1981 Legislative Session: 3rd 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)

MONDAY, MARCH 9, 1981

Afternoon Sitting

[ Page

4395 ]

CONTENTS

Routine Proceedings

Oral Questions

Northeast coal development. Mr. Leggatt –– 4395

Mr. Lauk –– 4396

Mr. Macdonald –– 4397

Natural gas pipeline to Vancouver Island. Mr. Lockstead –– 4397

Tabling Documents

Public accounts of British Columbia for the fiscal year ended March 31, 1980.

Hon. Mr. Curtis –– 4398

Report of the comptroller-general.

Hon. Mr. Curtis –– 4398

Budget Address

Hon. Mr. Curtis –– 4398

Tabling Documents

Return, refunds and remissions in accordance with the Revenue Act.

Hon. Mr. Curtis –– 4416

Returns, remissions and refunds in accordance with the Taxation (Rural Area) Act.

Hon. Mr. Curtis –– 4416

Provincial Capital Commission annual statement for the year ended March 31, 1980.

Hon. Mr. Curtis –– 4416

Purchasing Commission annual report, January 1, 1980, to December 31, 1980.

Hon. Mr. Curtis –– 4416

Unclaimed Money Act statement of unclaimed money deposits for the year ended

March 31, 1980.

Hon. Mr. Curtis –– 4416

Estate Administration Act annual return, 1980.

Hon. Mr. Curtis –– 4416

Financial administration act task force report.

Hon. Mr. Curtis –– 4416

Provincial Debt Repayment Act (Bill 14). Hon. Mr. Curtis.

Introduction and first reading –– 4416

Finance Statutes Amendment Act, 1981 (Bill 13). Hon. Mr. Curtis.

Introduction and first reading –– 4416

Social Service Tax Amendment Act, 1981 (Bill 12). Hon. Mr. Curtis.

Introduction and first reading –– 4416

Assessment Amendment Act, 1981 (Bill 11). Hon. Mr. Curtis.

Introduction and first reading –– 4416

Income Tax Amendment Act, 1981 (Bill 10). Hon. Mr. Curtis.

Introduction and first reading –– 4417

Tabling Documents

Labour Relations Board annual report, 1980.

Hon. Mr. Heinrich –– 4417

Human Rights Commission report, human rights branch.

Hon. Mr. Heinrich –– 4417

Ministry of Transport and Highways annual report, 1980.

Hon. Mr. Fraser –– 4417

Government air services logs for the year ending March 1980.

Hon. Mr. Fraser –– 4417

MONDAY, MARCH 9, 1981

The House met at 2 p.m.

Prayers.

HON. MR. CURTIS: I would seek your

indulgence and that of the House while I introduce a number of guests.

It's not possible nor appropriate to introduce every guest who is

present today, but may I first start with my wife Sheila. One week from

today will mark our 24 years of marriage. She has tolerated me for that

long and I'm pleased that she is in the House for this afternoon's

events.

Also, my mother Mrs. Helen Curtis is here, and the

House will be relieved to know that she has not imposed a time limit on

us this year in that she has no further appointments for the day. She

has tolerated me longer than Sheila has.

In addition, I

thought that because what we do in this assembly has an impact on young

people — will have an impact for years to come — it would be

appropriate to invite five students from various regions of British

Columbia. Other members may care to speak to them. But we turn to the

presidents or prime ministers of five student councils. Those five

students are here and I'm honoured to be able to introduce them to this

assembly: Miss Margo Listhaeghe, the president of Chetwynd Secondary

School Student Council in Chetwynd; Mr. David Kershaw, prime minister

of Mount Baker Secondary School Student Council, Cranbrook; Mr. Farley

Stewart, president of Prince Rupert Secondary School Student Council in

Port Edward; Mr. Troy Albo, president of Rossland High School Student

Council, Rossland; and Mr. Kevin Blude, president of Columneetza Senior

Secondary School Student Council, Williams Lake.

In addition

to the financial and business community who would normally attend on a

day such as this, we've also invited representatives of the Canadian

management group, for any placement which might be made by the

government of British Columbia, and the U.S. management group. I will

not list their names. However, I would like to identify three

individuals who have come from Europe representing a part of our

European management group if, and as, we turn to that particular

capital financing market. They are M. Jean-Phillipe Delacroix,

vice-president of Banque de Paris et du Pays Bas; Dr. Siegfried Weber,

spokesman of the board for Deutsche Bank AG; and Mr. Cristoph Kremp,

representing, out of Toronto, Bayerische Landesbank Girozentrale.

Perhaps the House would join me in welcoming them.

MR. HOWARD:

Mr. Speaker, I would also like to welcome a couple of guests to the

chamber and the precincts today. One, on probably his first and last

visit, is Mr. Brian Westwood, leader of the Progressive Conservative

Party of the province of British Columbia. While I have not been able

to identify the other gentleman visually, I am told that Mr. Trudeau's

personal representative, Mr. Jev Tothill, is also in the House.

MR. DAVIDSON:

Mr. Speaker, in the gallery today are 24 students from the Lewis and

Clark College in Portland, Oregon. The students are from the political

science department and are accompanied by Professor Donald Balmer, who

has for many years brought students here to observe our Legislature. I

ask all members to give them a warm welcome.

MR. NICOLSON:

Mr. Speaker, in the gallery today are His Worship Tex Mowatt and his

wife Edith from Nelson. Also I note in the gallery a long-time Kootenay

resident, well-known to both Nelson and Creston areas and the first

principal I served under, Mr. Ben Crawford.

MR. LAUK:

I don't know whether it's been officially done, but after a long

sabbatical may the House welcome back the Deputy Clerk who has served

the House for, I think, 378 years, Mr. George MacMinn.

I'd

also like the House to extend their welcome and their congratulations

to the former president of the UBC law students, now the Minister of

Consumer and Corporate Affairs (Hon. Mr. Hyndman).

MS. BROWN:

Mr. Speaker, the chairman of the Burnaby Tenants Association, Mr. Tom

Lalonde, is in the gallery. I would like the House to bid him welcome.

Oral Questions

NORTHEAST COAL DEVELOPMENT

MR. LEGGATT:

Mr. Speaker, my question is directed to the Minister of Finance. On

February 10, 1981, the Hon. Bud Olson, Minister of State for Economic

Development, announced on behalf of the federal government that all of

the federal government investment in northeast coal would be recovered

through the commercial freight and throughput charges. Is the minister

prepared today to make the same commitment to the taxpayers of British

Columbia that all B.C. government investments in northeast coal will be

recovered on a commercial basis?

HON. MR. CURTIS: Mr.

Speaker, to the hon. member, in the event that I have an opportunity to

speak this afternoon, I believe that I will be able to deal with the

question of northeast coal at some length. Therefore for this short

period I would take the question as notice.

MR. LAUK:

As part of the northeast coal deal — and the Minister of Finance is

fiscal agent for the British Columbia Railway — Teck and Denison will

pay transportation charges of $15.86 per tonne, plus a surcharge for

the Anzac spur line — I think it is $4.88 to the BCR and the rest to

the CNR. Can the minister confirm that there will be a $2 rebate on

these charges in the first five years of coal shipments?

HON. MR. CURTIS:

Mr. Speaker, to that hon. member, and without confirming or denying the

points he has put in the question, I think, again, I will be discussing

northeast coal in the course of the budget speech, which I hope I can

deliver this afternoon.

MR. SPEAKER: Does the Chair understand the question is taken as notice?

HON. MR. CURTIS: Yes, it is.

MR. LAUK:

Mr. Speaker, the minister did not take it as notice; he said he was

going to deal with it in the budget speech. That's not notice.

the minister taking it as notice, and will he reply to these questions?

Or is he saying, with respect to my question, that he will deal with it

in the budget speech?

[ Page 4396 ]

MR. SPEAKER:

Order, please. The intent of the question is that it be taken as

notice, and the minister will answer the question at his discretion. A

further question?

MR. LAUK: I put the same question

to the Minister of Economic Development. As part of the northeast coal

deal, Teck and Denison will pay transportation charges of $15.86 per

tonne, plus a surcharge for the spurline. Can the minister confirm

there will be a $2 rebate on these charges in the first five years of

coal shipments?

MR. SPEAKER: The Minister of Economic Development.

HON. MR. PHILLIPS: Mr. Speaker, I'm not aware of any Minister of Economic Development.

Interjections.

MR. SPEAKER: The time of question period is limited, hon. members.

MR. LAUK:

The minister full well realizes that the time is limited, Mr. Speaker,

which is the reason for his last answer. No one else in this province

is aware of a Minister of Economic Development.

MR. SPEAKER: The question, please.

MR. LAUK: The question is directed to the Minister of Industry and Small Business Development.

HON. MR. PHILLIPS:

I'd hope that the member, who has been in this House for some time,

would show respect for the House and address all members of cabinet by

their proper title.

Mr. Speaker, in answer to the member's

question, I am not aware that either the Canadian National Railway or

the British Columbia Railway will be making any rebates to any coal

companies.

MR. LAUK: The cost of the Hydro substation

and transmission line to the Denison and Teck mines and the Tumbler

Ridge townsite will be at least $50 million. How will this cost be

divided between the provincial government and the mining companies?

HON. MR. PHILLIPS:

Mr. Speaker, in answer to the member's question, B.C. Hydro is building

a line to service two mines, originally — there is one townsite, but I

say "two mines originally" because in that great northeast area, as the

member full well knows, there will be other mines — and the coal

companies will be paying those normal portions of the substations after

the power is taken off the main line.

MR. LAUK: Mr.

Speaker, can the minister assure the House that no portion of that cost

will be borne by the provincial government or by B.C. Hydro?

HON. MR. PHILLIPS:

Mr. Speaker, I think the intent of the question is to confuse the

public. I have made the statement that the coal companies will be

paying their portion of the facilities necessary to get the power to

their area from the main line, and that's a standard procedure.

MR. LAUK: The full costs?

HON. MR. PHILLIPS:

So far as I am concerned the standard procedure will be paid for... The

normal procedure will take place where the coal companies will be

paying for the transformers necessary to reduce the voltage to supply

their mines.

MR. LAUK: I take it from the minister's

answer that when he says the main line he means that Hydro will pay

entirely for the transmission line up to a certain point which will

arbitrarily be a cutoff point to the two separate mine locations.

HON. MR. PHILLIPS:

Mr. Speaker, the member opposite seems a bit confused. I've stated that

in the infrastructure we're providing for northeast coal there is some

fifty-odd million dollars to provide a powerline from the W.A. C.

Bennett to the Gordon Shrum power station to the town of Tumbler Ridge.

That is in the original estimated cost of the infrastructure, which the

government of British Columbia is putting in as their share of the $111

million for the infrastructure for northeast coal.

MR. LAUK:

B.C. Hydro has stated that they will not pay for the line, and the

negotiations are underway between the government and the companies.

With that information, can the minister now report to the House the

state which those negotiations have reached?

HON. MR. PHILLIPS:

I'd be happy to get the exact date. As I've said, Hydro isn't paying

for the line; the government is paying for the line. I've announced it

as part of the infrastructure. Maybe, Mr. Speaker, I could inform the

member again what the government has said we are providing by way of

infrastructure to open up that great inland empire.

MR. LEGGATT:

I have a question to the same minister. The minister has announced for

some time that there is a differential in the surcharge, that there

will be the sum of $2.50 chargeable to the Teck operation and $3 to the

Denison operation. Why is there a differential in this particular case

briefly, if you could.

