1982 Legislative Session: 4th Session, 32nd

Parliament

Hansard

The following electronic version is

for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

( Hansard )

TUESDAY, JULY 20, 1982

Afternoon Sitting

[ Page 8887

CONTENTS

Routine Proceedings

Oral Questions

Computerized tourist services. Mr. Hall –– 8887

Loss of seedlings. Mr. King –– 8888

Use of Aqua-Kleen in Osoyoos Lake. Mr. Skelly –– 8888

Use of 2, 4-D in the Okanagan basin. Mr. Skelly –– 8888

Distribution of lottery tickets. Mrs. Dailly –– 8889

Attorney General Statutes Amendment Act, 1982 (Bill

62). Report. (Hon. Mr. Williams)

Third reading –– 8889

Fire Services Amendment Act, 1982 (Bill 63). Report.

(Hon. Mr. Williams)

Third reading –– 8889

Utilities Commission Amendment Act, 1982 (Bill 66).

Report. (Hon. Mr. McClelland)

Third reading –– 8889

Election Amendment Act, 1982 (Bill 13). Committee

stage. (Hon. Mr. Wolfe)

On proposed

section 25 (A) –– 8889

Mrs. Dailly

On proposed

section 25 (B) –– 8889

Mrs. Dailly

On proposed

section 28A –– 8890

Mrs. Dailly

On proposed

section 29A –– 8890

Mrs. Dailly

On the amendment to

section 32 –– 8890

Mrs. Dailly

Committee of Supply: Ministry of Finance estimates.

(Hon. Mr. Curtis)

On vote 36: minister's office 8891

Hon. Mr. Curtis

Mr. Stupich

Mr. Hall

Mr. Howard

Mr. Brummet

Mr. Barber

Mr. Barrett

Mr. Lea

On the amendment to vote 36 –– 8909

Division

On vote 37: government financial support –– 8909

Mr. Stupich

On the amendment to vote 37 –– 8909

Division

On vote 38: Provincial Capital Commission –– 8910

Mr. Stupich

On the amendment to vote 38 –– 8910

Division

On the amendment to vote 39: compensation stabilization

program –– 8910

Mr. Stupich

Division

Appendix –– 8911

The House met at 2 p.m.

Prayers.

MR. HALL: It's always a pleasure, I'm sure, for members to

have members of their own family in the gallery. At this time of year,

school being finished for a while, many of us have the benefits of

having our children visit us. This is the case today. I would like the

members of the assembly to welcome my daughter Tracey, along with one

of her friends, Brenda McCauley, who are in the House today.

MR. RITCHIE: It's a pleasure indeed to introduce to the House

today friends to British Columbia, Mr. and Mrs. Mort Burman, who are

visiting us from Los Angeles. Would the House please make them most

welcome.

MS. SANFORD: Seated in the members' gallery today is John

Bright, who is here from London, England. Mr. Bright is station manager

with the BBC in London, and is on a four-month visit to Canada on a

bursary financed by the Commonwealth Relations Trust. He's very

interested in the Legislature. I hope we'll make him very welcome this

afternoon.

MR. BRUMMET: I take great delight and pleasure in being able

to introduce to the House today 14 young people from the Fort Nelson

Indian band. These pupils range from grades 4 to 8. They are taking in

the Legislature as part of a tour provided by the Fort Nelson Indian

band for their diligence and effort in their schooling. Accompanying

the students and looking after them is Kathie Dickie from the Fort

Nelson band; with her is her sister Linda Dickie from Victoria, and

Miss Susan Gower, a teacher in Fort Nelson. I would like to remind the

House that these people are used to northern hospitality, so I would

like the members to extend themselves and give them a real rousing

welcome.

HON. MR. ROGERS: I have three guests in the gallery today:

David and Janet Podmore and their daughter. Would the House please make

them welcome.

HON. MR. BENNETT: I'd like to welcome to the House the

daughter of one of our members, who is also a member of the cabinet;

Kim Heinrich and her friend Dean are wishing to see the kind and gentle

way the opposition deals with her father.

MR. SEGARTY: In the gallery today from Brentwood, in the

constituency of Saanich and the Islands, is Lieut.-Col. Thomas

Stephenson. I'd like the House to bid him a welcome this afternoon, on

behalf of the Minister of Finance (Hon. Mr. Curtis).

Oral Questions

COMPUTERIZED TOURIST SERVICES

MR. HALL: I have a question for the Minister of Tourism. The

tourist industry in British Columbia has many times recommended a

computerized information and reservation system for the province. In

view of the fact that a cost-benefit study has shown the advantages of

the system, can the minister advise why she has not implemented it?

HON. MRS. JORDAN: I'd like to thank the member for his

question. He's quite right; a study was done through TIDSA. When the

results of that study were analyzed, the practicality of implementing

such a system in British Columbia at this time simply wasn't there. It

would have served some people who are already working on a computer

system, such as the major hotels and airlines, but it would have left

out a lot of the smaller industries in other parts of the province.

So it was decided that it would be best to continue to explore the

feasibilities and watch as high technology, in this and other areas

which can be of benefit to tourism, comes to a plateau where, should

that be the decision, we do enter into either automated visual displays

in information centres, reservation systems, or many of the other

opportunities that will be available. Until the technology has

stabilized so we can go into a system that is highly profitable to the

industry, is practical economically, and is one in which everyone can

take part so there's no discrimination, we decided that we should delay

that decision.

MR. HALL: A TIDSA technical report was presented to the

government over two years ago. Parts of that report have been

re-presented three times in the past six months. Why has there been no

action on that study?

HON. MRS. JORDAN: I believe I answered the question, Mr.

Speaker.

MR. SPEAKER: The minister has the question.

MR. HALL: I heard no answer, Mr. Speaker. Maybe you had an

advantage over me. That technical report has not been addressed by the

ministry. However, her silence about that major study is eloquence

itself.

A further question. Can the minister confirm the observation by

industry leaders that the minister has been spending the Tourism budget

for political gain and that the maladministration has been a

contributing factor in the recent resignation from her staff by

Assistant Deputy Minister Plul?

MR. SPEAKER: There is considerable argument in the question,

but the minister answers?

HON. MRS. JORDAN: Contrary to the hon. member's last

statement, the record will show that I did answer his question. Perhaps

he wasn't listening. The report was studied and it's this government's

commitment, and mine as Minister of Tourism, to see that when we spend

tax dollars for a purpose we do it with full understanding of its cost

implications, its effectiveness, and the benefit to everyone. The

decision was made to delay any implementation of a reservation system

until such time as that could be established. High technology is moving

very quickly. It's very costly and at times it isn't as effective as

we'd hoped.

As to political gain, I would like to assume some modesty in

answering that. When I look through the annual reports of Tourism

British Columbia I notice the hon. member, when he was the Minister of

Tourism in 1972, couldn't resist putting his picture in several places,

not only inside but on the cover.

MR. SPEAKER: Order, please.

HON. MRS. JORDAN: We have the examples in Beautiful British Columbia magazine

in the year 1974. Guess

[ Page 8888

whose picture is there, Mr. Speaker? A message from

the minister of the travel industry, the Hon. Ernie Hall....

MR. SPEAKER: Order, please. The minister has now gone

considerably beyond the scope of the question.

HON. MRS. JORDAN: I have some wonderful Sunset magazine advertisements on

the ferries in British Columbia, and you'll never imagine — the name of

the Hon. Robert Strachan addresses that....

[Mr. Speaker rose.]

MR. SPEAKER: The hon. minister has now gone considerably

beyond the scope of the question.

[Mr. Speaker resumed his seat.]

MR. HALL: The second member for Surrey is merely attempting

to find out what contributory reasons there are for the resignation of

the assistant deputy minister, which makes a round dozen that have gone

through that revolving door in that ministry — photographs or no

photographs.

MR. SPEAKER There is a question there? The minister has the

question.

LOSS OF SEEDLINGS

MR. KING: I wish to address a question to the Minister of

Forests. Yesterday a press release was issued by the ministry,

indicating there has been a loss of two million seedlings this year in

the Prince George and Vancouver forest districts. Can the minister

indicate to the House the approximate cost to the public of that loss

of two million seedlings?

HON. MR. WATERLAND: The cost of producing seedlings is in the

order of 15 to 20 cents per seedling, and our losses this year are

probably quite modest. The production of seedlings is, as the member

knows, almost an agricultural operation, and weather conditions quite

often cause a loss. I could get the exact figure for the member if he

wishes, but it's in the order of 15 to 20 cents per seedling to produce

it to the planting stage.

MR. KING: Can the minister also indicate to the House how far

this loss will set back the program of bringing the unsatisfactorily

restocked forest lands up to date with the harvest? We're some two

million acres short of our reforestation program; how far will this set

back attempts to catch up with the current harvest?

HON. MR. WATERLAND: It won't set back the program at all. In

any management of that type of operation you must make allowances for

unavoidable losses, and we do that. Our reforestation program is

advancing at a very rapid rate. During the period of the last

government, I think the maximum number of seedlings produced was in the

order of 65 million, and already 97 million seedlings are being

produced in Crown forest nurseries in the province.

MR. KING: Perhaps the minister is quite satisfied with the

loss of two million seedlings that don't even get planted in the

ground, but the taxpayers hardly would be.

MR. PHILLIPS: Wipe the frown off your forehead.

AN HON. MEMBER: My, they're upset.

MR. KING: They're very sensitive about further bungling by

this government, and squandering of taxpayers' money because of

inadequate planning. My question to the minister is, could he not have

transferred at least some of those seedlings to other forest districts

where the climatic conditions were more appropriate for planting?

MR. SPEAKER: The question is in order; the

preamble was not.

HON. MR. WATERLAND: Yes, Mr. Speaker. I would point out the

direction given by the Speaker not too long ago when he said the

preamble need not exceed one carefully drawn sentence.

The member is trying to imply some political or administrative

failure because two million seedlings were lost, and why couldn't we

have moved them and planted them somewhere else. I'm afraid this

government doesn't have close control over weather conditions in the

province, although that member may feel that he does. By the time the

snow had gone and the weather became too dry, the seedlings had

flushed. We could have spent 20 or 30 cents per seedling to plant them,

but we might just as well have planted toothpicks; they wouldn't grow

into trees in any event. We don't intend to waste taxpayers' money

carrying out useless operations.

USE OF AQUA-KLEEN IN OSOYOOS LAKE

MR. SKELLY: I have a question for the Minister of the

Environment. Were B.C. Environment ministry officials present at the

U.S. Army Corps. of Engineers' illegal application of Aqua-Kleen 20 on

the American side of Osoyoos Lake, which later drifted into Canada at

four times the acceptable B.C. concentrations, thereby affecting

domestic and irrigation water intakes and contaminating beaches on the

Canadian side of the border?

HON. MR. ROGERS: No.

MR. SKELLY: Did the Corps of Engineers consult with the

minister or the Ministry of the Environment with respect to drift

conditions, concentrations, water intakes and recreation-use areas on

Osoyoos Lake prior to applying 2,4-D on the lake?

HON. MR. ROGERS: They did not consult with me. They may have

consulted with staff in my regional office in Penticton. I will take

that part of the question as notice.

USE OF 2,4-D IN THE OKANAGAN BASIN

MR. SKELLY: One final new question to the Minister of the

Environment. In 1978, the advisory committee on the control of Eurasian

water milfoil in the Okanagan Lake system recommended a complete review

of the progress of the Okanagan Lake 2,4-D program at the conclusion of

the 1980 season. They indicated that even if there were a major

improvement, the use of the chemical herbicide 2,4-D should be phased

out within three years. First of all, was the 1980 study carried out?

