussion, and that is that in the

negotiations that took place with regard to the BCEC lands, it becomes

apparent there was no intention to insist that there be social housing

sites entrenched within that agreement.

HON. MR. STRACHAN :

I will accept reference to a conversation that may have taken place

earlier between the minister and the critic, but to now use language

from

section 4 — which I said earlier only indicates that the

L-G-in-C may transfer any amount of balance to the Crown lands special

account — and to draw into that a debate on the Enterprise

Corporation sale and its regime for social housing is really stretching

it, I'll tell you, Mr. Chairman; I don't think the committee can accept

that.

MR. CHAIRMAN : Thank you, minister. I can't

help but agree, and I would ask the member to make his comments more

pertinent to the particular

section of Bill 18,

section 4.

MR. CASHORE :

I can understand why that minister doesn't want the loss of this

spending authority related to what's happening with the BCEC lands,

when the Tenants' Rights Action Centre and DERA are saying there should

be 50 percent social housing and this spending authority is being taken

away from the possibility to acquire social housing sites, and this

government is embarrassed that it failed to build the social housing

into that deal. I can understand, Mr. Chairman, why that minister is

upset about that. It's shameful to think....

[10:45]

MR. CHAIRMAN :

Hon. member, please. The Chair has asked you in a very nice way to just

subscribe to the rules as they apply and deal with

section 4 in its

context. I think we're rambling a little bit — let me put it that way.

MR. CASHORE :

Mr. Chairman, I would like to point out that as we continue to question

this minister with regard to the removal of spending authority for some

very needed assets within this province, we are going to be canvassing

different aspects of the

definitions under Crown land. I feel I have

made my point on the record, and I think that it is a valid point. I

can understand the embarrassment of this government in not wanting to

have that point stated.

MR. CHAIRMAN : Before we proceed, the second member for Vancouver-Little Mountain has asked leave to make an introduction.

Leave granted.

MR. MOWAT :

It is my pleasure to introduce to the House 25 students from division

one of the McBride Elementary School. They are studying the grade 7

curriculum on government, and they have joined us in the House today. I

just had an interview and discussion with them in our caucus room, and

I would ask the House to please make these students welcome.

MR. STUPICH :

Listening to the remarks from the hon. member for

Maillardville-Coquitlam and the responses from the government House

Leader, and rereading this section, I realize that the proceeds from

the sale of Crown land, from Crown leases and the interest earned in

any of those situations will now be totally at the disposal of cabinet.

We won't be able to have the kinds of discussions we've had when the

member was talking about the need for land for social housing, because

cabinet will have the authority to reduce that fund to nil at any time

cabinet wishes. As a matter of fact, the way they operate, I think they

would even have the authority to reduce it to substantially less than

nil if they wanted to create a credit balance somewhere else.

On that basis, the opposition will be opposing this section.

MS. EDWARDS :

I also want to make some comments about this

section which says that

the Lieutenant-Governor in-Council may transfer any amount of the

balance — and in this particular aspect of the

section it's

different than the other funds and the other accounts that are being

transferred. That's what we're talking about, Mr. Chairman. We're

talking about the fact that, with this particular account — which used to be a fund and now is only an account — we are now having not only that happen, but we're having it transferred. We're also having its statutory obligations reduced.

I can tell the minister that there are some major concerns for the people in this province —

just as an example, the ones who are interested in wildlife habitat. We

are at a point where it is absolutely critical, I am told, that if we

want to save some of the wildlife in this province, we must purchase

some land. We are faced with this critical situation, and there are

examples right across the province. I get my examples out of my area,

but there are examples in the Okanagan, in the Cariboo, in the

northwest and certainly on Vancouver Island, where land purchase is

being demanded by the managers.

The managers who want to manage — and management is proven to work —

are unable to do that. In the face of this, we have this reduction and

the ability of this particular clause to reduce the statutory

obligation for a function that is absolutely critical. We are reducing,

says one of the past presidents of the B.C. Wildlife Federation, whom

I'm very happy to use as one of my advisers, the capital of the

province. The capital of the government is its natural resources. We

need to replace that capital.

Just as a matter of interest,

as an example of why we need it, I might name a few things. For

example, the sheep herds in the East Kootenay area — which have

been in the news for years and years because of the constant stress on

these animals, with are very precious and very indicative of how our

habitat is going and how our environment is in its health —

require new habitat. There is private land in the East Kootenay that is

prime winter range and that has gone into private ownership, and it has

no particular use to the owners. It went with a block of land. It's

very likely that this land could easily be bought by the Crown.

I'm referring in particular — although there are so many it's difficult to choose one —

to the China Wall area. As I say, we all know, over the years, the

threat and distress that these sheep have been under and the reductions

in numbers that they go through because of stress of other use. One of

the things we need to do is to buy more habitat for them; intercept

range, it's sometimes called.

In the Okanagan, the Casorso

property is needed for habitat, again for sheep. You can speak in more

general terms. You can talk about relieving deer from stress on the

[ Page 4356 ]

habitat,

and burrowing owls and yellow badgers. There are any number of animals,

wildlife species, that need management, that need capital money to buy

land back from private ownership, to put that resource back into the

hands of the government and the ministry that does the managing.

would suggest, Mr. Minister, that this clause, with the particular

indication that there will be a reduction in the statutory obligation

for spending in this account, goes against the basic requirements we

have to keep our environment in order. It's partly on that basis that

you, I think, are going to have to make a decision that this particular

account should not be reduced; that this

section should be revised to

say that if you're going to transfer it, the Lieutenant-Governor-in

Council will transfer the balance in the Crown land special account, so

the statutory obligation is not reduced.