HON. MR. PHILLIPS: Mr.

Speaker, I'd be quite happy to answer the member's question briefly,

and that is because, very simply, Teck have to truck their coal some 27

kilometres, and therefore the surcharge is less for Teck Corp.

MR. LEGGATT:

In view of the fact that the minister has said that there could be

additional contracts let, are we now to expect that those other

companies, like BP, will also get a reduction in their surcharge

because they have further to go to get to the rail line? Or maybe we'll

have to pay BP to haul their coal over to the railroad. Because that's

the principle the minister has just enunciated.

HON. MR. PHILLIPS:

I'm very glad that the member recognizes what I have said all along —

that indeed there will be several additional contracts for northeast

coal. And as we've said in the past, we will sit down and assess each

project. But there will be a surcharge, and I want to tell you I don't

know of anywhere else in the world where we've had a surcharge on a

railway for building a new railway to open up a new inland empire.

[ Page 4397 ]

MR. LEGGATT: On January 28 the Japanese industry paper called the Japan Echo

confirmed that it would be most unlikely that there would be any

further contracts. I want to know if the minister bothers reading any

other news releases than his own.

MR. SPEAKER: Order,

please. Hon. members, the purpose of question period is not to bring

information to the House, but rather to seek information from members

in the House.

HON. MR. PHILLIPS: Well, Mr. Speaker,

that member has been wrong before, and I just want to tell the House

and all the big province of British Columbia that he's wrong again.

MR. MACDONALD: Mr. Speaker, I have a question for the minister for business and small development —

whatever. Prior to the signing ceremony, when the federal government

representatives and the ministers from this government and the two

companies Teck and Denison sat around with the cameras and the rest,

had the federal government sent a Telex — from Senator Olson —

outlining in detail the extent of their aid in terms of the port

charges that would be made — the CNR, the rehabilitation of the rail

lines and so forth? Had that all been set out in a Telex prior to the

signing ceremony?

HON. MR. PHILLIPS: Mr. Speaker, I

would suggest that the learned member for Vancouver East ask the

recipients of the telegram whether they have received such a telegram

or not.

MR. MACDONALD: Has the minister seen a copy of that telegram, or does he have a copy of a Telex of that nature? I'm asking you.

HON. MR. PHILLIPS:

Mr. Speaker, in answer to the member's question, I'll have to advise

him that I will have to check my records, because there were many

telegrams and much correspondence going on at that particular time.

NATURAL GAS PIPELINE

TO VANCOUVER ISLAND

MR. LOCKSTEAD: Mr. Speaker, I

have a question for the Minister of Energy, Mines and Petroleum

Resources. Can the minister advise why public hearings were not held

prior to the government's decision to reject the application of

Westcoast Transmission to construct the natural gas pipeline to

Vancouver Island?

HON. MR. McCLELLAND: Mr. Speaker,

first of all, there have been no applications yet, unless there happens

to be one on my desk today from B.C. Hydro. There were a number of

proposals put forward to the government suggesting that applications

would follow. The purpose of the public utilities commission will be

achieved in holding public hearings for the pipeline crossing that B.C.

Hydro will build to bring natural gas to Vancouver Island, a promise

which was broken by the previous government and which is being kept by

this one.

MR. LOCKSTEAD: Mr. Speaker, the minister

does not answer my question, as he has indicated that no public

hearings will be held into route selection for this pipeline. My

question is: what assurances have B.C. Hydro or the government given to

to users or potential users on theSun shine Coast, in Powell River and

in Squamish that there will be a natural gas pipeline and that there

will be a fertilizer plant in Powell River, as would have been possible

if Westcoast had got that contract and had that proposal been

successful? What does the minister intend to do about those potential

economic development projects at this time?

HON. MR. McCLELLAND:

I want the House to remember, first of all, what the promise of this

government was originally. The first, of course, was to move us away as

quickly as possible from our dependence on foreign oil by using a

substitute which is more readily available to British Columbians, and

that, of course, is natural gas. The largest area which is not served

by natural gas is Vancouver Island, and the promise made by this

government was to make gas available as quickly as possible to

Vancouver Island. That's the promise which is being fulfilled.

The

next promise, which I mentioned in the last session during my

estimates, I think, to the member for Shuswap-Revelstoke (Mr. King),

was that we would very quickly be establishing a rural gasification

policy in this province which would attempt to reach out to many of the

other areas of the province which are not yet served with natural gas.

That policy will be established in due course, I hope as quickly as we

possibly can; and we will in a very orderly manner make natural gas

available to many other parts of our province.

On the final

part of the question from the member, Mr. Speaker, with regard to the

fertilizer plant, if there is not gas available at Powell River, then

that plant will not be able to be located at Powell River. But in a

meeting with the principals of the consortium which was proposing to

build that plant in Cranbrook some three weeks ago or so I asked those

proponents one simple question. That simple question was: can that

plant be located somewhere else? They said yes. It's my understanding

that given the opportunity to have gas, economic development will be

able to go ahead, perhaps in some other locations.

I might

also just say very briefly, Mr. Speaker, that that fertilizer plant, as

well, was not a proposal as such. There were many, many terms which

would have to be achieved, including the price of the gas which would

be paid to supply that fertilizer plant. One of the other promises we

have made to the people of this province through our energy policy and

in other ways is that we won't give our natural gas away for any

reason. All of those things will have to be achieved in terms of normal

and good economic development.

MR. SPEAKER: Hon.

members, in anticipation of the order paper and the ceremonial events

of today there are a few preparations which need to take place.

Television cameras will need to be placed in readiness and some lights

will need to be elevated in intensity, so I am going to declare a short

recess in the absence of any other business. I will ring the bells as

soon as your attendance is required.

The House took recess at 2:31 p.m.

The House resumed at 2:38 p.m.

[ Page 4398 ]

Orders of the Day

Hon. Mr. Curtis tabled the public accounts of British Columbia for the fiscal year ended March 31, 1980.

HON. MR. CURTIS:

Mr. Speaker, I move that the public accounts for the fiscal year

1979-80 be referred to the Select Standing Committee on Public Accounts

and Economic Affairs.

Motion approved.

Hon. Mr.

Curtis tabled the report of the comptroller general in accordance with

section 25(4) of the Financial Control Act,

chapter 129, Revised

Statutes of British Columbia 1979.

ESTIMATES OF SUMS REQUIRED

FOR THE SERVICE OF THE PROVINCE

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

a bill intituled Estimates of Sums Required for the Service of the Province

for the fiscal year ending March 31, 1982, including

Schedule A sums required

by Her Majesty to make good certain sums expended for the period ended March

31, 1980, and to indemnify the several officers and persons for making such

expenditure, recommending the same to the Legislative Assembly.

Hon. Mr. Curtis moved that the said message and the estimates accompanying the same be referred to Committee of Supply.

Motion approved.

HON. MR. CURTIS:

Mr. Speaker, I move, seconded by the hon. Attorney-General (Hon. Mr.

Williams), that Mr. Speaker do now leave the chair for the House to go

into Committee of Supply.

BUDGET ADDRESS

HON. MR. CURTIS:

In speaking to this motion I am honoured today to deliver my second

budget speech and to present the sixth budget of this government. As

its predecessors did, this document will emphasize the importance of

sound financial management and fiscal integrity in government, two

principles which have enhanced the quality of life in British Columbia

in the past.

The budget is more than a mere accounting of

fiscal trends and positions. It must not be regarded in isolation as a

simple set of figures and policies by which a government intends to

maintain itself over a fixed period. The budget is a total statement of

the financial position of the province. It is an expression of past

performance, present programs and projects, and future developments. It

places recommendations and decisions in a more complete perspective, in

a clear light. It explores and explains the economy and provides the

best method of safeguarding our economic future. As such, it is a

strong indicator, a digest of facts concerning where we have been,

where we are now and where we shall be going.

The budget I

am presenting today contains measures and directions for here and now,

but it also contains strong statements about the long-term financial

health of the province. There is, after all, much about which we can be

proud and positive. Our actions have clearly demonstrated that a

responsible approach in matters of money is fundamental to the cause

and effect of providing superior standards of services to British

Columbians.

Today our government reaffirms support for

public services to British Columbians in all parts of our province. It

will assure support for a level of services already superior to and

wider-reaching than those of most other provinces in Canada.

should be clear from the record of this government that our planned

approach to fiscal policy has never caused us to shy away from

difficult challenges, nor shall we do so today. It's our firm belief

that we in the public sector must provide strength and leadership. In

doing that we never wish to supplant the role of the individual and the

private sector, but rather to strengthen and augment it.

this budget we demonstrate once more this government's solid commitment

to bold and imaginative projects that will dramatically transform parts

of this province. These projects call for major investments which we

can make because of our underlying financial strength, and projects

that will call for the ongoing involvement and commitment of British

Columbia's finest resource: British Columbians — people with pride.

May

I talk about pride for just a moment? We — and I include all British

Columbians in "we" — can and should take considerable pride in the

excellent performance of the provincial economy. Mr. Speaker, western

Canada has become the envy of the nation. We see it daily in the stream

of new people coming to British Columbia. We see it daily in the rapid

pace of investment, in the confidence expressed in our policies and in

the opportunities we have created. All of it attests to the attractive

economic, social and physical environment we have to offer. We welcome

these developments, but are well aware that they also bring some

problems. Increased economic activity puts pressure on labour and

housing markets. The demand for public services grows with every

newcomer. The need to further diversify our economy becomes ever more

pressing.

We are fortunate that the people and resources of

British Columbia are more than equal to these challenges. We are ready

and willing to make adjustments, to see our economy .grow and to

provide opportunities for ourselves and our fellow Canadians. As I have

stated already, the government has made a commitment to providing

support, services and economic direction to secure growth and

opportunity in the 1980s.

In spite of the rapid pace of

expansion, our economy, solidly based though it continues to be, is

vulnerable to sudden changes in external conditions. British Columbia

is still an open economy affected by trends and shifts over which we

often have little control. As such, we are integrated with markets

throughout the world. We are interdependent through capital and labour

markets with other parts of our country. And we are also integrated

with other governments in the total fiscal framework of Canadian

federalism.

Our ties with other regions, governments, trends

and spheres of influence are a source of strength. But they are also

the basis of our vulnerability. Now more than ever these factors are

having a profound impact.

This budget has been developed in

the face of some difficult external circumstances. We have had to

counter poor markets for our major export commodities. We are

experiencing turbulent relations with the federal government. These are

realities that have made my task this year very

[ Page 4399 ]

difficult. I shall elaborate more fully on these matters as I explain the budgetary measures to be taken this year.

However,

before proceeding to 1981-82, I should like to briefly review a number

of issues that have come up during this past year and describe our

responses to them. I can best explain these actions in the context of

certain guiding principles we've adhered to, particularly that I've

adhered to since assuming the Finance portfolio.

First,

fiscal responsibility. Early in the year it became clear that the

government would be facing a problem of expenditure unavoidably higher

than expected in last year's budget, coupled with a serious shortfall

in certain resources. My response to this situation was direct. It

could well have been the wait-and-see approach many people were

counselling — people who for one reason or another did not see the

situation as serious. This was advice I would not accept. Early last

summer I imposed a freeze on hiring and on all new consulting

contracts. Mr. Speaker, this prompt action enabled us to implement a

more carefully designed program of cutbacks in consultation with

individual ministries. As we approach this year end, the success of

this early action is apparent. We now expect spending in 1980-81 to be

close to the original budget estimate, despite major cost escalations

in the area of health care.

