1979 Legislative Session: 1st Session, 32nd Parliament
The following electronic version is for informational purposes only.
The printed version remains the official version.
FRIDAY, JUNE 22, 1979
[ Page 321 ]
Committee of Supply: Ministry of Finance estimates.
On vote 100.
Hon. Mr. Wolfe –– 321
Mr. Stupich –– 324
Hon. Mr. Wolfe –– 327
Mr. Kempf –– 328
Mr. Stupich –– 328
Mr. Levi –– 328
Hon. Mr. Wolfe –– 329
Mr. Hanson –– 335
Mrs. Jordan –– 336
Mr. Hall –– 336
Hon, Mr. Wolfe 337
Mrs. Dailly –– 337
Hon. Mr. Wolfe –– 337
Mr. Howard –– 337
Appendix –– 340
FRIDAY, JUNE 22, 1979
The House met at 10 a.m.
MR. SPEAKER: There are no introductions.
Yesterday the hon. member for Prince Rupert (Mr. Lea) asked leave under standing order 35 to make a motion for the adjournment of the House to discuss a definite matter of urgent public importance: namely, the content of a telegram indicating that the Fisheries and Oceans department of the government of Canada has decided not to enforce the A and B line, which is the international boundary between the Alaskan panhandle and British Columbia. The hon. member's statement goes on to say that thousands of pounds of fish may thereby be lost to British Columbia fishermen.
The duty of the Speaker in considering matters under standing order 35 is twofold. First he has to determine not the urgency of the matter raised, but rather prima facie there is such an urgency of debate that other business of the House should be put aside.
Second, he has to determine in accordance with the authorities whether the many general and special restrictions on such motions are applicable.
Although the hon. member for Prince Rupert may have brought to the attention of the House a matter of considerable concern, and a matter of some urgency, it must fail in view of the authorities relating to motions under standing order 35. It is stated in the sixteenth edition of Sir Erskine May at page 371: "The motion has been refused when an ordinary parliamentary opportunity will occur shortly or in time." This restriction has been applied in this House on a number of previous occasions — for instance, in the Journals for 1973 at page 155 and in the Journals for 1977 at page 55. The issues in question fall under the purview of one or more ministries, consideration of whose estimates have, by order of the House, priority over all other business, and these are yet to be considered.
Under this circumstance there is no mandate to dispense with the usual notice of motion, and I so rule.
MR. LEA: On a point of order, even though I understand that for technical purposes you had to reach the decision you have reached, I do feel that this is of such importance and such urgency that I am now challenging your ruling, so that the Legislature itself may decide whether this should go forward.
MR. SPEAKER: Hon. members, decisions of the House are usually not challenged. I will just confer with the authorities to see whether or not there is even provision for such a measure.
Hon. members, just a quick review reminds me that there is no provision for the challenge of a decision under standing order 35.
MR. BARRETT: On a point of order, I challenge your ruling on the ruling.
MR. SPEAKER: We have found the measure. Hon. members, the question is: shall the ruling of the Chair that the decision of the Chair cannot be challenged be sustained?
Mr. Speaker's ruling sustained on the following division:
YEAS — 31
NAYS — 18
Division ordered to be recorded in the Journals of the House.
Hon. Mr. Wolfe filed an answer to question 17 on the order paper.
Orders of the Day
The House in Committee of Supply; Mr. Rogers in the chair.
ESTIMATES: MINISTRY OF FINANCE
On vote 100: minister's office, $109,825.
HON. MR. WOLFE: Mr. Chairman, since I understand this vote has not yet passed, I would like to say just a word or two. In introducing the estimates of the Ministry of Finance, which leads off the estimates under our Committee of Supply, I'd like to make a few explanatory observations about some events which have taken place. First, for the information of the House, there's a slight change in the estimates as provided for each ministry this year. In the past no recognition was given in the setting of expenditure levels for the savings that occur as a result of vacant employee positions. At no time are ministries fully staffed. An attempt has been made to reflect this recruitment saving in this year's appropriations, and I referred to this in the recent budget speech.
Because of the difficulty to know precisely in which operating area of a ministry these savings will occur, a reduction has been made from each ministry's gross appropriation that must be voted by the House. This is shown in the summary prefacing the detailed expenditures for each ministry. I should also explain that in this year's estimate book our members will note there's no longer any detailed salary listing; there is simply a summary of the
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salary figure for each particular vote. After careful study by Treasury Board, we found that this considerably simplifies the estimate book for future use. No province in Canada any longer shows the detailed listing of salaries, so a decision has been made in this year's estimate book to not go into the full detail, item by item, of each classification of salary designation. There are simply the totals indicated. Questions may be asked about these, but I'm just explaining that in advance.
Turning specifically to the estimates of my ministry, I should remind hon. members of the changes affecting the ministry as a result of the reorganization implemented by the Premier late last year.
First, the Government Employee Relations Bureau, under Mr. Mike Davison, which formed part of Treasury Board and comprised a staff of 54, was transferred to the Ministry of the Provincial Secretary and Government Services.
The policy-planning division staff of 15 of the Ministry of Economic Development was transferred to the Ministry of Finance and is now identified as the economic policy planning and research branch under Dr. Jim Rae.
Other staff changes include the transfer of Mr. Alan McKinley from the comptroller-general's office as the ministry's first comptroller. Four new positions were established, two each in the operations of the comptroller and the financial manager.
I tabled the first report of the auditor-general at the last session of the previous Legislature. With respect to the recommendations affecting my ministry in that report, action is being taken in a number of areas to achieve the stated objectives.
The critical analysis of the office of the auditor-general contributes to management by increasing in the provincial public service the need for accountability and efficiency in spending of people's money.
This past year Treasury Board staff investigated more than 2,000 expenditure requests. It is interesting to note that ministry management now appears to be more critical and analytical of operations and requests.
The extension of zero-based budgeting procedures beyond the two ministries involved in this year's budget preparation should extend us along management levels.
The consumer taxation branch, which is responsible for the administration of all consumption taxes, continues to seek increased effectiveness of these collections. Last year more than 2,500 audits resulted in additional revenues in excess of $11 million.
As part of the government's programs of deregulation and efficiency, approximately 11,000 social service tax accounts were moved from a monthly to a semi-annual filing basis. Total tax collections by this branch last year exceeded $934 million, at a cost of administration of 0.36 percent. Commissions paid vendors for collecting the province's taxes were 1.36 percent. An office at Campbell River was opened early this year to serve northern Vancouver Island.
Last year the Purchasing Commission placed more than 48,000 purchase orders for a record value of $154 million. In recognition of the fact that public purchasing provides an important tool for economic development, preference was afforded British Columbia producers. Provincial manufacturers are given first consideration in all public purchases, provided that suitability to the end user and delivery terms are satisfactory. This policy includes the provision of a price preference to British Columbia manufacturers based on a sliding scale to reflect the actual value added within the province.
The maximum level of price preference is 10 percent. The commission has also adopted a policy of public disclosure on successful bids. This identifies the successful bidder and bid price. In addition to new purchases, the commission has made major strides in improving utilization of existing government equipment. An audio-visual equipment repair and loan service has been established for use by all ministries. Some 8,000 units of used office furniture were recycled, resulting in an estimated cost savings of $275,000. The office furniture loan service was expanded, saving ministries considerable requirements. The business machines service division expanded its operation to extend preventive maintenance procedures to Victoria and Vancouver metropolitan area office locations. The surplus disposal section realized a sale record of surplus government assets, resulting in revenue of more than $2.3 million.
The government agency system provides 52 government agent offices throughout the province to provide residents and visitors with easy access to government and with information on government itself. Agents perform functions for the ministry in the collection of revenue and the payment of certain accounts. Where necessary, they also represent other ministries in other areas. For the fiscal period ended March 31, 1978, the agencies received over $170 million in general provincial revenue and $29 million in ICBC revenue. Indications are that revenue collections for the most recent fiscal year will exceed $200 million.
An agency office was opened in Chetwynd on November 22, 1978, and it is planned to open new offices at Cassiar, Mackenzie, Bella Coola and Valemont this year. Offices are planned for Squamish, Sechelt and Sparwood, and studies are continuing as to the viability of other locations that have requested the establishment of government agencies.
New responsibilities handled by the agencies last year were the registration of mobile homes, required under the Mobile Home Act, and supervision of strike votes where required under the Labour Code. Agency personnel supervised a total of 275 strike votes, which required an estimated 136 man-days last year.
The income taxation branch collected over $130 million in revenue last year at an effective cost of 0.60 percent. Audit and assessment procedures were expanded and improved.
During 1978 the Logging Tax Act was changed to harmonize with the calculation of income under the Income Tax Act of Canada and full deductibility against income taxes paid. The adjustments also remove the logging tax from charitable organizations, municipalities and other non-profit organizations which are not subject to income taxes.
The branch's workload has expanded as a result of the introduction of revenue sharing with the municipalities. Since the Logging and Mining Tax Acts formed part of the revenue-sharing pool, the introduction of new accounting procedures was required to segregate shareable revenues.
The ministry, in conjunction with the British Columbia Systems Corporation, is administering the British Columbia Resources Investment Corporation free-share distribution, which is now basically concluded. Responsibilities include
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the establishment of appeal and post-application procedures and ensuring that institutionalized British Columbians are afforded full opportunities for share applications.
As you know, Mr. Chairman, property-tax reform was introduced last year in the new system of equalization of values. I think most taxpayers in the province are now aware of the fact that the objective of this program was to equalize assessments across the province, and that this has, to a large degree, been accomplished. The burden of school taxes on farm and agricultural reserve land will be lessened next year with the proposed 50 percent reduction in assessed value for these properties. The real property taxation branch collected over $164 million last year, at an effective cost of 0.45 percent.
In the area of management of the province's finances, zero-balance banking has now been achieved where practical. The investment of short-term provincial moneys, utilizing the expertise acquired by the ministry, has resulted in an increase of provincial revenues by an estimated $5 million. The bond-trading operation has improved the overall earnings of our investment funds by over $300,000. Work is continuing on a data system to provide timely investment and account information.
Mr. Chairman, the quarterly reports on provincial government and Crown corporations' finances continue to be well received by the people of British Columbia. Once again these reports indicated that spending is being controlled and the budget balanced.
Last year I reported on the budget-outlook positions of other provinces. The situation's well worth restating this year. The following deficit budgets for the 1979-80 fiscal year are noted: Nova Scotia, a deficit of $17.6 million; New Brunswick, $91.4 million; Manitoba, $122.6 million; Saskatchewan, $49.4 million; Quebec, $1.45 billion; Ontario, $1.15 billion. Because of elections in Alberta, Newfoundland and Prince Edward Island, and the recent federal election, their budget positions are not available. Except for Alberta, we can expect them to be in deficit, with the federal deficit in excess of $12 billion. Many of these governments also have capital budgets, such as highway construction, for which they borrow.
Mr. Chairman, these figures show the favourable position British Columbia now maintains as a result of our budgeting policy. By maintaining budgetary deficits over a number of years, other provinces have been building up direct debt.
I would also like to provide the House with these detailed figures which show that British Columbia has the lowest direct debt per capita of any province. This is important because it minimizes the claim of annual debt-servicing costs and taxpayers' dollars n the provincial budget, and frees provincial revenues for social and economic programs.
