Chair:	* Rick Thorpe (Okanagan-Penticton L)
Deputy Chair:	* Evelyn Gillespie (Comox Valley NDP)
Members:	* Pietro Calendino (Burnaby North NDP) * Rick Kasper (Malahat-Juan de Fuca NDP) * Joy MacPhail (Vancouver-Hastings NDP) * Steve Orcherton (Victoria-Hillside NDP) Glenn Robertson (North Island NDP) * Erda Walsh (Kootenay NDP) * Murray Coell (Saanich North and the Islands L) Gary Farrell-Collins (Vancouver-Little Mountain L) * John Weisbeck (Okanagan East L) * Jack Weisgerber (Peace River South Ind)
Clerks:	Craig James Kate Ryan-Lloyd
* denotes member present

[ Page 1279 ]

The committee met at 10:10 a.m.

R. Thorpe (Chair): I call the meeting to order. Hopefully, everyone has an agenda in front of them. There has been an extensive amount of documentation and correspondence flowing around on this issue, some coming in at midnight last night. So I thought it would be useful to ask the Clerk to just go over that to make sure that all members are aware of the correspondence. They should have all been copied on the correspondence, but we just want to make sure that all members are aware of it.

C. James: Received by my office since January 10, 2000, are the following pieces of correspondence: January 10, 2000, Bob Lingwood, B.C. Ferry Corporation, letter to Rick Thorpe responding to questions raised at the committee meeting of November 4, 1999; January 21, 2000, George Morfitt, auditor general, letter to committee members containing comments on evidence given January 12, 2000, by Lawrie McFarlane of Treasury Board, Nancy Carter of Crown corporations secretariat, Tom Ward and Frank Rhodes; January 2000, Sam Bawlf, a binder entitled "The Real Story of B.C. Ferries and the Fast Ferry Project"; January 21, 2000, Lawrie McFarlane, secretary to Treasury Board, response to questions posed on behalf of Murray Coell by letter dated January 13, 2000; January 24, 2000, Nancy Carter, Crown corporations secretariat, letter in response to questions posed by Gary Farrell-Collins; January 24, 2000, Tom Ward, letter in response to questions posed by Murray Coell; January 21, 2000, Lawrie McFarlane, Treasury Board, letter in response to questions posed by Murray Coell; January 21, 2000, Bob Lingwood, B.C. Ferry Corporation, letter in response to questions posed by Rick Thorpe; January 24, 2000, Tom Ward, letter responding to evidence given by Lawrie McFarlane, secretary to Treasury Board, at the committee meeting of January 12, 2000.

R. Thorpe (Chair): Hopefully, all committee members have received copies of those. In checking your files, if you have not received those documents, please contact Kelly in the Clerk's office, and she will make sure that you receive them.

Our first witness scheduled today is the auditor general. You will recall that at the January 12 meeting, the closing comments were that the auditor general would report back on the comments that were made by a variety of witnesses. So I would ask the auditor general to give us his report on those issues.

G. Morfitt: As the Clerk has said, in response to a request from the committee that I provide the committee with any comments that my office felt would be helpful pursuant to the testimony given on January 12, we've written a letter to the committee, dated January 21. A little earlier, before this meeting, I was asked by the Chair if I would read this letter into Hansard. I trust that's agreeable to everyone. It's a little lengthy, so I'm going to try and get through it as quickly as I can. This is addressed to the Select Standing Committee on Public Accounts, regarding the January 12, 2000, testimony on the fast ferry project.

[1015]

"During the January 12, 2000, meeting of the Public Accounts Committee, a number of points were raised that relate directly to my report on the fast ferry project or to my office generally. Also, in some cases comments were made that were not direct references to my report but that nevertheless reflect on the accuracy of that report.

"In accordance with my undertaking to the committee, I review below what I consider to be the most important of these issues and comments. For convenience, I discuss them by speaker and indicate the page reference in Hansard.

"Points raised during testimony of L. McFarlane.

"Mr. McFarlane commented -- page 1234 -- that my office had in mind an intrusive model of central agency monitoring of Crown corporations, requiring 'Treasury Board staff to inquire deeply into the affairs of the Crown corporation and to inform itself in the same manner that it informs itself about the activities of line ministries.' This comment is incorrect and not supported by either the present report or my Crown corporation governance study issued in December 1996. That study focused on the need to ensure that a good governance and accountability system is in place. Having this should be the priority, and it should be secured prior to oversight needs being defined. In this context, I am in agreement with the following comment from the 1997 B.C. Hydro IPC review: 'Excessive or misplaced oversight by government agencies and officials is no substitute for an effective system of corporate governance and accountability.'