The second guiding principle is

improved communications and accountability, and accountability is a

term we hear often. But what is it? What is the concept, the underlying

idea? Let me suggest what it means: better access to more information,

more clearly presented. It is a deliberate effort to communicate, to

present programs, define objectives, state goals and explain costs.

provide greater accountability, this government in 1976 initiated the

practice of doing something private industry has been doing for

decades: publishing quarterly financial reports. These documents have

always provided a valuable source of information between budget

presentations, but they were rather limited in scope.

This

last year I have had much more information included in the quarterly

reports and have placed a priority on making them more readable, more

accessible to the people of British Columbia. The reports are no longer

limited to information on the year to date. We have introduced revised

forecasts of revenue and expenditure for the full fiscal year. And for

the first time we have provided information on special purpose funds as

well as the general fund of the province.

This year, Mr.

Speaker, I will be taking further steps to improve accountability and

provide more helpful information to the public.

The subject

of government accounting has received increasing attention from the

auditor-general and a variety of professionals and other observers over

the past few years. Government, as we all know, has grown in size and

complexity and earlier accounting practices have become outdated.

Accordingly, a thorough review of this government's accounting policies

has been undertaken. New methods will be phased in, beginning with the

public accounts for the 1980-81 fiscal year and the estimates for the

1982-83 fiscal year. At the same time, the estimates will be amended to

establish a new structure of votes and objects of expenditure which

will be more useful and more informative for this House, for the people

we serve, and for public service managers. A background paper, to be

tabled with this budget, discusses the approach to be taken.

Now

while these improvements in presentation have been valuable, the most

significant way to improve accountability and control is to bring the

total financial administration of the province into the twentieth

century. When I took office, I was disturbed by the lack of precision

and consistency in the legislation assigning responsibilities to the

Minister of Finance. Members will know, Mr. Speaker, that the Financial

Control Act and the Revenue Act — guiding statutes both — have been in

effect for more than sixty years. They are clearly out of step with

modern techniques of financial management and with the size and

complexity of contemporary government.

Rather than proceed

at once with new legislation, we published in August a discussion paper

proposing a new financial administration act. My intention was to

stimulate debate and to receive reaction. I was surprised at the

massive response to the paper. To take full account of all these

submissions, a task force was established with responsibility for

providing advice on the final form the legislation could take. I shall

table the report of the task force today, and I would like to say that

the work of that task force, and the advice and responses I've received

from people throughout the province, have been excellent. We still have

work to do in this important area, but the act should be introduced in

this session and will demonstrate by its quality the value of open

public discussion.

To complete my brief review of the major

accomplishments of the past year, I would like again to remind hon.

members and all British Columbians that in 1980 the province was

granted a triple-A credit rating. We can all be proud of this

achievement. In practical terms it means that the province can borrow

at significantly lower interest rates, and British Columbians will

therefore save millions of dollars. The triple-A rating is the highest

rating possible. It is, if you will, the seal of approval from the

international financial community. We've received top marks for our

economic and financial performance.

This financial stature

has been hard won. We've balanced our budgets at a time when most

governments are going deeper into debt. Difficult and unpopular

decisions were necessary, but it is the responsibility of the

government to lead. We accepted that responsibility. We will continue

to accept that responsibility for safeguarding British Columbia's

financial and economic future.

While most people are

familiar with the government's role in securing borrowed funds at the

most favourable rates possible for provincial entities, there's less

awareness of our investment and cash-management role. The Minister of

Finance in any government in this province is responsible for

investment of the pension funds of various groups of public sector

employees — provincial and municipal government employees, teachers and

employees of some Crown corporations. The Minister of Finance also

invests the sinking funds related to the debt of Crown corporations. In

the past, almost all of these funds have been invested in long-term

loans to Crown corporations.

Although loans have always been

made at prevailing market rates, the current volatility of interest

rates has created a number of new opportunities in different types of

assets. While I expect that long-term Crown corporation bonds will

continue to be part of the trusteed fund portfolio, we are now making

significant investments in short-term assets in the open market. This

policy of diversification, and other extensions of this policy now

being considered, will improve the

[ Page 4400 ]

return

on trusteed funds. In addition, investment of provincial cash balances

will earn an estimated $97 million in 1981-82 and we intend to

continually improve our cash management practices.

A policy

of portfolio diversification can also provide significant social as

well as economic benefits. Where, for example, housing cooperatives are

unable to obtain capital financing from normal market sources, the

government would consider making such money available for insured

mortgages at competitive rates.

Mr. Speaker, I turn now to

the economic and fiscal setting with the heading "The Economy." In last

year's budget speech I emphasized that the 1980s would be a decade of

opportunity for the people of British Columbia. One year later I am

even more convinced, even firmer in my resolve, that we have in this

province every ingredient necessary to secure a standard of living of

unsurpassed quality. Very simply, my basic optimism about the future we

share is rooted in the undeniable fact that the world wants what

British Columbia has to offer.

We possess the resources, the

a great future. The challenge to all British Columbians is to pull

together towards common objectives; to maintain and expand export

markets in a tough and highly competitive international economy; to

develop a solid reputation as a reliable supplier; to create a safe and

obliging home for new investment; to tell the world that here we have

the materials, the people and the will to be competitive, dependable

and quality-conscious. We can and we shall position ourselves strongly

and directly as a world leader. We have all that is necessary,

including a reputation in the world as a desirable trading partner — a

blue-chip investment, a winner in every way.

I would ask all

of you today: when the world sees us in these terms is it not time we

in British Columbia took real pride in such an image?

There

remains almost unlimited potential for further economic development in

this province. But remarkable economic gains have already been

achieved. Over the past three decades, the provincial economy has

diversified into new resources and products, broadened into new foreign

markets and extended further into processing, manufacturing and

high-technology services. These are exciting areas in which to grow and

these are the areas in which we can offer strength and leadership.

reason for this optimism is that British Columbia has recorded more

rapid economic growth than the rest of Canada in 23 of the last 30

years. British Columbia has become a highly productive industrial

economy, supporting one of the highest levels of per capita income in

the world.

Pride? Very much so. For all of us. In what we have done and what we shall continue to do.

The

exceptional strength and resilience of our own economy has come to the

foreground in the past few years. While the rest of North America has

sputtered and stalled, the Canadian west has surged forward. After the

energy crisis of the early 1970s, demand intensified for western

energy, western coal, western metals, western initiative and

participation. As a result, there has been a pronounced westward shift

in Canadian economic activity. Walk through the streets of Vancouver or

Kamloops, Prince George or Fort St. John— you will see firsthand how

British Columbia has played a major

part in causing the west to become

the engine of economic growth and mobility in Canada. This government

gladly gives the credit where credit is due. It is due to all British

Columbians. We all share in that.

Here is some evidence of

what I am describing this afternoon: over the past five years, British

Columbia, which has approximately 11 percent of the Canadian

population, has contributed over 17 percent to total growth in the

Canadian economy. Since 1975, 195,000 new jobs have been created in

this province. These account for more than 14 percent of all new jobs

created in Canada. Over this same period, capital investment has grown

at an average rate of 15.7 percent in British Columbia compared to only

11 percent for Canada as a whole. In 1980 real gross domestic product —

or gross provincial product, if you will — is estimated to have

increased by 3.6 percent, while for Canada as a whole and in the United

States there was little or no growth at all. More than 62,000 new jobs

were created last year and the rate of unemployment declined — for the

fourth year in a row — to 6.8 percent, which is well below the Canadian

average of 7.5 percent. Indeed, the rate for January 1981 was 5.8

percent, which is the lowest British Columbia rate on record.

Let

us examine in greater detail why the British Columbia economy managed

to do so well when all around us there were slumps and downturns.

First, in 1980, British Columbia had the strongest investment growth of

all the provinces. This reflects the solid confidence that the business

community holds in the economic future of our province. The role we

have played in building this confidence is one of the major

accomplishments of this government. I might add that such confidence is

easily lost and we in government must be ever vigilant in our relations

with the business community. Not only must be, but will be.

Second,

while export sales of lumber and natural gas to the United States

weakened, much of the slack was taken up by increased sales of pulp and

paper to West Germany and Italy, coal to Brazil and South Korea, and

metals, coal and forest products to Japan. The diversification of the

British Columbia economy paid dividends in 1980.

Third, in

1980, a near record level of almost 50,000 more people entered than

left the province. These new British Columbians, together with overseas

and North American tourists, buoyed consumer spending and led to a

healthy 14 percent increase in retail sales — a much greater rate of

increase than the nine percent estimated for all of Canada.

Finally,

it's my firm conviction that the fiscal policy of this government

provided significant support for the economy in 1980. In the last

budget we returned to British Columbians a large part of the surplus

resource revenues that had been accumulated in the years during which

the economy was stronger than expected. I believe that our timing was

near perfect: when the economy needed selective stimulus, an extra $353

million was appropriated for new or enhanced programs. Added to this

stimulus, provided in my last budget, was the $200 million housing

initiative program, a program which led to a level of new housing

starts in the province that came very close to the all-time British

Columbia record — this accomplished in a year in which other

house-building markets in North America were extremely depressed.

All

these factors contributed to a strong performance in 1980 in spite of

that weak international economic environment. This accomplishment

reflects the partnership that has been formed between business, labour

and the provincial government. It's on the basis of this partnership

that another

[ Page 4401 ]

steady

advance is forecast for 1981. The detailed analysis presented in the

background papers suggests that in 1981 we shall see another year of

sluggish and hesitant growth in the North American economy. Although

export performance may improve somewhat, particularly in sales of

lumber, fish products, metals and coal, we shall rely once more upon

the strength of our healthy domestic economy.

One of the

most important reasons that the British Columbia economy has performed

so well over the past five years has been the pronounced downward trend

in worker days lost due to work stoppages. In 1980 there were almost 75

percent fewer days lost than in 1975. This has had immense benefits for

British Columbians, and a tribute is in order to the responsible

negotiations carried out between management and the trade union

movement, and also, I believe, to the government which has introduced

effective measures to help bring the parties together.

concern is that in 1981 the pressures on labour management negotiations

could undermine the very significant accomplishments of the past five

years. Contracts covering more than 200,000 workers are due for

renegotiation this year. I suggest, if I may, that it is crucial at

this time for all parties in the collective bargaining process to

exercise restraint. We cannot let the solid economic base of this

province be eroded for the sake of short-term objectives. Exorbitant

settlements fuel inflation and hamper our ability to sell export

products in the highly competitive markets of the world. Our enviable

but hard-won reputation as secure and reliable suppliers could hang in

the balance.

The private sector must take the lead in

restraint. Our responsibility in government is to see that public

sector settlements follow this lead. We intend to exercise this

responsibility. I shall be seeking the cooperation of all my cabinet

colleagues to ensure that settlements reached in coming months with

employees in provincial ministries, Crown corporations, agencies and

societies follow, not lead, comparable private sector settlements.

we manage to avoid costly work interruptions, the economy will record

another strong year in 1981. Our forecast is for real growth in gross

domestic product of approximately 3 1/2 percent in 1981. That is well

above the projections in the 1 percent range which are presently being

made for the Canadian economy.