In setting out the comparisons of direct debt across Canada, I'm aware of the fact that I'm not including contingent debt. We've been into this at great length in the debate on the B.C. Hydro financing bill, and we're well aware that Hydro has a substantial debt which is required to finance capital expansions. However, I think it's worthwhile to note the comparison of these direct-debt figures, because they do have a direct impact on the taxpayers of the province.
As of March 1979 the direct debt per capita of each province was as follows: British Columbia, $103.55; Alberta, $112.66; Manitoba, $1,652.45; New Brunswick, $1,341.31; Newfoundland, $2,435.39; Nova Scotia, $1,679.05; Ontario, $1,774.76; Prince Edward Island, $956.49; Quebec, $1,074.02; and Saskatchewan, $1,816.15.
One can see immediately the success British Columbia has had in minimizing direct debt as well as the results of accumulated deficits in other provinces. British Columbia is faced with much less debt-weight and debt-servicing claims on its budgetary revenues, while those provinces that continue to run budgetary deficits are met with an increase in such claims.
In the economic policy planning and research branch of this ministry the major activity has been in the follow-up from the First Ministers' Conference on the Economy in February of 1978. The document, entitled Towards an Economic Strategy for Canada, presented at the time, was followed by Towards an Economic Strategy for Canada: The Industrial Dimension, which was presented by the Premier at the November conference. Attention has also been given to the formulation of a provincial economic strategy with particular reference to science and immigration policies and deregulation.
The financial analysis and research branch has maintained the monitoring of the provincial budget and, assessing the financial implications of program proposals, participated in a federal-provincial study on taxation of the mineral industry for reporting to First Ministers, and undertook studies in the province in a number of financial policy areas.
Mr. Chairman, that concludes the explanatory remarks of events which have taken place in the Ministry of Finance during the past year. Before sitting down I'd just like to pay my personal respects to service staff members who other members will be familiar with: first of all my deputy who is sitting with me, Mr. Gerry Bryson. He's no newcomer to this business; he does a very capable job, and I'd like to recognize him here today. And, of course, we have assistant deputy minister Bob Alexander. Hugh Ferguson does a yeoman job in preparation for ministers' meetings and various briefing material which we require from time to time. As well, we now have Dr. Jim Rae, assistant deputy minister, and assisting him Dr. David Emerson, John Elliot and Allan Eastwood.
In the Treasury Board we have Mr. John Kelly, our Treasury Board staff director and deputy minister, and John Currie, director of the administration policy within Treasury Board staff. I'd like to recognize also our new comptroller-general, Mr. Lionel Bonnell, and the deputy comptroller Keith Lightbody, and the jobs they do.
Of course there is our surveyor of taxes, whom you've seen in the House on occasion here with us, Mr. Jack Moore, who's done a considerable job in terms of the new property tax administration. As well, we have Mr. Keith Prowse, director of income tax; Ed Turner, director of consumer taxation; the chairman of the Purchasing Commission, Mr. Art Charlton; the head of the Assessment Authority, Mr. Ted Gwartney; and of course the director of government agencies, Mr. George Brodie. I just think we should recognize the work done by these gentlemen and with that, Mr. Chairman, I'll be happy to hear comments and observations by other members in the Legislature.
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MR. STUPICH: I notice that the House Leader (Hon. Mr. Gardom) has given up his attempts to get this vote through. I trust he will be back sometime this morning.
I would like to start by asking one question that I've asked, I guess, for four years now. That is a question about the B.C. Savings and Trust report. In previous years I have asked whether or not the minister is prepared to make this report public, and I've always had the answer in the negative. I expect I will get the same answer this year.
I would like to follow it up with another question, Mr. Chairman: would the minister tell us where the Carrothers report is lodged? It was delivered to the government in 1952, I think it was, and was found in 1972 by the incoming NDP administration in the garage of the outgoing Provincial Secretary. I just thought I would like to ask annually where this report is lodged so that when the NDP administration is returned to office in the not-too-distant future, I hope, we would know where to look for that report. So if the minister's reply is as it has been in other years — that he's not prepared to release it — would he at least tell us where the report is lodged so that we will know where to look for it?
I would like to refer to the minister's remarks on June 8 when he re-presented the budget for 1979-80. I marked some of his remarks. The opening comment on June 8 by the Minister of Finance was: "A new dental care program for British Columbians not permanently covered under an existing dental plan will be developed by the Ministry of Health." This was also mentioned in the throne speech — I think both throne speeches that we've had this year — and certainly in the budget speech, as well as in the minister's remarks on June 8. What I am wondering is what financial estimate the minister has of the cost of getting into this program in the fiscal year in which we are currently involved, 1979-80. I expect not too much; there's nothing in the estimates. But I think it's a fair question to ask. Surely this must have been discussed by treasury, by cabinet, and they must have some idea as to how much they are going to spend in the current fiscal period.
The second question pertains to a proposal which has been made to provide developers or building owners who adapt buildings to the needs of the handicapped with an accelerated write-off or income tax credit. I think the minister said in April that this depended upon negotiations with the federal government. I'm wondering whether or not the minister has entered into these negotiations, whether he will be able to go ahead on this plan at all without some prior agreement with the federal government, whether the provincial government will be able to do something on its own, or just exactly what the state of that particular program is.
The next question following along the same lines is about a new type of investment company, and this has been discussed in some of the income tax legislation, I think. "A new type of investment company will be encouraged to finance high-risk enterprises. A special tax deduction will be allowed British Columbia taxpayers who place their funds in these venture programs." Again, I would like to know whether or not the minister or ministry has entered into any negotiations with Ottawa on this and what he can tell us about the results of those negotiations.
Further on the minister, in commenting upon the effect on provincial government revenue of the reduction in personal income tax, stated that this change will mean tax savings of up to $65 per year per family of four with an income of $23,000. In that, the reduction does not come into effect until halfway through 1979. I'm wondering whether that figure of $65 per year means for a full year or whether that is the figure for 1979 taxpayers.
Speaking on June 13, the minister was commenting again about this hoary subject, I suppose, of debt. It's been here for so long now that one wonders why we have to keep talking about it except that we mention it and the minister responds. The minister responded at some length in one of his speeches. I told him that that would come back to haunt him during his estimates, and I intend to refer to some of his remarks today. Specifically at this point I would like to ask him a question. He said on June 13: "We estimate that had the tax increases not been invoked at that period of time" — he was referring to 1976 — "the alternative was some direct debt of over $1 billion." I wonder what detail the minister has to back up that estimate of $1 billion, had they not invoked the tax increases that they did invoke in 1976.
HON. MR. WOLFE: It would be a lot more than that by now too.
MR. STUPICH: Mr. Chairman, my question was simply what detail the minister has to back up that figure of $1 billion. After he has given me the detail, then we can argue as to whether it would have been more or less had they not instituted those very repressive moves against the provincial economy. But that's an argument we will get into later once we have the information.
I would like to comment on, and perhaps ask the minister to reconcile, some of the figures. He stated in his budget speech, I think it was, or perhaps in some of his remarks about the budget, that expenditures this year are being held within 5 percent of what they were last year. I have some figures that I've taken from the estimates for 1979-80. The estimates were $4,567,450,000. The estimates for 1978-79 were $4,280,350,000. That's an increase of $287,100,000 which I work out to be not 5 percent, but 6.7 percent. That's a minor difference.
I think it would be proper to look not just at the estimates but also at the figures provided in the surplus allocation bills. There was one in 1978-7 in the amount, I think, of $76 million, and if we add that $76 million to the actual estimates that were voted in 1978-79, the total figure we're dealing with is $4,358,350,000. In 1979-80, dealing with the estimates plus the surplus allocation, the government is proposing to spend $4,787,950, 00 — an increase of $429,600,000, which works out to an increase not of 5 percent, but actually of 9.9 percent.
Not only that, but we should take a quick look through the estimates at the new figure that is described as recruitment savings. That is, in effect, a new method of portraying the expenditures to be lower, so that comparison between last year's estimates and this year's estimates is thrown out by the amount of recruitment savings. I think it's in the neighbourhood of about $65 million in total, which is another 1.5 percent of total expenditures. So when the minister says expenditures have been reduced, that the increase in expenditures is just 5 percent over what it was in the year before, it is actually 9.9 percent plus 1.5 percent — if we're going to compare apples with apples — making the increase in expenditures actually closer to 11.5 percent than 5 percent. Perhaps the minister can comment on that.
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I shouldn't really hold the Minister of Finance to task for some of the remarks of the Minister of Health (Hon. Mr. McClelland), but they deal with this question of government debt and government spending. On June 8 the Minister of Health said: "This government is not against increased government spending. What it is against is increased waste, as we saw with the NDP government in this province." I'd like the Minister of Finance to tell us some of the examples of what he considers to be waste incurred by the NDP administration. He used figures to show that the overexpenditure for 1975 and 1976 under the NDP administration totalled $998 million and the overexpenditure during the three years of Social Credit administration were only $193.2 million — I think those were the figures he used.
Mr. Chairman, I think we have to look not just at the total figures, but at what was done with that money. If the minister is going to talk about waste, then he has to get into some details as to what kind of programs we wasted money on. During the NDP administration transfers were made into special purpose funds totalling $330.55 million. Now that takes up roughly one-third of that overexpenditure. I would challenge the minister to say that there was any waste in such transfers to special purpose funds. Indeed, Clarkson Gordon have some comments about how the government may transfer money into and out of special purpose funds.
To contrast that with the present administration, not only did they not transfer money into special purpose funds; they actually took $40.5 million out of special purpose funds. I noticed that when the hon. member for Skeena (Mr. Howard) was talking about the money that had been taken out of special purpose funds by the Social Credit administration — and he used a figure of $40 million — the minister challenged him and said that, in fact, it was only $27 million. As a matter of fact, I think it was $29.6 million, but in addition to that there was some $10 million taken out of one of the special purpose funds — it wasn't cancelled completely, but $10 million was taken back. So the member for Skeena was quite correct in saying that approximately $40 million was withdrawn from special purpose funds. I contrast that with our record of transferring some $330 million into special purpose funds.
Transfers to Crown corporations. I’m not sure whether the minister would consider any of those to be waste: perhaps he will, and when we get into details, perhaps we can discuss that. There's one particular transfer that I thought should not have been made on the part of the provincial government, but it was. During this period just $400,000 short of $300 million was transferred to a number of Crown corporations, and I wonder whether the minister would consider that to be waste. By contrast, during the course of the Social Credit administration some $32.6 million was transferred to these Crown corporations.
Investments in shares amounted to $78 million during the course of the NDP administration. Has the minister some comments about waste in those investments in shares? I would think not. When we look at the specific investments — we've done this on previous occasions — the largest single investment was $25,457,000 in shares of Westcoast Transmission, which have since been sold at more than a 50 percent gain. We bought shares in BCBC of $25 million — the present administration has since put $10 million into that same corporation, so I would think that is not a waste; shares in Kootenay Forest Products and shares in Plateau Mills, both transferred to BCRIC; shares in Panco which cost less than $5 million were sold for approximately $15 million; shares in Ocean Falls, which they are proposing to sell now — goodness only knows how much that will bring in. The minister will have a hard time convincing me or anyone on this side of the House — or even perhaps some of his own backbenchers who may be hearing the details for the first time — that there was any waste in those very good investments for the people of British Columbia.
