PAGE 4, THE HERALD, Friday, September 24, 1976

Phillips rouses Terrace Socreds

tah

you some of my views on the
economic climate that
exists in British Columbia
today.

And to outline to you what
I think is the single most
important challenge that
faces all of us if we are to
enjoy equal opportunity
through free enterprise.

I wish that I could tell you
here tonight that the future
outlook for economic ac-

tivity was bright. I wish -]
could tell you that we are
over the hill. That the
problems we faced were
gone. ;

_ Unfortunately I cannot do
that. I don’t want you to
stick your head in the
ground, etc. I can however

* tell you that once the people

_of this province clearly
recognize the problem —

_ . identify the issue that I have
- enough faith in this province

— enough faith in the
government — enough faith
in the workers and in

- Management that we can

and will move together.
The major challenge that
we face in the coniing year
is to bring about harmony in
our labour management
relations. i
to. make people realize
‘that we as British Colum-
bians must compete on the
world markets for sales of

our products,
To. make people realize
that . today in. British
Columbia we are taking too
much out of our economy.
To make people realize
that this continual fight for
more wages’ — more
. government ‘services - and
. higher and higher standard
of. living has to stop in

- British Columbia until the
- rest of the world catches up
‘ with us,

Having said that you could
say to me that we as a
government have increased
the costs and made people

«ask for more.

' Let me make one _ point
very clear here and now.
The costs we faced of

providing’ government-
services were there on.

December 22. They were

alive and real. They had-

increased by nearly 100

percent in three years under |

a Socialist Administration.
We as a new government as
aresult of a winter election
were faced with a unique.
situation — we had little
more than three months to
prepare a budget and we

were faced with difficulties .

in determining. just how the

‘province stood financially.

when we took over the of-
. fice. |

To obtain the facts, the -
government requested an

independent financial
review by the firm of
Clarkson, Gordon, Char-

. tered Accountants. ‘This

review was to Serve as a

guide for our preparation of *

the current~ year’s budget
‘and it was of great
assistance: to us. in pin-
pointing those areas where
responsible restraint could

‘take place to minimize the’

fiscal 1975. -

‘deficit of the province for
“Tam happy to report to

you, that as a result of the.

action we took last winter,
the deficit of the province
for fiscal 1975 will be $405
million, down — ap-
proximately $135 million
from the figure predicted in
the Clarkson Gordon
Report. That $135 million
reduction came about in two
ways: as a result of a cur-

‘tailment of expenditures by

the government; and in-

creased revenue during the.
final four months of the -

fiscal year — December
through March, 1976.

How did we achieve this?
The chartered accountants’
estimate of. a $540 million
deficit assumed _ that
government spending would
continue at the same pace
established for the first
eight months of 1975 under
the former administration.
The Clarkson Gordon
Report could not assess the
effect of strick controls
imposed by Treasury Board
on hiring, use of consultants,
purchase of automobiles
and furniture and a host of
other government = ex-

penditures. ;
As a result of strict con-
trols and ' sound

management, your

government was able to ~

save over $60 million in four
months. And we did this
without sacrificing the level
of performance in those
areas of essential services

to people such .as. health .

care; education and social
services. In fact, during this
period, expenditures for
health care increased by.
$11.8-million. = - ;

“Further evidence of the
strict controls we imposed:is

demonstrated by the fact.

that as of May 31, 1976. a
total of 40,551 were em-
ployed in the public sector,

down 5.6 percent from the

same date a.year earlier.

‘Auditor General — Maxwell

Henderson. .
You will recall as well that

the government sought and

obtained authority from the

Legislature to borrow $400 _

million to finance the
deficit. To date, only $150
million has been borrowed. I
am sufficiently confident
about the effectiveness of

-our controls to predict that it .
-will not be necessary for the -

government to borrow the

full $400 million ‘authorized —

by the Legislature. -
In ‘short, what I. have

outlined is the first fruits of

cur program of Sound
management .without
conmipromising ‘needed
services to people. Your
government has made -a
commitment to face reality

so that the expenditures of
the province will not exceed —

its income. As British
Columbians, we cannot live
beyond our means.

Having: outlined what I

- believe to be a new positive
atmosphere surrounding the’

province’s finances, let us
now turn to the economy.
1:. We changed the Mining

. Legislation to bring about.
‘common sense. rules that

will ensure a fair return to
the people of this province
from the: development of

their natural resources and ~

atthe same time,provide an
incentive - for.‘ . their

development."

.

2.:Our Minister. of. Human.

there would be no more frets

ee

rides for people who did not
want to work. I think he said
something about shovels.

We are committed to
giving the people of this
province value for their tax
dollar. And our underlying
philosophy. which is

reflected in our system of
budgetting is that British.

Columbia can. only remain
strong and competitive if we
live within our means.

This same concern must
be shown by all segments of
our society — management
‘— businessmen — labour.

If we do not accept this.

responsible position we will
price ourselves out of the
international marketplace.

We are already suffering
severe competitive
disadvantages as a result of
high production costs and

low levels. of productivity.

To demonstrate the cost

crisis situation that British °

Columbia faces, let me
quote to you some ap-
proximate wage rates which
workers in British Columbia

receive compared with’
_ wages received by workers:

doing the same job in

Washington State. I would
point out .that these are.

approximate figures and the
impact of fringe benefits has
been taken into account.
What [ have tried to.do here

_is compare apples with

apples and. oranges with
oranges. - oe '

_ It is only such factors as
low cost power, abundant
forests, technological

leadership and low-cost -

water transportation which
is keeping the British
Columbia product com-
petitive — and that com-
petitive edge is shrinking
every day.