Underlying this forecast is a

major impact provided by the development of the northeast coal fields.

This injection into the northern economy will be spent and respent on

the goods and services of large and small businesses throughout the

province. More than 2,100 new jobs from this single activity will be

generated in 1981 alone. The overall result of this imaginative

development will be to transform a moderate year in the economy into

another solid year of expansion and development.

While the

perils of long-term economic forecasting are recognized, we expect that

even without coal development there would be a strong resurgence of

economic growth in 1982 and beyond. The international economy,

including that of the United States, should be entering a period of

recovery, thereby generating new demands for British Columbia exports.

A further economic boost is expected to come from the Pacific Rim

countries and from our own dynamic western Canadian market. On top of

these longer term projections, the northeast coal development will add

almost 5,000 jobs during peak construction in 1983 and a permanent

increase of approximately 3,500 new jobs for British Columbians.

The

rate of real growth in 1982 could exceed 5 percent, and over the next

five years should average at least 4 percent. The early 1980s could see

British Columbia become one of the most dynamic economies in the world.

It is our collective responsibility to make sure that this opportunity

is explored, exploited and secured to the fullest extent.

Now

to the financial position of the province. The strong performance of

the economy in recent years has been reflected in revenues flowing to

the provincial government. Between 1976-77 and 1979-80, for example,

operating revenue grew at a compound annual growth rate of 16 percent

and reached $5.5 billion. Over this period, natural resource revenue

tripled. These were dramatic increases. With an excellent financial

position, the government was able to sustain financing for existing

services as well as to introduce a number of innovative programs. Could

we review some of the more important initiatives: a revenue-sharing

agreement with our municipalities to provide an assured and independent

financial basis for local government decision-making; urban transit

services that removed responsibility from the British Columbia Hydro

and Power Authority and put it where it belongs, in the hands of local

governments, but with the support of generous and dependable provincial

financing; a long-term care system to provide improved service to our

sick and elderly, while making better use of expensive acutecare

facilities; and a dental care program that provides coverage for almost

one million British Columbians.

These programs represent

just a sample of the responsive and responsible action taken by this

government to meet needs and improve services. These programs alone are

expected to cost almost $600 million in the current fiscal year.

Although

the provincial treasury benefited from the success of the economy, the

government was cautious in using additional fiscal resources without

adequate long-term planning and preparation. New programs and tax

reductions were introduced gradually. The government was criticized by

some for accumulating surpluses and for not returning them to the

economy more rapidly. Our caution, I suggest, was prudent and well

advised, as will be clear when I explain the financial situation we

face this year.

Although the international recession only

touched us in terms of the total provincial economy, it has hit us

quite hard — as hard as it has hit other Canadians — in the area of

provincial finances. There is a most important, fundamental difference

here, a difference that is vital to fully understand. While there is no

question that the overall economy is in excellent condition, there is

also no question that the overall finances of the province have been

seriously affected by a number of trends and developments.

most unsettling event in 1980 has been the sharp decline in natural gas

exports. Although a variety of factors contributed to this weak

performance, the basic point is that the federal government's pricing

policy has made British Columbia gas uncompetitive with alternative

fuels. The large industrial users in our neighbouring states of the

Pacific Northwest have turned to cheaper residual fuel oil. United

States utilities have bought more domestic gas in preference to a

higher-cost imported alternative. The process of deregulating natural

gas sales in that country has also made interstate movement of gas much

easier and more profitable, and our finances are suffering the effects

of these moves.

The combination of higher export prices and

lower export volumes has led to a serious decline in the value of

export revenue to the British Columbia Petroleum Corporation.

[ Page 4402 ]

Petroleum and natural gas revenue is expected to be $447 million in 1980-81, down from $599 million in 1979-80.

We've

been fortunate that strength in other areas of the economy produced

more revenue than originally estimated for 1980-81. While forestry

revenue declined as expected, log prices have held up better than

anticipated. Timber sales revenue in 1980-81 is now forecast to be $341

million, $107 million above the original budget estimate. To put it in

perspective, however, this is still almost $200 million below 1979-80

timber sales revenue.

Overall operating revenue for 1980-81

is now forecast to be $5.75 billion — $54 million below the budget

estimate and only 4.6 percent above the 1979-80 level. By contrast,

operating expenditure for the full fiscal year is expected to reach

$5.66 billion; that's $112 million above budget. Higher than

anticipated expenditure, particularly in the Ministry of Health, will

be partially offset by savings as a result of the restraint measures

instituted during the year.

The revised outlook for the

operating account, therefore, indicates a balance of $84 million

compared to an anticipated balance of $250 million. The decline of $166

million in expected operating surplus means that the province will now

have to provide more funding from the contingency balance of

unappropriated funds.

It's now expected that funds remaining

in the revenue surplus account will decline to $53 million by the end

of this fiscal year, and this, you will know, Mr. Speaker, is a very

small contingency balance to carry forward into 1981-82.

Clearly

the province will be working to some fine financial tolerances in

1981-82, leaving little margin for error. I cannot overstate how

difficult this makes budget planning. Even small changes from revenue

and expenditure estimates can lead to wide divergencies in net

financial requirements. For the 1980-81 year, the variances in

forecasting total revenue and expenditure have been extremely small —

only 2 percent on expenditure and less than 1 percent on revenue — and

yet this 3 percent spread has led to a 66 percent decline in the size

of the anticipated operating balance. The financial position of the

province will remain vulnerable to such small revenue and expenditure

variations. In the coming year, however, there will not be an adequate

balance of funds to provide for such contingencies. This must condition

the government's attitude to budget-making. A cautious and responsible

approach is more than ever called for.

Now for the prospects

for 1981-82. Although the general performance of the economy is

expected to remain strong, there exists considerable uncertainty about

lumber and natural gas exports, the performance of which are crucial to

the revenue position of the province.

It had been expected

that lumber markets would rebound quite quickly in 1981, but high

interest rates in the United States and a weakening in Japanese demand

for lumber have dampened our optimism. These factors, together with

normal lags in the appraisal system, will cause another decline in

provincial revenue from timber sales in the coming year.

The

prospect for natural gas sales also remains bleak. The export-pricing

policies of the federal government underly this negative outlook.

Whether British Columbia is able to recapture traditional markets

depends on many factors: the price of competitive fuels, the

availability of United States gas, and the energy policies of the

Canadian federal government. At present, the Ministry of Energy, Mines

and Petroleum Resources and the British Columbia Petroleum Corporation

are pessimistic about the near-term outlook for these markets.

Fortunately

for producers of natural gas, the British Columbia Petroleum

Corporation accepts significant financial risks associated with the

marketing of natural gas. As sales decline, the British Columbia

Petroleum Corporation continues to pay producers for gas that is not

taken to market. This is the take-or-pay principle. It provides a

measure of security for producers, but it reduces the income of the

British Columbia Petroleum Corporation accordingly. The combination of

poor markets and take-or-pay payments of more than $100 million will

lead to a further reduction in natural gas revenue in 1981-82. Recovery

in market share and provincial revenue can only be expected to come

gradually.

Once again, the revenue forecast is one of

contrasts. Although forestry and natural gas revenue will be down in

1981-82, revenue from other sources is expected to increase by 12.5

percent before revenue measures. Total operating revenue of $6.01

billion is expected if no action is taken to build upon this revenue

base. This would represent an increase of 4.6 percent over 1980-81.

However, the cost of providing government services is increasing at

over twice that rate. It is this imbalance between revenue and

expenditure growth that produces a serious budgetary situation for

1981-82.

Our fiscal projections for the next few years

indicate gradual improvement in resource revenue. However, not until

the middle of the decade will it approach the level experienced in

1979-80. Therefore the budgetary imbalance projected for 1981-82 is not

expected to disappear over the medium term. The government is facing a

difficult gap between operating revenue and expenditure, and it is

going to be very hard to balance the budget.

May I turn to the federal budget, Mr. Speaker?

MR. LAUK: You're delivering.

HON. MR. CURTIS: Paying both, my friend.

The

problem of slow revenue growth would have been difficult enough, even

without the measures announced in the October federal budget. Now the

situation has become critical. The Canadian government has introduced

new energy taxes that directly reduce provincial revenue. More

significantly, the federal government has increased the tax burden on

the petroleum industry and has reduced incentives to explore for and

develop new oil and gas fields in British Columbia. At a time when

energy shortages and cost escalations are a regular occurrence, can

such actions be considered as responsible or positive for Canadians?

The

impact of these measures on the industry and on provincial revenue is

substantial. Over the period 1980-81 to 1983-84, federal taxes have the

very real potential of reducing provincial revenue by over $1 billion.

How can the people of British Columbia be expected to cope with such an

intrusion?

In addition to new energy taxes, the federal

budget contained other proposals to reduce provincial revenue. From

careful reading of the fine print of that budget, it becomes clear that

the federal government is embarking on a general cutback in shared-cost

financing for social services. For our province this could mean reduced

support for health care, reduced support for policing, and reduced

support for post-secondary education. I am sure that it has not escaped

the attention of the federal government that these are the areas where

the cost of providing public services is also growing rapidly.

[ Page 4403 ]

Although

the precise details of these federal measures are not yet known, the

trend is distressingly clear. At the very end of last year, for

example, the federal government decided to terminate the community

services program. This pushes a larger burden of costs onto the

municipalities for sewer and water facilities. Municipalities will in

turn seek more assistance from the province.

The impact of

federal action will not be temporary. On the contrary, we expect these

measures to put an ever-increasing burden on the provincial treasury.

To repeat: the federal government has turned a difficult situation into

a basic budgetary problem, and there is little in the way of

accumulated surplus to help alleviate the problem.

Now, Mr.

Speaker, the priorities for 1981-1982, the balance of choices. This

unusual combination of a strong economy and yet slow government revenue

growth has forced difficult choices upon us. If the budget is to be

balanced, additional revenue must be raised to meet expenditure needs,

or government programs must be drastically cut.

The third

possibility — that of running an operating deficit — was ruled out

early in our planning. This government is not prepared to consider

borrowing to pay operating expenses. Too many governments have adopted

this short-sighted way out of their financial difficulties only to find

that tough decisions become even tougher to make as the debt load

accumulates. It is a problem which is painfully obvious at the federal

level. Once a government becomes trapped in the mire of deficit

spending it is almost impossible to correct the situation. I do not

intend to leave that legacy to my successors in this portfolio.

For

these reasons, we consider it responsible to face fiscal difficulties

now, rather than put them off for future British Columbians to cope

with. Once again, therefore, this government's budget will be balanced.

stress that even with operating expenditure and revenue in balance, the

government will still be providing considerable stimulus through major

capital investments. The province acts as the fiscal agent for all

guaranteed debt issued by Crown corporations. With the northeast coal

project, urban redevelopment in Vancouver, an all-time record hospital

building program and construction of new correctional facilities, the

government will be providing considerable investment stimulus to the

economy.

On the operating account, however, the hard choice

remains: cut expenditures or increase revenue. In the short term, major

expenditure reductions are neither possible nor desirable. Almost

one-half of provincial government expenditure is accounted for by the

ministries of Health and Education, and only 35 major programs account

for 80 percent of provincial expenditure. We will not curtail these

essential social programs.