There were other investments on the part of the NDP administration totalling $17 million which I haven't detailed, but I can do so if necessary. In total those I have listed add up to almost $726 million, whereas if you take into account the fact that the Social Credit administration has sold assets to BCRIC for $151 million, they have had a net withdrawal. Their sale of assets has exceeded the money they transferred to various Crown corporations. So they have not only overspent the budget revenue, they have actually sold off assets and drawn money out of special accounts. I’m not suggesting that any of that was wasteful or that it shouldn't be done; I'm only saying that the minister said that we wasted money. But in view of the description I've given of some of the items on which we spent it, I'm wondering whether that was waste.
With reference to actual expenditures within the department, there was one program that was brand new in 1972-73; there was absolutely no money spent on it in 1972 — unless I'm looking in the wrong places. In 1976 we had increased that to an infinitesimal degree to almost $9 million. In fairness to the present administration, they have increased to $22 million the money available for sewage and water, but there was nothing spent on it in 1972. By 1976 we had increased it to an infinite degree; by 1979 they had increased it by 150 percent. That accounts for some of this very large increase in the rate of expenditures under the NDP as opposed to the smaller increase under the Social Credit administration.
In 1972 the government spent $39 million-plus on B.C. Ferries. By 1976 it had increased to $97 million, an increase of 148 percent; that accounts for some of the increase in our totals. In the Social Credit period from 1976-79 the amount spent by government on ferries is reduced by 48 percent. So it's easy to show our expenditures growing rapidly when we're putting money into people services such as the ferries, and to show theirs not increasing so fast if they're spending less money on that particular service.
Reforestation is something I've talked about since I was first elected and will be talking about as long as I serve as an MLA. In 1972 Social Credit spent $4.7 million — a very sorry record. By 1976 we had increased it by 193 percent to $14 million. By 1979 the Social Credit administration had increased it by only 42 percent, just under $20 million.
There was no Pharmacare program at all in 1972. In 1976 it was almost $24 million. The NDP administration had increased the rate of spending on Pharmacare to an infinite degree. By 1979 there was a further increase of only 42 percent to $33.6 million.
The program which used to be called Old-Age Assistance became Mincome and is now called GAIN. What about the spending there? In 1972, $5.5 million was spent on Old-Age Assistance. In the year ended March 31, 1976, our last year, $109.8 million was spent on Mincome, an increase in those four years of 1,890 percent. That accounts for some of the increase the minister talks about in the rate
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of spending under the NDP administration. There was an increase of 1,890 percent spent on those elderly citizens.
What has happened under the Social Credit administration? In 1976 it was $109.8 million; in 1979, during which period they changed the name of it from Mincome to GAIN, it was $101 million, a reduction of 8 percent in the amount spent on this program — and they talk about spending money on people. Those are the figures from the government's own accounts.
I don't know whether I should stop for a while and let the minister catch up, or whether I should keep on going. I haven't exhausted my....
HON. MR. WOLFE: I'm back at question two.
MR. STUPICH: Well, I guess we'll have to wait until we get the Blues and start all over.
Again, in one of your speeches — and this was a serious charge, Mr. Chairman, very serious — the minister said that the outgoing NDP administration, knowing that it was facing a tough year, when looking at revenue deliberately overestimated certain sources of revenue.
Mr. Chairman, another minister said at one point in time that we bugged their room. I know that wasn't serious and I know that the minister in saying that did not intend to say that the Deputy Minister of Finance told him that we deliberately overestimated revenue. I'm positive that that particular Deputy Minister of Finance would never say anything like that. No one else could be privy to any kind of information or discussions about how we calculated our revenue and how we calculated our expenditures, so that was another charge that has absolutely no basis in information or in fact.
Let's look at the figures. We're supposed to have deliberately overestimated revenue in 1975-76. I've got the figures here for 1975-76, 1976-77 and 1978-79. Let's look at some of them.
Sales tax. Our estimate for sales tax in 1975-76 was $480 million, and it was lower; the actual figure was $444 million. So we did overestimate it by $36 million — less than 10 percent, but nevertheless an overestimate.
Let's look at 1976-77, completely under the control of the incoming Social Credit administration. Of course, they wouldn't do such a thing as overestimate revenue. They estimate $710 million; the actual figure was $663 million. They overestimated sales tax revenue by $47 million. Now these things happen. I don't suggest it's deliberate because they did it, but neither was it deliberate when we did it. The figures for 1977-78 show $740 million estimated; $748 million came in. It was very close that year, so close that you can say it's right on, but certainly 1976-77 was not right on.
Corporation income tax. We estimated $260 million. We were high because the actual figure was $207 million. But what has been the experience of the present administration? In 1976-77 they estimated $251 million. They received $237 million, $14 million over the estimate. In 1977-78, by which time they've had more experience and presumably are better at it, they estimated $283 million and received $246 million — $37 million over the estimate. I can't carry it into 1979 because we don't have the figures yet.
Personal income tax. Remember how we deliberately overestimated our revenue? We told our staff to deliberately fudge the figures to make it look good. The estimate for personal income tax in 1975-76 was $655 million. How much did we overestimate it by? We received $674 million, $19 million more than was estimated. If we were really trying to fudge revenue we certainly weren't doing a very good job of it. In 1976-77 the present administration estimated $816 million and received $811 million, less than they estimated. In 1977-78, $1,116 million was estimated and $986 million received, $130 million less than they estimated, yet we're the ones that were supposed to be deliberately overestimating our revenue. In their year — the last year for which we have the information — they overestimated personal income tax by $130 million. In the year that we were supposed to be doing everything we could to fudge revenue, we underestimated revenue from this source by $19 million.
Petroleum and natural gas royalties, leases and fees. This is the one, of course, where we really would have fudged the revenue to make it look good if we were looking for it. It's one that's hard to calculate in advance. We estimated $230 million; we received that year $285 million, $55 million more. Over 25 percent more than was actually estimated was received from that single source.
Now I've listed every source which was in excess of $200 million. I haven't bothered with the faults of the others, but I've left out none that were more than over $200 million, apart from governmental transfers.
So in that period we underestimated by 25 percent. As for the present administration, in 1976-77 their estimate was $275 million, with $255 million received. They overestimated by $20 million. In 1977-78 they very much underestimated: $246 million, $427 million received.
So I think the minister's charge about our deliberately fudging revenue to make it look good does not stand up in fact when you look at the sources of revenue. And I hope he did not mean to imply he had been told by anyone we had deliberately cooked the books that year.
On the question of debt: I made some comments about the Clarkson Gordon report. The minister said, or indicated, the Clarkson Gordon company, being auditors, would not knowingly — at least, that was the implication in what he said — deal with false figures. I don't think there is any question about that. They were asked to add up certain figures; but had they any indication at all that the figures were incorrect, that they were getting information that was not property backed up, they certainly would not have put their name to any kind of a report, even one they disclaimed the way they did this one. But I think we have to look at the source of the information.
I've done this before and I'm going to do it, I think, more for the benefit of some of the new members. On December 22, 1975, you requested us to coordinate the production of certain unaudited financial information. They weren't asked to express any opinion on any of this information. The request was simply to coordinate the production of certain unaudited information for the year ending March 31, 1976, which you had requested from the Deputy Minister of Finance.
It was addressed to the Minister of Finance. The Minister of Finance asked the deputy to bring forward certain information, but since he apparently didn't trust the Deputy Minister of Finance to put it together in one package he wanted Clarkson Gordon to do it. That was the extent of their responsibility.
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So the comptroller-general and the management of all Crown corporations, boards and agencies produced a summary report of the overall financial position of the province. They had some problems, and I intend to discuss some of those problems.
Any discussion of a province's finances usually starts with a consideration of the anticipated surplus or deficit, and for five years now we've been talking about the extent of that surplus or deficit. Based on actual results to the end of 1975, and estimates made by the appropriate officials and managers for the rest of the year, the deficit for the current year is estimated at $541 million. That's the figure they come up with: $541 million.
The minister now tells us that it was actually $267 million — $261 million. Commenting on this total, they were saved. This information is meaningful only if the reader understands the way British Columbia accounts for its revenue and expenditures. So before commenting on the results we would like to discuss in broad terms what a surplus or a deficit is, and what each is not. I'm just picking out a few lines here and there because the minister and I have talked about the Clarkson Gordon report before.
First, used in this sense, surplus or deficit is an annual concept. The reserves available at the beginning of the year resulting from surpluses less deficits of all previous years do not enter into the calculations.
[Mr. Strachan in the chair.]
Second, revenues and expenditures in cash deal with cash receipts and cash disbursements. If a building is purchased or an expenditure is made, that contributes to the deficit, or at least reduces a possible surplus. For example, Mr. Chairman, we built three new ferries, and that added to this overexpenditure the minister was complaining about earlier — the $981 million or whatever. The incoming Social Credit administration sold these three ferries, and that added to their revenue. It's just that simple, and there's nothing wrong with it. Legally, it's proper. But when you start adding up the figures and comparing the administrations on the basis of one administration building for the future, acquiring new assets, building ferries, and the other one coming in and selling those ferries, and you say that one has a deficit and one has a surplus, you then have to look at how those figures were arrived at, or else it doesn't mean too much.
MR. CHAIRMAN: Three minutes, hon. member.
MR. STUPICH: I'I carry on with this, but I think in the meantime the minister may by now be on question three. I'I have to remember what four was and pick up from there.
HON. MR. WOLFE: Mr. Chairman, I could deal with two or three brief questions the member started off with, not necessarily to his satisfaction, but they would constitute the only answer I can give him.
He asked about the comments in the budget speech about the dental plan and whether we had any estimate of cost. At this stage, it's still being worked on by the Minister of Health (Hon. Mr. McClelland) and I'm sure that he will have further information on that during his estimates. This will be in the form of a measure to be adopted sometime during the fiscal year, as was indicated. I just don't have any figure I can give you. You'I have to ask the minister for that.
You asked about the measures indicated on the incentive for improvements for the handicapped under the income tax and under the venture capital and other measures requiring cooperation with Ottawa. Four such measures are now in negotiations with National Revenue, and none of these has been drawn to a conclusion.
The two that you mentioned in terms construction for the handicapped have been accomplished in one or two areas in the United States in terms of a cooperative tax measure, but nowhere in Canada. We indicated in the budget that we wanted the national government to adopt this under their Act so that it would be more easy to operate in terms of the Income Tax Act.
In terms of venture capital, that is currently in progress insofar as developing legislation and insofar as Ottawa is concerned. Once again we're negotiating with them on it, because it requires a special credit under provincial income tax which we, as yet, don't have an agreement with them on, so I don't have a satisfactory conclusion of that matter at this point. The change in government and the federal election have, of course, delayed these matters.
You asked about the detailed question on the income tax reduction of 2 points where we referred to the fact that the average taxpayer with a certain income would save $65. I'm informed that represents the full year of 1 point. In other words in the future the 2 points would be double the figure, I'm given to understand. So the $65 represents the year in question here, 1979-80, which is really involved effectively in 1 point for that year, having taken effect on July 1.
You challenged me, Mr. Member, to provide more detail on the estimate of $1 billion in costs if this government had not instituted tax increases in early 1976. I'I be happy to provide more information on that. I just don't have it with me at the moment.