"Points raised during testimony of N. Carter and B. Brohman.

"Mr. Brohman stated -- page 1244 -- that, to the best of his knowledge, only a Crown corporations secretariat representative was involved in the presentation to the B.C. Ferries board at its April 14, 1994, meeting. Our information, reflected on page 30 of our report, is that the minister responsible led off the presentation by providing his views on and support for the proposal. He was followed by the CCS representative, who presented details of the proposal.

"Ms. Carter stated -- page 1238 -- that both the mid-Island transportation strategy and B.C. Ferries' capital plan supported the introduction of fast ferry technology. In fact, the strategy considered the merits of fast ferries but did not support or oppose the use of fast ferries. In this regard, B.C. Ferries board resolutions on implementing the mid-Island transportation strategy -- made at the February and March 1994 board meetings -- called only for the development of Duke Point. Similarly, B.C. Ferries' draft capital plan proposed investing in trials to determine whether fast ferries would be useful to B.C. Ferries; it in no sense endorsed them without further careful consideration.

"Ms. Carter stated that 'it's difficult to imagine what governance framework would have prevented the particular instance that happened here.' A careful reading of chapter 2 of my report would have helped to resolve this difficulty.

"Points raised during testimony of F. Rhodes.

"Mr. Rhodes -- pages 1253, 1256 and 1257 -- discussed the extensive nature of the information supplied to the board of Catamaran Ferries International -- CFI. This discussion minimizes the real concerns of the board about the quality and completeness of the information provided to them, and I reiterate the facts and conclusions stated on page 33 of my report.

 

"Mr. Rhodes -- page 1248 -- said that the Canadian transport centre of Transport Canada determined that the route chosen by B.C. Ferries was appropriate for the use of high-speed technology. This is an overstatement. The purpose of the centre's study was to evaluate the economic feasibility of using fast ferries on a number of Canadian ferry routes. The Nanaimo-Horseshoe Bay route was not one of the routes they selected for examination; that route 'was examined only as a validity check of the model as it is already being pursued by British Columbia Ferry Corporation as a fast ferry route.' Although not its primary purpose, the centre's model evaluation, using cost and revenue estimates provided by B.C. Ferries, did indicate that even with a 15 percent premium fare, the Nanaimo-Horseshoe Bay fast ferry route would not break even.

[ Page 1280 ]

"Mr. Rhodes -- page 1250 -- indicated that at a November 1996 board meeting, the CFI board received a detailed budget, and senior staff stated they had high confidence in the accuracy of the budget information. The minutes of this November 22 meeting do not support Mr. Rhodes's interpretation. Dissatisfied board members called for 'a budget project that is properly prepared and defined.' Senior staff made clear that the cost estimates could not be guaranteed because of the difficulty of estimating the labour productivity that would be achieved during the construction period.

 

[1020]

"Reference was made by Mr. Rhodes -- page 1253 -- to a committee of management that had oversight over capital projects, including the fast ferry project: 'All of the capital initiatives flowed through the management's capital committee and then went to the board.' It should be noted that Mr. Ward chaired this committee of management from its inception in summer of 1994 until late 1997, so that, in my opinion, during that period the committee could not have provided independent oversight of the project.

"Points raised during testimony of T. Ward.

"Mr. Ward contended -- page 1262 -- that the CFI board was fully informed. However, his response focuses on the quantity of detailed data provided by the board and does not address the board's desire for organized, summarized information presented in a format they specified. I stand by the assertions on page 33 of my report.

"Mr. Ward stated -- page 1263 -- that my report did not refer to the formal change order process put in place. In fact, pages 56 and 57 of the report mention the system and point out that it was not fully implemented and was sometimes bypassed.

"Mr. Ward -- page 1263 -- discussed provisions of the contract aimed at transferring some risk to the contractors, but neglected to mention that the last shipyard -- and the largest one -- did not sign the contract until May 1998, well after construction had started and shortly before the first ship was launched. See page 17 of my report.

"Points raised more than once.

"I am very concerned that the presentations by Mr. Brohman, Mr. Rhodes and Mr. Ward may leave the committee with the impression that the 1994 cost estimate was of reasonable accuracy. This is not so. Here is some further background on that estimate, to supplement the discussion on pages 54 and 55 of my report. The cost estimates provided by international fast ferry designers in response to the request for qualifications were not the price to build, in B.C., what B.C. Ferries wanted. They were estimates of the cost to build, in the proponent's country of origin, a vessel that had already been built and that the designer thought was sufficiently similar to what B.C. Ferries wanted. However, there were many differences between what was wanted and what was being priced. For example, Incat's proposed vessel carried 214 B.C. automobile equivalents rather than the 240 specified in the request for qualifications; it had single-deck, three-lane loading, with internal ramps leading to a second deck, although the selection committee decided that 'the requirement for a fast turnaround and the use of existing terminals would definitely require a vessel capable of loading cars simultaneously on two decks and using two-lane loading to each deck'; assumed that loading ramps would not be part of the ship, which turned out not to be the case; had a cruising speed of 32 knots, loaded, at 90 percent MCR -- mean continuous engine power rating; the selection requirements were cruising speed of 37 knots at 90 percent MCR.