The government is faced with many

cost pressures similar to those of any private organization: inflation

and higher wage demands. In addition, a number of expensive government

services are open-ended and expanding rapidly in response to a growing

and ageing population. Services must also be provided for an

increasingly urbanized society within a more decentralized province.

An alternative to reduced spending on social programs is to restrain expenditure

in the economic development ministries. Unfortunately, cutbacks in these areas

could be counter-productive: they could weaken our industrial base and thereby

erode the future strength of the economy and provincial revenue. In the 1980-81

budget, for example, there was an allocation of $388 million for the first stage

of a $1.4 billion five-year program to enhance and sustain our forest resource

base. Without this type of investment our most valuable renewable resource would

be reduced to a depleted asset offering no future benefits. This type of public

sector investment is essential to the economic health of the province.

[Mr. Davidson in the chair.]

Having

explained some of the difficulties associated with curtailing

government expenditures, I do not wish to leave the House with the

impression that the government has no flexibility. In the short run, as

I shall indicate later, some changes can be made.

Perhaps

more important than short-term expenditure cuts are steps to ensure

reduction of waste and expenditure control in the longer term. To

ensure that such control is achieved, the government is continually

updating its financial management and planning tools. Zero-based

budgeting, for example, has been introduced in all but five ministries.

In addition, the Treasury Board is introducing a procedure for review

of capital expenditure. A method has been developed to allow careful

planning and budgeting now for the expenditure to be made several years

into the future when capital facilities such as schools. hospitals and

courthouses are completed and require staffing, facilities and

maintenance.

But financial controls are valuable only if

they work. That's why I have stressed improvements in all aspects of

financial accountability and why I shall continue to insist upon them

in the year ahead.

Although controls must be in place to

prevent waste in the public sector, the government is not prepared to

dilute in any way the high standard of services delivered to the people

of our province. This cannot be accepted. We shall not compromise

improvements we have put in place. We shall not hold back on

enrichments long overdue. We shall act responsibly, openly, cautiously,

but with determination. This is a prosperous province, a dynamic

province. Our people deserve public services of the highest standards,

and it is our intention to see that they are provided. We shall

continue to provide economic leadership to protect valuable resource

strengths. And we shall explore and develop all opportunities so that

our prosperity can continue.

In the spending plan for

1981-82 these commitments have been kept. The operating budget for

1981-82 is estimated to be $6.61 billion, an increase of 16.7 percent

over the revised forecast of 1980-81 expenditure — in line with the

expected growth of the economy in the coming year. The rapid growth

rate reflects the cost escalation pressures I have already mentioned,

plus a number of special factors.

In 1980-81 a number of

programs were financed out of previous years' surpluses. In 141-82

these programs have been incorporated into the operating budget of the

government and are presented as part of the estimates. Also, a number

of new programs and program enrichments introduced in 1980-81 are

having a full-year impact for the first time in 1981-82. If allowance

is made for these differences, the growth of operating expenditures for

1981-82 is actually closer to 12 percent. Finally, the government will

have to finance a further instalment on the debt resulting from the

socialist administration between 1972 and 1975.

I have indicated already that our projections suggest that operating revenue at present tax rates will reach $6.01 billion

[ Page 4404 ]

1981-82. With total expenditure at $6.64 billion, the government must

raise an additional $625 million in revenue — 10 percent on top of the

revenue forecast — in order to balance the budget. This will not be a

simple or easy matter. I shall turn to the details of my proposed

revenue measures later in this speech. But be assured, Mr. Speaker,

that it will be done, and it will be done responsibly and equitably,

with a keen eye on the future and on the potential of British Columbia.

Now, expenditure priorities:

Social

Programs. Every provincial budget must give a high priority to the

funding of services for people. This includes funding provided directly

by the province and that provided at the local level with provincial

assistance. I have already outlined this government's excellent record

of expanding and upgrading social programs. This budget provides

sufficient funding to sustain all existing programs and allows for new

initiatives in many areas.

The three primary ministries for

the delivery of social programs are Health, Education and Human

Resources. Together they account for $4 billion of estimated operating

expenditure in 1981-82 or 60 percent of the total. This level of

spending is $479 million more than in 1980-81, and almost $900 million

more than in 1979-80. Even so, given the cost pressures on basic

services and the difficult financial position faced by the government,

additional funds have had to be limited to certain very high priority

program areas. I am pleased that this budget is able to provide for

expanded services for disabled persons, improved services for families

in need and enhanced educational opportunities for people throughout

the province.

Once again the Ministry of Health will place

the greatest demands upon the government's operating budget. It's

estimated that just under $2 billion dollars will be required from the

province for health care delivery in 1981-82. That's a 15 percent

increase over expected 1980-81 spending and a 27.4 percent increase

over the estimate presented to this House last year.

Part of

this large increase can be attributed to the contract settlements

imposed through arbitration last year for hospital workers, nursing and

professional staff. For the most part, these contracts are not

negotiated directly by the government. Collective bargaining takes

place between the hospital workers and the Health Labour Relations

Association, although the government is required to pay the bill. What

this means is that the government is exposed to financial risks without

adequate means of influencing the outcome. This is a major impediment

to efficient and responsible fiscal management.

The cost of

the dental care program in 1981-82, its first full year of operation,

will be $76 million. This valuable program will provide basic coverage

for more than one million British Columbians. It's a generous program

to be sure, but it is not in any way excessive. By focusing help on

those least able to afford dental care and on the young, the program

will achieve maximum effectiveness at minimum cost.

The

medical care program continues to be one of the most costly and rapidly

growing social services financed by the province. It is appropriate,

therefore, that the cost be reflected in medical premiums so that users

are reminded of the costs associated with a modern medical care system.

Although full application of the user-pay principle is clearly not

desirable, the government last year decided to set premiums at a level

sufficient to finance 35 percent of medical care costs in the province.

Therefore, as costs increase — as they are expected to do this year

following a new contract settlement with physicians — 35 percent of the

increase will be paid through premiums and 65 percent will be financed

from general taxation. I emphasize, however, that low-income families

and the elderly will continue to receive premium assistance so that all

British Columbians will be able to afford the finest quality health

care.

In the area of hospital programs, the focus this year

is again on reducing the cost of institutional care. By providing lower

cost extended-care and long-term care facilities and by allowing

individuals to receive support in their own homes, a better and more

efficient service can be provided. This government made the fundamental

decision a few years ago to move patients away from costly acute-care

facilities, if they could be successfully cared for in alternative

settings.

It was well understood that such a fundamental

shift would take time. Program changes have been introduced gradually,

but the new emphasis is very clear, particularly in the hospital

construction program. Of the almost 2,000 new beds expected to become

available in 1981-82, over 80 percent will be for extended- and

long-term care.

Although the Ministry of Health will be

dedicated to the maintenance of the major hospital, medical and dental

care programs, a number of smaller but important initiatives will also

be funded by the ministry. A detoxification unit will be set up under

the Alcohol and Drug Commission, and health services to rural

communities will be enriched.

In short, this government

intends to continue its support for quality and affordable health care

in British Columbia. We restate that today. The British Columbia

government provides the best and the most comprehensive medical

services in Canada.

During 1981-82, the Ministry of Human

Resources will continue to provide a broad range of social services and

income-security programs. Despite the current financial situation, the

government continues to take the position that these services provide

necessary and valuable assistance in response to real social needs.

Consequently, the decision has been made to allocate more than $836

million to this ministry for the 1981-82 year.

First, I wish

to highlight the efforts being made by the Ministry of Human Resources

to provide services to families and children. In light of the

importance which we attach to these needs, this area of services will

receive $104 million in 1981-82, an increase of 18.8 percent over

1980-81. Also included in this budget are funds to increase subsidies

to help more than 10,000 parents in British Columbia meet the costs of

daycare services. The increase reflects inflation and also provides a

catch-up to current day-care centre rates. This assistance will offer

valuable support to low- and fixed income families who rely on the

subsidy to ensure suitable daytime supervision for their children.

Further,

we've provided the necessary funds to develop five intensive child-care

resource units for emotionally disturbed adolescents who cannot receive

proper care under existing programs. This program is a cooperative

endeavour by the Ministries of Human Resources, Health, Education and

the Attorney-General. It's another example of the productive efforts of

the Interministerial Children's Committee established in 1976.

Other

important services to families and children which will be expanded this

year include an increase in specialized services and community

resources for children with emo-

[ Page 4405 ]

tional

problems — this will enable them to return to their own families and

communities while receiving care and attention; and increased staffing

to deal with reported child abuse and neglect generated by the Helpline

for Children. This program has proven to be of immense value in

identifying family crisis situations so that assistance can be provided.

The

Ministry of Human Resources will continue to provide assistance to

families in need through income security programs. An additional $32

million will be directed to increased income assistance and handicapped

benefits.

To ensure that the Ministry of Human Resources can

effectively administer these services the field operations budget of

the ministry has been increased by almost $3 million to provide

additional staffing. New ministry offices will be established to meet

the growing need in the Valemount-McBride area and in Stewart. An

additional 85 social workers and support staff will be hired to provide

services in areas where a need has been identified, such as the war

against child abuse. These new positions will be placed in all regions

of the province, including the northern and interior areas where the

pace of economic and social change is rapid.

I would like to

spend a few moments with respect to the International Year of Disabled

Persons. While this government has spearheaded the provision of

services to the handicapped, particular attention will be given to the

needs of the disabled during 1981. The United Nations has declared this

year to be the International Year of Disabled Persons. This is an

excellent and most worthwhile focus for worldwide attention. In

recognition the government of British Columbia will introduce a number

of programs to complement those already provided.

It's estimated that between 5 and 9 percent of our population is affected

to some extent by a disability. It is to these people that provincial programs

will be directed. Financial people the assistance has been made available through

GAIN, and in addition there are programs to provide educational and employment

opportunities for the disabled.

The government has created a coordinating committee to organize government

efforts during this special year. The committee has been allocated almost $3

million for new initiatives for the disabled in 1981. Grants will be considered

for those organizations within the province whose projects meet the objectives

for the international year as set out by the UN by providing assistance directly

to handicapped persons as well as increasing access to existing programs; by

expanding employment opportunities; by improving the quality of life through

better housing, transportation, recreation and other social opportunities; by

increasing public awareness and responsiveness to the needs of disabled persons;

and by encouraging prevention of avoidable disability.

Complementing

these grants are a number of provincial government activities and

services. These will involve various ministries and will offer a broad

range of initiatives. First, the homeowner grant of $630 will be

extended to all handicapped persons in British Columbia. The maximum

grant is currently available only to handicapped persons who are in

receipt of GAIN or war veteran's disability allowance. Second, the

Ministry of Education will enrich several special education programs to

ensure that disabled persons are given equal access to educational

opportunities as well as to provide special training for students with

hearing and sight impairments. Third, programs administered by the

Ministry of Human Resources will be enriched in the following way: the

infant development program provides special training from birth to the

age of three years for handicapped children who are delayed in their

physical development. This program has been highly successful since it

was introduced. Funding will be increased by 100 percent to expand

existing services and to provide services where none currently exist.

Funding

for specialized day-care programs for children with exceptional needs

will be expanded. This will enable an anticipated 170 handicapped

children to receive day-care services in facilities throughout the

province.

The counselling and home training programs for

deaf children introduced by the federal government will be continued.

They will be continued by this Social Credit government — the

provincial government — despite withdrawal of federal funds. Fifty

families of deaf infant and preschool children will be given training

in all forms of communication. It is our firm belief that early

training by specialized staff can greatly support later education for

children with hearing disabilities.