You referred also to questioning the fact that this budget shows an increase in expenditures of only 5 percent. You went on about the fact that when you add the expenditures of previous years' surpluses to this, it becomes anywhere from 6 percent to 11 percent, when you take into consideration expenditures from previous years and so on. I'd just like to say that we have had an announced policy — which is no secret to anyone.... Where we have the cash flow to accommodate it, we're going to expend these surpluses as soon as possible where we figure the need is. You may not agree with this, but this is simply a case of allocating moneys over and above the budget, as we've indicated here, to areas which are in the greatest of need. I think you'd agree or wouldn't argue with many of the areas where this money is being allocated. Sure, we can bandy figures around about 5 percent, but our budget in terms of the budgetary expenditures as you and I both understand them has shown considerable restraint when you look at other budgets across Canada. We can argue with the people of this province about whether it is 5 percent or 11 percent, but it is certainly well under the rate of inflation, the rate of gross provincial product in terms including inflation, and therefore I don't suppose we'll accomplish anything by arguing that particular point.
You mentioned waste. I don't suppose you'd ever agree with comments from this side of the House that always charged you with waste during the years of 1972 to 1975. The Minister of Health (Hon. Mr. McClelland) dealt with
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this the other day. Just have a look at page 6 in the budget speech, which goes into the detail of each year in which the former government overspent — and, of course, it is for three years — $998 million; in the course of the following three years under this government there was a net overexpenditure of $193 million. Each of those figures is a substantial amount, Mr. Chairman, but the point is that we had a budget and we tried to stay to it. We're saying that that side, when they had the responsibility to do so, moved outside of the budget in very substantial terms to a tune of 14 percent over their three-year budgetary figures.
There is no one who can argue with that. They did overexpend their budgets of those years by 14 percent, Mr. Chairman, and that's an argument that we could go on with all day about, but it's fully explained in a "Schedule on Budgetary Performance" on page 6 of the budget speech.
[Mr. Rogers in the chair.]
MR. KEMPF: Mr. Chairman, I have just a few short words to the Minister of Finance on his estimates for this budget. I was interested to hear that in the plan for this year are government agencies in certain communities within the province. I was a little sorry to hear that no consideration is being given government agencies in two communities in my constituency: Granisle and Fraser Lake. I have for some time now attempted on behalf of the citizens in these communities to convince the minister that government agencies are a must in these communities.
In the case of Granisle, which is 50 miles from the nearest government agency, the problem is acute. Citizens looking to get licences, prints, et cetera, especially during the winter months, have many problems. In the case of Fraser Lake the distance is only 30 miles, but again, during the winter months many hardships are faced by the citizens of this community in availing themselves of a government agent. I ask the minister that reconsideration be given in this budget year to somehow make a government agency available to the citizens of those communities in my constituency.
MR. STUPICH: Mr. Chairman, as the minister said, I guess we're just never going to agree on some of these things. He's drawn my attention to page 6 of the budget speech. He says — maybe he didn't say it this time, but he said it previously — that they are spending their surplus, and it's a question of time. We spent money as money came in, and the page 6 figures do show that we did spend $998 million more than was budgeted.
When we arrived in office the surplus of the province was $98.4 million. When we left office on December 22, 1975, to the best of my knowledge there was not a deficit. Not even the minister has ever told me that there was a deficit on December 22, 1975.
Looking at that figure of $998.7 million, I think what we should really do is cut it off at December 22 or even December 31, rather than at March 31, 1976. For three and a third months of 1976 control of government spending was in the hands of this government and this minister. For example, look at some $265 million of non-budgetary expenditures in the year ended March 31, 1976. With the exception of $21 million of that amount — in other words, some $244 million — this was money that was paid out by the Social Credit administration. If we are going to compare these figures, instead of looking at $998 million against $193 million, we should really subtract from the $998 million some $244 million, which would bring it down to $754 million. We should add that $244 million to the $193 million to make it $437 million, which brings them a lot closer together.
Mr. Chairman, I have told you in detail some of the programs that we spent more money on, and of some of the ways in which we invested surplus funds. I've asked the minister to tell me — and if he can't, maybe some other minister can; maybe the Minister of Health (Hon. Mr. McClelland) would like to get back into the Finance debate; the Minister of Agriculture (Hon. Mr. Hewitt), I know, likes to talk about Finance — which of the programs were wasteful. Give me some instance of us wasting money.
Remember also, Mr. Chairman, since we've adjusted the figures down to $774 million, that we spent all that money....
MR. STUPICH: Do you want to do it right now? Because I can come back, you know. You can't cut me off this time; it doesn't work.
Anyway, we spent that $774 million over budget not by increasing taxes, Mr. Chairman. We got more money out of the economy. We increased the coal royalty, remember? The average was 14 cents, and we got it up to $1.44. We got more money out of BCPC, in excess of $100 million a year. We got more money from the community through the exploitation of resources, but we did not increase taxes in the way this administration did.
They got their money by increasing taxes. The minister has said that had they not done so they would have been $1 billion in the hole. Well, the figures don't show that. He's going to give me some detail on that at a later date, I suppose. I guess I've got to ask him in question period, or put it on the order paper, one or the other.
I'm still waiting for him to tell me that there was an instance of waste. I'm not complaining about the transfers the Social Credit administration made to Crown corporations. I have done that in the past and will do again if I'm encouraged to. Some of those were waste, in my mind, and should not have been made, but nevertheless they were made. I'm simply asking: where was the waste in our administration?
MR. LEVI: Mr. Chairman, I want to discuss the Systems Corporation with the minister. First of all, I want to ask him if he can tell me whether the Systems Corporation ever filed, in the last fiscal year, under the Public Bodies Financial Information Act, a report as it was required to do. I ask the minister that because we haven't been able to find any information. As usual, he's paying attention and he knows exactly what I am asking, so I'm going to try again.
Did the minister file, on behalf of the Systems Corporation, the Public Bodies Financial Information Act report that it's required to do within 90 days of the end of any fiscal year? We are not able to find last year's report.
Now as to this year's report, I don't know why it is, but this government has made a practice over the past three years of never getting its reports on ministries in in time, or any relevant information that it's required to report. I was in
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touch with the Systems Corporation this morning, and I'm informed that their latest report which has to be filed under the Public Bodies Financial Information Act will be filed on June 29, because there's a board meeting next week. I find it somewhat incredible that the board isn't able to accommodate this House in making available that report at the time when the estimates come up. I'm not talking about the annual report; I'm talking about a report which is required to be filed under the Public Bodies Financial Information Act. You're going to table it today?
HON. MR. WOLFE: This is last year's, which was tabled.
MR. LEVI: It was? We weren't able to find it. We went to the Clerk's office; we went to the library. That's very good. Well, after the committee perhaps you would be good enough to file it.
But let's deal with this year's. There is a board meeting next week, and you're going to approve the filing of that, and by then we'll be through the estimates, presumably. You know, you have to make some attempt to make the information available. Do you mean you're going to file the one for the current year?
HON. MR. WOLFE: Can I answer that question?
MR. LEVI: Yes, if you would.
HON. MR. WOLFE: Mr. Chairman, I'd just like to say that I've been attempting the best way I can to get that report available to the House. Unfortunately, their year end is March 31, which leaves them a fairly tight schedule to have their records audited and so on, and have a complete report prepared before June 30, which is the date required under the Act. Subsequent to that I am obliged to file a report by July 15, or within 15 days after that. I've been putting a lot of pressure onto this company to have that report available, as required, before June 30, so that is why it was indicated to you it would be ready June 29. That's the earliest possible date we can get it. It isn't a case of delaying it, but I'm afraid that's the earliest, mechanically speaking, that it can be accomplished.
MR. LEVI: It's not a very satisfactory state of affairs, because what we want to be dealing with is the most current information possible.
HON. MR. WOLFE: March 31 year end?
MR. LEVI: Yes, except that that's going to be available after we've finished your estimates, which means we have to go all the way to next year before we can really deal with that, unless we get up and ask a series of questions in the House over the next little while. It's really a question of looking at what the mechanics of this are, and producing the information.
The previous government made a change in the reporting system of the annual reports. Instead of dealing with information that was only available up to the end of the previous fiscal year, it was a practice that they would make the information available up to December 31 of the end of the calendar year before the House met in the spring. There has to be something wrong, Mr. Chairman, with that kind of arrangement where it's not possible. After all, the minister tells us that every quarter he makes available to this House a non-government state of affairs in terms of the government and various departments.
In the last quarterly report he issued before the election, there is information about the Systems Corporation — albeit unaudited, but it's there. Now I can't understand why it is that difficult, considering that there is an ongoing quarterly reporting process, to produce that report in time for the estimates in the House.
There is a problem, of course. We have traditionally in this Legislature met in the early spring or the late winter. We used to meet in January, so then there were fairly legitimate reasons for not having this information. But now, of course, we don't know when we meet. We either meet before the end of the fiscal year or we meet in the first quarter of the new fiscal year. But I'm basically making the point that all the information that needs to be available to this House should be made available in time. The only thing that we're going to be able to do is to ask the minister a series of questions about what is going on in the B.C. Systems Corporation.
I now want to take him slowly and carefully through the deputy minister's report that I dealt with in March prior to when the House met. I'd like the minister to answer a number of questions in respect to a report which is called the "Initial Report: Inter-ministerial Committee on the Electronic Data Processing Services." It was requested by the Minister of Finance. The report, which is the third draft, is dated October 15, 1978.
The first response we got after I released the report was not from the minister, but from the president of the corporation, who promptly said that the report was out of date, albeit it was issued in March, which was five months after the report was done. He also went on to say that the complaints made by the deputy ministers who made up the committee who were doing the report was a question of sour grapes and interministerial rivalry. However, it didn't deal at all with some of the problems in respect to what the report lays out.
Now perhaps the minister would tell us the history of how this report came to be written. I would like to know from the minister when he actually requested the report. We should bear in mind that the B.C. Systems Corporation actually came into operation in its own right on April 1, 1978, albeit it was set up in 1977. But it started to operate on its own completely by April 1, 1978.
Now I'd like the minister to tell us whether this report was requested some time after that date. Presumably I would suspect that it might have been requested perhaps sometime in July of that year, possibly because of the great confusion that was going on. I'm not surprised that there was confusion; obviously they were trying to centralize something. So, okay, that's fair enough; he asked for a report. What I find difficult is, as soon as the report.... We didn't get the report; somebody sent it to me and we released it. Then we're told that the report was out of date. I would like the minister to tell us exactly what he means by out of date.
There are a number of items that I would like to deal with in the report so that I can better get the minister to understand what some of the serious problems were. Now I'll only deal with the recommendations because I think the recommendations are the important ones. Bear in mind that
[ Page 330 ]
this deputy ministers' committee is made up of the people who are the largest users of computer services in the government. We're talking about people from Finance, Human Resources, Health, Lands and Environment; these are the major users.
Recommendation No. 1 is that "the minister be given authority to effectively control the systems and electronic data programming functions required to deliver their services." Now what they've said here is they want to go back to what existed before the B.C. Systems Corporation was set up. The ministers themselves want to have control over the functions in terms of the EDP.
They go on to say: "At the present time the Systems Corporation has what is in fact total control over the system which ministers depend on and are ultimately responsible for in the delivery of their services. The manner in which the Systems Act is being applied leaves responsibility with the ministries and authority with the corporation."
Presumably this kind of recommendation was what sparked the president of the Systems Corporation to say that there's sour grapes and petty rivalries, but implicit in the first recommendation is that they want to take back control of their own systems in terms of computer systems. They want to take it back. That's the first major remark against the idea of having a centralized system, and this is made by the six major users of the corporation.