HON. MR. STRACHAN :

I'd like to respond as Minister of Environment, because these are

environmental issues that the member has brought to the attention of

the committee. I appreciate her concern, and I welcome her argument on

behalf of the Ministry of Environment and game management and game

enhancement; although I think — and I said this earlier in debate on this

section —

that debate would be better covered during my estimates, when I can

deal with the priorities and initiatives I have taken in my use of the

Crown land account and the funding that goes with it. Then there are

several that look good, and we'll get to those later.

I did

want to respond to some degree to what the member said, because the

points that she raised are legitimate and valid and, as I said earlier,

I support and welcome her argument on my behalf. What we're looking at

here, though, is in fact a spending authority procedure. I don't think

it in any way at all impacts on the Ministry of Environment operations,

and the argument presented by the member for Kootenay using this

transfer regime and methodology really doesn't apply. If the government

of the day wishes to give first priority of all spending to Crown land

and wildlife enhancement, it will. If it doesn't want to enter into any

spending for wildlife enhancement, it won't; it's that simple. Whether

or not this

section is in place will have no bearing on what a cabinet

or an administration spends on wildlife enhancement. It will be up to

that government, not on words contained in a

section in a finance bill.

MS. SMALLWOOD : Does the Minister of Environment support this reduction in the Crown land account?

HON. MR. STRACHAN : It's not a reduction.

MS. SMALLWOOD : Let me rephrase it. Does the minister support the reduction in the spending authority?

HON. MR. STRACHAN :

Number one, I don't see it as a reduction. Secondly, it's the

auditor-general's request. Thirdly, I am just one of the agencies that

would use this fund.

MS. SMALLWOOD : The Minister of

Finance has explained that it is at the auditor-general's request,

although I think if you look at the request, there are other ways of

achieving it. We have a reduction in spending authority, and while the

minister is only one of several ministers involved in that account, I

would suspect that your ministry has a very strong demand on that money

because of the need in our province and the growing conflicts between

the environment and industrial activity.

Again, I would ask

the minister whether he supports the increased pressure that this

reduction puts on his ability to deliver his mandate to the environment

and the preservation of wilderness in this province. Have you expressed

a concern, Mr. Minister?

HON. MR. STRACHAN : That

debate with respect to this I can't see as being relevant. We know

there are many agencies who put pressure on this account. I am just one

of them. The L-G-in-C in totality — the whole cabinet — will

decide on what the priorities will be, whether it be wildlife

enhancement, social services or Crown land for other purposes. They

will make that decision. A bookkeeping and financing arrangement as

discussed in

section 4 has nothing to do with what priority cabinet is

going to put on Crown land and its disposition.

MS. SMALLWOOD :

I have a question to the Minister of Finance. I think very clearly what

we have seen is a priority shift. The Minister of Environment has

indicated that it's up to the government where they put their

priorities, and where they want to spend their money. By the reduction

of the spending power in this account, we are seeing this government

put a lower priority on the mandate that this account was initially

established to fulfil. Can the minister tell us why they decided to

restrict the power of spending in this account and in no way restricted

the ability of this account to continue to raise money? Does the

minister anticipate any change in the ability of this account to raise

money in the future? What effect will that have on general revenue?

HON. MR. COUVELIER :

I'm having some trouble finding consistency in the arguments from the

members of the opposition on the range of methods by which we bring

forward these issues. For example, we've had long debates in the past

on the question of special warrants, and the argument is that they

should be in appropriations, and there should be opportunity for the

House to comment.

The auditor-general has criticized the large sums that have been in these accounts —

historically unspent and unnecessary to be put in that account. He

raised the argument that you are offending the rights of the House by

leaving these accounts with such a large unallocated balance, and that

if you really believe in the democratic process, this government should

be allowing the House to comment on voted expenditures. By perpetuating

this historic device, in effect we're denying the House that democratic

right.

It seems to me that it should be in the opposition

members' interests for us to oblige the auditor-general's comments. We

are attempting to do that. When we attempt to do that, we get

criticized for some sort of devious purpose that we're going to try to

reduce the expenditures on these admittedly important issues as

represented by a minister of the Crown who is given that specific

responsibility to ensure that we do justice to that issue.

You

might draw that conclusion, were we not to have a Minister of

Environment and Parks, someone specifically charged with the need to

preserve and safeguard the issues you describe this morning. But, hon.

members, I don't see how you can have it both ways. Here we are, trying

to change an accounting technique so that these issues can be put in

voted expenditures in the future, and you would then have a

[ Page 4357 ]

chance

to debate them; and when we oblige your interest and the

auditor-general's interests, here again we seem to be subject to some

criticism. I concede that it is your elected mandate,

but sometimes it gets a little difficult for lay people like me to

follow the switch of logic, as you jump and straddle both sides of the

fence, depending on what the issue is at the moment.

Mr.

Chairman, this does not reduce, in the government's opinion, the

interest in the subject or our desire to make sure that we continue to

do our public duty in respect of protecting parks and habitat. You make

the assumption that that's our purpose, and we say to you that it was

not our purpose — and that's a matter of record with the

auditor-general's comments. Then you ask us the question, "Are you

going to reduce your emphasis?" and we say: "No, we're not." And that's

something that only time will prove. Clearly, the government side

disagrees with your assumption that we're reducing our interest in

these subjects.