The number of

achievement centres will be increased so that handicapped adults may

receive more opportunities for training and social interaction. As

well, the monthly transportation allowance for travel to achievement

centres will be increased for 1,700 handicapped people receiving

'income assistance.

I am pleased to announce that additional

funding is being provided through the Ministry of Health for the kidney

dialysis program and for long-term care for the physically disabled.

important objective identified by the UN is the expansion of employment

opportunities for handicapped adults. With this specific objective in

mind, the Ministry of Labour will expand the personal placement program

as well as the employment opportunities program.

Finally, I

should like to indicate two tax changes that will recognize the special

transportation needs of disabled people: effective tonight,

transportation aids for the handicapped will be exempt from social

service tax and eligible handicapped persons will receive a full rebate

of provincial fuel tax paid.

May I now turn to the

allocation of funds to assist local government, Mr. Speaker. I am happy

to have been involved in the financial arrangements this government has

established with local authorities. Funding for municipalities is now

predictable and generous. It is a model for all of Canada, The cost

burden of providing local services and the upward pressure on property

taxes have been reduced while maximum independence at the local level

has been retained. Our overall commitment to local funding can be seen

in the growth of the budget of the Ministry of Municipal Affairs. which

has doubled since 1978-79. Funding in 1981-82 will be $380 million, an

increase of 16.4 percent over 1980-81.

The most significant

transfers to municipalities are those provided through the Revenue

Sharing Fund. Payments into this fund will grow by 21.3 percent despite

slow revenue growth last year and in the coming year. Although the

revenue-sharing formula has been designed in such a way that

municipalities share in both revenue strengths and weaknesses, the

structure of payments includes adjustments for prior years. Therefore

in 1981-82 municipalities will continue to share the unexpectedly

strong revenue increase realized by the province in 1979-80. Of course,

this lag in the system could lead to slower growth rates in the future

if revenue growth remains weak.

The Urban Transit Authority was established in 1978 to provide central guidance and direction to the planning of

[ Page 4406 ]

improved

urban transit in all regions of British Columbia. It is also through

the UTA that the government channels its subsidy for transit services.

With the metropolitan transit systems joining this program last year,

all pieces are finally in place.

This budget provides $92.7

million for transit funding in 1981-82, an increase of 19.2 percent

over the previous year. This increased contribution reflects the

accelerated rate of investment in transit facilities across the

province. In Vancouver, for example, orders have been placed for 200

new trolley buses to be delivered within the next two years, at a cost

of $42 million.

Buses are becoming an alternative form of

transportation to the private car for residents of more and more

communities in the province. As of February 1, when the province's

newest transit system went into operation in Fort St. John, 20

communities outside the lower mainland and Victoria have bus systems of

their own. These range from the 14-vehicle system in Kamloops, which

carries more than 1.5 million passengers a year, to that of Vernon,

with one vehicle and an estimated annual ridership of 46,000.

The

major development in public transit over the next few years will be an

advanced light rapid transit system for Greater Vancouver. Last year's

budget set aside $55 million for the capital financing of urban

transit. The province will draw upon this for an initial contribution

to the ALRT project. We expect that the federal government will

contribute to costs associated with this important new proposal. The

majority of the financing, however, will be done by the Urban Transit

Authority under its existing mandate.

Through the Ministry

of Municipal Affairs the province will continue to provide funding for

grants to defray the capital costs of sewer and water systems.

Municipalities, however, will no longer have federal support for such

projects. At the end of last year the federal government announced the

termination of the community services program, as I indicated a few

moments ago. The term of the original agreement, Mr. Speaker, was

limited to two years because both sides wanted to work toward a

longer-term arrangement. Now the federal government has taken advantage

of this renewal provision by withdrawing from the program.

Unfortunately, this action is only one more example of Ottawa's present

fiscal thinking: federally induced spending followed by reduction or

withdrawal of federal funds as programs mature. I will discuss this

disturbing aspect of fiscal federalism in greater detail later.

Through

its substantial direct grants to municipalities the province reduces

the property tax burden on local taxpayers. British Columbia also

contributes in a number of other ways to help restrain the growth of

property taxes. These include:

Provincial grants to school

districts to cover operating and capital costs. In 1981-82 these will

increase by 10 percent to $512 million, and the provisional mill rate

for school purposes has been reduced from 41.25 to 41.20 mills.

Including colleges and institutes, the province pays for two-thirds of

all education costs. This figure is rarely referred to, but it

represents the magnitude of provincial assistance for education.

The

fifteenth largest program allocation of the province is its employer

contribution to the Teachers Pension Fund. As a result of legislation

introduced in the last session to improve the financial standing of the

fund, the provincial contribution in 1981-82 is almost double that

budgeted at this time last year. Furthermore, British Columbia has

agreed to cover the employer cost of the Canada Pension Plan for

teachers, rather than have it paid out of their pension fund.

grant of at least $380 is available to homeowners for credit against

property taxes. Where homeowners qualify by reason of age or

disability, they may claim a yearly grant of $630 to be applied to

property taxes.

Mr. Speaker, our financial situation

precludes a further increase in the homeowner grant this year, but the

government will continue to spend approximately $254 million on the

program. For those persons whose property taxes are so low that

application of the homeowner grant would reduce taxes payable to zero,

current legislation requires that the minimum tax payable be $50. Mr.

Speaker, I believe that homeowners should make a contribution to the

provision of local services. Since this minimum has been in effect for

some time, I intend to increase it to $75 — just over $2 per month.

This will not cause undue hardship and it will reinforce the important

"user-pay" principle at the local level. However, this minimum has not

applied — and will not now apply — to the elderly or the handicapped.

That amount remains at just one dollar per year.

Mr.

Speaker, the shortage of housing in several parts of British Columbia

is of concern to every member of this House. It has been brought about,

in large measure, by the dramatic westward movement of many Canadians

from other provinces. My colleague, the Minister of Lands, Parks and

Housing (Hon. Mr. Chabot), will speak of this in greater detail during

the session.

His ministry and the government have clearly

identified the major cause of the problem: a shortage of land. Disposal

of large blocks of Crown land for development purposes continues at

record high levels. Of tremendous significance in the lower mainland

are the thousands of lots to be developed in the northeastern sector of

the Greater Vancouver Regional District. To assist in that development,

an on-site office will be opened in Coquitlam during the year. In the

Capital Regional District, this government in cooperation with the City

of Victoria has recently announced that development of the Songhees

land will proceed on a priority basis.

Interjections.

HON. MR. CURTIS:

They're getting restless on the other side, Mr. Speaker. They don't

like the news; they don't like the progress that's being recorded in

British Columbia.

Similar initiatives in other parts of the

province will see a gradual but steady improvement in the availability

of developable housing land.

During the 1970s the province

assumed almost total responsibility for social welfare, thereby

relieving municipalities of a major expenditure item. Nevertheless,

municipalities with population in excess of 2,500 have been expected to

share in the cost of providing these services. A per capita levy has

been used to return to the province 10 percent of shareable welfare

costs. Last year this percentage was reduced to 7 percent and I am

pleased to announce that it will remain at that level for the coming

year.

In spite of these large provincial transfers to

municipalities, a number of local taxpayers are concerned about the

possibility of substantial increases in property taxes this year. In

order to, forestall a dramatic increase in taxes, as a result of higher

property assessments, I took action in the fall of last year to reduce

the ratio of assessed value to actual residential

[ Page 4407 ]

property

value from 14.5 percent to 11 percent in rural areas as well as in

those municipalities which adopt that assessment option. Our aim was to

ensure that increased services at the local level would be financed by

increased rates of tax rather than taking the easier, less accountable

route of higher assessments. The adjustment also ensures a proper

balance between taxes on residential as compared to commercial and

industrial property. We shall review this situation again this year if

residential property values continue to escalate.

As well as

providing assistance to local government, the province provides

services directly to unincorporated areas. To help pay for these

services the government levies property taxes on land outside organized

districts. The tax rates on such properties have not been changed for

many years. For example, the ten-mill rate on rural land has been in

effect for almost 60 years. With a constant tax rate, the gap between

revenue raised and the cost of providing services has grown. It is now

estimated that revenue from this tax source yields less than half of

the cost of local services provided to unincorporated areas. This is a

matter of concern and one which must be addressed. In view of the other

factors leading to an increase in property taxes in rural areas in

1981, it is not appropriate to recommend an increase in provincial

property tax rates at this time. However, I shall be advancing the date

for property tax payment, provincially that is, from July 31 to July 2.

This will eliminate confusion which at present exists between payment

dates in municipalities and rural areas. Owners of property which is

classified as farmland will still have until the end of October to pay

their property taxes.

Mr. Speaker, priorities for economic

growth in the 1980s. Having outlined the social programs funded by the

budget, I would like now to turn my attention to economic matters. The

budget speech provides the opportunity to inform British Columbians of

the government's priorities for economic development in the coming

year. Our priorities flow from our economic philosophy, which is to

encourage and coordinate growth in the private sector. Let me put it

quite bluntly. We want to help without meddling. Government has the

responsibility to provide leadership in economic development, to lay

the foundation for stable expansion. But perhaps most important,

government has the responsibility to ensure that all British Columbians

receive their share of benefits from the development of our natural

resource heritage.

This year's budget goes several steps

further toward implementing an economic strategy. The priorities for

government action during the next year include the following. Firstly,

we must continue to assume the crucial, leading role in opening up all

regions of the province to new development. The government should serve

as the catalyst by bringing all parties together and assuming some of

the risks. We must help transform imaginative ideas into productive

realities. Secondly, we must upgrade manpower training programs so that

more British Columbians can participate directly in the growth and

development of the province. Third, we must make a continued commitment

to manage, protect and enlarge British Columbia's natural resource

base. Fourth, provincial energy policy must be implemented to ensure

energy supply at stable prices while encouraging the conservation and

development of alternative fuels. And fifth, government must continue

to accept the important responsibility of helping the private sector

pursue new market opportunities and create new and innovative products.

May

I now describe in some detail how this year's budget helps to meet

these priority objectives. On January 23 of this year the provincial

government announced that a formal agreement had been reached to begin

the development of British Columbia's massive northeast coal resources.

A new phase of northern development has finally begun, decisively and

irrevocably. The agreement calls for the sale of 7.7 million tonnes of

coal per year for 15 years. This is a fraction of the vast coal

deposits in British Columbia. It is a major undertaking for this region

of our province, and it is a major step forward.

The project

will demand vast amounts of work, services and systems to be put into

place. That in turn means massive investment capital must be injected.

It's easy to see how coal development will open this untapped region,

but northeast coal must be viewed within a broader perspective. It

should be seen as only one of the key components of the ongoing

economic development of British Columbia. There are enormous immediate

benefits. Including thousands of new jobs, a new town and a new

vitality for Prince George, Prince Rupert and other established

northern communities. This is growth and vitality that will in turn

benefit every British Columbian.

The northeast coal

development will further reduce our historic dependence on the forest

sector and its cyclical markets. Coal development assures us of a more

diverse base for a more stable economy.