If so, what were the results of that major review? And what plans does

the minister have to phase out the use of 2,4-D in the Okanagan basin,

according to the recommendation of that committee?

HON. MR. ROGERS: Mr. Speaker, I think that the member doesn't

expect me to have all of the answers to those

[ Page 8889

questions at my fingertips. I will take the matter

as notice and bring an answer back to the House.

DISTRIBUTION OF LOTTERY TICKETS

MRS. DAILLY: Mr. Speaker, I have a question for the

Provincial Secretary. A number of retailers have complained of a

general deterioration in the distribution of lottery tickets ever since

the minister brought in his new scheme. This deterioration is affecting

the sale of tickets to the purchasers. I wonder if the minister will

agree to meet with these retailers?

HON. MR. WOLFE: Mr. Speaker, the member for Burnaby North

asked a similar question some days ago, and I thought I responded at

that time. Her

preamble was inaccurate in this respect: the changes in

the lottery distribution system were not the initiative of this

minister but a change in the Western Canada Lottery Foundation

procedures for distributing tickets.

In answer to the question, I'll be happy to meet the retailers. I've

already done so on a number of occasions.

MRS. DAILLY: On a supplementary to the minister, I wonder if

he would confirm that, despite his previous answer, one of the main

reasons for bringing in this new distribution is to divert lottery

sales from the former lottery tickets to the government's own new

lottery, 6-49, which is primarily to finance megaprojects to help this

government politically?

HON. MR. WOLFE: Mr. Speaker, the answer to that question is a

categorical no. The two ticket systems are completely different and

completely separated. My information is that sales of the traditional

lottery tickets, which have been available under the system she's

referring to, have maintained their level of previous years from week

to week as the new distribution system has taken place. We're

monitoring it very closely, and we're anxious that the participation by

the retailers does not fall off and that the financial benefit to the

former distributors does not suffer in the process. So I can say to her

that the week-to-week sales of the traditional lottery tickets are

maintaining a level commensurate with last year.

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and

orders.

Leave granted.

HON. MR. GARDOM: Report on Bill 62, Mr. Speaker.

ATTORNEY GENERAL STATUTES

AMENDMENT ACT, 1982

Bill 62 read a third time a passed.

HON. MR. GARDOM: Report on Bill 63, Mr. Speaker.

FIRE SERVICES AMENDMENT ACT, 1982

Bill 63 read a third time and passed.

HON. MR. GARDOM: Report on Bill 66, Mr. Speaker.

UTILITIES COMMISSION AMENDMENT ACT, 1982

Bill 66 read a third time and passed.

HON. MR. GARDOM: Committee on Bill 13, Mr. Speaker.

ELECTION AMENDMENT ACT, 1982

(continued)

The House in committee on Bill 13; Mr. Davidson in the chair.

Section 25 approved.

On proposed

section 25(A).

MRS. DAILLY: I move the amendment standing under my name on

the order paper. [See appendix.]

The basic purpose of this amendment is to provide for people who

vote under the absentee provisions to have the same right to register

the day they go in to vote if they find that they're not already on the

voters' list. In other words, it would grant that same right to the

voter who is not registered. We cannot understand why the Provincial

Secretary (Hon. Mr. Wolfe) did not extend that same right to these

people.

HON. MR. WOLFE: May I just say, before responding to the

member, that I never cease to be amazed at the wonderful job done by

the Queen's Printer. We have before us the Orders of the Day

for 2 p.m. on Tuesday, having been already amended by the many changes

which took place this morning. To make all those changes in the order

paper is a wonderful thing that they accomplish in a short period of

time.

The member asked a question under her amendment to

section 25(2).

Simply put, regarding our venture into the polling-day registration

procedure, we have found that in other jurisdictions that have done

this they have not included the advance poll. At least at this stage,

we were not prepared to include availability for polling-day

registration at the advance poll. Similarly I believe the amendment

includes the suggestion that a person could register in a constituency

other than his own. This would also be very difficult to administer. So

on those two counts, plus the fact that the motion is out of order by

virtue of the further expenditure of public funds, we're not able to

accept the amendment.

MR. CHAIRMAN: The amendment fails, hon. members, by virtue of

standing orders.

On proposed

section 25(B).

MRS. DAILLY: This is probably irrelevant now, because the

Provincial Secretary has not seen fit to accept my other amendment.

This amendment was simply to provide the proper voting certificate

which would allow someone at the advance poll to vote.

I move the amendment standing under my name on the order paper. [See

appendix.]

HON. MR. WOLFE: The amendment is no longer necessary, by

virtue of the non-acceptability of

section 25(2).

[ Page 8890

MR. CHAIRMAN: Hon. member, that would fall in the

out-of-order category as well, and the Chair so rules. There is no

debate on it at this time. The motion has been ruled out of order.

MR. MITCHELL: Do you mean to say I can't talk on why the

minister should have it in there?

MR. CHAIRMAN: That's right, hon. member, you can't.

Sections 26 to 28 inclusive approved.

On proposed

section 28A.

MRS. DAILLY: I move the amendment standing in my name on the

order paper as 28A. [See appendix.] The purpose of the amendment is

simply to broaden and reinforce the rights of access of candidates or

their agents during a campaign period to voters who live in apartments,

mobile-home parks and hotels. The reason we're putting it in, even

though we know the Residential Tenancy Act allows this access, is that

we feel the Residential Tenancy Act is sometimes not really strong

enough to allow proper access for candidates' agents. So we feel it

would be better if the Provincial Secretary would accept this amendment

for expanded access and place it in the Election Act, where we feel it

really should be. I so move.

HON. MR. WOLFE: For the reason given by the member, we are

not prepared to accept that amendment. As she mentioned, it's already

taken care of under

section 27(3) of the Residential Tenancy Act. I

believe this provision is somewhat differently worded. We're concerned

about the overlapping of the two different laws. So we're not prepared

to accept the amendment.

Amendment negatived.

Section 29 approved.

On proposed

section 29A.

MRS. DAILLY:

Section 29A is one of the most important

amendments by the opposition. I move the amendment as it appears in my

name on the order paper. [See appendix.]

During second reading we covered the reasons in detail for bringing

this in. I noted at that time the need for the limitation of election

expenditures to a certain sum of money and also for full disclosure. I

do not believe the Premier was in the House at the time. Just in case

he didn't take the time to read all my speeches, I thought perhaps I

should briefly go over the reasons for this amendment. I really find it

almost ridiculous that I should have to stand up here and explain to

the Premier of any government how important it is in 1982 to have a

limitation on and detailed public disclosure of the amount of money

spent during an election campaign.

Mr. Chairman, I know that you, the Premier and the Provincial

Secretary are well aware that the federal government has this

legislation and that provinces other than B.C. have similar

legislation. We in the opposition have taken the time to place on the

order paper, in great detail, what we consider would perhaps be of some

assistance to the government in revising the Election Act to include

this.

A government such as Social Credit, with its history of having had

some very serious problems in explaining to the public of B.C. just

where their campaign funds come from and how they are spent, would, I

think, find that acceptance of this amendment might help ease some of

the nervousness and grave concern people in this province have about

how this government may proceed in the next election to use campaign

funds in a manner not considered desirable. I do not know why the

government would see fit to want to hide that sort of thing. If they

cannot accept this amendment, it means that their past indiscretions

have not been absolved, despite the fact that the Premier said there

was going to be a careful watch on this through the Social Credit

Party. Until he accepts this on behalf of the government and asks the

Provincial Secretary to really.... We're entering into another election

period that is going to cause many people grave concern, because they

do not have full disclosure.

I know we hear comments about contributions from unions. The NDP is

presenting this because we are always prepared to make complete and

open disclosure of campaign funds. And we're prepared for a limitation.

I think we've made our points very clear. I was going to say that I

would impeach the government — I wish I could do that. I would implore

the government to sincerely look at these amendments. I think we could

enter into another election campaign on a much better footing on both

sides, without any unnecessary accusations against each other, if full

disclosure were accepted. I hope the Provincial Secretary will comment

favourably on this.

HON. MR. WOLFE: I want to thank the member for her amendment,

but I would have to point out that this amendment is out of order for

two reasons: it creates an offence contrary to the prerogative of the

Crown and involves expenditure of public funds.

MR. CHAIRMAN: On that, hon. members, the Chair has no

alternative but to rule the amendment before us out of order, and I so

rule. The amendment therefore fails.

Sections 30 and 31 approved.

section 32.

MRS. DAILLY: The amendment on

section 32 again primarily

refers to an amendment which, unfortunately, was not accepted by the

government, but I wish to move this amendment as it appears in my name.

[See appendix.] This would provide that

section 80 ballots are ordinary

ballots. We just put this amendment on the order paper because we felt

it would be necessary to do so if the government accepted it.

Apparently they are not going to accept it, but, Mr. Chairman, I would

still like you to call it, and I so move.

On the amendment.

HON. MR. WOLFE: As the member quite properly pointed out, we

cannot accept this amendment. It has the effect of causing the ballots

of newly registered voters who register on voting day to be deposited

forthwith in the ballot box without being engaged in further

verification procedure. I think it is a very necessary element of the

new polling-day registration that those ballots be held back in a

separate envelope and verified as to their authenticity before being put

[ Page 8891

in the ballot-box some days after, during official

count day, as the member well knows. Therefore we cannot accept her

amendment.

Amendment negatived.

Section 32 approved.

MR. CHAIRMAN: Although the forms are attached to

section 32,

shall the forms as specified pass?

Forms approved.

Section 33 approved.

Title approved.

HON. MR. WOLFE: Mr. Chairman, I move the committee rise and

report the bill complete with amendments.

Motion approved.

The House resumed; Mr. Davidson in the chair.

Bill 13, Election Amendment Act, 1982, reported complete with

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

today.

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

ESTIMATES: MINISTRY OF FINANCE

On vote 36: minister's office, $188,673.

HON. MR. CURTIS: I have just a few remarks to make, as you

can see, with respect to the operations of the ministry. Before the

committee reviews the votes I wonder if I could offer a couple of

comments regarding the accomplishments that we have achieved during

1981-82, but particularly our objectives for 1982-83. When I say we, I

make it very clear that I include all those involved in the Ministry of

Finance, whether long-time employees or relatively new. I happen to

feel that I am fortunate to have an outstanding group of public

servants whose loyalty to the province of British Columbia is beyond

question, and who have been prepared to accept most of the challenges

which have been offered to them in the course of these two years in

particular.

Excluding the contingencies and compensation stabilization vote, the

total budget for the ministry for this year is $81.3 million. We felt

that we had to show leadership within government; this, therefore,

represents an increase of only 2.4 percent over the comparable amount

of $79.4 million for 1981-82. It reflects the many measures taken in

the last fiscal year and further action to be taken in this fiscal year

to increase the efficiency of the ministry while at the same time

meeting or exceeding our objectives. Mr. Chairman, I would like to

think that the Ministry of Finance is one example of what the 1982

budget is all about: that is, attempting to do more with less from the

public of British Columbia.

In reviewing recent major accomplishments the following highlights

come to mind. After a lot of work and input we developed the Financial

Administration Act, which clearly defines the responsibilities and

provides what can be described now as a modern statutory framework for

public sector financial management in the province of British Columbia.

We're encouraged by the fact that we've had interest shown in the

Financial Administration Act, as it has been proclaimed in recent

months, from other jurisdictions in Canada. I don't believe that we've

had inquiries from beyond the borders of this nation, but certainly it

is of interest to a number of other provinces and, indeed, to the

federal government as well.