MS. SMALLWOOD : If indeed the purpose

of this change was to deal with the issue of accountability, as

requested by the auditor-general, then I suggest to you that there are

better ways to be accountable for this money than shifting it into

general revenue, where there is no accountability for the bulk of that

money.

The point here is not only the priority that the

government is indicating by leaving this small amount to deal with

these important issues of social housing and the environment and other

important issues, but the concern I have, which I would like the

minister to address, namely the shift of finances, where that money is

being funnelled off into general revenue. That money was raised, I

understand, by the sale of Crown lands for a specific purpose, and is

now no longer being accounted to that purpose. Perhaps the minister

could explain how the House can be assured that the money raised by the

sale of Crown lands will be spent on the purposes it was intended for.

HON. MR. COUVELIER :

Mr. Chairman, I suppose the hon. member was absent from the House when

I read into the record at the start of this session this morning a

detailed explanation of the history of these funds. I assume from that,

therefore, that her question was expressed because she hadn't heard my

earlier explanation.

I am very pleased to send across the

floor to her now a copy of the ten or 12 pages that I read into the

record on this issue. The funds went into general revenue in 1982, hon.

member. This device does not put money into general revenue. So with

respect, Mr. Chairman, I think the question makes an assumption that is

not correct. I'll send this material across the floor.

MS. SMALLWOOD :

Is it not true, Mr. Minister, that the fund, prior to this change,

indicated that a certain amount of money, whether it was actually held

in general revenue or not, was to be spent for the purposes outlined?

What you are doing now is limiting the amount of money; therefore,

there is a set amount of money that is no longer allocated to social

housing and enhancement of environment.

[11:00]

HON. MR. COUVELIER :

Mr. Chairman, we're talking about authority to spend; that's all, just

authority to spend. There were no dollars in the account. The dollars

were transferred to general fund in 1982. We've debated this

authority-to-spend issue now for — I don't know, a day and a half. That's the issue: authority to spend, only that.

You're

saying that by reducing the authority to spend, we've lost our interest

in this subject. And we say to you that that is categorically not true.

We are reacting to a request of the auditor-general, which in effect,

by obliging his concerns, means that you will then be able to debate

the issues through voted expenditures. It does seem to me that that's

in the democratic interest, and clearly in your interest. To the

suggestion that we've lost interest, time will prove your assumption

false, hon. member; but unfortunately you're going to have let the time

pass in order for my statement to be proven or disproven.

MS. EDWARDS :

I take what you have to say: it's a statutory obligation, a commitment,

that we're talking about. We're not talking about dollars. Fine with

me; I'm quite happy to talk about finance and commitment. The

commitment is reduced. You have told us that the commitment is not

gone; however, you have been unable to convince us that it is anywhere

else. Until you can, I think that we are arguing that you are taking

away that commitment without replacing it with something. I don't think

you can avoid that, because by taking away the obligation that was

there by statute to spend this money that came in in this way for these

particular functions.... We certainly do not see that those particular

functions have been carried out to the extent that you are reducing the

statutory obligation.

Section 4 approved on division.

Section 5 approved.

section 6.

HON. MR. COUVELIER : Mr. Chairman, I move the amendment standing in my name on the order paper. [See appendix.]

On the amendment.

MR. STUPICH : So that I will have time to find it, would the minister tell us why he introduced this amendment?

HON. MR. STRACHAN :

I'll let the Minister of Finance elaborate when he gets his notes. This

makes reference to the First Citizens' Fund, and the committee will

recall that last fall we amended the First Citizens' Fund legislation

to allow them the right to lend money as opposed to just offering

grants. This amendment, as I understand it, makes the wording of the

six First Citizens' Funds consistent with the amendment to that fund

that was passed last fall. It gives them the right to lend as opposed

to just giving grants.

Amendment approved.

section 6 as amended.

MR. STUPICH :

I note that this reads that the Minister of Finance "may pay an amount

equal to the interest...." That also means that he may not, I take it.

Does it leave the door open for him to do anything else with it? I just

wonder why it's made.

[ Page 4358 ]

HON. MR. COUVELIER :

As I understand it, we did not change the wording from the original

piece of legislation. We merely reproduced it as originally written,

and that was in 1979.

MR. STUPICH : The minister says "as originally written in 1979." This fund was established long before that.

HON. MR. STRACHAN : In '69, actually.

MR. STUPICH : Yes, perhaps.

I'm

still wondering at the "may." The minister is telling me that I should

have been listening more in 1969 than in 1988, that 19 years ago I

should have asked why it was "may" rather than "shall." But in those

days the fund itself was inviolate. The fund interest could be used for

no purpose other than this, but I'm not sure anymore. The minister is

still talking about 1979. It could have been that there was an

amendment then, but I think the hon. House Leader is correct in saying

that it was introduced in 1969 — sometime in that area. I still don't know why it's "may."

MS. EDWARDS :

I think it would be appropriate for me to say for the record the

response that I've had on these changes to the First Citizens' Fund.

From what I understand, the native people accept that they can now get

loans, but their feeling is still that the loans are not nearly as

necessary as some major amounts of capital. They need it. They have

asked that this fund be increased. They need capital grants out of the

fund, and they are not particularly happy with the change, which allows

them to have loans that they can probably get somewhere else.

Section 6 as amended approved.

section 7.

MR. MILLER :

With regard to the million dollars, I guess it was, in the fund. As I

recall, although I wasn't a member of the Legislature at the time,

there was great fanfare around this act and what it would do for the

forest industry in terms of reforestation, etc. The target, if I'm not

mistaken, was some $25 million. Yet we have a million dollars. I'm just

wondering if the Minister of Finance could comment on the source of

those funds and maybe disbursements that have been made with regard to

their stated purpose.