We are opening a

vast new inland empire which is rich not only in coal but also in

forests, natural gas and other energy resources. Development of these

will provide more balanced regional growth and add to greater

prosperity for all regions of British Columbia. All of Canada will gain

from our initiative and hard work. British Columbia will provide Canada

with an annual injection of $500 million in much needed foreign

exchange that will add strength and value to our dollar. In addition

there will be new and profitable contracts for the Canadian National

Railways and a boost to Canada's steel and manufacturing industries.

The

northeast coal development provides a further means of improving the

northern tier of Canada'a east-west transportation system. Now, more

than ever, the continent will be linked with major west coast port

facilities. This fulfils a long-standing dream — 70 years! — of Prince

Rupert to be that major port, handling grain, potash and other

commodities as well as coal. British Columbia's future as Canada's

gateway to the Pacific Rim will be even more firmly entrenched.

The

project is awe-inspiring in scope. It is by far the largest development

in British Columbia's history, with combined public and private

investment exceeding $2.5 billion. It includes the building of 130

kilometres of new railroad through difficult terrain. It means the

upgrading of another 864 kilometres of the British Columbia Railway and

the Canadian National Railways. It calls for the construction of a

minimum of 92 kilometres of new roads. It requires the construction of

182 kilometres of new power lines, and it means the creation of a new

townsite at Tumbler Ridge and a major new port at Ridley Island

adjacent to Prince Rupert.

[Mr. Speaker in the chair.]

All

of these projects are on a tight timetable and the work commences

immediately. For this reason I've made sure that sufficient funds are

in the 1981-82 budget to keep these investments on schedule; $48.2

million is to be appropriated for northeast coal development in

1981-82. This total, includes: $750,000 for environmental impact

studies and ac-

[ Page 4408 ]

tion

to ensure compliance with environmental protection legislation; $22.9

million to bring electrical power to the new town and mine sites; $22.6

million to build new roads and upgrade existing roads; and $1.9 million

for development of community plans for the new townsite. The balance of

the budgetary allocation will be for provision of social services in

the areas affected by the project.

The construction of a

rail spur to join the British Columbia Railway main line at Anzac is a

major development, expected to cost $310 million in 1980 dollars.

Financing for this line will take the form of provincially guaranteed

debt, issued on behalf of the BCR. A surcharge on all rail shipments of

coal will be used to repay the debt.

In mentioning the

British Columbia Railway, I would also like to announce that a further

$70 million is to be provided for interest costs and retirement of the

historic debt of the railway. By removing this burden, the British

Columbia Railway should be able to carry on more efficient financial

planning and operate as a more dynamic and businesslike company.

Following the recommendation of the auditor-general of the province,

the government has written down its investment in the railway to the

sum of one dollar.

Mr. Speaker, may I talk now about

manpower programs. We are experiencing a major investment boom. While

we welcome and encourage the confidence that the business community is

showing in B.C., the rapid pace of development creates new demands upon

government. Perhaps most pressing has been the need to deal with the

critical shortages of skilled workers resulting from high levels of

construction activity and the rapid growth of mining and forestry

capacity.

The Ministry of Labour has been working to solve

this problem. Last year the new Provincial Apprenticeship Board studied

alternative proposals to revitalize apprenticeship programs and

increase the supply of skilled labour. Over $40 million was allocated

in last year's budget for apprenticeship training and employment

opportunity programs. This year the programs will be continued and will

be enriched.

During last spring and summer the government

learned that a particularly severe shortage of skilled labour was

emerging in the northern regions of the province. In October the

Cabinet Committee on Economic Development, led by my colleague the hon.

Minister of Energy, Mines and Petroleum Resources (Hon. Mr.

McClelland), toured the north to identify more precisely the full scope

of the situation. More recently the committee visited the southeastern

area of the province. In both instances, the committee met with

representatives from trade unions, from industries and from the public.

It was concluded that the supply of skilled labour in several key

trades was already inadequate to meet the needs of industry, and that

the shortage is likely to grow in the years ahead.

Historically,

British Columbia, as well as the rest of Canada, has relied upon new

Canadians as a source of skilled labour. A recent study estimated that

more than 70 percent of Canada's trades people had acquired their skill

training outside the country. We see in this situation the opportunity

to take a leadership position, to make British Columbia self-sufficient

in skilled labour. Clearly the time has come for the province to look

after its own needs. This is especially important in view of the

co-existence in some regions of skilled-labour shortages and high

levels of unemployment among our young people.

Youth is one of British Columbia's most valuable assets, and we must harness

its energies more productively. Realizing the vital role that skilled trades

have in the future of British Columbia, a new $14 million critical skills program

was initiated in September last. It will attract additional apprentices in seven

critical trades areas by providing grants to employers for the extra apprentices

they employ. I can enthusiastically report that in the first three months of

the program the training of more than 900 additional apprentices has been initiated.

further action I am pleased to mention is the launching of a

comprehensive manpower forecasting system. Its task is to define more

accurately the current training needs necessary to supply the right

amount of skilled labour for the future. On the cabinet committee tours

I spoke of, this was specifically requested by various representatives.

We shall meet this request immediately.

While greater

emphasis must be given to on-the-job training, educational

opportunities in our schools and post-secondary institutions should

also reflect the demand for skilled workers. Enrolment in colleges and

provincial institutes is growing very rapidly. In this year's budget

provincial funding for these institutions has been increased by 20

percent — to $283.2 million. The government has also substantially

increased the amount of money available for student aid. This will

assist young people to gain the necessary skills to be productive and

contributing members of our society.

This year we have

focused the employment opportunities program directly upon job creation

in the private sector. Greater emphasis is being placed on the creation

of permanent jobs. It is, after all, in the private sector that each

new job will have the greatest overall impact on the economy. Because

of this emphasis on providing permanent employment, the decision has

been made to terminate just one part of that — the Work in Government

program, originally designed to provide students with seasonal jobs in

government during periods of high unemployment. The economy is strong,

and jobs should be more readily available in the private sector.

Mr.

Speaker, I've already stated that British Columbia is a prosperous and

fortunate province. The base for the prosperity of British Columbians

is largely in our natural resources, not only the quantity of these

resources but also their quality and their diversity. Consider that in

1979 the extraction and processing of natural resources directly

employed more than 170,000 British Columbians. This is the core of

employment on which the rest of the economy so heavily depends. These

are jobs that must be protected through careful management of forest,

mineral, water and land reserves. This government is committed to their

protection.

In 1979, the overall condition of provincial

forest and range resources was assessed and a number of difficult

challenges to the government were identified. Simply, it appeared there

would be difficulties in maintaining current levels of wood supply over

the long term.

Last year's budget recognized the singular

importance of forestry to the provincial economy by providing for a

major initiative in the care and management of our forest resource. The

new $146.6 million Forest and Range Resource Fund was directed towards

silviculture — the cultivation and tending of our forests. It includes

measures for protection against fire and pests, improved harvesting

techniques, improved range management and other forest management

responsibilities.

Now, in the second year of this five-year

program, a total of $293.4 million will be devoted to the care and

protection of the forests. This includes an allocation of $35.9 million

from

[ Page 4409 ]

the

Forest and Range Resource Fund as well as a hefty $9.3 million increase

in direct ministry spending. Also included is $94.8 million for credits

against stumpage revenue as compensation for certain projects related

to forest management undertaken by private companies on behalf of the

government.

A priority in the 1981 program is the completion

of the reorganization of the Ministry of Forests. This will ensure that

forest region and district operations are fully equipped, organized and

supported. It will enable them to work effectively towards meeting

forest and range resource management goals.

The government

has recently approved revisions to the original five-year plan to

accommodate an increased rate of reforestation. This should result in a

doubling of the number of tree seedlings planted between 1980-81 and

1985-86.

Agriculture and food production is a mainstay

industry in our provincial economy as well as being of great importance

to all British Columbians concerned with secure supplies of high

quality agricultural products. With growing pressures on the use of

land for housing and industrial applications, it is vital that land

allocated to agriculture be utilized with the utmost efficiency. To

this end, the ministry continues to monitor agricultural land reserves

to ensure the continued farming of all lands with capability for food

production.

Under ALDA, the Agricultural Land Development

Act, loans are provided to farmers to develop and improve agricultural

lands. This worthwhile program will be enriched this year by

introducing the revolving fund concept. As loans are repaid, the funds

will be made available for new loans under ALDA. Under this system,

almost $1 million more will be available in 1981-82 than in the

preceding year to farmers who wish to take advantage of this loan

program.

The Ministry of Environment has also undertaken

major initiatives towards protecting the ecology of British Columbia.

Programs that monitor and manage pollution, fish, waters, wildlife and

pesticides will all be enhanced. An industrial waste transportation

manifest will be established to manage and control hazardous wastes.

British Columbians will now be given much greater access to

environmental information and programs through the creation of seven

new regional storefront offices across the province.

I am

also pleased, Mr. Speaker, to announce that a perpetual fish and

wildlife conservation fund will be created for habitat improvement on

Crown lands. This initiative represents a cooperative undertaking

between people and their government. To launch the project, the

province will advance $750,000 to the fund. Subsequently, it will be

maintained by a $3-per-licence impost fee for fishing, hunting and

trapping. The Salmonid Enhancement Program — I love the fish but can't

pronounce its name, M. Speaker — will also continue as a positive step

towards restoring our Pacific salmon stocks. This year, $2 million has

been budgeted to support this important initiative. And finally, a new

program has been established to deal with waste management issues in

the lower mainland. This program is long overdue and I am pleased to be

able to confirm it for 1981-82.

May I now speak about energy

and energy strength. One prominent feature of the British Columbia

economy, one which makes it so attractive to investors from all parts

of the world, is our overall energy position. We offer an abundant and

secure supply of electricity and natural gas. Already, energy resources

are being considered as feedstock for the development of a major

petrochemical industry in this province. We intend to continue

attracting new secondary industry to British Columbia. We also intend

to seek expansion into further processing of our natural resources. To

do this, we must be sure our energy supplies are sufficient to meet the

demands. We must plan today for the expansion that will take place

later in the 1980s.

I have already described how the

development of natural gas in British Columbia has suffered major

setbacks. Sales to traditional export customers have collapsed. The

national energy program of the federal government has dramatically

reduced the profitability of both exploration activity and production

from existing wells. Over the longer term we must offset these

unfortunate events by locating and developing new market opportunities.

New possibilities are already emerging. More and more companies are

presenting proposals to liquefy natural gas for sale to Japan. And

while such projects present interesting new prospects for the

provincial economy, I must stress that they can and they will be

approved only if the province is assured that sufficient reserves are

available to protect our domestic needs.

In order to

demonstrate the existence of sufficient reserves, exploration activity

must continue. By grabbing at energy revenues and in turn removing the

incentive to explore, the federal government has jeopardized future

western growth and weakened our energy future. The provincial

government is prepared to review the incentives to producers in light

of that federal taxation. We are now awaiting a report from the British

Columbia Utilities Commission on the entire issue of wholesale and

field prices.

And in reviewing the field pricing question,

particular attention must be paid to recent developments south of the

border. As I said earlier, with accelerated de-control of oil prices

and the prospect of early de-control of natural gas prices, United

States producers are facing a much improved domestic investment

outlook. The contrast between the Canadian and American governments

attitudes could not be more dramatic, This is yet another reason why

the Canadian government should rethink its revenue-minded energy

policies.

Although we are fortunate in our energy wealth, we

cannot afford to be casual in the use of limited resources. We remain

"energy rich, but oil poor." This is why the principal themes of the

provincial energy strategy are energy conservation and reduced

consumption of imported oil. The Ministry of Energy. Mines and

Petroleum Resources will continue to implement the energy strategy.