In conjunction with the FAA we've had the development of a

comprehensive set of financial administration policies approved by

Treasury Board to ensure uniform

interpretation of the new act, and to

recommend implementation procedures to ministries. We have worked very

closely with ministries in considerable detail with this new document

called the Financial Administration Act, replacing statutes which had

become very familiar to ministries and to managers in government. The

process of seminars was used, as an example, to ensure that everyone

who had the need to know of the workings of FAA was fully informed and

had the opportunity to ask questions and to make suggestions to us. A

great deal of that work has gone on over the past number of months.

Further, we have had the development and implementation of new

accounting policies approved by Treasury Board, which are reflected in

the most recent public accounts before the Legislative Assembly, in

what I believe to be an improved format for the 1982-83 estimates,

permitting easier comparisons with the public accounts and to provide

program managers with greater flexibility to respond to program demands

within well-defined legislative and management constraints.

A major reorganization of the ministry was implemented in 1981-82;

it was based on a master plan completed actually in 1980, and the

structure which we have now allows the ministry to be more responsive

to the complex economics, financial and management issues facing the

province. Indeed, Mr. Chairman, within very recent weeks I've been able

to announce the further reorganization of the ministry, or a refinement

of the reorganization in terms of the economic and policy branch and

Treasury Board, now headed by Mr. David Emerson, who is well known to

most members of this Legislative Assembly. Mr. Emerson, I think, will

join us on the floor in the course of the debate of these estimates. I

would also refer to the presence on the floor of my deputy minister,

Larry Bell. who has proven to be of tremendous assistance in the major

changes which we have undertaken in the ministry in something just over

two years.

An aspect of the activity within the ministry relates to

responsibilities as fiscal agent for a number of provincial Crown

corporations and the raising of about $1.87 billion in long-term

financing to meet the capital requirements of those Crown corporations

and the development of fiscal agency agreements between the Ministry of

Finance and the Crown corporations, particularly British Columbia

Hydro, but not exclusively. Parenthetically, Mr. Chairman, I carry a

responsibility for the Provincial Capital Commission, and I'll be happy

to answer any questions which are raised in that context.

Looking ahead to the remainder of the 1982-83 fiscal year, the major

thrusts for the ministry include enhancement of the efficient and

effective collection and administration of tax revenues. This is being

accomplished partly through the establishment of a collections branch

within the revenue

[ Page 8892

division to provide more effective collection of

all assessed and other taxes, the addition of eight new

auditor-inspectors for the consumer taxation branch, and the continued

monitoring of fees and licences to ensure compliance with cost-recovery

principle.

Further enhancement of the management of our assets and liabilities:

we've placed great emphasis on this within the ministry to identify,

first of all, the assets and liabilities of the province. This

enhancement is to be accomplished by broadening the investment powers

for the management of government, Crown agencies, and trusteed account

financial assets; by investigation and implementation, if proven

desirable and feasible, of master trust arrangements for the investment

of public funds; and by the implementation of fiscal agency agreements

with Crown corporations regarding capital borrowings. These fiscal

agency agreements, while perhaps sounding somewhat dull, I think are

extremely important in order that the guidelines and several

responsibilities between Crown corporations and the Ministry of Finance

are clearly identified in advance, rather than as we move through a

particular activity.

There are many more objectives for the ministry in the course of

this fiscal year. Each branch has been very ambitious in its goals for

1982-83; as I said at the outset in a somewhat different way, I

compliment them on their accomplishments in the past year, and for

their enthusiasm, their eagerness for continued improvement in 1982-83

and beyond.

Mr. Chairman, with those few remarks, I welcome the debate on my

estimates and look forward to answering whatever questions I can. I am

now available to the committee as they wish.

MR. STUPICH: First of all, I would like to agree with the

minister that there have been considerable improvements in financial

reporting in the last couple of years. If there had been more mistakes,

or if something had gone wrong, I would expect him to take full

responsibility; since improvements have been made, I give him the

credit. He may want to pass some of that on to his staff, but that's up

to him. He's the one responsible in this House; he should take the

blame when blame should be attached, and he should take the credit when

credit should be attached.

Certainly there is a good deal of credit due the minister for the

improvements that have been made. I don't necessarily agree with the

Minister of Finance that he should take credit for the fact that his

budget has been kept under such tight rein, without looking at some of

the items within the Ministry of Finance. I'm not sure it's good to say

that certain things have been kept under tight control.

For example, take government financial support. I haven't had a

chance to look at this as much as I would have liked, but I believe it

does include the revenue-collecting work of government. It's my

information that over the years — and I suspect it is still the case —

there just hasn't been enough examination of tax returns. I remember

being told by a former deputy minister of finance that an additional

sales tax auditor made something like four to six times the amount of

added revenue to the Crown. I don't see anything in the estimates that

leads me to believe the government is tightening up on that at all. The

additional revenue is revenue the Crown is entitled to. People are

remitting less sales tax than they collect, and I think that sort of

thing should be checked up on. Legislation was passed earlier

increasing the fines for offences. I don't agree with that, and that

was argued at the time; but I do believe in collecting everything that

is due the Crown. The minister might have been well advised to have

included more provision for sales tax auditors, for example, and

perhaps others.

Another item is the Provincial Capital Commission. I do not intend

to discuss this at any length, but one of my colleagues will; perhaps

the minister will wait until that submission is made. My only concern

at the moment is that I believe we should all be proud of the work

being done in the provincial capital. I am not pleased to note that

there has actually been a reduction in the number of dollars for that.

The compensation stabilization program: again, I'll not discuss that

at any length at this time. It's a new program, almost a million

dollars, and there have been comments recently on exactly what we are

achieving from that compensation stabilization program. There seem to

be people employed with little or nothing to do.

As for contingencies, I suppose the minister is hoping that the

figure under that item will be enough to cover everything that

contingencies is supposed to cover.

I'd like to get into another aspect. On occasion in the House we've

asked the Minister of Finance to bring us a little more up to date on

the figures he used in preparing the budget. We suspect that those

figures are no longer valid. The minister has shared some comments with

people outside of the House and has been encouraging us in the House to

wait until the quarterly report was ready. We would have liked to have

had the quarterly report before the estimates came up. I'm not

suggesting that his estimates have been timed so that the quarterly

report wasn't ready. It is just about the last one to come before us,

and he couldn't have waited much longer if he was going to have his

estimates approved before we got to the end of the road. Mr. Chairman,

if that minister has information — and I would think that by now he

would have it — this is the time when he might present to the members

of the House a little more of it on what exactly is happening with

respect to the government accounts.

I'm quoting from a story dated May 14, 1982, in which the minister

is quoted as telling the Vancouver Sun that "there has been

little change in his forecasts of government revenue for 1982,

although, he said, there are some 'worrying points around the

periphery.' The consensus among private-sector spokesmen interviewed

Thursday was that the government must revise its estimates downward to

perhaps as low as zero percent growth." Mr. Chairman, this was May 14;

by July 20 I would think that it might be even less than zero percent

growth — at least that's the feeling we have; we don't know.

On another occasion the Minister of Finance was speaking at a

meeting of the Greater Victoria Chamber of Commerce, and at that time

he was saying again that there'll be no tax increases in B.C. because

the private sector cannot afford them. At that time he predicted — or

at least the reports indicate it to be the case — that there would not

be all that much change.

Perhaps the minister was quite correct in saying that his forecasts

in government revenue for 1982 would not be changed very much. The

forecasts printed in the budget.... Perhaps by the time he spoke to the

Sun on May 14 he had a different forecast and didn't expect to

have to change that very much. What is the situation on July 20? What

does the minister expect will be happening to the provincial government

revenue? What has happened in the three months ending June 30?

[ Page 8893

At the time the budget was being debated we predicted that some of

the minister's estimates of revenue were grossly overestimated. In

particular, we pointed to forestry and said that the 21.4 percent

increase in forest revenue to the Crown was one that was indeed grossly

overestimated. In addition, we said that the sales tax revenue, which

is a reflection of the total economy of the province, and also a

reflection in part of construction activity, must be very much

overstated too. We predicted that retail sales would be down, and there

are newspaper stories to the effect that they're down — not as much as

some people anticipated or feared, but nevertheless down. We wonder

what is happening to the minister's forecast with respect to sales tax

revenue and income tax collection, with unemployment being certainly

much higher than predicted when the minister spoke in the House on

April 5. Again, if people aren't working, they aren't paying income

tax. I would suspect that the minister's estimates of that source of

revenue, income tax, must also have been grossly overestimated.

Corporation tax revenue, while it's not as big an item as the others,

with corporation after corporation reporting losses.... Surely in that

area as well the minister must have been way out in predicting the

revenue coming from that source.

I wonder if the minister is able to bring us into his confidence

today and tell us something about what is happening to his budget in

relation to the first quarter which has gone by.

HON. MR. CURTIS: Mr. Chairman, I'll deal first with the

remarks made by the member for Nanaimo (Mr. Stupich). The hon. member

asked about the audit and inspection process in the Ministry of

Finance. He was referring, I assume, essentially to consumer taxation,

where most of the activity takes place. I think there has been the

complaint for some considerable time that there are not enough

auditors, and it is true that an efficient auditor-inspector can and

does produce a number of times more than his or her salary in the

course of the year. We have eight new staff, five inspectors and three

auditors. We anticipate that they will find about $1.8 million

additional revenue. We're trying another approach — a new approach, I

believe, and I'm subject to correction — and that is to ensure

compliance through education; that is, assisting the tax collector, the

person who is collecting on behalf of the Crown, as to how it should be

done and the way in which it should be carried out. I think we could be

faulted in past years for not having attempted that educational process

to the fullest extent possible.

There is a difficulty as well, Mr. Chairman, which I think the

member will understand very well, and that is notwithstanding the fact

that we have eight new staff in this section, there is a very severe

problem in recruiting. These individuals are in great demand. That, I

think, has been going on for some two or three years, and we're looking

for auditors or inspectors, qualified men and women. I think the

private sector will confirm that they are in short supply. It is a

particular talent which has been in demand, not just in these few

months; it's been the trend for quite some time. We hope to fill vacant

positions as and when possible on the basis of the availability of the

individual, not on the basis of any constraint or unwillingness to do

that.

To the larger question. The member has asked for me to take the

committee into my confidence with respect to the first quarter. I don't

have the first-quarter report. The member for Nanaimo (Mr. Stupich) was

fair....

AN HON. MEMBER: I can get you a copy.

HON. MR. CURTIS: There's an interjection from another member

that he can get a copy. Well, I'm not sure that it's been printed yet.

I have not seen, even in draft form, the first-quarter report. It will

be on time. It will be available in the last hours of July or, more

likely, because of the calendar break, the first two or three days of

August. I think that matches pretty closely the release date of the

quarterly report in previous years since it was introduced by this

government.

With respect to real growth, we now are expecting something of this

size: we're still on the plus side, but not significantly. It is due in

large part to such projects as northeast coal and others which have

been debated at length in this chamber in the course of this and the

last session. I'm going to give the member the three percentages. We're

forecasting a real growth increase of 0.4 percent for B.C. as opposed

to the latest forecast for Canada, real growth in decline minus 2

percent and the latest available figure in the United States, minus 1

percent. I'm not sure that that is as of July 20, today, but it's the

most recent forecast that we can offer.

Before I entered government or this chamber, I watched this kind of

forecasting. I am a layman; my experience has been practical, in local

government, provincial government, regional districts and so on. In

turning to professionals — and I think I might find some agreement in

the committee — there has probably not been a time such as this, where

forecasts can fluctuate so rapidly, in the working memory of many

professional economists. It is a very strange art at the best of times,

and right now one has the feeling that it is even a little less

reliable. I don't say that out of criticism, but because of all the

variables which occur and the numbers which are produced out of the

United States.