HON. MR. COUVELlER : I'm

advised that there is no change here from the previous legislation.

It's merely a question of moving the status of the item. We're not

talking here about any change from past practice.

MR. MILLER :

That's what I was trying to get at: what is past practice? We passed an

act in the Legislature, and its stated purpose.... I'll read it, and it

sounds good: "The forest stand management fund is established as an

account in the consolidated revenue fund for the purpose of providing

an ongoing appropriation of money for (

a) silviculture and other

management and enhancement of forests, forest lands and range lands,

and (

b) employment and training opportunities related to...." — the above.

What

have we done? Why are we keeping this? It seems to me a waste of time.

It never worked, did it? You talk about straightening out the books on

the recommendation of the auditor-general; I don't know why we're

keeping this red herring around. It never did the job it was intended

to do. It never can with the amount of money that's earmarked for it.

Why don't you just take the money and put it into general revenue and

forget about it? In terms of the operation of this particular thing,

it's a waste of time.

HON. MR. COUVELIER : That's the

second comment that I've heard from members of the opposition, and I

suspect if we had done that, they would have found some other petard to

attempt to hoist us on.

If the hon. member has any

difficulty with the numbers of dollars involved here, then I suggest it

might be directed with respect to the estimates when the minister

brings them forward. All we're talking about here is the accounting

treatment. I read into the record, before the member joined the House

this morning, I suspect, some explanations of what we were doing with

this bill. If the hon. member likes, I'll send him a copy also so he

can have the benefit of its comment. In any event, the issue about the

dollars themselves might properly be directed to the estimates. As to

the principles involved here, I can confirm what I said earlier, that

all we've done is retain the terminology used in the previous

legislation.

MR. MILLER : The Minister of Finance

gets up rather testily and seems to object to some line of question

that's coming from the opposition. I'll be quite happy, Mr. Minister of

Finance, to debate this government's record on reforestation and

silviculture. I will do that at the appropriate time. I'm not trying to

pin that on you, so don't be so defensive about it. All I'm suggesting

is that you're the Minister of Finance, you're responsible for the

books of this province and special funds, and here's a glaring example

of a special fund that (

a) was a waste of time when it was set up and

(

b) has never done anything. If you want to talk about a BS fund,

you've got it right here. If you want to look at the books and decide

what's useful and what's not in terms of weeding out things — which is your job, I presume — you should take a look at this one.

MS. SMALLWOOD : I'd like the minister to tell the House, for the record, where this money comes from — how it is raised.

HON. MR. COUVELIER :

This account can be credited with contributions from the general fund

industry, forest sector unions and others. No financing transactions

are provided for under this account.

MS. SMALLWOOD :

Perhaps the minister could further clarify. It sounds like it's a

goodwill fund: if somebody would like to contribute, they can do so.

Can the minister explain to the House how the money is collected?

HON. MR. COUVELIER : I thought I just did. I'll say it again. The account can be credited — that is to say, funds received; that's how it gets there —

with contributions from the general fund under vote 41, from the

municipalities, the forest industry, forest sector unions and others.

[11:15]

MS. SMALLWOOD : How would the forest industry contribute to this fund, and for what purpose?

[ Page 4359 ]

HON. MR. COUVELIER :

It's my understanding, Mr. Chairman, that the forest industry might

embark on joint venture programs and be required to make some

contributions under them, and that this account might be used for that

purpose.

MS. SMALLWOOD : Is it at any time used for the sale of land or timber rights?

HON. MR. COUVELIER : No, Mr. Chairman, not to our knowledge.

Section 7 approved.

section 8.

MS. EDWARDS :

I have a question of the minister on this. It arises out of an

understanding that the moneys for the habitat conservation fund

originally came as interest on the Crown land fund — that was way back. Then there was a change and it was done with a surcharge. As I understand it, that's the history of it.

Interjection.

MS. EDWARDS :

I don't know, and it may not have anything to do with my question,

which has to do with (2)(b), which says: "There shall be paid into the

account money acquired by gift, donation and bequest, or by disposition

of any land for the purposes of the account." My question is: how would

that land be decided? What land would that be — "any land for the purposes of the account"?

HON. MR. STRACHAN :

I welcome this opportunity to stand and discuss this

section of Bill 18

in general, because there has been some concern from the hunting and

fishing community — who are, of course, the shareholders of this fund —

about the disbursement of those funds. Just for the benefit of the

committee, I will advise you, Mr. Chairman, that

section 8 and the way

it reads down to subsection (2) is taken right out of

section 11 of the

Wildlife Act, where the habitat conservation fund and what it should do

are laid out. The reading there is identical.

With respect

to the comments the member made about the history of this fund, I'm not

aware of previous ways of collecting revenue for this fund, but the

Wildlife Act, which we operate under now, says that the revenue will

come, as is indicated in the section, from "surcharges collected on

licences or applications for licences issued under this Act and...money

acquired by gift, donation and bequest or by disposition of any land

acquired for the purposes of the fund." From that, we will disburse

funding for enhancement purposes, using a board of directors appointed

by me and chaired by Dr. Ian McTaggart-Cowan. We will also acquire

land, gifts and donations; that land is also administered by the

habitat conservation fund board.

During my estimates, Madam

Member, I'll be more than happy to bring you an account of what they

have done over the last year in the management of that habitat

conservation fund. To be brief, nothing has changed. They've taken

money from a surcharge on the sale of licences for angling and hunting,

and they've taken land and donations. It all goes into the stewardship

of the habitat conservation fund board of directors, and they can

disburse and carry out their projects as they see fit.