More work will be directed in 1981-82 at encouraging energy

conservation: government buildings will be inspected to ensure that

energy is used in the most efficient way; public information programs

will continue; and a further $2.8 million will be provided for

demonstration projects on renewable energy and energy conservation

technologies.

The Energy Development Agency has been

directed to continue its research and development programs for

alternative energy supplies. Detailed studies of the possibilities for

liquefaction of coal deposits at Hat Creek will continue. If this

option can be shown to have merit, the province will consider inviting

companies to make formal application for the development of coal

liquefaction facilities. Attention is also being given to the possible

use of compressed natural gas as an effective alternative to other

fuels. Gas-for-oil substitution may be the way of the future and can be

expected to gather momentum in the years to come.

[ Page 4410 ]

last year's budget I introduced a number of taxation measures designed

to encourage energy conservation generally, and in particular to

encourage more efficient use of crude oil derivatives. Today I should

like to complement the actions taken last March. Effective tonight the

following changes will be made to the Social Service Tax Act. Fuel oil

used in commercial establishments is to become taxable. Currently fuel

oil is exempt, while electricity, natural gas and propane are taxable.

I remind hon. members that last year the Fuel Oil Tax Act was repealed

in order to assist homeowners with the increasing cost of heating their

homes. Let me emphasize this afternoon that fuel oil for residential

use will remain tax exempt. Kits for the conversion of motor vehicles

from gasoline or diesel to compressed natural gas will become tax

exempt. All weather-stripping and caulking materials designed to

prevent loss of heat from a building will become tax exempt, and new

cars will continue to be taxed at differential rates.

Last

year in the budget I established three categories of fuel efficiency;

today I intend to redefine two of these categories to provide an even

greater incentive to purchase fuel efficient cars. At present, cars

that require more than 13 litres of gasoline per 100 kilometres are

regarded as the most fuel inefficient and are taxed at the highest

rate. From tonight, cars that require more than 11. 3 litres per 100

kilometres will be in the upper category and will pay the highest rate.

While

these changes, in conjunction with those introduced last year, will

provide added impetus to the provincial energy strategy, their impact

on the use of oil for transportation purposes will be relatively

limited.

The most effective means of encouraging

conservation of gasoline and motive fuel oil is to increase the prices

of these products. I am sure that most Canadians and most British

Columbians now accept the necessity and the wisdom of higher oil

prices. The federal government has failed to face this unpleasant

reality or to accept a leadership role. Therefore the province can and

must use its system of fuel taxation to encourage greater conservation

of energy.

Today I announce fuel taxation changes that

encourage fuel efficiency. The essential features of the new system are

as follows. The tax rate on gasoline will be increased tonight from

3.74 cents to 5.32 cents per litre, thereby increasing the average

price of gasoline from 31 cents to 32.6 cents per litre. The new tax

rate is 20 percent of the retail price of gasoline before provincial

taxes. Starting October 1, 1981, the gasoline tax rate will be adjusted

every three months to maintain the rate at 20 percent of the pre-tax

pump price. Therefore, if the retail price of gasoline increases by 5

cents per litre, the gasoline tax rate will be increased by 1 cent per

litre. Diesel fuel is currently taxed at a higher rate than gasoline

and this practice will continue. Propane will continue to be taxed at a

lower rate than gasoline.

The current fuel taxation system

provides preferential rates for certain off-road uses of fuel, and

these will be continued. For example, purchasers of purple or coloured

gasoline will still pay a tax rate 2.64 cents per litre below the clear

gasoline rate. The current system also provides a preferential rate to

bona fide farmers and fishermen. These rate preferences will be

continued at their present levels. For example, a farmer buying diesel

fuel for his tractor will continue to pay a tax rate of 3.74 cents per

litre less than the clear gasoline tax rate. Finally, fuel used in the

propulsion of steam-driven ships will become taxable at the coloured

gasoline tax rate.

These measures will increase the fuel tax

rate on all uses of petroleum fuels and will keep the tax rates in step

with increases in the price of fuel. At the same time all the rate

differentials contained in the existing system will be retained at

their present levels. As I announced earlier today, eligible

handicapped people will receive a full rebate of tax paid.

Mr.

Speaker, on the topic of industrial development, it has been a priority

of this government to broaden the provincial economy and diversify its

base. New markets and new products can be initiated only through

aggressive pursuit of export opportunities and imaginative research and

innovation. Where possible, industrial activities must be developed

that utilize British Columbia's many other advantages. These obviously

include our scientific capabilities, our accessible and attractive

geography and our near-ideal Pacific Rim location.

Not only

British Columbians but also visitors to British Columbia play a major

role in our economy. Our visitor industry is the third most important

industry in British Columbia, following only forestry and mining. In

1980, the visitor industry generated spending in the provincial economy

at a record level of $1.85 billion.

Unlike the two leading

sectors, the visitor industry can offer a relatively stable pattern of

employment as well as considerable opportunities for our young people.

As an industry it is not as sensitive to the same external fluctuations

that affect our resource industry. With virtually unlimited natural

potential for development and with worldwide interest in British

Columbia, I am sure that tourism will be fundamental to our economic

future.

During my working visit to Europe in October, I was

surprised at how much was known about the varied attractions of this

beautiful province. Many Europeans have already visited our region,

while many more are looking forward to vacations on the west coast of

North America with British Columbia high on the list of places to see.

This

budget recognizes the importance of the visitor industry. The budget of

the Ministry of Tourism will increase by 18 percent to almost $15

million in 1981-82. Additional funding will be available for the

marketing and advertising strategy of that ministry, with new emphasis

on extending the tourist season and also expanding British Columbia's

traditional markets. In addition, this will include the establishment

of a new visitor information centre in Prince Rupert.

colleague the Minister of Tourism (Hon. Mrs. Jordan) has placed a high

priority upon developing a feature film industry within the province.

Drawn by the magnificence and diversity of British Columbia's scenery

and the available pool of technical expertise, the feature film

industry here is the fastest growing of any province in Canada. A

special film production budget has been allocated to the Ministry of

Tourism to further encourage this trend.

Under the direction

of the Minister of Industry and Small Business Development (Hon. Mr.

Phillips), the federal-provincial travel industry development

subagreement will provide more than $11 million for the modernization

of tourist facilities throughout the province. In spite of this year's

mild winter, visitors and residents have enjoyed new ski industry

developments which were assisted by this program.

The

provincial park system is a vital part of outdoor recreation facilities

for all British Columbians and a major contributor to tourism. Last

year, provincial parks had a record level of attendance — over 2.4

million campers and

[ Page 4411 ]

14.6

million day visitors. I am pleased to announce another $3 million will

be provided for continuation of the five-year parks facilities

development program to expand and improve our parks system.

British

Columbia's two major metropolitan centres, greater Vancouver and

greater Victoria, are both ideal for large conventions. Their

comfortable life styles, varied cultural attractions and convenient

access to the outdoors make both cities ideal for this important

activity. At the same time, both are thriving centres of commerce and

industry. The provincial government has long recognized these

advantages and has encouraged both cities to proceed with the

construction of trade and conference centres. Plans for both are well

underway, although final decisions have yet to be made on all aspects

of design nor have funding details been finalized. The province stands

ready to assume its share of responsibility if appropriate support from

other levels of government and from the business community is

forthcoming.

In 1980 approval was given by the International

Bureau of Expositions in Paris for the staging of a transportation

exposition on the site of British Columbia Place in 1986. This

exposition, Transpo '86, will coincide with the anniversary of the

arrival of the first transcontinental train in Vancouver. In the

nineteenth century, the railroad was the symbol of transportation. In

today's energy-conscious age, the transportation symbol is surely urban

transit. It is appropriate, therefore, that Vancouver's new advanced

light rapid transit system, incorporating the very latest in transit

design, will be in place for the start of Transpo '86. Planning for

this exposition has already begun. In the 1981-82 budget of the

Ministry of the Provincial Secretary and Government Services, we have

provided $2.5 million for the further advancement of this world-scale,

exciting project.

The Ministry of Industry and Small

Business Development will continue its active trade promotion program,

putting particular emphasis on the growing Pacific Rim market. The

ministry plans at least 24 trade missions this year. These are expected

to increase sales of British Columbia products by as much as $90

million. In addition, the cooperative overseas market development

program will be extended with a budget of $31.5 million. The program is

jointly funded by the province, the Council of Forest Industries and

the federal government. Its aim is the expansion of overseas markets

for British Columbia wood products.

The province will

continue its commitments under the industrial development subsidiary

agreement, which has proved to be an immense success since its

introduction in 1977. This year the province will contribute more than

$18 million to the program, specifically for community industrial park

projects in Kamloops, Cranbrook, Campbell River, Squamish, Elkford and

Invermere. The success of the industrial park initiatives is already

evident in Kamloops, where serviced lots in Southgate Park were sold

out in 1980, far ahead of schedule.

Last year, British

Columbia's low interest loan assistance program, LILA, provided $9

million in loans to small businesses outside the metropolitan areas of

the province at one half the prime rate of chartered banks. The program

has proven particularly valuable in offsetting the punishing impact of

high interest rates which is felt keenly by the small business

proprietor. Because interest rates remain high, we are again enriching

the program to further assist the small business sector of this

province. In 1981-82 the province will allow the chartered banks to

provide the capital but through the LILA program will subsidize the

interest payable on these small-business bank loans. In this way the

province will make possible a flow of capital of $14 million to small

businesses outside the metropolitan areas, and that is a $5 million

increase over the amount provided through LILA in the preceding year.

Ours

is an age of science and technology, of research and development. Over

the past few years the Minister of Universities, Science and

Communications (Mon. Mr. McGeer) has made remarkable advances in laying

the foundation for development of high-technology industry in British

Columbia. He has created an environment which demonstrates the

province's high priority for applied technologies and which fosters

innovation in industry.

The Science Council has encouraged

and supported research over a wide range of scientific disciplines

helping ideas to become innovations. new products, new jobs. This year

we make long-term commitments in this area by providing an additional

$5 million for the Science Council to continue its outstanding work.

Also, construction is underway for industrial research parks adjacent

to our post-secondary educational institutions as part of the Discovery

Foundation program. These parks bring industry, technology and

scientific capability together to attract high technology production to

British Columbia. Construction has begun for development of a discovery

park at the British Columbia Institute of Technology. Its first two

tenants plan to be in operation by the end of next year. Discovery

parks are becoming a reality through the foresight and careful planning

of this government. To ensure that this useful work continues, funding

of $1 million is provided for the foundation this year.

Mr.

Speaker and hon. members, all of us in government, all of us in this

House, took considerable pleasure in the announcement last week that

the government's shares in the British Columbia Resources Investment

Corporation, worth more than $20 million, are to be transferred to the

Terry Fox Medical Research Foundation. That non-profit foundation will

be dedicated to fighting cancer and other diseases of man through its

support of medical and pharmaceutical research. The foundation will

enter into an agreement with Pacific Isotopes and Pharmaceuticals Ltd.,

a provincial Crown subsidiary of the British Columbia Development

Corporation, to finance the building of an interferon purification

plant on the UBC campus.

Clinical studies on interferon may

be started in Canada prior to the completion of the purification plant.

Some of that interferon will be donated to the British Columbia Ca