There are those who have the distinct impression — they are not

unanimous; economists never are — that the United States economy

bottomed in May. I don't offer that as an ironclad statement from the

Ministry of Finance; I simply allude to it. But I've heard that from

more than one source. There are economists forecasting a decrease in

interest rates over the next three to six months in the United States.

That, of course, will have an impact on the Canadian economy,

particularly the British Columbia economy. There are those, on the

other hand, who are forecasting more bad news in terms of interest

rates in the United States and Canada, in that order. I don't want to

suggest to the committee that I subscribe to one or the other, but I

think that any objective observer at the present time will agree that

those whose job it is in the private sector or advising government as

to what is going to happen in the next month, six months or year, are

working in a rapidly and dramatically changing environment.

We saw a very significant increase in the United States housing

starts annualized in May. I believe the figure was — I'm going from

memory, but I think I'm correct — annualized at 1,086,000. I was

awaiting the figure yesterday, knowing that it would be released on the

19th. The figure reported in the press — certainly in the Vancouver

Province and in the Globe and Mail — is an annualized

figure of 911,000. That's down, obviously, from the blip which occurred

in May — the 1,086,000, or for round figures, 1.1 million. We also hear

some encouraging information with respect to building permits being

taken out in the United States.

I don't want, at this early stage, to filibuster my own estimates.

The point is that we still see a slight positive

[ Page 8894

growth for the provincial economy in the year now

before us. That has come down from the very early estimates in mid-1981

and from the figure presented to this House which formed part of the

background for the budget of the fiscal year 1982-83. On the other

hand, it has not yet had an opportunity to reflect some of the positive

developments announced in the last two, to three, to four weeks. I will

have to stay with that figure for today.

With respect to revenues, we do see that there has been a slippage

in revenues from a number of sources. The member mentioned several. One

in particular, though, was income tax. As he knows, income tax has such

a lag. Indeed, it can go back over two years with adjustments,

recalculations and transfers to the provinces. That curve tends to

flatten out.

Whereas the actuals might show some dramatic swings, with

these adjustments going back into prior years, the curve is much

flatter in that area.

We see the retail sector in British Columbia, without question, in

decline. Therefore our revenues under the social services tax — the

sales tax — are in decline. It would be pointless for me to pretend

otherwise before this committee, or in dealing with anyone interested

in the provincial economy. We, on the other hand, see some encouraging

signs in the revival of the real estate market, which may lead to an

improvement in the relatively near future in the purchase of durable

goods. That revival perhaps is so recent that it is not yet capable of

being identified with any accuracy.

The challenge which faces us in government and in the ministry at

this point in the fiscal year, with the third quarter just concluded,

is to ensure that our expenditure pressures are maintained at the

lowest possible level. That is what the Premier has been speaking

about, and certainly that is what I've been actively engaged in:

because of the slippage in revenues, avoiding the widening gap between

expenditure and revenue in the province of British Columbia. I can only

assure the committee that we are going to make a concerted effort to

hold the expenditure increases to an absolute minimum in order to

cushion the impact. If we were to do nothing in that area, then I think

we would be very seriously faulted by the people of British Columbia

during these very volatile times.

MR. STUPICH: I'm a bit intrigued, about the minister sticking

with a target of 0.4 percent real growth, when almost everything he

mentioned indicated that it's going to be something less than zero,

rather than a little bit more, with the exception that he's hoping for

a turnaround in housing starts in the States. That was mentioned. That

will be a long time reflecting on B.C.

The other things he mentioned were a couple of good announcements

for the province of British Columbia which I don't think will be

reflected in economic activity in the year ended March 31, 1983. I

wonder whether he can indicate in what area of the economy he expects

some growth to take place, because in most areas there is a decrease.

It has been said that the only economic activity in the province that

has been actually increasing has been unemployment insurance. That, as

well, will start decreasing soon when people have used up their

unemployment insurance and switch to welfare. Apparently the only

economic activity that is showing any signs of increasing at the

present time, unemployment insurance, is also going to go down. There

must be some area of the economy where there is going to be real growth

if we're going to end up with a break-even position, which is 0.4

percent.

I'm not surprised that the minister doesn't have the quarterly

report — or even some of the figures, I would think. I expect the sales

tax revenue included in the report for the month of June will be that

which is collected by July 20 — we're now on an accrual basis. That

being the case, some of that money is still coming in today. I perhaps

feel a little better about quarterly reports now that they're not

coming out quite as promptly as they did formerly. I can recall the

second quarterly report ever issued in the province of British Columbia

being printed and released to the press five days after the end of the

second quarter. On October 5, 1976, we had the second quarterly report;

it was released by the Premier on that occasion. I suspect that was

more a political document than it was an historic document reflecting

receipts and disbursements.

So I'm looking forward to seeing the second quarterly report; this

year I think it will be a more meaningful report. There is something I

would like to have in that report that, I believe, has not been in

reports up to this point. Unless the minister has already started that,

it won't happen this time but sometime in the future. While the

quarterly report does compare the estimated expenditures with the

actual expenditures on a quarter-by-quarter basis, even month-by-month,

it hasn't done that with respect to revenue. It reports the revenue

collected, but it doesn't compare what has been collected in that first

quarter, or whatever quarter it is, with what was estimated to be

collected in that quarter. I think I'm right in that, and if that could

be included in the reports they would be more meaningful.

I'd like to get into another area and invite the minister to comment

on this, and this is again with reference to the speech that he made to

the Victoria Chamber of Commerce. He was taking some pride in the fact

that "British Columbia took action two years ago to prepare for the

economic rainy days." I'd invite the minister to comment on that and

also compare it to page 22 of the budget speech, which indicates that

in the year ended March 31, 1981, there was a drawdown of $313 million

in the consolidated revenue fund; there was a drawdown in the 1981-82

estimates — and perhaps it's still in the estimates, but by now it

should be pretty well refined — of $356 million; and, of course, there

is a drawdown in the year we're currently in of $279 million. It would

appear that in those three years — some of it is still to come, but

going back to 1980-81 — while the minister has taken some pride in

having built up a cushion that enables him to carry on, they have not

been building up a cushion since the year ended March 31, 1980. We

don't have the figures here for March 1980, and I haven't tried to work

them out — I'm not sure just how I could, anyway; there are so many

changes in accrual basis accounting — but it would appear that we have

not been building up that kind of a cushion in the province of British

Columbia. Rather, we have been using up a cushion that was built up by

previous governments, governments that have been building up cushions

from the 1950s on — not every year, but up until March 31, 1980,

cushions have been accumulated. It would appear that since then we have

been drawing down on those cushions, not drawing down on them just in

1982-83, but drawing down on them starting in 1980-81 — I can't say

about the previous year. So I'd like the minister to comment on that

with reference to his remark to the effect that we took action two

years ago to prepare for the economic rainy days. The action we took

two years ago, it

[ Page 8895

would appear from this, was to start drawing down

on the rainy-day funds that were accumulated by previous

administrations.

MR. HALL: Mr. Chairman, I want to change the subject

slightly. I note there are a couple of questions in my remarks. I want

to explore with the minister a number of points that have come to my

attention not only in my role as a member of this House but also as the

chairman of the public accounts committee.

I came to this House some years before the present Minister of

Finance and year by year have seen the information presented to us

regarding the budgets and the supply which we have to grant to Her

Majesty for the service of the province. That is essentially what we're

doing here in committee today — discussing exactly how many dollars are

required to service the programs of all the various ministries. Each

individual member of the House has to deal with the quality of that

information, and this minister has this added responsibility, over and

above the normal administrative responsibility of the Ministry of

Finance, for that particular information, which is absolutely essential

to a private member's career — private, day-by-day, political career.

It's been my task from time to time to speak on this, not only in a

private way in the public domain but also in the political club, if you

like, that we all belong to — when one's asked to sit on panels and

discuss with other politicians and academics the whole question of

accountability. After all, this is an accountability session in a way

that we're going through now; it's part of the accountability chain.

It seems to me that unless the quality of information that we get is

absolutely the very best obtainable, each person in the House is

impeded in the performance of his or her duties. What kind of

information does the member really require? The member requires the

estimate — that is, the best guess of this particular gentleman we're

discussing today — of what it's going to cost and where he's going to

get the money to do the work envisaged in the forthcoming 12 months,

part of which is already gone. Secondly, we need the last set of books

that he can lay his hands on for us to examine by way of record — the

budget papers supporting his various ideas and the various facts at his

disposal. That information combines with each member's basic knowledge

of the economic underpinnings of the province — the basic data, the

population, what one percent of sales tax produces, what the gross

provincial product is. All of those raw materials, the simple

one-liners, produce part of our tools of the trade as politicians.

How can we do our work better? How can this Minister of Finance help

us do our work better? Simply by improving the quality of the

information. While there's been a definite improvement in many of the

things that this minister has done — and I'm on record already as

saying so not only in this chamber but outside — there has been, in my

view, some slight slippage in the provision of the amount of

information that we really require. There has to be some consolidation

of the material we have to deal with as we're examining the record. We

have to be able to compare more easily last year with this year,

department with department, ministry with ministry. We have to be able

to compare performance not only in this province, but similar programs

and ministries in other provinces.

In my view, that's where electronic data-processing comes in. It

seems to me that it's possible these days, with that particular

marvellous invention, to break things down into standard objectives of

expenditure. Using the coding methods that are available and well based

in this province, we can start comparing our performance in British

Columbia with performances elsewhere, all helping in the accountability

chain. It should be possible to express those performances in terms of

productivity, if you like. There are ways of expressing clerical and

programmatic performance in a productivity way. It's possible for those

things to be expressed every which way — per capita, movement, are we

first or tenth? How do we spend each particular share of our budget as

compared to the particular share for education, for example, in the

province of Alberta or Nova Scotia? The need for that standard

objective expenditure data to be agreed to across the country, to have

the same objectives, is now obviously paramount.

[Mr. Davidson in the chair.]

I've hinted at a number of questions, and I'm sure the minister has

the general drift. Is there any movement by ministers of finance to

standardize that kind of procedure so that we can, as members of the

House and decision-makers...? We like to think we're decision-makers,

but sometimes I think it's really not that simple, that we're not

making as many decisions as we think we are, that there's a policy of

organized drift. But that's a conversation for another day. I think we

should be able to get this information more quickly, and be able to

deal with it in that way.

That's the first general topic of discussion that I'd like to throw

out on the occasion of having the Minister of Finance's estimates

before us: the quality of information that's provided. It's absolutely

essential that this be constantly worked on and improved.

The second point again deals with quality. That is, over the last 70

years auditors and accountants have agreed, slowly but surely, on a

definite standard of accounting practices and procedures in the private

sector. Every auditor or accountant who signs a financial statement

attests to that fact. Whether he's operating a bubble gum factory in

Prince Edward Island or sending off space rockets in the United States

of America, each person knows that his books are being examined on

exactly the same principles. That is not true in the public sector.

There are no generally accepted standards of accountancy in the public

sector. This situation has totally bedevilled the Canadian Institute of

Chartered Accountants. Only now are we grappling with the erection or

compilation of an acceptable set of standards for public accounting.