Then they go on to say: "This is the overriding concern of the user ministries, and this recommendation is the major one being presented." They are, in fact, going more than 50 percent along the way to what appears to be the dismantling. Their recommendation is that half of the function of that ministry should be dismantled and returned to the ministries.
The second recommendation is that "each ministry be given the capability and authority for selecting the computer service best suited to its needs." This is part of the interdepartmental versus the Systems Corporation rivalry, because in the government the ministries have always been able to select the computer service that they most need. It's more responsive; they can go to it directly. They're asking for that; they're further recommending a breaking down of the central authority of the Systems Corporation. They say: "This would eliminate the Systems Corporation's monopolistic position and would allow ministries to select EDP services on a cost-competitive basis and to optimize overall program costs."
For example, it is much more important for Medical Services to reduce the overall cost of the plan than simply the computing costs associated with it.
Bear in mind that we are talking about a report that was done by the deputy ministers, the people who are responsible to their ministers for the functioning of the ministry, particularly in respect to the computer services they need. They go on to say that a maintenance programmer is being assigned on a permanent basis to user ministries and, where appropriate, he is to be located on ministry premises — a further request that decentralization be effective.
They have a third recommendation:
"To improve communications, to reduce learning time and errors and to improve the service, it is essential that a minimum number of maintenance programmers be permanently available to the ministries. At the moment they only exist within the Systems Corporation. The development and operation of a good EDP system is dependent upon EDP staff, which understands and associates with the goals of user ministries."
The big debate that goes on among people in the industry is that people who have the expertise — in engineering techniques related to planning — to set up and do the programming do not necessarily have the same kind of expertise in doing something related to the Health field, or the Human Resources field, or the Attorney-General's field. Everybody's been thrown into the same bag. There appears to be a generalist approach to what is going on, and it is creating a great deal of confusion and loss of time. All of this is part of the report. We want the minister to tell us what has happened since the report was issued — although it's a somewhat confidential document.
The last recommendation is that "the interministerial committee on data processing be the vehicle whereby all ministries can exert the necessary level of influence upon decisions which affect them." They say that the committee would also assist in the decision-making and prioritizing process involved in government-wide applications. High priority objectives would be to coordinate (a) development of long-range systems and data-processing plans for each ministry, (b) requirements for a shared, province-wide data-communication network. It's somewhat complicated, and it's not necessarily something that the minister has to respond to here, because it is somewhat technical and it is not necessary for us to discuss it in the House.
I want to deal now with the recommendations of the committee. What has taken place in respect to those recommendations since then? Perhaps the minister would be good enough to tell us what actually took place with respect to the Systems Corporation and the problem that apparently existed in the Ministry of Forests, which was so bad that it was even referred to in the auditor-general's report. She says on page 42:
"My examination included a review of the systems of internal control over the collection and recording of major provincial revenues. In the course of this review, it came to my attention that abnormal delays had occurred in the billing of timber royalties and stumpage fees. These delays were attributed to problems encountered with a new computerized billing system in the Ministry of Forests. As a result, an estimated $26 million of revenue, which otherwise would have been collected in the 1978 fiscal year, was collected and recorded as revenue in the following year. "
Perhaps the minister can tell us what happened. That's a serious loss to his revenue picture. Reference is made to this in the report by the ministers. Obviously the auditor-general has to be concerned with the way revenues are collected, and she makes a point of saying that this is a very serious problem.
I want to go for a minute to the staffing of the corporation. The president, Mr. Alexander, is in charge of the overall operation. This report was issued in October 1978. Presumably at that time there were discussions about trying to clean up what was obviously a great deal of confusion and a mess — what I would characterize as somewhat chaotic.
[Mr. Davidson in the chair.]
HON. MR. WOLFE: I recall that.
[ Page 331 ]
MR. LEVI: Yes, I've called it the "chaos corporation."
The minister is going to have to convince me that it's not the "chaos corporation."
The report was released in the middle of October. Having read the report, the minister would presumably instruct everybody concerned to get their act cleaned up and straightened out and to work for the benefit of the whole government and the taxpayers. We presume that action was taken. Sometime in November the Premier made a statement about BCRIC shares. And towards the end of the year it was announced that the head of the Systems Corporation would be responsible for the issue of the BCRIC shares. I'm only going to deal with the BCRIC share distribution only as it affects the Systems Corporation. It appears that the man in charge of the whole operation then became responsible for the issuing of the BCRIC shares — a monumental undertaking.
My first question is: if that was the case, who was running the show? We were constantly getting complaints out of the Systems Corporation that there was a great deal of confusion and people were dissatisfied. Some of the things mentioned in the report were characterized as being true and in some cases understated. Now who was running the show if the chief executive officer was involved in dealing with the BCRIC shares? We should bear in mind that the corporation at that time apparently had no chief financial officer. Mr. Welham had left by the end of December. He went to work for the Victoria General Hospital. Since that time, according to the latest information I have — and we're now talking about a time at least six months after this individual left the Systems Corporation — there is no chief financial officer in the organization. There is an acting individual. I understand that they are advertising. But bear in mind that during all of this time the head of the corporation was involved in the BCRIC share distribution. Also on his desk, presumably from the minister, was the interministerial report of October 15. So who was taking care of cleaning that mess up? What is the actual situation today? I would have hoped that we would have been able, had we had the information that is coming next week — and I presume I'll have to deal with that in questions to the minister in question period — to get some understanding of what is actually happening with the corporation.
I would like the minister to comment on what is happening to the Honeywell project, bearing in mind that half of the Honeywell operation was taken to Vancouver. The primary work of that operation was to deal with education financing and to provide a service to the universities and colleges around the province. My inquiry in respect to that operation concludes me to say that that operation is now defunct. I would like the minister to tell me if it has been decommissioned and what the plans are for that operation. In my discussions with various colleges and universities I have learned that the computer services they require in respect to accounting and the other work that universities have to do are being provided primarily by either Simon Fraser or the University of British Columbia — or the colleges themselves. Now what exactly is happening to Honeywell Information Systems? Two years ago the minister made quite a statement in this House about how they had renegotiated the contract, that half the operation would go to Vancouver and that it would be utilized to the maximum. My inquiries have told me that is now almost in the state of being decommissioned. If that is the case, I would like the minister to tell us that and tell us what plans there are for it.
I would like the minister to comment on the composition of the board and whether he did in fact appoint somebody from the industry. I did write him a letter in 1978 suggesting to him that the board would be well served by having a member from the private sector on it so that they could get a perspective other than the government's perspective. I would also like the minister to comment on how the user committee is functioning and what kind of priority system is being used.
In January of this year the Ministry of Health were advertising for programmers. There was such an advertisement, and I can make it available to the minister. What actually is the situation at the moment with respect to the Systems Corporation and other ministries? Can the minister tell me whether in fact some of the departments of government are slowly taking back the function of doing their own computer service provision? Certainly the Ministry of Health was advertising in January for programmers. We know, for instance, that the Assessment Authority is not involved, because they have a rather difficult and complex area. Are there any other departments that are not actually working with the Systems Corporation?
I would like the minister to comment on the statement made on page 4 under item 5 of the report. It's entitled "Development" and it says:
"For instance, the justice information system of the Ministry of the Attorney-General has ceased at the critical integration stage. It took approximately two years for the adjusted information system to develop the necessary familiarity with the operation of the ministry to develop what is generally recognized as one of the best adjusted information system models in the world today. That staff has been lost to the ministry for good, and the ministry states: 'It seems unlikely that similar expertise will develop within the bureaucracy, which is totally independent of the ministry'."
I would like the minister to comment on what has happened to the adjusted information system. The statement made by the ministry that I just quoted deals with this whole question of the generalist versus the specialist in this kind of work. They go on to say that loyalty, enthusiasm and dedication are admittedly intangible factors but they are critical to the development of the system. This was one of the criticisms of the introduction of the centralized system: everybody would be thrown into the hopper; they'd all be generalists. Those who had specialized for years could very easily be placed on other work with which they would maybe not be familiar. I would like the minister to tell us what has happened to the justice information system. I've heard other answers: some people said that it's not true what the deputy ministers said. Well, I'd like the minister to confirm this for us. Are they actually stating what has happened, or are they blowing a lot of hot air?
I keep going back to the report, Mr. Chairman, because it is important to remember that the report was requested by the minister. It was dealt with by the staff and support staff of the deputy ministers of the major users of the system. The report itself is something of a serious condemnation of the system. It's the third draft: perhaps the minister would comment to us if a further report has been done. Have they had an opportunity to review the adjustments that needed to
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be made in the Systems Corporation? Are things better off? Obviously in terms of the operation of the Systems Corporation, it's a bit of a leaky ship, and some people are unhappy about it. As a matter of fact, when I released the report in March at a press conference I understand that people in the Systems Corporations said: "My god, if the NDP get back, they're going to break up the Systems Corporation." We never said that. The discussions, in terms of an integrated Systems Corporation, were held under the previous government,
HON. MR. WOLFE: I think you said that in the House, didn't you?
MR. LEVI: No, we never said at all that we'd break it up. What we wanted to look at was its operation. We wanted to look at whether, as the minister said when he introduced the Act, this operation would be competitive with the private system. We had the rather strange situation over here of the socialists arguing the private enterprise point of view in order to save some of the business for it. The point is what we're trying to do is to look at this in a critical, constructive way. There was no question that the system had to be broken up, but there certainly was a question....
HON. MR. WOLFE: Your press release wasn't very constructive.
MR. LEVI: Oh no, the press release was fine. You didn't read it; somebody read it to you.
HON. MR. WOLFE: I've got it right here.
MR. LEVI: I know you don't read press releases. You don't even read your own press releases, because if it doesn't come out at the end of a computer, you're in trouble. But the point is that there has been a lot of dissatisfaction.
All right, let's put aside the political stuff for a minute between the opposition and the government and talk about the enormous amount of money that's being spent and the kind of strain that is being put on the system. I pointed out that the chief executive officer was suddenly designated by the Premier to be the person to be in charge of BCRIC. That's got to put a strain on the operation. It's got to put a strain on an operation which, according to the deputy minister's report, is having very serious problems.
Later on we will be asking about the financial question: just how much is it costing to operate? How much contracting-out is being done? What arrangements have been made for the purchasing of new equipment?
I don't expect, Mr. Chairman, to get too many answers from the minister today because he doesn't have his assistant with him. We don't have the president of the Systems Corporation, and I can usually tell when the minister talks to somebody beside him whether he is actually getting the information. It's going to be interesting to see what kind of replies the minister can make.
Perhaps the minister will be good enough to particularly devote his remarks to the report that was done in October. What remedial work has been done, and how does he characterize the importance of the report? Is the report important? Did the deputy ministers know what they were talking about?
HON. MR. WOLFE: Mr. Chairman, I appreciate the member's constructive remarks and questions. I know he has had a growing interest in this subject, and I'm not sure everybody in the House has. Last year's report, which was a financial report, was tabled on June 28 — just for your information.
MR. LEVI: Yes, but we can't find a copy.
HON. MR. WOLFE: This year we've had reports on systems in each quarter, including the third-quarter report which was released after January.
You mentioned many problems associated with the Systems Corporation: the whole concept of centralizing the decisions on equipment; trying to consolidate the use of equipment; trying to prevent the proliferation of buying of unnecessary equipment, which is really quite a widespread problem.