MS. EDWARDS :

Thank you, Mr. Minister, but I wish you would clarify for me. I believe

you said the only land that would be involved in this subsection was

land that had been given to the habitat conservation fund. In other

words, there would be no land assigned to that purpose, and the

proceeds given to the habitat conservation fund, that might have come

under the Crown land account. That's not what we're talking about at

all? There is no possibility that the Minister of Environment — or the Minister of Finance, I would think, even more so somehow —

through the Lieutenant-Governor in-Council decides that certain land is

to be sold for the benefit of this fund. It's only land that has

already been donated for the fund — is that correct?

HON. MR. STRACHAN :

That's a really good question. I'd like to take some time, Madam

Member. I will get that for you at some other date or during my

estimates. You raised a good point. I think what you're trying to get

at does happen in that the habitat conservation fund may request of the

government some Crown land in the Crown land account for enhancement

purposes. I think we from time to time have done that, or they have

come with the money they get from the surcharges of licences and, in

fact, bought land from the Crown. That may have happened as well. I am

not aware of all the details, but I give you my undertaking now that I

know the gist of your question. I will do my best to supply the answer

to you.

MS. EDWARDS : I think we can eliminate land

that has been bought by the fund. I can understand that. I am curious

to see the connection that might exist with other Crown land, and I was

interested in that before we passed the bill.

MS. SMALLWOOD :

Perhaps the minister can tell me whether my information is correct.

First of all, I understand that the habitat conservation fund has three

components: an acquisition account, which relates to the discussion we

had previously around the Crown land account; an enhancement account,

which is basically the largest dollar value account; and a compensation

account, having money in it that was provided to compensate for loss of

habitat.

If that is true and I have the right picture of

the account that we're talking about under habitat conservation, can

the minister tell us the value of the overall habitat conservation fund

at present and the effect of this legislation on that value?

HON. MR. STRACHAN :

I can't tell you the.... Oh, here we are; it has just been passed to me

by Finance. The balance at April 1, 1988, was $904,166, and....

I'm sorry, I've forgotten what the other question is, thinking about this.

MS. SMALLWOOD :

Is my information correct that it has the three components, and what

effect will this legislation have on the value of the account?

HON. MR. STRACHAN :

There are more than three components, because the habitat conservation

fund board are very inventive and are always trying to think of new

things to do and innovative ways of spending the money and handling the

funding. Those are essentially the three components, but I just didn't

want you to think that those are the only three things they do. They

are very innovative.

Secondly, with respect to what impact this will have on the habitat conservation fund: absolutely none. You will see

[ Page 4360 ]

that

subsection (2) says there will be money paid into the account from

surcharges and from gifts and bequests; (3) says the total amount paid

out of the fund cannot exceed that which comes in under (2), and that's

it. So what this simply reinforces is that it is an in-out situation.

Further, it reinforces that the Minister of Finance can't touch it.

They've coveted that for years, but we're not going to let them have

it. It's under the directorship of the habitat conservation fund and

that board of directors. That money is contained there for those

purposes and that's it.

MS. SMALLWOOD : I'm very

pleased to hear that. Perhaps the Minister of Finance can explain to us

exactly the purpose of having this in this bill if indeed all it does

it recognize a situation as it is presently.

HON. MR. COUVELIER : I sent across to the hon. member a statement that I read into Hansard

at the beginning of this morning's session. She has it by her right

hand, I believe. She hasn't had a chance to read it yet, maybe. The

main purpose of Bill 18, the statement says, is to convert existing

special funds into special accounts. The purposes for which the funds

were established are unchanged by this conversion. What we're talking

about here is merely a change of accounting treatment as requested by

the auditor general.

The Minister of Environment and Parks

has already told you how brave he is in facing my regular onslaughts to

expand the authority of the Ministry of Finance and how he has stoutly

resisted these efforts by me successfully. I trust, Madam Member, that

you will have time to read my explanation. I've said it three or four

or five or six times this morning. It seems to me always the same

general thrust of the questions put.

MS. SMALLWOOD :

My understanding is that this is changing a fund to an account. The

Minister of Environment assures us that the control over the money paid

into the habitat conservation fund is still protected by the committee

that deals with the spending priorities of that money. The minister is

telling us that the overall intent, what we have seen around the Crown

land account, is a diminishing power for spending. How does that

diminishing power affect this particular account?

HON. MR. COUVELIER :

Mr. Chairman, I don't know how to deal with these repetitive questions.

It might be useful if everyone in the world stopped and listened when

we explain. Why do we keep going round and round the merry go-round?

Maybe I'll just not respond to them, Mr. Chairman; that might move

things along a little faster. I see no sense in repeating myself time

after time to each individual member as they appear spasmodically, to

earn their paycheque. If you sat here all the time, you'd have heard

the answer and then you wouldn't have to ask the question so

repetitively.

MS. SMALLWOOD : Perhaps the minister

feels that by waving his arms around and acting confused and perplexed

he's going to make a point over on this side. The point is that you

have not made it clear. We are asking you questions that account for

the dollars that have been put in accounts that have direct purposes to

important issues for people of this province. Mr. Minister, you have

not answered satisfactorily.