Those standards — which, as I say, are adequate, accepted and

understood by everybody in the private sector — are inadequate and

variable across the public sector. Every set of public documents I've

seen.... May I hasten to add, in case you think I am suggesting for one

second that we have some sort of runaway auction set of books in this

province — I am not — that our set of books in this province,

especially now that we have a consolidated set of statements, is among

the best. There's no doubt about that. However, the conditional

statements applied to our set of books still make it unsatisfactory and

difficult to compare with others. I'd like to ask the minister what

specific and special efforts are being made by our Ministry of Finance

to play our important role as a leading industrial province — number

two or number three in the country — in making sure that standards of

public sector accountancy are constructed and adhered to.

[ Page 8896

Not only do we have our own house to look after, not only do we have

this first figure of $7.7 billion to look after, which is in the budget

presented by this gentleman on April 5, but we also know that 50 cents

out of every one of those 7.7 billion dollars goes out the back door

quite legally — all signed by at least two people, or somehow or other

authenticated in every which way, as transfer payments — there to

escape the kind of scrutiny we're having today, and the kind of

scrutiny we have in Public Accounts, by the comptroller general and by

the auditor-general. That's not to say that some of them aren't

scrutinized magnificently. But they're not scrutinized the way we

scrutinize them here. We don't have those standards of scrutiny for 50

cents in every tax dollar.

It seems to me, therefore, that those three things should be

bothering us, as well as the $1.95 luncheon that this minister may or

may not have had from time to time. These things should bother us just

as much as profligacy, bad policy — and there's plenty of that — or

mistaken policy — and there's plenty of that. They should receive our

attention — and congratulations when we see good legislation, as we

have from time to time. Once in a while we've seen some of that. On

those hopefully constructive notes, I ask the minister if he would —

without suggesting for a second that he filibuster his estimates — make

some response.

HON. MR. CURTIS: I will first answer the points made by the

hon. second member for Surrey (Mr. Hall), and then I think I have a

couple of answers to give to the member for Nanaimo (Mr. Stupich), from

when he last took his place in this debate.

The second member for Surrey has made a very good point. We are

striving in this province — and, I think, in other provinces as well —

for a continuing improvement, not in the volume but in the quality of

information which is available to the elected members sent here to pass

judgment on what the government of the day offers, and also to those

who must work under the laws which we draft and pass in this chamber,

whether they are advising clients or collecting a particular tax or are

required, in one way or another, to respond to the government's

requirements and regulations.

I note that the member said that the quality of the information has

been showing an improvement — the accountability is coming along quite

well. But he made the point, with validity, that we have some distance

to go in the public sector, whether it be in British Columbia,

Manitoba, Quebec or the Atlantic provinces. He observed that there has

been "some slight slippage of information." I think that was the

precise phrase he used — observing that, on the one hand, there have

been improvements but that, on the other hand, some of the tools with

which we all work are not as efficient as they should be. We share

those concerns with the member, Mr. Chairman. While he did not allude

to it specifically, I know that this general topic was discussed very

recently at the meetings of chairmen of public accounts committees

across the country and of auditors-general, who met concurrently in

Victoria a few weeks ago.

The annual report for the Ministry of Finance is, I regret, not

ready for tabling today, but I hope it will be ready for tabling within

a very few days. I spent most of the weekend prior to this one

reviewing it, and I suggested some points which I think will improve

the document. This year, for the first time in the annual report out of

the ministry, we are attempting to compare an item such as our cost of

operation within a

section of the ministry with the cost of the same

operation in other provinces. This is not said boastfully, because in

some instances we don't show up that well. But it is important for a

member sitting in this Legislative Assembly — on one side or the other

— to be able to say that consumer-taxation activities cost this much

per thousand dollars collected or per number of accounts and that they

cost more than that in another province, less than that in still

another province. I would like to have the members' observations —

privately and publicly, Mr. Chairman — as soon as the annual report is

tabled. The moment it comes to me from the printers, I will bring it to

this House for tabling. That could be within a very few days.

I might mention that British Columbia convened the first meeting of

provincial comptrollers-general in February of 1981, just a

year-and-a-half ago, to discuss, among other things, the very kind of

accounting standardization to which he has referred. I believe this is

now an ongoing annual meeting; the next meeting is scheduled for

October of this year.

He referred to the CICA. The institute itself.... Perhaps he has the

report on his desk. We're cooperating fully with the CICA committee

which is studying public-sector accounting standards. There is no doubt

that there is room for improvement in the public sector in this country

in terms of accountability, but perhaps more importantly in terms of

standardization — that was the word which I think both of us have used

— so that whether you are examining British Columbia, Alberta or

Saskatchewan, you are at least comparing apples with apples and oranges

with oranges. We have sought the guidance of the institute then, and we

have shared our experience with other provinces.

The member, towards the end of his remarks, referred to the fact

that while we engage in strenuous debate here over what ministries

expend, we are still with relatively little debate passing about 50

cents out of every dollar to QUANGOs — that delightful anachronism for

quasi-autonomous non-governmental organizations. Mr. Chairman, the

member is right. We've had debate in here, and we've had debate in the

ministry as well, with respect to the fact that that money is passed to

those organizations, Crown organizations of one kind or another, almost

as a matter of course. It concerns me greatly. It concerns me that

one-half of the dollar is given very detailed, lengthy, exhaustive

scrutiny in this chamber, or in another room in this building, but the

other half is not subject to the same kind of control. I know that some

of my colleagues in other provinces share the concern, to a lesser or

greater extent, depending on their circumstances. I can only speak for

myself in here in this regard.

The Financial Administration Act provides the basis for ultimately

correcting that lack, through amendment. That won't happen within the

next two weeks or two months, but I think it should happen. I think

that the money which we do pass over with relative ease and in

relatively good time to these QUANGOs should be subjected to the same

kind.... They won't like it, but until we firmly address that half of

the dollar we are failing in our responsibilities to the public; not

totally failing, but falling short of the mark. I will disagree with

that member strenuously on other matters, but I think that there is

agreement among some members on both sides of this House with respect

to that absence of control. Therefore I can expect within the next two

or three days....

MR. HALL: Your vote to go through.

[ Page 8897

HON. MR. CURTIS: No, I can expect within the next two or

three days that I will have letters of annoyance and letters expressing

concern that I do not rely on some of these agencies, because I've had

those before when I've made similar remarks outside this chamber. But

that's fine. That shows that in identifying this problem we're hitting

a nerve. It is not good enough for us to simply worry about the

one-half dollar and not the other half. We've made some movement to

that end, and I think it is an obligation we face to go the entire

distance in the very near future.

Mr. Chairman, I was a little puzzled by the observations of the

member for Nanaimo (Mr. Stupich) concerning the quarterly reports where

we show estimated expenditure as we move through the year but not

revenue to the extent that he would wish. He may want to expand on

that. I don't have a quarterly report immediately in front of me.

AN HON. MEMBER: I happen to have one here.

HON. MR. CURTIS: You just happen to have my copy? Mr.

Chairman, we can debate that then without taking the time of the

committee; we can wait until he expands further on that.

He spoke about a rainy day and alluded to a speech that I made in

Victoria and a similar speech I made in Vancouver earlier this spring.

In response I would say to the member for Nanaimo that in 1979-80 we

had a resource revenue surplus. For 1980-81 we placed those in special

accounts. That was the identification early on of rainy-day money,

which has been drawn down for the 1982-83 fiscal year and which we

spoke about at length in the budget debate. That was very much the

activity which was occurring in that period, going back into the fiscal

year 1979-80.

MR. STUPICH: I would like to draw the minister's attention to

table 2 on page 22, which indicates that the consolidated revenue fund,

which includes the special purpose funds, was drawn down in the year

ended March 31, 1981. Perhaps he can come back on that later.

MR. HOWARD: I was interested to listen to the minister talk

about expectations with respect to interest rates in the United States

and Canada, or prognostications of lower interest rates by some people

who claim to have the inside knowledge. When it comes to interest

rates, generally speaking, we know the damage they have caused.

It's interesting to note in passing that it was this government,

with this Premier, who not too long ago went to Ottawa and importuned

the federal government to continue on the course of high interest

rates. It was this government and this Premier who went to the Prime

Minister of Canada, Mr. Trudeau, and urged him to follow a policy of

high and increasingly high interest rates to deal with economic matters

in this country. The results, of course, are felt within this province.

Never since then has the Premier or anybody in this government had the

courage to rise, either in this place or outside it, that I have heard

of, and indicate that they were in error a few years ago when they

advocated high interest rate policies for this nation.

Since this government took office in 1976 we can trace the fiscal

difficulties that we have had. We can trace a succession of complex

bookkeeping arrangements and imaginative bookkeeping arrangements by

the two Ministers of Finance in the Social Credit regime since 1976,

and show that by their imagination they have accomplished the

presentation of a picture about fiscal matters to the people of British

Columbia that is not in accordance with reality or the facts. They've

been relatively careless in the custodial relationship they have with

respect to taxpayers' money.

The member for Nanaimo, on a number of occasions, has very

adequately, carefully and clearly outlined the financial circumstances

existing at the time this Premier took office. He has very clearly

pointed out that the debt of some $261 million was the result of a

manufacturing process. It was the result of this government, in 1976,

attempting by that process of creative bookkeeping to blacken the name

of the preceding administration.

I don't need to go into the details of our fiscal situation at the

time of the change of administrations, but I do point out that after

this government took office there was a declaration of a budgetary

deficiency of $261,447,790. In the fiscal year 1976-77, five separate

borrowings of funds were undertaken by this government in pursuit of

satisfying that fictionalized $261 million debt. To point it up very

clearly, I would say to the committee — this is from records provided

by the government, not by me — that on March 15, 1977, more than a year

after this government had been in office, it sought to borrow and did

borrow, 15 days before the end of the first full fiscal year during

which this government was in office, the amount of $11,477,790. That's

the precise amount of money necessary to satisfy the fictionalized

$261,447,790 identified more than a year earlier as being a budgetary

deficit.

This government borrowed more than $11 million, 15 days before the

end of the fiscal year, 15 days before they declared a budgetary

surplus of $76 million. There was no need whatsoever, regardless of

what may have existed a year earlier, to borrow that additional

$11,477,790. It was borrowed solely and precisely for the purpose of

keeping alive fictions. They're still engaged in that kind of activity.

I only mention that to indicate the commencement point of our financial

difficulties today; the creative bookkeeping concepts followed by two

Ministers of Finance in this government has resulted in a situation

where the general public simply does not know what the financial state

of affairs is. They keep getting different figures from time to time.

When this minister became minister, and upon the introduction of his

first budget. we saw the estimates of expenditure over the previous

fiscal year increase by some 20 percent. There was roughly a billion

dollar increase in expenditures, directly under the authority of this

minister. It's almost as if he were a drug addict loose in a

dispensary. He found, so we are led to believe, millions upon millions

of dollars of extra money. He could perceive of nothing else to do with

it except spend it and embark this province on a spending spree and a

state of profligacy and squandering throughout all ministries that we

are now living to rue and are now realizing was improper.

[Mr. Richmond in the chair.]

In the following fiscal year, 1981-82, we saw another massive

budgetary increase of some 20 percent. Unable at that time to keep up

with the expenditure philosophy and psychology that he and the Premier

had engendered in the cabinet, that was the year that the minister

found it necessary to impose tax increases: sales, personal, gasoline,

and even the hotel room tax — the only people he excluded from the

hotel room tax were his friends who live in the Union Club

[ Page 8898

over here — to the extent of some $625 million in

that particular fiscal year. From the commencement of this minister's

stewardship over the accounts of this province the theme has been one

of "spend, spend, spend." The exploits of Broadway Bob, which came to

our attention in now infamous revelations, took place during his first

fiscal year in office, 1980-81. That was the fiscal year in which the

minister himself had public funds expended on his behalf to visit

certain events in the city of New York. Not too many weeks ago he had

to rise and say that yes, he found that and he undertook to — and in

fact did, so I'm told — return that money to the Crown. But that was

the result of the "spend, spend, spend" philosophy of this minister,

this government and this Premier commencing in the fiscal year 1980-81.