I guess one of the more difficult problems associated with the job that Systems has had to do is to gather in all of the data processing people under one umbrella. Of course, this causes certain unhappiness with people who are separated from former ministries. I did call upon this user committee to study the matter and report. I think what you have is probably a partial draft, basically similar to the one that was the final form. I think we can look positively on that report, and you can believe that we are going to continue using a user committee and ask for further reports.
I might say that having had their report and observations from the staff members involved, I had a meeting with senior deputies who had written that report to get their verbal observations of what some of their thinking was and some of the, you might say, dissatisfaction with service. This is what the objective of getting this report was: was there a problem in terms of delivering the computer data processing service to ministries by this corporation?
Now it is new, and it has gathered all these staff members under one roof. So the software side of this is a problem you find universally wherever you go. It's a more difficult one to administer. With regard to the finding of capable people in this field, which they constantly advertise for, the training availability is to be questioned and needs to be increased and improved.
Having said that, I consider we should deal with the report in a positive way and I therefore welcomed it. One of the major references in it was the fact that we did not yet have interface positions in the ministries. I think at this stage all or most of these interface positions have been established. I don't know whether all of them are filled, but this is a major improvement which I think is taking place, or has been completed, in terms of the relationship between Systems and the ministries. Incidentally, this might explain the advertisement by Health that you referred to. They were advertising for programmers and it may have been for these positions I'm referring to.
One thing that was referred to in the report was the delay that took place in getting approvals for data processing systems in ministries. The fact that Treasury Board as well as the senior executive of Systems had to approve this caused a lot of delay. We've resolved some of those to try to expedite these applications.
As I say, I'm going to see that this committee will continue to function and get an update on the situation as it
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took place, as you read their report, which was last October or November.
You mentioned a problem in the Ministry of Forests which was referred to by the auditor-general. I met with officials when that question was before us, and tried to solve that problem. It had to do with installing a new, more modern system in that ministry, which has considerable detail in terms of weigh scales, and so on, in the reporting of these figures. I was pretty well of the view at that time that any delay that took place was temporary, and there was some fault on both sides on that question. I think you will find that that has been resolved long since.
You questioned the seconding of Mr. Alexander to the BCRIC project. I think maybe there's a simple answer to that question, but I can't think of a project better suited to a person of his background and capability, which is acknowledged expertise in data processing systems. The BCRIC project and the delivery of that system, the handling of all those applications and the systematizing of all this is just exactly designed for a person with that capability. So that's why the decision was made to place him in charge of that. In addition, he had other people to support him, in terms of his ongoing task with Systems.
I'm pleased to be able to say, in answer to your question about directors, that we have moved on this and we have now appointed three outside directors to the corporation. One is Mallory Smith, a business executive with Coppers International of Canada in Richmond. He has substantial experience and is a very bright executive, I think, and he's doing an excellent job in acting on this board. We've also added a chartered accountant, Mr. Bruce Sangster, for many years with Winsper Higgins and Company. Quite recently we've added Mr. Bud Stapleton, who is a senior systems man with MacMillan Bloedel, who is going to be giving his time to this as well. We are very pleased to have added Mr. Stapleton to the board, and I think he can add some special expertise on the practical side of this, for the benefit of other directors. I think those new additions to the board are going to help considerably in the problems we have had with Systems in the development of the Systems concept.
You mentioned the vacancy of a financial vice-president. We've been very aware of this. I can assure you that a search has taken place and we have now made an appointment. I'm told that he has accepted the proposition. He happens to be from Ontario. We're very pleased that he's going to be coming here because he has tremendous capabilities. I can't release his name at this stage, but I can say that position has been closed and he'll be here very shortly.
We always bring up the situation of the Honeywell. We always remember that Mr. Strachan ordered the Honeywell on something like a $7 million or $8 million contract without any examination of what it might be used for. It was one of the biggest computers in Canada at the time and when we arrived on the scene in late 1975, this equipment arrived with us. Nobody seemed to know what it was going to be used for nor was it compatible with existing systems in government.
That, I think, exemplifies a basic problem with data processing: you have to have the expertise to accommodate the equipment that you buy in terms of it being able to turn out the material that you want to produce. Anyway, the Honeywell is still here. We've renewed the contract. We've now extended the contract at a reduced rate, and I'm told that it is, in fact, being used basically to capacity but I can't give you the detail on that at this stage. I don't think it's correct to say that it is defunct at all. I think either a large part or half of it is now being used in the Vancouver operation.
The justice information system goes back quite a ways. I know there was a tremendous reticence on the part of the staff members who had adopted a very innovative new system in the justice field to being seconded then to this new corporation. That, I believe, was worked out at the time at a meeting with staff members of the Attorney-General, and I really can't report any further on the status of that. There were certain elements who resisted strongly being brought into this new corporation and it was very difficult to accommodate this at the time. That's about all I can say.
MR. LEVI: Like I suspected, Mr. Chairman, you treat the minister nicely and he doesn’t give you any information. I think it's rather appalling that the president of the corporation isn't present, and that the minister wouldn't have expected that I would get up and ask a few questions.
His information in respect to the Honeywell is not only incomplete but it doesn't have any validity. I am going to have to, with the agreement of my colleague from Nanaimo (Mr. Stupich), keep this debate going at least until Monday so that the minister will undertake to have the president of the corporation present so we can actually find all of the facts.
HON. MR. WOLFE: What do you want to know about the Honeywell?
MR. LEVI: I want to know exactly what is happening to it, because it is my understanding from discussing with people that it has been decommissioned. It was originally intended to take care of most of the educational financing problems in the province.
In my discussions and calls to various colleges, asking what services they were using in respect to computing all of the work that they have to do in scheduling classes and that, it's not being used. It's sitting there on Renfrew Street in all its glory but it's not being used. So that's a question that we've got to understand.
Your remarks about the justice information system are only the beginning of the facts that exist. We know that there was a great deal of protectionism going on with the staff. After all, they'd worked on it for a couple of years. We know all that; we know that people were a little reluctant to get dumped into one big hopper. I would ask the minister now whether he would like to be candid with us and say that if they had to do it over again — I'm not disputing the fact that the thing needs to be integrated and to some extent centralized — whether in fact they would not have agreed to go much slower, that it was not necessary to do all of the integration and throw everybody into the hopper at the great speed that they did, because one of the things that it resulted in was that staff left. That was a great loss to the whole operation. There's no doubt that these people are in demand. There is a great deal of mobility in the system. There is a constant upgrading in the technology and people do tend to move on. That's apparently one of the paramount problems faced by the industry anyway. That whole situation was exacerbated by the fact that the
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government insisted on throwing everything together immediately.
We said to them in 1977 that if you were to do this thing on a piecemeal basis you will have less trouble. You will be out to learn as you go and you won't have what could result in a great deal of confusion. We have from the minister's report the verification that confusion did come about and it was a problem, a very serious problem.
Now I would like the minister to tell me, on another tack just for now — this is in relation to his own direct financial estimates — how much money his department spent on computer services. I know that there are two things together, computer and consulting. Last year in the estimates there was something like $6.8 million for computer services and consulting. This year it has an increase of $1.4 million. It's up to $8,032,000.
Now can the minister tell me why there is a significant — and it is significant — increase in the amount of money that has been estimated, and whether...? We don't actually get into the Ministry of Health's estimate on this, but I would like to know from the minister why it is that last year the Ministry of Health appropriated $7.7 million for computer services and this year has $2.1 million. I would like to ask in terms of his department. There is a significant increase in what he is doing in his own department.
While the minister is listening I'd like to ask him some other questions. I don't know who is taking down the notes, but we may have to go back over it again.
Can the minister tell us, within 5 percent or 10 percent, just how many people are employed by the Systems Corporation? Has he that figure available? I did receive a letter from the personnel people in the department on July 12 of last year, which said: "Effective July 1, 1978, there were 357 employees with the Systems Corporation plus an additional 25 students hired to cover the summer holiday schedule." What I would like to know from the minister is whether he can tell me how many regular employees there are — an estimate — and how many more employees were hired as a result of the job they had to do to issue BCRIC shares. It's my understanding that the staffing in respect to BCRIC shares resulted in an increase of about 125 to 180 personnel. On top of the 357 they already had, we're looking, possibly, at 500 to 550 people.
All this information, I presume, will be available to us in some respect in the report he's going to table next week. I did ask the minister, but maybe he could comment on what did happen to the report they are required to publish, the public bodies report for last year. We haven't been able to find it. Perhaps the minister might find out for us where that report is, and if he could make a copy of it available, that would help us to some extent too. We would like to know just what costs were incurred in starting up the operation. I'I carry on, because I presume the minister would like to wait for his deputy to come back.
There appear to be some significant changes in expenditures in respect to the operations of the Systems Corporation, as we can gather from the estimates book. In some respects there is reduction in departmental expenditures, or at least the estimates; we still don't have the expenditures. So as I sit down, I would ask the minister if he has any idea what the final figure was in his own department on the expenditures for computer services. May I ask the minister that? Is he able to tell me? Has he a figure for the final expenditures within his department for computer services? The estimate was $6.8 million last year. Has he any idea just what it is, within $100,000? Can he tell us that?
HON. MR. WOLFE: You mean the final figure for last year now?
MR. LEVI: For last year, because what we have for the coming fiscal year is an estimate of more than $8 million, an increase of $1.2 million. I'd like to know what the expenditure was for the last fiscal year, and what the reason is for the increase. I did ask him to comment, if he can — because he is responsible for the Systems Corporation — why there is such a dramatic drop in the Ministry of Health's estimate on computer services from $7.7 million down to $2.1 million. Does he understand why this dramatic drop in that department from $7 million down to $2 million for computer costs?
HON. MR. WOLFE: Which one are you talking about now?
MR. LEVI: Well, I've asked you about your own department, which was $6.8 million in the last fiscal year. How much did you spend? You're going up to $8 million this year. I've also asked you whether you can comment on why it is that the Ministry of Health last year had a budget of $7.7 million — we don't know how much they spent. But this year they're budgeting only $2.1 million. There's a difference of more than $4 million. What's taking place there?
HON. MR. WOLFE: That's in Health?
MR. LEVI: That's in Health, yes. There are some dramatic changes and you can go down to some of the others. Transport and Communications, for instance, which last year was more than $4 million, is now $2.6 million. So from the minister I would like to know the reason for these very dramatic changes in the expenditures. Does the minister want to reply now, or shall I carry on? Just in case any of my new colleagues on this side of the House are going to say, "There's a stranger in the House," that gentlemen who just came in is Mr. Alexander from the computer corporation; so we're okay.
Well, I guess I'I have to keep talking, Mr. Chairman, or else I'I lose my position on the floor.
MR. CHAIRMAN: Something like that.
HON. MR. McCLELLAND: Or you could sit down.
MR. LEVI: I don't want to sit down. I'm trying to find out about the Minister of Health's (Hon. Mr. McClelland's) department. Why has his estimate in the computing gone from $7 million down to $2 million?
I would like the minister to let us know in respect to the appointment of the directors. In the letter that I wrote to him I suggested that he go to the industry — and there is an industry association — and suggest to them that they might recommend a representative from the industry that might sit on the board. He's announced that there are three new people on the board. Could he tell me whether any of the three people who have been appointed to the board were nominees from the industry itself?
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Now that the Premier's come in, we're not going to get any answers out of him, because he's got to deal with three people now.
HON. MR. WOLFE: I don't know if I can answer all these detailed questions, Mr. Chairman, but perhaps I could answer some of them after today with written replies and so on. But I'll try.