 

[1025]

"A 1994 CCS document suggested that this proposed Incat design would cost $74 million if built in British Columbia.

"I noted that in several places in the presentations to the committee -- e.g., pages 1250, 1252, 1259, 1262, 1263, 1270 -- there was confusion about the type and quality of cost information being reported to the CFI board. There are three points I wish to clarify.

"A properly functioning accounting system gathers complete and timely information on an ongoing basis. If Mr. Ward is correct in his assertions that he had to spend several weeks of his own time and obtain information from a number of unrelated sources in order to find the actual or projected cost of the project, this is a serious criticism of the management information system for which he had responsibility.

"As I pointed out on page 55 of my report, at no time was a detailed budget developed that established what the cost of each component of the project should be. In the language of project management, there was no complete work breakdown structure. Mr. Ward described a process for tracking progress on modules of the ship, such as portions of the hull. However, to the best of our knowledge there was no detailed budget linked to each of these modules. In other words, management and the boards would at best know how much they had spent up to a certain date and how many modules they had completed at that date. The critical information they lacked was how much they should have spent to that date if they were to remain on budget. Mr. van Iersel makes this point well on page 1278.

"There was extensive discussion of the cost averaging that occurred in 1998 reports to the board, as noted on page 36 of my report. The averaging related to expenditures to date on the ferries. However, this discussion should not overshadow the more important point, also on page 36, that the board was not provided with management's estimated final cost of the ferry.

"Members of the committee discussed an accounting of benefits resulting from the project, such as taxes paid to the provincial government. Mr. Kasper had asked for my comments on that same point at the November meeting of the committee, and I attach a copy of the letter I wrote to the committee at that time on this matter.

"I trust these comments are helpful to the committee."

Attached to the letter, then, is a copy of the letter written to the Clerk on November 19, dealing with the issue of the tax implications of the project.

R. Thorpe (Chair): Does any committee member have questions of the auditor general at this point in time?

J. Weisgerber: I'm not certain that I can draw a direct link between my question and the material you've presented to us today, although it certainly is relevant, I believe. I was interested in testimony we heard last week about the nature of the contracts that were allegedly there with the various shipyards. You've indicated that some of those were not signed until the first ferry was almost built. We've also learned that those contracts provided for B.C. Ferries to assume the obligation to pay for all labour costs -- budgets aside.

What I was more interested in is: how, in those cases of significant labour overruns, is the issue of supervision and management. . . ? Were the companies paid? Was there a formula that returned that, or was that something that they were obliged to eat as part of an incentive? Were there any profits earned? I saw very little incentive for the shipyards, quite honestly. I saw a situation where, in retrospect, I'm not at all surprised that the shipyards were singing the praises of this project. Anyone who was fortunate enough to have a contract, I expect, would have felt the same way. But specifically, I'm interested in knowing whether there were any penalties at all if labour costs doubled or tripled what they were anticipated to be.

G. Morfitt: I'll ask my staff to come to the table, just to see if we have that information available.

[ Page 1281 ]

[1030]

J. Weisgerber: Perhaps I could be a bit clearer. Assume the contract covered a specific amount of labour -- let's say 1,000 hours, although it obviously would have been many times that. During that specified period of time, the shipyard would be entitled to the direct costs for production workers. It would be entitled to a supervision management fee, and into that would be built a profit factor, a margin. Once the labour went beyond what was specified in the contracts, what fell away? What did the shipyards not get on this second or third or fourth component of labour that they were entitled to under the contract in the first instance?

O. Trist: If memory serves me, the first component that fell away was the profit component. I believe that at a later stage the administrative overhead component also fell away. What didn't take place was the establishment of -- to use your example -- the 1,000-hour level. There was never agreement that after 1,000 hours, the disincentive provisions would kick in. The contract contemplated reaching agreement on those levels, but it didn't take place with respect to the first ship.

J. Weisgerber: In the review of the project, then -- perhaps either to Mr. Trist or to Mr. Morfitt -- were there significant portions of the contract that had the profit component stripped away? Or did the Ferry Corporation in fact continue to pay all of the management fees and the profit incentives on all of the construction costs related to these? Or were there elements where the profit was stripped away; and if so, was it on 10 percent of the work or 50 percent of the work or 70 percent of the work, as one might expect it should have been?