This minister issued a Treasury Board directive which appears to

have been disregarded by those in his cabinet to whom it was directed.

This was the Treasury Board directive identified as No. 10-80, issued

May 20, 1980. It was the one that established a control and a policy

with respect to hospitality expenses and the use of funds designated

for certain purposes, and how it should be followed. That was the

Treasury Board directive which gave direction to Broadway Bob before he

went to New York in June, the following month. It says that any

functions in excess of $2,500 must be approved in writing by Treasury

Board before the function takes place, and that functions up to $2,500

must be approved in writing by the minister or the deputy before the

function takes place. Apparently no such authorization was given by

either Treasury Board or...even though a telegram was sent from the

Ministry of Industry and Small Business Development authorizing an

expenditure of $5,000 for that visit to New York.

MR. MACDONALD: For a couple of nights on the town.

MR. HOWARD: Whatever it was, they must have felt that $5,000

was sufficient; otherwise they would allocated more. But that was done,

Mr. Chairman, without any apparent authorization — that we can discover

— by Treasury Board before the event, even though on May 20, just a few

weeks before the Minister of Energy (Hon. Mr. McClelland) embarked upon

that escapade of his in Times Square with limousines and Broadway shows

and the like, the Minister of Finance, as chairman of the Treasury

Board, affixed his signature to a document that says: "You can't go

unless you get Treasury Board approval for events over $2,500. You

can't go unless, if it's up to $2,500, you get approval in writing from

the minister or the deputy. And it goes on and on.

Interjection.

MR. HOWARD: Speaking of the triple-A rating, the minister of

Finance himself had the insulting temerity to indicate in this House

that the purpose of his trip to New York in the fall of that year of

1980 was to put on a show that exceeded that of Jimmy Carter in the

city of New York in order to influence the lending institutions to give

this province a triple-A rating. He knows that that is not the way the

system functions. He knows that no matter how many lavish banquets he

might have put on in the city of New York, that would not have any

influence whatsoever on Kuhn Loeb or Salomon Brothers or any of the

other groups in the syndicate that handle borrowings for British

Columbia on the New York market. They cannot be bought off by banquets.

But the minister indicated that that was the result, thus implying that

that was the purpose of his trip and he succeeded.

What I very briefly want to point out in a quick overview of what

has happened is that we apparently are in some difficulty in this

province by having a shortfall in income and an excessive amount in

expenditures. I want to point out to you that it was this minister in

his first budget who embarked us upon that course of excessive

expenditures. It was this minister who presented a budget to this House

which we in the NDP voted against, which showed a 20 percent increase

over the previous year, flying directly in the face of the declarations

of his own Premier, who said that budgetary increases in expenditure on

the part of government should never exceed the rate of inflation. The

minister doubled it in his first year in office. He doubled the

increase with respect to the relationship with the rate of inflation —

roughly 10 percent rate of inflation, a 20 percent increase in

expenditures — and the same the next year. Now, regretfully, we are

living in a period of time when the people who are being injured by

that careless attitude and approach of this government are none other

than the taxpayers in the province of British Columbia.

No amount of gentle conversation on the part of the minister or

involved, intricate statements with figures and percentages in them can

deny the fact that we are in fiscal difficulties as a direct result of

the carelessness of this government, this minister and this Premier,

who set the cabinet and the deputy minister structure and the whole

public service at the top level — starting in the fiscal year 1980-81 —

on a course of spending and squandering as much money as they could

possibly get their hands on. Public accounts, which have been referred

to and are being considered by the public accounts committee, for the

fiscal year 1980-81 — the first year that this minister presented a

budget to this House — show clearly the commencement point of that

profligacy.

It's regrettable that when the minister started his conversation

today about the introduction of his estimates, he didn't indicate to

the general public that he had indeed made an error when he started

preparing for and presented his first budget. That would have been much

more helpful, beneficial and in keeping with the practice that should

be expected of a government: namely, levelling with the general public.

When you make a mistake, say: "Yes, I made a mistake." Instead the

minister seeks to embark in the other direction, and if there are

problems or difficulties, it's everybody's fault but his. If there are

problems or difficulties, it's not this Premier or government that

caused them; it's President Reagan in the United States. And if it

isn't him, it's Prime Minister Trudeau in Ottawa.

Admittedly, Trudeau and MacEachen have caused a great deal of the

problems that we have in this nation; they are following the course

advocated and presented to them by this Premier in 1978, namely a

course of high interest rates. That was an error, a major mistake in

policy direction by this government, and it hasn't got the courage to

'fess up to the general public and say: "Look, we made an error. We've

reversed ourselves. We want to go in the other direction and try to

straighten it all out." A minister who would make that kind of

declaration sincerely and openly to the general public would have a far

better chance of having his fiscal policies accepted by the general

public than is likely if he continues on his present course.

[ Page 8899

MR. BRUMMET: I regret that so much time has been spent in

this Legislature by members of the opposition going over the same

ground. I wonder if the Finance minister could calculate how much it

costs to keep this Legislature open each day, each week, each month.

MRS. WALLACE: Maybe we shouldn't be here at all.

MR. BRUMMET: Wait your turn.

When this Legislature is in session, and when it serves a purpose,

then that money is well spent. But these members of the opposition, who

claim somehow or other to be acting responsibly for the taxpayers of

this province, show perhaps the greatest irresponsibility that I think

I've seen in my lifetime. We're talking about thousands of dollars a

day. I have a hard time calculating how much it costs to keep this

Legislature in session for an extra month. I would say that we have

extended the sitting of this Legislature by at least a month, for no

other purpose than to have the opposition go over and over again, for

no other reason than their partisan, political purposes, the few

thousands of dollars involved in the expenditures of the minister whom

they are talking about.

I'm not trying to make light of those few thousand dollars. I'm

trying to put them into perspective. As a member of the public accounts

committee, I know that since May 10 the auditor-general and her staff

have been there every Monday morning that we've sat — and figure the

cost of that — because they were on call to that committee to study and

investigate a roughly $6 billion budget from the year covered by the

the auditor-general's report. Instead of getting at that $6 billion,

instead of investigating it to see how this could save the taxpayers of

the province money....

When we have dealt with this responsibly, we have come up with

suggestions that could save hundreds of thousands of dollars in this

province. Instead, we have been subjected to the silly, political

activity of the opposition. I would say that hundreds of thousands of

dollars have been wasted. You talk about irresponsible spending of

taxpayers' money. We spent three or four weeks on one $60 invoice, one

$72 invoice and one $35 per diem. We had the auditor-general, her staff

and all of us sitting there for hours, dealing with $100 or $125.

MR. NICOLSON: How much does it have to be before it matters ?

MR. BRUMMET: I'll tell you how much it has to be. It has....

MR. HOWARD: Mr. Chairman, on a point of order. Mr. Speaker

and Mr. Chairman of committees have said on many occasions that we

cannot examine what takes place in a standing committee of this House

except upon a report of the committee. I want to save the time of the

House, that's all — and save some money.

MR. BRUMMET: Pretty sensitive, aren't you?

Interjections.

MR. CHAIRMAN: Order, please. The member rising on a point of

order is correct. The detailed evidence before the committee cannot be

discussed, but the topics in general can be discussed in this committee.

MR. BRUMMET: I was not concerned about discussing the detail,

except that we have had that member of the opposition talk about

expenditures of ministers' travel, how that is a waste, and how it

hurts the taxpayers of this province. I am trying to put in perspective

that realistically, in other ways, because of the opposition's petty

politicking, we have actually wasted hundreds of thousands of dollars

of the taxpayers' money in this province. Because of their petty

politicking and irresponsible actions and statements, we have had to

neglect the major concerns that that committee could have been

studying. But so be it. Let's leave that committee.

Now I can understand the politicking, and I can certainly see why

the opposition would take an issue such as the spending of the

ministers and point it out, and bring it to the attention of the

public, because they see that as serving two purposes. One is to

safeguard the taxpayers' money, and the other is to use it for their

own political gain. They'll do anything in a quest for power. I can

understand that. But what I cannot understand is the constant

repetition in bill after bill, in estimate after estimate, in every

committee, of prolonging these expensive activities of government in

order to carry on over a few dollars.

I am convinced, as I think the public in this province is, as are

most responsible people in this House, that there is an investigation

that has been scheduled and is underway. The opposition will have ample

opportunity, if they're not satisfied with that investigation, to again

attack. The only thing they understand is to attack. They have attacked

every program this government has undertaken, whether it's good....

Naturally they think it's bad. They've seen fit to attack every

program. That is understandable; oppositions do that. But when we have

spent hours, days and weeks going over the same items, which will be

investigated, which can be dealt with properly.... We are spending

hundreds of thousands of dollars of the taxpayers' money in this

province to satisfy their petty politicking.

I don't know at what point we can come to our senses in this place

on that. We've heard that same speech from the member for Skeena (Mr.

Howard) on every topic that has come before this House. Look at the

time they have spent in various technical approaches in here to waste

time, to try to score political points. You talk about waste; let's put

it in perspective. At least when the ministers were travelling and

doing some spending, remember that spending was in the year 1980-81,

and somehow the opposition is trying to link it to these times. It

doesn't make high spending right at that time because times were

better. But they constantly link today's restraint program with that

spending at that time, and they are a year or more apart.

So what I'm trying to do, Mr. Chairman, is put into perspective what

we're talking about here. They have spent hundreds of thousands of

dollars of the taxpayers' money in this province in order to score

political points over a few thousand dollars. That certainly is

upsetting to me, and I think to many members who could be doing

something far more productive and much more useful than listening to

the political claptrap that we've had to listen to over and over again

here.

The member for Skeena, along with many of his colleagues, is quite

concerned about the fact that a debt from their time in office is being

dealt with by this government. They don't like it.

MR. NICOLSON: We were never in debt.

[ Page 8900

MR. BRUMMET: Well, I don't know what socialism sees as debt,

but in most of the real world, bookkeepers decide that when you spend

far more than you take in, that is called a deficit.

Interjection.

MR. CHAIRMAN: Order, please. Will the member for

Nelson-Creston (Mr. Nicolson) please come to order.

MR. BRUMMET: We've learned to expect that from that member.

Any bookkeeping simply says that if your expenditures exceed your

revenues, that is a deficit. During the NDP years, not only did they

spend far more than they took in, but they also spend everything that

was left in the pot by the previous government; yet they maintained....

And I can see why they're so sensitive about that, because they would

like the people of this province to think that they can manage the

affairs of this province fiscally. Yet over and over again in

everything that they have had to prove — not just that they had to talk

about, but whenever they had to act — they made it very clear, in short

order, that they knew how to spend and they weren't concerned about

where the money came from, because socialism simply says that we can

always take things over afterwards. You know, that's how you recover —

you take over, you nationalize things. For heaven's sake, so what if

you nationalize!

We've certainly got a fantastic example of nationalizing our energy

programs. I might point out that it had the full support of the Leader

of the Opposition, who now tries to dissociate himself from the federal

government. But at the time that the national energy program was

announced, that Leader of the Opposition went to a B.C. Federation of

Labour conference and stood up and said: "The only thing wrong with the

national energy program is that it's not moving far enough or fast

enough." My goodness, if it had moved any further or faster, we'd be

completely wiped off the map by now, because look at what that program

has done to the economy in this country; look at what the taxpayers are

paying for that silly nationalization scheme under the guise of a

national energy program. I think he was suggesting even further steps

should be taken at the time.

