BRITISH COLUMBIA

Heinrich tax
plan booed by
boards, media

Continued from page 1

_ Mustees would “request the minister of edu-
_ ation to return to school districts at least
the 1984 budget levels plus an inflation fac-

tor, and also return the local power of taxa-
tion to trustees in 1985-86.”

Return of local taxing powers is a
demand that has gained momentum in the
Past few months. Boards had that power
Until education restraint was imposed in
1982, accompanied by a legislative whammy
that seized from trustees the authority to tax
local commercial and industrial properties.

Education Minister Jack Heinrich’s
Tesponse was a cynical piece of legislation,
10 be enacted at this sitting of the legislature,
Sranting” boards the right to tax residen-
tal property to raise the shortfall form the
Ministry’s cuts.

It fell flat with the education community,
and, significantly, even the daily press edi-
torialized against the legislation.

“The minister has made a very clever

' Proposal. . .because it has taken the indus-

trial tax base away from the local boards
and has left the local school boards to tax
the residential properties only,” said Van-
Couver board chairman Pauline Weinstein.

“T’'m certain it didn’t take the minister
Very long to figure that the vast number of
boards facing budget cuts could in no way

80 forward with a referendum to raise the

Money they need in order to halt any further
Cuts,” she said.

“If we are going to have referendum
democracy, then let’s have referendums for
Coal devleopment, Expo, hospitals. . .let’s
Vote for dog catcher,” said Pat Clarke, pres-
Ident of the B.C. Teachers. Federation...

BCSTA president Bill Lefeaux-Valentine

a

Parents rally
against budget cuts
Queen Elizabeth Theatre
Feb. 24, 2 p.m.

a

Complained that boards would have to the
ar the costs of the referendums.

NDP education critic Mark Rose said the
teferendums would create greater inequities

tween districts with wealthy residents and
those of lower income parents.

Weinstein said Vancouver school. taxes
Would have to double to meet the ministry’s
Jnancing shortfall, calling the proposal

totally unaceptable.”

Heinrich also announced last. week he
Was sending the defiant trustees a letter
ee acing that the appropriate budget be

ed.”

Under the School Act the ministry has
the power to disband boards disobeying its

Tectives and impose its own trustee to
adminster the district, but Heinrich has
Tetreated from that threat in the face of

Widespread public reaction. At press time —

Tuesday, boards had yet to receive the min-

ASter’s letter.

Students and faculty in B.C.’s universities
ve also been on the march against post-
Secondary education cutbacks. Some 500
Students rallied outside the legislature in
Ictoria Feb. 14 to demand an end to cut-
acks which has denied students entry into
© province’s colleges and universities.
Neither Heinrich nor Universities Minis-

_ter Pat McGeer met the combined univer-

Sity and secondary student rally, but NDP
MLA’s Lorne Nicholson and Lyle MacWil-
Mm gave addresses.
On Tuesday, students and faculty from
the University of B.C., the University of
Ictoria and Simon Fraser University were
Set to rally at Robson Square in Vancouver
following the annual UBC Trek.

4

Free zones ‘distort economy’

A leading University of B.C. economist
warned this week that the Socred govern-
ment’s plans to develop “special economic
zones” for job creation would not only fail
to create any significant number of jobs
but would lead to distortion of the provin-
ce’s economy and would create further
social inequality as more government
revenues go into tax concessions for cor-
porations.

UBC economist Dr. David Donaldson
made the comments in a paper entitled
“Does B.C. need special enterprise
zones?”, one of two papers issued at a
press conference Monday by the B.C.
Economic Policy Institute.

“If the government wants to do some-
thing about unemployment — and I
think it should — there are far more effec-
tive measures that can be taken, including
housing construction and tree planting
programs,” Donaldson told reporters.

Also released at the press conference
was economics professor Chris Archi-
bald’s paper on the impact of Socred poli-
cies on the universities, “The Government
and the Universities.”

The establishment of the Economic Pol-
icy Institute was prompted by the Socreds’
notorious July, 1983 budget and the need
to respond to the restraint policies deve-
loped by the gov't.

Since its inception two years ago, the
UBC-based Institute has issued some 30
papers, criticizing various aspects of
government economic policy and urging
greater government stimulation of the
economy and strengthening of education
and social services.

Donaldson said his latest paper was
prompted by the leaked memo on special
economic zones sent to cabinet last July by
Economic Development Minister Don
Phillips.

The memo outlined the various features
intended in the zones that B.C. would
establish, including special customs arran-
gements, a variety of tax concessions,
reductions in regulations and establish-
ment of the zones as economic develop-
ment projects as provided for in Labor
Code amendments last year.

Legislation establishing the zones is
expected when the session opens next
month and Premier Bill Bennett hinted in
his televised address that the Mulroney
government would be moving together

with provincial governments to establish

“special enterprise zones on the east coast

University funds, autonomy cut

For the past three years the Socred
government has exploited increased fed-
eral funding to universities to cut its own
financing while at the same time it has
moved to impose greater provincial con-
trol over programs and administration,
according to a paper released by the B.C.
Economic Policy Institute.