The most important
component of production |
_ costs, labour, now favors the

competition.

. You remember, I am
sure, when contract
negotiations in the forest
industry used to centre

around parit with
‘American woodworkers.

That ‘does not happen
anymore. What we will be

hearing in the future. is the.
desire of the American

Woodworkers to achieve
parity with
Columbians. .
In agriculture, a similar
situation exists. American
farmers can sell their
product in British Columbia
and make a profit at a price
equal to only the cost of
production for the British
Columbian farmer.

. The: situation: which our .

primary industries face is
no worse than the situation
confronting our manufac-
turing industries — most of
which are substantially

more labour intensive.

And, there is nothing

- special. about British

British .

‘Canadian: Lift and. Loadér,

Dad’s Cookies, - Dominion
Chain, Fitwell) Garments, —

Hayes Manufacturing,

Hickman Tye Hardware. .

The list goes on and ‘on. - —
_’ This report indicates that
as.a result of companies

‘leaving British Columbia,

more than 2,500 jobs: have
been lost and a further 5,000
jobs have been indirectly
affected amounting to: a
total impact of almost 8,000
jobs. _
This report deals only
with the companies which

were located in British >

Columbia and left. What
would a list of companies
who could have come. to
British Columbia and didn’t,
read like? How many jobs -
would we be talking about
there? oo "
With this situation, our
primary resources may
never be developed because
other jurisdictions can. sell
for less.. Manufacturing
industries may not want to
locate in British Columbia
because the costs. are
prohibitive. oe
Why has this problem
developed? = :
‘In answering this
question, I want to. em-
phasize most strongly that it
is not my intention here-
tonight to blame British
Columbia’s declining
competitive ‘ability on
labour.

; B.C. Wash. Percent Diff. ¢

Farm Machine Operator- 3.75-4.00 3.00 33
Unskilled Farm Labour 4000 © °° 2.50. 60)
Master Ferry Worker. 12.26 10.71 15
Coastal Woodworker avg. 10.39)  — « 9.45 10.
Pulp and Paper Worker 9.800. — 852 i.
Mining (avg.) 7.39 oa 5.90 8

| Manufacturing. - 6.55 481 36)
‘Hospital Cook 5.36 0. _ 2.200. 143.
Practical Nurse 5.550 0°. |: 3.06 ‘BL =
Bricklayer oo M122. 10.70 a
School Teacher, gr. 6. Boe . le eae
5 yrs. exp. ct 15,533 (Van) 11,441 (Seat) 35
Bus driver ee —— :
(effect. Nov. 1,76) 8.52 (Van) 7.06 (Seat) . 26
(2,000 hr. work yr.) 17,040 (Van) 14,120 (Seat)

sold in the United States.

7

Resources told ‘people that’

In short, in those. vital
areas of = resource
development, manufac-

turing and construction,
‘British Columbia is well on

its way to becoming the
most expensive labour
market in North America.

This high cost Jabour
market creates. serious
problems for our economy

‘because British Columbians
-donot buy all the things they
: produce. In fact, they buy

very little.
Virtually all the pulp
produced in this province is

exported. The same_is true
of lumber. And, about 75 -
reent of.:British Colum-—

ia’s lumber production. is

Yet, woodworkers in the

‘United States: make less.

Labour costs are lower. If
all other factors were equal,
and the Americans had the
abundance of wood that

‘British Columbians do, it.

follows that they would

: purchase little, if anything,
from us, because their -
‘product. would be ‘ much

cheaper. -

Actual cost. figures
provided to the government.
from. the forest industry
show that the cost of
production. in British
olumbia’s sawmills has.
icreased: 80 percent bet-

Ween 1973 anid 1976.

Columbia “to attract
manufacturing or secon-
dary industry. . .

-’ Mining companies must

go where the minerals are —
or leave it in the ground.
Forest ‘companies. must go
where the trees are — or
leave.them in the forest.
‘But, in. our modern
society, - manufacturing
companies go where labour
costs are lowest. given that
other important  con-
siderations such as political
climate and availability of a
work ‘force are equal.
British Columbia is no
longer attracting those
companies. =
’ Infact, we are losing them

‘every day.

. Recently,. the B.C.D.C.
undertook a_ study — of
companies which had been
located in British Columbia

and which -have left the

province within the las
three years. -
It is shocking to note that
the majority of these
companies said their main
reason for leaving was the
high cost of labour in British
Columbia. oe
_- The study, by no means
exhaustive, listed more than
‘30° companies .which have
left British Columbia. Some
of the names. are familiar
ones: Aethna Life, B.C.

_ Distillers. Canada Packers,

I think ll. British
Columbians have a share in
the problem and a stake in
finding a solution,

As government, we do not
have all the answers. And as
government, we cannot do
the job alone.

In fact, governments and

management, must accept .

their share of the blame. I
can recal] the settlements
during construction of the
St. Lawrence Seaway; or
the settlements in the Lower
Mainland, in the con-
struction industry during

the boom years of the six- -

ties. , :

‘There are many examples
of management acting

‘irresponsibly. because their. .
fat, cost-plus contractors
meant a profit at. any cost... -

level.

In - many ~~ cases,

management has ignored:
the long-term consequences ~
for the sake of a fat: profit.

today.

just one. ©

‘con't P, 10 |

.

In the case of government,

there. are many examples |
which show that. govern- -
ment has led the way to |
higher. costs, wage. set- .
tlements in the public sector

over the past two years is ,

Nag secre Sec =