MR. NICOLSON: What's wrong with Canadianization?

MR. BRUMMET: We're not talking about Canadianization; the oil

industry was basically Canadianized. We're talking about the

nationalization that you people supported and the price every person is

paying at the gas pumps, every taxpayer in this province, every natural

gas user — the amount of money that they are paying for through the

nose for that nationalization scheme.... Let's keep it in perspective.

MR. NICOLSON: It's Canadianization.

MR. BRUMMET: Canadianization — nuts! We owned the oil then;

we had the gas then; we had investors coming in here and putting our

people to work. When you started nationalizing it, trying to call it

Canadianization, then what did we have? We've got no jobs, we've got

the oil industry moved out, and we've got higher prices. And you talk

about Canadianization.

MR. LEA: Try BCRIC.

MR. CHAIRMAN: Order, please.

MR. BRUMMET: Well, I'll tell you, BCRIC would be in a lot

better position today if it wasn't for that silly national energy

program and those federal policies which have discouraged investment.

MR. NICOLSON: We'd be a lot better off if it weren't for

northeast coal, too.

MR. BRUMMET: Here they bring up northeast coal again. I would

like one of those members in this House who keep attacking it to have

the gumption to stand up and say that if they became government

tomorrow they would cancel the northeast coal project and all the jobs

that go with it. I'll challenge any member of that opposition to stand

up in this House or anywhere else and say that they would....

Interjection.

MR. BRUMMET: You take your turn; you stand up after I'm

finished. You won't have the guts, because Prince Rupert has never

benefited more from anything than it has from that northeast coal

project and all of the other spinoff effects. Certainly it hasn't been

because of the efforts of the member for Prince Rupert (Mr. Lea), who

prefers to live here on the Island and let the Social Credit government

look after doing things for Prince Rupert. He stands up and smirks. He

can do whatever he likes, but I would like him to stand up in this

House and say that he would cancel the northeast coal project if he had

the authority or if he were government.

Interjection.

MR. BRUMMET: You'll get your opportunity in a minute. You'll

say all kinds of things, but you'll never say that you would cancel

that program. They constantly attack this government for proceeding

with it, but they wouldn't have the gumption to say that they would cut

it down.

Mr. Chairman, I've got a bit carried away here because of the

heckling, but I did stand up to try to do one thing: put something in

perspective. Their attack is understandable, their politicking is

completely understandable, but the hundreds of thousands of dollars of

taxpayers' money that has been wasted because of their prolonging it,

and repeating over and over again the same relatively small amounts

that you couldn't even calculate in terms of a percentage....

I would also like to suggest, Mr. Chairman, that virtually all of

that discussion has been based on allegations and stolen documents.

Most of it has been based on nothing more than that. This opposition is

not prepared to wait for any of that to be confirmed or properly

decided upon. They've used the allegations and they have wasted

hundreds of thousands of dollars of the taxpayers' money of this

province on the basis of allegations. I have to think back to last year

when the Attorney-General (Hon. Mr. Williams) and some of his staff

were attacked over and over on the basis of allegations. When it

finally went to court, all of those allegations were proven unfounded.

They haven't even had the decency to apologize to the taxpayers, to the

people of this province. When I consider the examples they've set

before, I am certainly not prepared to consider everybody guilty

because the socialists

[ Page 8901

say they are guilty. I think we need to put things

in perspective. I am not, regardless of what any of the next socialist

speakers will say....

Interjection.

MR. BRUMMET: Oh, we even know what you're thinking — and it's

very little.

I have not been trying to defend wasteful spending by any minister

or by any arm of government. I have not made any attempt to do that. If

it has been improper, it can be shown. If it has been excessive, I

think that can be shown — and can be remedied. Compared to the hundreds

of thousands of dollars of the taxpayers' money that this opposition

has wasted by prolonging and repeating, I think that any of that kind

of waste — as they call it — pales in comparison.

MR. STUPICH: Mr. Chairman, the minister has some notes of

questions and I'll give him some more, if he'd rather have it that way.

In a press release put out by the minister on April 23, 1982,

there's one paragraph I'd like to comment on. "In the capital markets

available to Crown corporations, cost advantages exist for certain

classes of capital acquisition through lease arrangements." I'm curious

as to what sort of cost advantages there might be. I can see cost

advantages to individuals, or to corporations, and taxpayers are able

to get some real advantage from lease arrangements. In general I can't

see any tax advantage to either the Crown or a Crown corporation,

unless it is in instances like the sale of ferries, where, it was to

the advantage of some public corporation operating in the private

sector which is able to take advantage of the Income Tax Act and is

able to pass on some of that advantage. That may be what the minister

is referring to in this press release. I'd like to know whether that is

the case.

The minister has talked about Ottawa running up a deficit of $20

billion. I understand that Ottawa's deficit is a cash flow deficit of

$20 billion. The minister has been very critical of Ottawa for running

up that tremendous cash deficit. It is tremendous. It certainly

outweighed everything the federal Minister of Finance tried to do in

his most recent budget. I think it would have had a much better impact

on the community had it not been associated with a more than doubling

of the expected cash deficit.

I'm not sure that the minister is not living in a glass house when

he complains about that. In the current year, the minister proposes to

borrow an extra $2.4 billion in the names of Crown corporations. That

means that B.C., the government and the minister as fiscal agent for

these Crown corporations will be going to the market for $2.4 billion,

which is one-eighth of the amount that the federal government is going

for. It works out to a little higher proportion than our population is,

or whatever other economic measure you want to use. I believe it's

higher than average among Canadian provinces. I'd better not say that.

I'll simply say that if the amount that B.C. will be going to the

market for is $2.4 billion — I doubt that this includes everything; I

expect that there will be further borrowing for B.C. Rail, because

earlier it was expected that we could finance that out of current

revenues, and now we know that can't be done — and the federal

government is going to the market for $20 billion, it seems to me that

the situations are not that far apart. I would welcome the minister's

comment on that.

I'd like to ask the minister to bring us up to date on the Housing

and Employment Development Financing Act. We were told how important

this legislation was. It received royal assent on June 25, 1982. The

minister, at the time, said: "It is important to create employment by

financing housing and other capital projects." I'm wondering whether

the minister can bring us up to date on whatever negotiations he's

having with Ottawa as to the exclusion from income of interest earned

by the people who invest in these bonds, or alternatively some

arrangement where there will be a reduction in income tax payable by

the recipients of these bonds.

If the minister is able to tell us anything about that, I might have

some other questions, depending upon what the minister's response is.

I'm not suggesting that I feel any happier about that program than I

did when the legislation was being discussed, but at the moment I think

the question is: how are we getting along with Ottawa in our

discussions? Just to comment about that, every other western province —

Manitoba, Saskatchewan and Alberta — has been able to provide some

special interest program for their citizens for residential mortgages

and, in some cases, for small business financing problems. B.C. has not

done very much along those lines. The one thing that it has held out so

far has been these housing and development bonds. I think it's

important that we find out something as to how that's getting along. I

wonder if the minister wants to comment on some of the questions raised

by some of the members.

HON. MR. CURTIS: To the opposition's official critic for

finance, there are two or three things.... I think I answered

everything from the previous set of questions.

MR. STUPICH: You were going to took at page 22 of the budget.

HON. MR. CURTIS: Yes. I'm in not in any way attempting to

frustrate the committee, but I think we can clarify the problem for

each of us if we meet sometime in my office, because I disagree with

the

interpretation.

I don't want to suggest that the member is necessarily inaccurate in

some of his statements, but if you look at the 1982 budget document,

table 2, page 22, under consolidated revenue fund, with the footnote,

actual '80-81, $313 million negative indicates that the fund was set up

and we started to spend from it in that year in a stimulative way — and

that's not a zip phrase; I don't use it today as a zip phrase — to

stimulate the economy. That is why, in large measure, the 1980-81

recession did not have an impact on the province of British Columbia.

There are charts available which show the United States growth in real

GNP in quarterly percentage changes and show how dramatically the U.S.

GNP dropped in that second quarter of 1980. I think the member in his

remarks earlier this afternoon said that we had worked to set aside

rainy-day money in 1980-81. We had started to set it aside as well as

to put it to use. That is clearly spelled out.

Following that, in the quarterly report for the nine months ended

December 1981, the member will note on page 17 funds which were set up

in 1980 and which we have drawn on in the 1982 period thus far. Those

funds which we set up in 1980 are shown under operating balance, March

31, 1981: downtown revitalization, $24.8 million; energy development,

$9.4 million; forest and range resource, $122.6 million; lower mainland

stadium, $44.2 million; northeast coal development, $15.6 million;

provincial computerization of

[ Page 8902

libraries, $3 million; urban transit, $55 million.

The list may miss one or two, but essentially those were the funds set

up in 1980. They are referred to in table 2, page 22 of the 1982-83

budget, and these are already showing, in the quarterly report, the

effect of some drawdown as of March 31, 1981. I'll try to go through it

once more if that's what the member wishes, but beyond that we could

perhaps discuss that less formally.

The member for Nanaimo has referred to the press release of April

23, 1982, which spoke of cost advantages through lease arrangements.

The reference there, and I apologize if it was not clear — I don't have

the press release immediately in front of me — but when we speak of

cost advantages we're speaking of cost advantages to the people of

British Columbia, not to those who might be the other participant in

the lease. We have people actively exploring lease opportunities for

us. That is not to say that they will be taken up, but we see a saving

to the provincial taxpayer, in some instances, of between 75 and 150

basis points under leasing versus long-term borrowing. Those leasing

opportunities can dry up or they can expand, and the actual saving can

vary from time to time through the course of a given year; nonetheless,

I think that in a program where we are acting as fiscal agents in the

Ministry of Finance for a number of Crown corporations it would be

almost irresponsible of us to ignore that opportunity. Again, that is

not to say that we are committed to lease irrevocably as a fundamental

policy. Nonetheless, when the opportunity presents itself, we want to

be fully informed. There is that measure of cost saving from

three-quarters of a percent to 1.5 percent, again depending on

circumstances at the time. So it's well worth examining.

The member for Nanaimo spoke about the projected $2.4 billion

borrowing by British Columbia Crown corporations in the course of this

year. He will, I'm sure, realize and acknowledge that some of that

amount would be accessed through the Canada Pension Plan funds, which

are made available to us for this kind of purpose. So that's a gross

figure, rather than net. We'll have a philosophical discussion again,

because the member, who served as Minister of Finance in the 1970s

under the former government, has drawn a comparison between the federal

deficit and the projected provincial borrowing for 1982. Maybe we

should have the debate today. Surely the member will admit that the

federal deficit of which he speaks, about which both sides have

expressed grave concern, is an operating deficit,

whereas, while debt

is incurred under the borrowings we undertake for Crown corporations,

it is a capital debt. It is a very carefully structured debt. It is a

debt which will be repaid by the entity in whose name it has been

borrowed. I will not reflect on how it was described previously.

The estimate for British Columbia Hydro this year is $1.4 billion,

so you have some feeling of the borrowing which will occur for others.

The gross is $2.4 billion, including what we can access from Canada

Pension Plan; $1.4 billion of that is for Hydro. Therefore the amount

which is to be borrowed for.... We could work with a figure of about

$350 million being available through CPP this year.