The number of staff at March 31 is 378. The number of staff involved in BCRIC on a temporary basis is 38 students, plus about 50 other temporary employees.
You mentioned the public bodies report. I'd have to check this further myself, but I'm advised that under their Act it's required to be tabled there. But I don't think it's required to be tabled in the House. But I'll check the public bodies information report further.
Now the reason for the reduction in the Health vote is mainly the removal of the medical plan from this particular vote.
You asked about the Finance vote increase. I think you'll find that they spent approximately their estimated amount during the previous year. The increase in expenditure is about 99 percent represented by charges payable to the Systems Corporation for development and operation of information systems. It's the development of new systems — for instance, a new sales tax system and so on, which is very extensive. I don't know whether the new payroll system would be included in that or not. I think the new payroll system revision is in that too.
MR. LEVI: I just have one other question for the minister. He did announce that there were three new directors. When I wrote to him last year I suggested that he might have a discussion with the industry and its association about the possibility of appointing somebody from the industry. Now can he tell me whether any of the three individuals that were appointed were designated or suggested by the industry association itself — whether that was followed up on? No, I don't think it was.
[Mr. Rogers in the chair.]
HON. MR. WOLFE: I can only say that I consulted with many people in trying to find people who were prepared to serve. Mr. Stapleton is not in the industry directly, but indirectly he is well known to many people in it. I guess the answer to your specific question is no.
MR. LEVI: As I understand it then, there was no consultation with the association or the industry itself as suggested. I gave you a name. I suggested you might contact somebody.
Then the answer is no?
HON. MR. WOLFE: Yes, except for maybe informally. There's been no direct consultation with them.
MR. HANSON: I have a couple of observations to make and then a couple of questions to ask.
Having been a union representative representing the employees of the B.C. Systems Corporation, and having talked extensively with those employees over some period of time, there are a couple of things I think the House should know about the way the employees feel about the corporation itself. To put it in a nutshell, I guess you would have to say that the main observation that the employees make is that there are too many bosses and not enough workers.
I think some interesting figures would be to look at the payroll for the B.C. Systems Corporation and do a breakdown of the proportion of salary paid out to exclusions and the proportion of salary paid to employees within the bargaining unit. I'd also like to know the number of excluded positions and the number of positions in the bargaining unit. It looks like I'm going to get that answer, but perhaps I could just continue.
In addition to the number of excluded positions and the number in the bargaining unit, I would like to know the breakdown of salary for the bargaining unit and for the exclusions.
As you know, our party is in agreement that there had to be a rationalization of the equipment, the hardware, and it doesn't make sense for ministries to be going about building their own computer network. We are not in disagreement with the concept. However, there are a number of things that happened when the corporation was established. Within the public service, the prior arrangement, the public service is pyramidal in structure. In other words, it's got lots of workers at the bottom and it comes to a point as you go higher up the management scale.
What we have in the B.C. Systems Corporation is a rectangle. The relationship between line worker and management is an almost direct one-to-one ratio. We have a $60,000-a-year manager and a $20,000-a-year line analyst.
There are other aspects of the employer-employee relationship that I think are interesting. Employees are given a charge-out rate. They are regarded as revenue generators for the corporation. A line employee from government service, rather than being regarded as a systems analyst paid a certain amount per month, is thought of as a $40 an hour charge-out. In other words, that employee must generate $40 an hour for the corporation to justify his existence.
The pyramided public service and the rectangular corporation means that the employees — the people who have to do the work, who do the key punching, who do the systems analysis and so on — have to carry a large number of high-paid exclusions. That may make sense in the computer industry but it has a deleterious effect on the employees. This is a guess on my part but in the outside industry I think the relationship between the number of managers and the number of workers is that there are not as many managers as there are workers. I think it's a characteristic of the systems corporation at this time.
The deleterious effect is that there is a high stress aspect on the employees because it is a new corporation and because of the facilities, particularly the Wismer House on Fort Street. It is not a building that was built for that operation. It's leased and it is not conducive to a good work situation. The pressure for the corporation to compete on the market, and to compete on the market carrying these large number of managers, results in a high stress factor. There has been a high incidence of nervous and emotional problems among the employees of the B.C. Systems Corporation.
The bargaining agent and the employer have had some meetings on the need to have a stress study in B.C. Systems. But I think that it's something that the members of
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the Legislature should be aware of. As the corporation is presently structured and presently operates, the employees are under a tremendous amount of pressure to carry fat at the top.
I would like to hear the minister's comments and his reply regarding the proportion of salary paid to excluded positions. My understanding is that a large number of the excluded positions are from out of province. Why are we not able to recruit the expertise here in British Columbia? Do we not have enough suitable managers from the computer industry within British Columbia?
There's been some controversy over the use of the social insurance number. My understanding is that the social insurance number is to be used by Revenue Canada and by the Unemployment Insurance Commission, but not to be used by other agencies. I gather it is being used in computerized credit systems and so on. I would just like to know — Mr. Alexander is here, perhaps he could clarify that for me — what are the restrictions on the use of the social insurance number in the computer industry.
While Mr. Alexander is here — if he would care to respond; he is certainly under no obligation to respond — I would like an answer from him regarding the occupational health and safety stress study that was proposed to the employer. Will they participate? Will the employer be embarking on that program on behalf of the employees? I know that management is aware that there is a serious problem in B.C. Systems, the stress problem among the employees. I would be happy to hear those answers.
MRS. JORDAN: I don't intend to take up much of the House's time or the minister's time, but while we're discussing all these esoteric subjects on technology, I would like to bring up a subject that relates specifically to people. It involves an area that became part of Okanagan North in redistribution, Edgewood, Fauquier, Burton and Arrow Park, and was charmingly represented in the past by the hon. member for Shuswap-Revelstoke (Mr. King) — perhaps not effectively represented. In fact, some of the best-kept secrets in the world were government policies. The people of the area might better have been able to learn how to plug into those programs. I recognize the difficulty of keeping them informed.
The basic economy is forestry. The population is small and is in the four isolated communities which are very much removed from the mainstream of this province except via the Monashee Highway. We've given much thought to how we might better serve them and how we might add some impetus to their economy. We looked at tourism as a possible assistance.
I would advise you that the only government entity in that area is the Forestry office in Fauquier which is serving as a clearing house for almost everything relating to government. Ineffective as this is, it is certainly an added convenience, though one which perhaps wrongly utilizes the people in that office. We could investigate the feasibility — I have discussed this with the ministry — of establishing a provincial government contact within that area.
I understand the community of Nakusp is seeking a government agent office. If we go that route, then that government agent should visit the Fauquier-Burton-Edgewood-Arrow Park area for perhaps half a day once a week in order to see if there is a response to the opportunity to receive information and to converse directly with government.
If that is not possible, perhaps it would be of greater advantage to the people if we could consider hiring a local person half time. We could bring him to Victoria in order to familiarize him with the overall workings of the various ministries and where to go for information. We have to recognize that the economics of such a presence would be in question, but we have to consider the need of these people for service and for access of information. For my own part, I hope to be an outstanding MLA in that area, give them the very best service possible and keep them well informed as well as charmingly informed. The everyday needs in relation to business operations are beyond the scope of MLAs to respond to as much as they would like. I bring this to your attention, Mr. Minister, for your consideration and study. I hope that some sort of contact is made as a start, so that we can test its desirability and feasibility.
MR. HALL: I'd like to ask the minister four or five questions on his salary vote before we get to vote 52 and the other ministry for which he is responsible.
I notice in the estimates that we seem to be grouping all the figures together. I presume this must have been the practice over the last couple of years. So we can have it down on the record, would the minister tell us about his office staff and the disposition of the salaries, number of personnel, and so on, all of which make up the $87,149? Who indeed will be sharing in the travel expense of $12,062? In other words, tell us about the minister's office itself in vote 100: what the salaries are; who gets what; and how the travel moneys will be apportioned out of that $12,062. Who is entitled to draw from that fund?
The Minister of Finance is responsible for getting together all of the figures which go to make up the budget. In going through the estimates, I notice there is a line that appears in almost every department: "Less recruitment savings." It's not explained in the notes in the back of our estimates. Can he tell us what "recruitment savings" means, how they are going to be achieved, and what he thinks their level of success and achievement will be?
Again, a general line that appears throughout the estimates is the British Columbia Building Corporation rentals. What level and what formula is used to determine how much rent each department pays? As I understand it, there are some departmental comptrollers who are not exactly ecstatic with the amount of money they're being charged for the rent for the premises that their departments occupy. That is question 3.
Question 4 is to do with the liquor distribution branch. Again I refer to the auditor-general's report and also to press releases over these past three years and speeches in the House over the last ten. Page 43 of the auditor-general's report simply and boldly states: "In general the accounting systems and procedures were found to be inadequate for today's business environment." The minister was quick to point out to my colleague, on the other complaint which has to do with the forest system, that he had already met with the forest department and that was all fixed up. I wonder if he could tell us what he's done about the liquor distribution branch, and whether now the controls are adequate, and if some of the investigations that were going on into the liquor distribution branch reported in the press from time to time have been (a) finalized, (b) acted upon, or (c) found
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noteworthy and perhaps noteworthy to the extent that this House should be advised of what the investigation did produce.
The fifth question is: am I correct in assuming that we are going to go into vote 52 next? I didn't understand what the House Leader said this morning at roughly 10:15. Is the next vote vote 52?
MR. CHAIRMAN: The Chair has no knowledge. It may be possible that someone can advise you, but certainly not the Chairman.
HON. MR. WOLFE: Just a couple of things, Mr. Chairman. The member asked about details on salaries in the minister's office. I can supply him that after the breakdown — there are five staff members, including myself.
He asked the question about travel. That's associated with anyone in my office. For instance, my executive assistant would be included in that travel appropriation as well as myself.
Could I indicate too, Mr. Chairman, that his questions regarding how rent is computed might be better asked of the Provincial Secretary (Hon. Mr. Curtis), who is responsible now for the B.C. Buildings Corporation and their method of computing the rentals and space charges. Similarly I would suggest that questions on problems associated with the operation of the liquor distribution branch might be better answered by the Minister of Consumer and Corporate Affairs (Hon. Mr. Nielsen).
MR. HANSON: Mr. Chairman, may I redirect that question again to the minister? Could I expect an answer regarding the breakdown or the proportion of salaries to excluded positions versus the bargaining unit in the B.C. Systems Corporation?
MRS. DAILLY: I have a question with reference to assessments which now exist and the placements of these assessments and the effect they have on the work done by fraternal organizations. I'm sure that the minister and many other MLAs have received letters from fraternal organizations which are making what I consider to be a fairly good case for the fact that they are non-profit; they are doing a lot of good work, as we all personally know, particularly for the young people. In my own riding of Burnaby North there is a lodge whose assessment has gone up 56 percent since 1977. The minister is nodding, so I know that he is very much aware of the problem, Mr. Chairman, and therefore you know what my question to you will be. Is your ministry giving any consideration at all to any concessions for fraternal organizations which are non-profit and which can show that they are aiding and helping in the community?
HON. MR. WOLFE: I'm very much aware of the problem indicated by the member in terms of the assessments of the fraternal organizations. Previous to the new system, various municipalities offered different treatment toward fraternal organizations; to quite a degree it's up to the local municipality how they might want to apply a benefit toward a fraternal organization. The fact is they enjoy, probably to a large degree, the residential assessment, but the problem lies in the fact that many of them do supply a commercial service of one kind or another. We've had considerable study on this and at this stage there has been no resolution of it in terms of the provincial Assessment Authority.