If we can put the questions in

some way to get through to you, to make the point that the people of

this province want to be assured that the mandate of these funds will

be fulfilled; that the increasing amount of money that is going into

this habitat preservation, due to permits for hunting and other

activities.... If they can be assured that the money will again be

returned for the purposes it was intended, then indeed we will be

happy. You have not made those assurances to us. You have repeatedly

said this is purely an accounting procedure. Well, Mr. Minister, this

is a political arena. There is no such thing as a pure accounting,

bureaucratic procedure. It has political intent, and we are asking you

what that political intent is. What are the government's priorities?

Can we be assured that the taxpayers' money will go for the purposes it

was intended for?

[11:30]

MR. CHAIRMAN :

Before anyone responds, the member is back in the second reading debate

when she gets into that area. If the minister wants to respond, I'll

recognize the Minister of Environment.

HON. MR. STRACHAN :

No, I don't want to respond to that, Mr. Chairman. It's a typical

comment and a good argument and debate; it's second reading stuff, but

not relevant to what we're doing.

However, I have something

to bring to the committee's attention, and I'm indebted to the member

for Kootenay (Ms. Edwards) for pointing out a printing error to me.

therefore move an amendment from the floor, Mr. Chairman. It refers to

section 8.2(b). As printed in the bill before us,

section 8.2(

b) says:

"...money acquired by gift, donation and bequest or by disposition of

any land for the purposes of the account." This is taken directly from

the Wildlife Act,

section 11, but we have a typo.

We should

have the word "acquired" after the word "land". Subsection (2)(

b) will

read: "...money acquired by gift, donation and bequest or by

disposition of any land acquired for the purposes of the account." I so

move, and I thank the member for Kootenay for bringing that to my

attention.

Amendment approved.

Section 8 as amended approved.

Sections 9 through 17 inclusive approved.

section 18.

MR. STUPICH :

I wanted to ask why the revenue for the year '88-89 as opposed to

'87-88 is down. Maybe I should be asking that of the Provincial

Secretary (Hon. Mr. Veitch) — the expected estimates for revenue.

The estimates on page 201 show a decline of some $12 million in

expected revenue. Do we really think people are going to buy less

lottery tickets this year than last?

HON. MR. COUVELIER :

The hon. member could quite properly put that question to the

Provincial Secretary, but just to assist the hon. member, it is my

understanding that it's a worldwide phenomenon that revenue from

lotteries appears to be declining. All over the world there appears to

be declining interest in that kind of activity. I am aware that as a

[ Page 4361 ]

consequence,

the staff are spending a lot of time attempting to develop new products

and market niches in order to increase revenue from that kind of

source. If more specific information is required, the Provincial

Secretary would be best able to provide it.

MR. STUPICH : I note that in this fund we are transferring $79 million from lottery profits to general revenue or the BS fund —

or whatever. I wonder what the statutory authority is. As I read the

legislation, we don't have the authority, and this particular bill

doesn't seem to provide for the authority. If I may read from the

legislation, "Disposition of fund" — and the fund comes from the

profits of the lotteries: "Money deposited in the fund under this Act,

after providing for the payment of costs of administration under

section 6, may, on the requisition of the minister, be (

a) transferred

out of the fund into the consolidated revenue to repay an advance made

under

section 6; or (

b) paid out for cultural or recreational purposes

or for preserving the cultural heritage of the Province or for any

other purpose consistent with the objects of the Western Canada Lottery

Foundation." I just wonder where the authority is to transfer $79

million of lottery proceeds to general revenue.

HON. MR. COUVELIER : That authorization is contained in Bill 14, the Budget Stabilization Fund Act — sections 6 and 7, 1 believe.

MR. STUPICH : We'll deal with it when we get to Bill 14.

Sections 18 to 25 inclusive approved.

Title approved.

HON. MR. COUVELIER : Mr. Chairman, I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill

18, Special Accounts Appropriation and Control Act, reported complete

with amendments to be considered at the next sitting of the House after

today.

HON. MR. STRACHAN : Committee on Bill 14, Mr. Speaker.

BUDGET STABILIZATION FUND ACT

(continued)

The House in committee on Bill 14; Mr. Pelton in the chair.

section 2.

MR. STUPICH :

The minister was a little more complete in his answer, I suppose, when

he responded to the press as to why this fund was being established by

saying that yes indeed, it could be used for political purposes. My

question at the moment is this. It reads in subsection (2): "The

purpose of the fund is to assist in stabilizing the operating revenues

of the government." I am just wondering how it is going to stabilize

operating revenues.

HON. MR. COUVELIER : The hon.

member, by virtue of his vast experience and long record of public

service in this province, would be aware of the fact that we depend to

a remarkable degree upon export trading activity in order to sustain

vitality in our economy. That means, therefore, that inevitably we are

subject to wide swings in terms of our provincial revenue. As a

consequence of that, the ability of government to sustain and maintain

social spending — I include in that category education, health, social services and advanced education —

is very materially affected as these revenue fluctuations occur. This

government believes that it is morally responsible and fiscally correct

that we should be isolating these windfall revenues when they occur,

not allocating them to any one budget year but putting them aside in

the budget stabilization fund.

The hon. members describe it

as the BS fund, and I take some satisfaction from the fact that it has

now had a wide, common understanding and usage by virtue of that

descriptive term. We also describe it as a rainy-day fund. This will

have the effect of allowing the government of the day to survive

downturns in our revenue receipts by sustaining important social

programs through the availability of moneys put aside for the rainy

day. This government does believe that it will help stabilize the

operations of the government; therefore it is in the public interest to

do so.

MR. STUPICH : Mr. Chairman, I can't help observing that sometimes the initials "b.s." refer to something other than the fund.