Entitled “The Government and the
Universities,” and prepared by University
of B.C. economics professor Chris Archi-
bald, the paper also notes that the Socreds
funding policy on universities doesn’t even
make economic sense because of the long-
term loss of skilled, educated workers and
because it is “cheaper” to train people ina
time of high unemployment.

According to Archibald’s statistics, the
federal contribution to universities rose
from $206.4 million in 1982/83 to $225.7
million in 1983/84 and $236.6 million in
1984/85. But at the same time, the total
provided to the universities over the same
period actually fell because the provincial
government’s contribution was slashed
from $109.7 million in 1982/83 to $89.6

DAVID DONALDSON...few jobs at
heavy cost in Socreds’ special zones.

and the west coast.” Earlier this month,
when unemployed groups lobbied MLAs,
they found that the Socreds were focusing
all their attention for job creation on estab-
lishment of the zones.

But there are likely to be few jobs
‘created and the costs are likely to outweigh
any benfits, Donaldson stated in his paper.

Those conclusions are based both on
economic theory and experiences with
zones elsewhere in the world, he said.

@ The U.S. experience with zones
where, in 1981, only 14,000 jobs, “‘a minis-
cule fraction” of the total across the coun-
try, is an indication of what could be
expected here, he said.

If B.C. tries to entice labor-intensive
manufacturing into its zones it would be
“doomed to failure”, he said, because the
province would be into direct competition
with such countries as Singapore and the
Philippines “‘where wages are as low as
one-tenth of ours.”

@ The tax holidays, concessions and
low-interest loans — lumped as “fore-
gone taxes” — would.also result in lower
government revenues.

“These foregone taxes are likely to
result in even lower expenditures on social
programs and education,” Donaldson
stated. “...Thus, we can expect the zones

million in 1983/84 and to only $62.4 mil-
lion in 1984/85.

“What happened was when the feds
increased their contribution, the provin-
cial government took advantage of the
opportunity to reduce its contribution,”
Archibald noted. “...Morally, although
not legally, the provincial government is
certainly playing games with the feds.”

At the same time, the government is
moving to increased control of post-
secondary institutes, Archibald warned.

Although Archibald, now on sabattical

Jeave, prepared the paper some months

ago, his warning about autonomy is “very
timely,” said Institute member Gideon
Rosenbluth. He noted that earlier this
year, University of Victoria president
Howard Petch had told UVic faculty
members that Universities Minister Pat
McGeer had suggested during discussion
on budget cuts that various university
departments — considered ‘“‘frills” in
Victoria — be eliminated entirely to cut
costs.

“One might conclude that the govern-

- activity...”

to increase poverty and inequality in this
province.”

Pointing to the Asian experience with
zones, he warned that the costs of tax
breaks can be very high because “more
and more zones (means) more and more
governments competing for the favors of
multinational firms.” And many of those
same firms, once the tax breaks run out,
move their plants elsewhere, he noted.

® The need to provide subsidies to new
industries locating in the zones through
tax concessions also creates distortions in
the economy, pushing development away
from those areas where B.C. enjoys a
comparative advantage, namely the
resource-based industries and areas invol-
ving a high level of skill and education.

Donaldson’s paper also emphasized
that:

@ The additional foreign investment
that zones would bring “is not needed in
B.C. and foreign-based industries have
disadvantages for us;” ,

@ High technology should be deve-
loped not by attracting industries such as
low-skill microchip assembly but rather by
applying new technology and new skills to
traditional industries;

© Special economic zones will bring
with them “serious administrative prob-
lems.” He cited the case of existing busi-
nesses seeking relocation to the zones to
take advantage of tax breaks and other
concessions as well as problems of compe-
tition between businesses inside and out-
side the zones producing the same
product.

“These considerations should remind
us too that economic policy should not be
neutral about what is produced,” Donald-
son warned. “If we give up spending on
social assistance, education and parks to
stimulate exports and other private sector
activity, then we do not get close substi-
tutes in return.

“No amounts of cheap videocassette
recorders or automobiles will feed the
poor or make us less ignorant...

“Our economic future can include the
prospect of full employment, economic
growth and economic justice for all. To
ensure that future, we must reverse the
recent education and social program
expenditure cuts, (and) recognize govern-
ment expenditure as an important and
useful component of overall economic

ment wants the power to tell the universi-
ties what to spend the money on, as well as
how much they are to have,” Archibald
noted in his paper. “If this came to be, one
could easily imagine that, one day, the
minister would act on his whims: ‘Shut
down philosophy; it is unproductive (and
subversive too: Look at Socrates!) ”.

Archibald also emphasized that cutting
university funding during high unem-
ployment is the wrong economic policy.
“It costs society relatively less to take
people out of the labor force for training
when their labor is in less immediate
demand than when it is in more demand,”
he said.

“Any government which says it is ruled
by the ‘cash in the till’ criterion reveals that
it does not understand its public duty,” he
stated. “A government properly con-
cerned with social costs and benefits
would be taking advantage of the reces-
sion to expand the universities a little; it
certainly would not be cutting them
back.”

PACIFIC TRIBUNE, FEBRUARY 20, 1985 e 3

iia ts