MR. HOWARD: Mr. Chairman, I think probably the more often a particular statement is repeated — especially over the years — the more it tends to become accepted as fact and truth when it may not be so. I think this is the case with respect to the continual reference by this minister and other ministers to the question of the debt of the province. It falls in the category of being almost mythology at this stage. As often, I think, as the minister or other members of the Crown want to perpetuate that myth by making reference to it in that way, then just as often it will be necessary to put the other situation forward, to point out that the continual reference to the direct debt of the province, or the debt-free situation in the province, and so on, comparing with other provinces, does not — and the minister knows this as well, too, being, as I understand he is a chartered accountant — reflect the full truth of the matter.
Before we get to that, though, I would like to reiterate, as we mentioned earlier, that there are — as is contained in the public accounts, and reference is made to it from time to time — some debt obligations of the province, money which the province itself borrowed directly, looks upon as being its absolute debt and its sole obligation, and lists in the book as being an obligation to the province directly. It's been reduced somewhat now, I understand, but the initial $261,000,447 which this government borrowed a few years back.... Some of that money was borrowed in earlier years at 8 percent and, as of May 1, 1978, a little over a year ago, this government and this Minister of Finance took that $261 million of debt, which was then coming due and coming to maturity, and rolled it over into another debt for a period of ten years at a higher interest rate.
A year ago in May — when we had a direct debt of the province of some $261 million and were paying slightly over 8 percent of the taxpayers' money to service that debt — the minister, in his wisdom, decided that the thing to do was to renegotiate that debt that was coming due and float it out at a rate of 9-1/8 percent. As a result of that, the general public in this province have been required to pay an additional $2.3 million a year in interest to service that debt.
Before May 1978 and right now as a condition of having borrowed the money at 9-1/8 percent, the province can retire that debt at any time, can wipe it off the books, can pay it off. If you pay it off completely, you will be saving the taxpayers something in the neighbourhood of $21 million to $23 million a year in interest payments that otherwise have to be paid. Because this government has such an aversion to the idea of direct debt, gloats throughout the years about having a debt-free province, shudders at the thought of there being debt on the books, continues to tell the general public what a heinous thing it is to have to pay interest on debt, continues as.... The Minister of Health (Hon. Mr. McClelland) says that if he could just get his hands on that $20 million that is now being paid out in interest on the debt, he could finance the whole Pharmacare program. When references of that nature are made, it seems to me that it behooves the Minister of Finance to tell the people of this province why he didn't before in May 1978 or why he doesn't now pay off that $260 million in debt. He has the right to do it. The borrowing that was engaged in in May 1978 to roll that over into 9- 1/8 percent, carried with it
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the right to retire the debt in whole or in part — that's what the words in the public accounts say; that's what the arrangement was. I ask the minister why he doesn't use all the resources that he has available to him to reduce the debt.
I know he can't pay it off in its entirety. Instead of carrying the....
MR. RITCHIE: Carry on; you're okay.
MR. HOWARD: I hesitated there a minute because the Minister of Finance was getting his instructions from the Premier, and I didn't want him to interrupt that conversation — that's all. There were other reasons as well, which I can't disclose at this time. And I have difficulty hearing the Premier when he speaks in such an out-of-order way. I would suggest the Premier read pages 261 to 266 of May's seventeenth edition, that I was ordered to read. If the Premier would take that advice, we'd be much better off in this House.
I would like to know, just with respect to that debt question — because there is such a sensitivity about debt on the part of the Minister of Finance — why he doesn't move speedily to retire it or reduce it as much as he possibly cannot just the absolute amount of 10 percent per year, as he is contemplating doing.
The question I pose to the minister is: will he take some steps to reduce that debt as quickly as possible, and not just at the prescribed rate of 10 percent of the initial amount every year, so that it is retired in ten years? Can he tell us why he doesn't move to use the surplus funds to do that?
I wonder if I could ask the minister that question again; I see he didn't hear it. Why doesn't the Minister of Finance, in carrying out his duties and obligations to the people of this province to save them money, reduce that debt as quickly as he possibly can so the taxpayers are not paying out undue and unnecessary amounts of interest over the years?
HON. MR. WOLFE: Mr. Chairman, as I've said earlier in the House many times during this debate, those funds are being used very importantly for hospitals, for job creation and for very necessary programs that you would be the first one to agree with.
MR. HOWARD: The funds that the minister borrowed, the $261 million, are being used for important purposes. I understood him to say that. Also, the taxpayers of the province are paying out $23 million a year in interest on that. That's what I'm getting at: if it's such a terrible thing for the taxpayers to have to pay interest on money that this government borrowed, then why doesn't it relieve the taxpayers of that onerous burden of continuing to have to pay interest on unnecessary debt? Because the cash is in the bank to pay it off. The only reason that the Minister of Finance wants to keep that debt on the books is so that regularly and periodically he can continue to pay homage to that myth about debt within this province, that's all. It's a political game and he's charging the taxpayers of the province $23 million a year to supplement his declarations and his statements. That's not a very sincere way to approach things, Mr. Chairman, in terms of dealing with the general public's money.
Let's take the next step in discussing direct debt. It is highly misleading, Mr. Chairman, for this minister and members of this government regularly and continuously to talk about the debt of the province and say it's only whatever it is — $100 per capita year or something of that nature — and then compare that with other provinces. Isn't it terrible how these other provinces are going into debt and how beautiful it is that we here in B.C. don't have any of that terrible debt lying around?
Let's just look at the public accounts, Mr. Speaker, for last year. The public accounts carry an amount of debt obligation in there guaranteed by the province under the B.C. School Districts Capital Financing Authority. It shows it to be an amount of $851 million in debt under that particular Act. Now that, as I understand it, is capital debt, money borrowed by school districts to build schools. There's some money in some sinking funds in there, so there's a net position of some $693 million.
Disregarding the sinking fund for a moment — and I don't think it matters whether you use the $800 million or the $693 million figure — the essence of what I am putting forward is the same. Under the process of funding school buildings, of financing capital projects in school districts, of paying for the building of new schools, there is a direct obligation on the part of the provincial government to pay half of that. There is a formula arrangement involved. But there's an absolute and undeniable direct obligation on the part of the province for 50 percent of the capital money for school districts.
Because of a desirability on the part of an earlier Premier in this province to display to the public something that was not fully truthful....
MR. HOWARD: I didn't say "untruthful"; don't be sensitive about this. It was not fully truthful what happened and it's not fully truthful what is happening now in talking about debt. At one time if a school district wanted to build a new school, it borrowed half of the money and the province borrowed half of the money. The province gave to the school district the half of the money that the province borrowed so that the school district could pay for the building of the school. The province then carried that as debt on the books of the province, and paid it off paying the interest as it went along. Starting in the early '50s an alteration was made so that the school district borrowed all the money. The school district borrowed 100 per cent of the money, and the province didn't borrow any of it — an alteration in bookkeeping. All of the debt showed up on the books of the school district, but there was still 50 percent direct responsibility of the province to paying off half of the capital money and half of the interest on that debt that was borrowed, and the whole 100 percent was borrowed by the school district.
I would say to you, Mr. Chairman, that if the Minister of Finance wanted to paint the full picture of what happens with respect to debt and what exists with respect to debt in this province, he would add to his bookkeeping figures half of the amount of that $851 million carried by school boards. He would add to a direct obligation to this province some $425 million of debt because the province owes that. It is obliged to pay it, and it will be paying it. I think to shunt that off on one side and say, "that is not our obligation, that's not our debt, that's somebody else's debt," is highly misleading, highly improper. It's the sort of thing that leads
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the general public with an increased attitude of cynicism towards government and towards this chamber.
There is another item in the public accounts. I only pick out two of them, because there's no point in going through the whole range, but they all fall in the same category. There's another item in the public accounts of guarantees similar to guarantees of school district financing — guarantees authorized pursuant to section 9 of the British Columbia Regional Hospital Districts Financing Authority Act. This is another arrangement whereby under the Act and under the regional hospitals Act there is a direct, absolute and clear obligation on the part of the province to pay for money borrowed by hospital boards to expand their hospital facilities. It's capital money. The amount of debt carried on the books there is some $331 million.
Now with hospital finance capital construction there is a formula involved, and the province has the responsibility to pay 60 percent to the hospital boards of the money they borrowed to expand their hospitals. If the minister wanted to paint the full picture about what's going on under this, he should include in that another $151 million as being debt of the province.
If he would do that with respect to all the other guaranteed debt, and I exclude B.C. Hydro from this even though the minister made reference to it earlier, B.C. Hydro doesn't fall in that category of having debt which the province has any direct obligation for. It has only the backup obligation to guarantee the principal and interest in case Hydro can't pay the bonds off. But in these other items, the province has that direct and that absolute responsibility for that debt, and should acknowledge it; it should tell the people the full truth about what is going on here.
Let's look at the British Columbia Buildings Corporation.
HON. MR. GARDOM: We'll pass them all right now if you'd like to sit down.
MR. HOWARD: The Attorney-General is trying to relay something to me, but I didn't hear it, Mr. Speaker. Perhaps if he sent me a note I would get it.
The British Columbia Buildings Corporation, set up by this government two or three years ago, puts out a fancy annual report which the Provincial Secretary was kind enough to send me along with a stapled slip of paper on it telling it was with his compliments. It's a fancy glossy-covered annual report. You could pick that up and you might think that it was from B.C. Forest Products or any other corporation in British Columbia. But what B.C. Buildings Corporation is, as hon. members know, is a Crown corporation that was set up by this government and this Legislature. It takes possession of provincial government buildings and then rents those buildings back to the provincial government and charges the departments rent for space in the particular buildings the government or the people own.
That's all right. I don't think that matters a great deal in any real sense; but that's the way to do it. I read the note from the Attorney-General, and that's contrary to my understanding of the situation. If I'm in error, I apologize. We can straighten it out afterwards — after one o'clock, that is.
Let's look at what the B.C. Buildings Corporation does, and remember the B.C. Buildings Corporation owns the buildings that the people owned at one time and rents them back to the people or back to the government. The B.C. Buildings Corporation, according to its annual report, which the Provincial Secretary was kind enough to send me, says they have long-term debts of $68,086,000.
MR. HOWARD: I have difficulty with all these instructions I'm getting from various members as to what should happen and I don't hear half of them.
HON. MR. GARDOM: I move that the committee rise, report progress and ask leave to sit again.
MR. CHAIRMAN: Hon. members, just prior to putting the question, I would draw your attention to the fact that Dr. Wilson of the University of Victoria and his nine legislative interns who have been in the precincts for some months are in the gallery, and today is their final day. We've all been invited to the Ned DeBeck at 13:30 hours. The members may wish to make them welcome.
The House resumed: Mr. Speaker in the chair.
The committee, having reported progress, was granted leave to sit again.
Hon. Mr. Gardom moved adjournment of the House.
The House adjourned at 12:58 p.m.
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17 Mr. Stupich asked the Hon. the Minister of Finance the following question:
For each of the fiscal years ended March 31, 1975, 1976, 1977, 1978, and 1979, what was the breakdown of social services tax revenue between that paid by consumers and that paid by industry?
The Hon. E. M. Wolfe replied as follows:
The estimated breakdown of social services tax revenue is as follows:
' Tax on alcoholic beverages remains at seven per cent.