However, what the minister really said in response to my question — the real answer to my question —

is that it doesn't do anything at all to stabilize revenue. What it's

saying is that in the year 1987-88, for example, we are not going to

recognize $450 million of revenue that actually came in; we're going to

say it doesn't exist this year. What we're going to do is say that it

will exist in some year in the future, whatever year we choose to

recognize it. It doesn't do anything to stabilize revenue. It

stabilizes the net figure of the P and L statement, if you like. But

really what it's doing, and what we're doing in this section, is

saying — it has nothing to do with stabilizing revenue — that

some year hence, down the road, whenever it chooses us, we're going to

recognize $450 million worth of revenue that came in during the year

ended March 31, 1988. It's a b.s. explanation.

MR. WILLIAMS : Maybe the minister can elaborate. It's simply giving you freedom to cook the books down the road. Isn't that it, Mr. Minister?

HON. MR. COUVELIER :

The hon. members opposite would always desire to have it both ways. I

remember, following debates in this House over the years, dealing with

the question of the homeowner grant, and how that was cooking the books

and misleading the public — a devious device — and all of

these descriptive terms. Yet during this session, I've heard the hon.

members complaining that the homeowner grant is not increased; so they

jump and straddle this fence. They are just fortunate that it's not a

picket fence. They would have greater difficulty straddling one of

those.

The fact is that this government is saying that one-time windfall revenue should be isolated to help the government

[ Page 4362 ]

sustain

essential social programs during downturns in the economy. This is the

only government that I'm aware of in Canada, if not the western world,

that has the budgetary integrity to take those one-time windfalls and

isolate them for that rainy day. We will not grab this money and use it

to create some false impression of wellness and a healthy economy, when

such may not be the case.

Certainly this government will be

bringing forward a balanced budget. We'll do it without hocus-pocus and

without grabbing one-time windfalls. We will balance a budget and will

have, in that process, built up a budget stabilization fund such that

this province has never seen before.

MS. MARZARI :

The minister suggested that we wanted to have it both ways. Let me

suggest that the government side wants to have it both ways.

want to say on the one hand.... Look, everybody in this room and in

this province wants to talk about stability, and your staff has chosen

the name for this fund very well. Suggesting that there is a

stabilization element in this fund casts a pall of respectability over

it which, in fact, doesn't really hold up under any investigation. The

acronym is even better.

How do we get at this? How do we get you to lay out exactly what is

going on here. On the one hand, you are talking about the need for

fiscal and financial planning, and everybody wants to see financial

planning in this province. As we sit on the Public Accounts Committee

every Tuesday morning, we would like to see a rational laying-out of

what plans might look like. On the other hand, having come out of the

city of Vancouver, where we set up a property endowment fund back in

1975.... We actually used the property that we had in the city and put

it into a special fund and let that accrue and grow, so that we could

properly plan our land acquisitions, properly landbank, properly deal

with the acquisition and dispersal of land. The city still holds onto

that landbank, and it is its basic technique of fiscal planning. When it goes off to New York, when it goes off to float bonds, when it

goes off to get its triple-A rating, it points to the property endowment fund

to show that the city is stable financially. Those lands themselves represent

an asset, a piece of collateral which the east recognizes as something that

gives us in the west some credibility in financial circles.

that is what it's all about, if stabilization is what it's all about,

then surely you want to have a planning mechanism that gives this

province some credibility with those people who are going to be helping

us float our debentures and those who are loaning us money.

[11:45]

don't understand, quite frankly, what this fund stabilizes. I don't see

you having a windfall profit, so-called, from last year injected into

this year's budget. I don't see the cash.

I see an account

that's been spent and that you're borrowing against, and inflating our

budget by $450 million. I don't see how this stabilizes anything.

do see that in Bill 18, what we just did was to take a solid asset, a

fund for Crown lands, and basically absorb it back into general

consolidated revenue. Just ten minutes ago I witnessed this province

saying goodbye to $200 million worth of money that had been accrued

from the sale of Crown lands in this province over the last who knows

how many years, leaving that fund with only $50 million. That fund

could have been your stabilization fund. You could have rested it in

land the province owns.

Who are you trying to kid with this

stabilization clause? Are you trying to kid the guys in the east that

are lending us money? Are you actually trying to convince the lenders

that this is making us a stable province because we have a bill in

front of us that says that $450 million exists, when you yourself, Mr.

Minister, have said that it's long since been spent? It seems to me to

be a piece of paper. It's a piece of paper that you're going to use

down the line, as my colleague for Nanaimo has suggested, to pull $450

million out of the air in authorized expenditure. Where and what does

this bill stabilize, since the money has long since come and gone?

HON. MR. COUVELIER : The hon. member raised a number of points that I'll try to deal with if my memory will serve me.

First

of all, there was some reference to the eastern financial community and

their assessment of this government's performance. I can tell the hon.

member that as a consequence of this budget and its presentation, and a

subsequent trip that has been made to the New York financial markets

and the rating agencies, they are very favourably impressed with the

kind of initiatives this government has shown, and with the imaginative

way we are ensuring that every cent of value is wrung out of taxpayers'

dollars so that their interests are better served in the process.

the hon. member happened to have missed it, Mr. Chairman, I might refer

her to some comments made by Richard Allen, the chief economist of the

B.C. Central Credit Union, an organization which the hon. member, I

know, has some background experience with. This unbiased, presumably

independent observer has said about our initiative that this fund will

enable the government to move away from an annually balanced budget to

a cyclically balanced budget, "which is far more economically

justifiable and far more fiscally responsible." Furthermore, there has

been specific comment by Mr. Allen, who says: "I think the budget

stabilization fund is an excellent idea. It's crazy to try and balance

the budget on an annual basis, because business cycles don't work that

way. You need a rainy-day fund like this."