I'm sorry, I have very real difficulty.... I don't think it's good

enough if the member or some other member takes his place in the debate

to say: "A debt is a debt is a debt." As we have said, and as others

have observed, the most significant problem in Canada today is spending

more for operating purposes in a single year than you take in. That is

the situation nationally, and it is the situation in a number of

provinces: a planned, projected, budgeted deficit, with $1 billion

coming in and $1.3 billion going out for the purposes of operating the

province. I use that as an example, whatever province it might be and

whatever number you want to attach to it. Clearly, in my conversations

with those who are the ultimate investors in bonds issued by the

government of the day in British Columbia, whether it is the present

government, the previous government or the government before that, the

investor looks very favourably on a debt for capital purposes which can

and will be repaid by the activity or the agency which has borrowed the

money, rather than by a government simply saying: "Well, these are the

programs we want to undertake, and if we're going to spend more this

year than we will take in through the levying of taxes, the imposition

of fees, and such revenues as occur.... I have a very real problem in

comparing the two. We spoke earlier today about apples and oranges. The

federal deficit is a very bad apple on the national scene.

The member also asked — and this was his last question in this set,

I believe — for an updating with respect to our negotiations with the

federal Minister of Finance, Mr. MacEachen, regarding the housing and

employment development bonds. I wrote to the federal minister just a

few days ago, having received a letter from him a few days prior to

that. The letter is available for tabling at the conclusion of this

afternoon's sitting. I will be happy to give that undertaking. I can

quote from it and then I shall table it, because I'm sure it is of

concern to all members of the Legislature.

The letter to which I refer in terms of tabling is my reply to Mr.

MacEachen. In sum, the federal minister has turned us down with respect

to cooperation, although the most recent information, which was

received within the last few days, is that perhaps there is an

opportunity for a meeting to review. I've written what can only be

described as a very straightforward letter to Mr. MacEachen, indicating

that I'm writing in response to his letter, in which he indicated that

the federal government will not provide an income tax exemption for our

proposed British Columbia housing and employment development bonds.

I continue by saying: "I must say I am extremely disappointed in

your response, especially in light of the consultation paper entitled

'Inflation and the Taxation of Personal Investment Income' which you

tabled with your June 1982 budget." I have answered some of the

concerns which the Minister of Finance for Canada expressed in his

letter to me and I have asked for reconsideration. In my final

paragraph I say: "I would ask that you reconsider your negative

response to our housing and employment development bonds. For the

reasons outlined in this letter, I believe they are superior to your

indexed term deposits, at least in the short term." I then conclude the

letter with one or two other observations.

That is the most up-to-date information I can provide to this House

and this committee with respect to a proposal advanced by the

government of British Columbia, and which I frankly feel has been given

short shrift by the federal minister. In order that the record be very

clear, it was alleged earlier this year that in fact we had made no

contact with Ottawa. I think that observation was made not by a member

of this House, but by Mr. Nelson Riis of the NDP federally. The fact is

— and it's easily supportable — that we made very early contact with

the Ministry of Finance for Canada with respect to the kind of thing we

were looking at. It was dealt with in the throne speech in a general

way, and was then elaborated upon later. But in the interval, from

throne speech

[ Page 8903

until budget day of April 5, certainly a number of

meetings and consultations took place.

We were not satisfied with the letter received recently from Mr.

MacEachen. I think it is an unfortunate position, and I hope he is

going to reconsider. On the basis of an invitation to meet with him to

discuss it, or with his officials to discuss it at the officials level,

I will certainly want that to happen.

As a reminder, Mr. Chairman, at the conclusion this afternoon, I

will table this letter.

MR. STUPICH: It may be that some of my questions will be

answered by the letter. But I haven't seen it yet, so I'm at a

disadvantage.

Assuming that the federal minister is raising the concern that

taxpayers in British Columbia would get some special advantage not

available to taxpayers in other provinces, what arguments would the

provincial minister advance to say that this program should be

implemented in the province of British Columbia, and whether or not the

same tax advantage is given to taxpayers in the rest of the country?

Has the minister, in calculating the effects of this program,

calculated the potential loss of provincial government revenue? It will

appeal, I would think, only to people in the top income tax brackets,

those with taxable incomes in excess perhaps of $50,000. So it's a very

limited group to which we are appealing. A lot of those people, being

very sophisticated investors, would want to make sure that they would

be gaining something from this, not simply breaking even, and certainly

not losing. I would think there would be a substantial loss in

provincial government revenue, and I trust the minister has taken that

into account.

Getting back to leasing for a moment, the minister didn't mention

ferries, which I thought was perhaps the only possible answer. He did

say that the Crown is able to enter into arrangements, or at least is

considering possible leases, because it is cheaper in some

circumstances to lease rather than enter into long-term borrowing. I

would think the Crown is able to borrow in the short or long term, more

cheaply than almost anybody with whom it does business; that is, in

supplying things we would be buying or leasing. That being the case,

the supplier of that equipment or whatever would be paying a higher

rate of financing charges, so presumably does it only to make some

money. I'm at a loss to think of any circumstance in which someone

doing business with the Crown would not make more money by leasing than

by an outright sale. On the other hand, I can't see how the provincial

government would come out ahead in a leasing arrangement, unless there

is, as I say, some special tax advantage — depreciation, capital cost

allowance over a longer period of time. They can in effect take

advantage of the taxpayers generally, and there's some loss of revenue

to British Columbia from that as well.

I don't know if the minister has any more he can tell me about that.

I'm still puzzled by it.

He left the door open for me to go a little more into this question

of the difference between borrowing for capital purposes and borrowing

for operating purposes. When I referred to the federal government

deficit of $20 billion, I did say — and perhaps the minister didn't

catch it — that I don't know to what extent it is an operating deficit

and to what extent it is a cash deficit. I haven't looked at the

federal budget yet; I haven't had a chance. After we adjourn I'll have

time to read things like that. I'm not sure whether the figures I've

seen mean that the federal government will have to go into the market

for $20 billion to cover its cash requirements, including what it needs

for everything it's doing, or whether it's simply for operating

expenditures. It makes a difference.

Also, there's some question in my mind as to how you differentiate

between capital and operating expenses. I can see that in a business. I

can see it in my own business. However, it becomes a little foggier

when dealing with government accounts. It used to be, for example, that

public works was a department of government — in those days we talked

about departments, not ministries — and buildings that were being

built, including the Douglas Building across the street, were charged

against operating revenue for the year or years in which they were

being built, as was the museum and things like that. Certainly those

are capital projects in an accounting sense, but they were being paid

for out of the current revenue of the days in which they were being

built.

[Mr. Strachan in the chair.]

With respect to that. B.C. Buildings Corporation is now a Crown

corporation; it's one of the Crown entities that make up this figure of

$2.4 billion that we're borrowing this year. B.C. Systems Corporation

is another Crown corporation, one established by the present

administration, that is borrowing for what it calls capital projects.

Currently, any work of that kind, any leasing or acquisitions — and

some acquisitions were made prior to this government's taking office,

computers and that kind of thing — were charged against operating

revenues of the day. Now they're defined as capital expenditures.

They're thrown into a Crown corporation and that's considered to be

capital debt. To quite an extent, therefore, the extra $2.4 billion

that we're borrowing in the current fiscal period would have been

included under current revenue and expenditures using

definitions that

were in force just six years ago. I've mentioned just two Crown

corporations; there are others. The Urban Transit Authority is another

new one that was established.

It seems to me that the ground changes. You stand in one position

one day and then you move a little bit, and all of a sudden something

new is a capital expenditure. The government might go even further in

that field, As a matter of fact, Mr. Chairman, you'll recall that in

the opening speech delivered some time in November 1981 the

Legislature, the people of the province, were threatened — or promised,

depending on your point of view — that the government was looking at

further privatization of government activities; I think those were the

words used. It would lead one to wonder whether other activities

conducted by government are going to be converted so that further

borrowing could be done by a new Crown corporation and taken out of

current revenue. There's no suggestion which ones. There still hasn't

been any suggestion. We've been waiting for the other shoe to drop. We

don't know what the government has in mind; we don't know whether

they've abandoned that.

I notice that one commonwealth family has privatized hospital care.

I see some applause from across the way; they think that would be a

great idea. I certainly hope that Minister of Finance doesn't think

he's getting some support for that possibility from the back benches.

There are others. Maybe highways might be privatized. Certainly

highways are capital in the sense that buildings are capital, and that

other activities are capital expenditures.

[ Page 8904

HON. MR CURTIS: Not likely.

MR. STUPICH: Not likely? I'm pleased that the Minister of

Finance says it's not likely.

What I am saying to him is that the definition of capital has

changed within public accounting, at least. When we talk about $2.4

billion extra borrowing, some of it is for items that were not

considered capital not too long ago. If the minister would like to

carry on this discussion a little further, and perhaps persuade me that

he has a different approach and point of view on some of these, I'd

like to hear from him.

HON. MR. CURTIS: I think that any reference to privatization

which has been made in the House is not relevant to the discussion

which the member and I are having, because the sort of....

Interjection.

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

Vancouver East (Mr. Macdonald) interjects, and I would suggest that

either you're going to permit the question to be put under my estimates

or it would be dealt with under the Premier's estimates.

The member for Nanaimo and I are speaking of capital projects.

Notwithstanding that which has been followed for a good many years in

this province, I personally subscribe to the view that simply because

one is building a building — as an example — in a given year or 18

months, the cost of that building should not be paid for by the

taxpayers of those 12 to 18 months. I trust the member opposite is not

offended when I describe that as a simplistic description of my

philosophy. If the life expectancy of a facility — whether it is a

vessel, a terminal, a building, a school or, in the case of a

municipality, a recreation facility or a municipal hall — is 25 years,

for example, that is the span over which the cost of that building

should be spread. That has not always been stated with great feeling

from this side of this chamber. I'm very keenly aware of that, but it

is the philosophy of this government, has been for some time and, I

expect, will be for some little time to come.

The member started this portion of his debate by returning to the

question of leasing. I would point out that ferries are potential

candidates. We have no particular commitment at this point in time, to

the very best of my up-to-date knowledge. Buses which are to be

purchased in quantity are candidates for leasing, with a life

expectancy of a good number of years. Again, when fleet improvement is

occurring on a relatively massive scale, as it is through transit in

British Columbia, then leasing might well be the appropriate mechanism

for paying for those particular units. Miscellaneous pieces of

equipment of a large size, such as railcars, are a possibility, as is

certain office equipment — with an emphasis on the word "certain,"

because it would not apply to relatively small pieces of equipment; but

for some of the more expensive items which are now found in the

workplace it could be appropriate. In order to be completely frank with

the Legislature, we've identified leasing. That's why the press release

was issued on April 23. We've identified it as an alternative which

should not be overlooked in the total borrowing program and span of

government providing that which is required by its citizens I have very

little more to say about leasing that will assist the member.

MR. STUPICH: The member hasn't been assisted very much yet on

the subject of leasing, but is prepared to let that go for the time

being until we have a specific example to deal with.

On the question of capital versus operating expenditures, the

member, I must say, is more confused than ever. I think some of the

minister's confusion is spreading across the floor. He mentioned

several assets that have a fairly long life. Yet when I expressed some

concern that they might be thinking of privatizing something like

hospital care, and then went on to highways, he said: "Not likely." I

thought the "not likely" was with reference to highways. We're not

doing as good a job these days, but the Romans built highways that

lasted for a couple of thousand years. I can't think of anything that

would last much longer than a well-built highway. Even with the ones

we're building today, certainly the roadbed to some extent lasts; the

surface is not all that long, but in any other context it still would

be considered to be a capital asset from the point of view of capital

cost allowance allowed by Revenue Canada. Highways are in the 4 percent

class, which is awfully low. So the m