Furthermore, may

I just remind the hon. member that if the fount of all wisdom in

financial affairs is resident in eastern North America, then I would

point her to the editorial comments of the Globe and Mail ,

which is certainly in the eastern part of the continent. If, as the

hon. member alleges, there is more wisdom out there than here, then let

me just remind her that in an editorial of, I believe, late March — I can give you the specific date, although I don't have it on this photocopy — the Globe says:

"This is good public management in the west, which has a lot to teach

the rest of Canada about financial prudence." So those who are

experienced in assessing provincial budgets from every province are

very favorably impressed with the kinds of things we are doing.

the suggestion that those in the financial community themselves might

not be supportive, I just point the member to comments made by

Pemberton Houston Willoughby, one of B.C.s prominent financial houses,

so that I give you both an east coast and a west coast perspective. The

west coast perspective would be: "A good way to keep the focus firmly

on deficit reduction and to reduce the temptation to spend too freely."

We have, I think, a pretty balanced representation from right across

the country that this Social Credit government in British Columbia is

doing some imaginative things; but more important than that, that it's

managing the public, taxpayers' dollars with prudence, discipline and

integrity.

[ Page 4363 ]

MS. MARZARl :

I couldn't let some of those comments go without rising to the

challenge. The wisdom of the east is something that I don't necessarily

respect, but one always has to look in terms of where one sits

geographically. One has to look to where one gets one's ratings from.

One has to go to New York; one even has to occasionally go to Europe to

talk to financiers, to talk about where we are getting ratings, where

we are getting our interest rates from. Definitely, any province in

this country has to look to the bond market, to the ratings officials,

to their criteria — whether or not we agree with them as to what

our standards of performance should be. We are not stupid enough to

think that there aren't standards for performance, and the financiers

do want to see stability.

Let me suggest that reducing the

temptation to spend too freely, if that is the vernacular way of

putting some of these funders' criteria, is not necessarily to be found

in this piece of chicanery, the budget stabilization fund. This

province has many funds; this province has many assets. This province

has a number of things it can carry to the table when it wants to talk

about its fiscal responsibility.

It has capital. I just

referred to the Crown land assets. Why we would ever want to take that

fund and put it back into consolidated revenue is beyond me. But

anyway, that was just one example of a fund that was sitting there that

could have been used and probably has been used when we go to show how

credible or how stable we are.

But this eleventh-hour

business.... I assume from reading the recent press just after budget

day that this was an eleventh-hour political gimmick dreamed up by

someone on your side of the House, named apparently at the eleventh

hour by the comptroller-general. And there was a suggestion that it was

named by the auditor-general too, something that caused me a great deal

of concern, in the sense that the auditor-general should not be

involved at all in the naming of funds and that kind of assistance to

the government. But it was an eleventh-hour piece of chicanery, thought

up and put onto the books to make it look as if there were stability

and planning and fiscal arrangements inside the provincial government.

The

fund will be used in the future, which serves no purpose to us right

now. You may quote Richard Allen at length and you can quote the Globe and Mail

editorials. This particular fund is not what they were referring to.

They could have been talking about other aspects of the budget —

who knows? This fund needs to be seriously looked at. It does not have

credibility. It has been ripped apart by the popular press, by the

professional Institute of Chartered Accountants. It is perceived as a

political fund injected by this government into the fiscal framework of

this government to look good now and to give you a slush fund or a

piece of paper which will enable you to draw $450 million out of thin

air in the future. It is not a credible entity, and we simply cannot

see what it stabilizes and how it assists the budgeting of this

province in any way.

MR. STUPICH : If the minister would quit talking and just give us answers to our questions, we'd get along a lot further. To quote the Globe and Mail

and to quote Richard Allan talking about the budget and the financial

performance of British Columbia has nothing at all to do with the BS

fund. It has to do with the fact that a year ago a deficit of $850

million was forecast, and at the end of the year the revised estimate

is $350 million. That shows we're better off by $500 million more than

we said we would be. That's progress. The fact that we knew that was

going to happen has really nothing to do with it, because it's still a

much better performance than the year before, when we had a deficit in

excess of $1 billion. That's what's good about finance in B.C. right

now. We are coming out of the hole gradually. It's nothing to do with

the BS fund. If the minister had admitted from the beginning that all

they were doing is not recognizing $500 million of that revenue this

year but waiting to recognize it some other year when it suits their

purposes....

The minister talked about using that money to

maintain services. If he wanted to spend 5 cents out of that money,

he'd have to start by borrowing $4 billion to clear off the deficit

that's now on the books, and then borrow an extra nickel, and then he'd

have a nickel to spend. There is nothing there to maintain services of

any kind to the people of British Columbia. It's just an entry on a

balance sheet. They are not recognizing the revenue this year. They're

going to recognize it some year in the future. That's all it is.

Sections 2 to 5 inclusive approved.

section 6.

MR. STUPICH :

I know there are several who want to ask questions and talk about this.

I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

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

Hon. Mr. Strachan moved adjournment of the House.

Motion approved.

The House adjourned at 11:58 a.m.

Appendix

AMENDMENTS TO BILLS

18 The Hon. M. B. Couvelier to move, in Committee of the Whole on Bill (No. 18) intituled Special Accounts Appropriation and Control Act to amend as follows:

SECTION 6, by adding "or lend" after "may pay".

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