O. Trist: I don't have the information with respect to what actually happened.

G. Morfitt: No, we don't. I don't know whether the B.C. Ferry people might have that information, but we don't have it handy. We could research it, but perhaps the Ferry Corporation would be best able to answer that question.

J. MacPhail: Well, just a question of process here. It's interesting. I found the last meeting very interesting, and I'm sure today will be very interesting as well. But do you, Mr. Chair, plan on allowing for a back-and-forth amongst witnesses regardless of the engagement of committee members, or will people who have been challenged in the auditor general's statements now be called back to be witnesses?

It's not a cheeky question. I wonder about that, because I certainly don't think anybody on the government side is challenging the auditor general's report. In fact, we want to proceed to deal with the auditor general's report. I expect that the members opposite are not challenging the auditor general's report. I would expect not at all. So I'm just curious as to what your intention is.

[1035]

J. MacPhail: Actually, that's not what I was suggesting. What I was suggesting was that the government members certainly don't wish to engage in any challenge to the auditor general's report. We certainly wish to learn from it. Perhaps there's a need for a committee of bureaucrats to work out their differences, but. . . . I mean, I think there are some important issues that have been examined here and that to learn from the auditor general's report is what the Public Accounts Committee is about -- not to redo the auditor general's report.

R. Thorpe (Chair): No, I agree with that statement. However, in the January 12 meeting, statements were made by certain individuals and other people. In this particular case, the auditor general wanted to make some comments. If you read Hansard, it was the closing paragraph where the auditor general in fact undertook to come back to this committee. Also, there were witnesses and conflicting reports from witnesses, and in those particular cases we told those witnesses that if they chose to, they could reply to this committee. That's some of the correspondence you've received.

I think it's very, very important -- and I know you do too -- that we get to the bottom of this and that we get all of the facts. If people choose to dispute, I think they could do that in writing to us, and I think we should accept that.

J. MacPhail: You see, in order for us to move forward. . . . We move forward on the basis of the auditor general's report. I don't think there's any other issue before the committee. It's the auditor general's report, and I certainly know that the government members wish to deal with the auditor general's report.

M. de Jong: I think the reality -- and I don't think my colleague would dispute this -- is that as we have gone through this report, particularly in the last couple of meetings, new information has come available, some of it that the auditor general may or may not have had at his and his office's disposal. To the extent that that may impact on the findings or the opinions of the auditor general, I think that in certain cases -- perhaps not all -- it's relevant for the committee to explore that.

J. MacPhail: That's simply not the case. The Public Accounts Committee is dealing with the auditor general's

[ Page 1282 ]

You know, there's lots of important work that we have to do. The auditor general and his staff have spent an incredible amount of time on this report. There are three very salient recommendations, and in the interest of efficiency, we need to get on with dealing with those recommendations. I don't think the government members are in any way interested in further disputes amongst witnesses.

R. Thorpe (Chair): Thank you for your comments. Our intent here today was to move through the list of agreed-to witnesses, which all parties agreed to in letters dated November 8, November 17 and December 21. That has always been the agreement of this committee, to my knowledge, and I think that's the process we're trying to follow. If you're suggesting another process now, then you're going to have to approach it in, I think, a little bit different way than you've approached it so far.

J. MacPhail: My approach would be to get the heck on with it. Let's go. We don't need to revisit the auditor general's report. He's done an incredibly thorough investigation.

R. Thorpe (Chair): I'm sure -- or I'd like to believe -- that for most, if not all, of the recommendations that have been made in the auditor general's report, the government would have given its bureaucrats directions to be working on those, on the assumption that they're all going to be approved by this committee anyhow.

[1040]

R. Thorpe (Chair): So I would think that they're not waiting for this committee. I think that what we're trying to do here, as we've done in the past, is see if there are any modifications to the auditor general's recommendations, see if there are any additions to the auditor general's recommendations -- as this committee has done in the past. I realize the member is a recent addition to the committee, and your expertise. . . .

J. MacPhail: Inexperienced, yes.

R. Thorpe (Chair): Experienced or. . . ?

J. MacPhail: Inexperienced with public accounts.

R. Thorpe (Chair): Inexperienced. I'm not going to argue with your statements.

I think that what we should try to do. . . . We did have meetings scheduled for December 15, January 18 and January 19. For whatever reasons, those meetings didn't take place. If we could maybe deal with the issues here, then we could keep moving forward. But it's your choice.

Any other comments?

E. Gillespie (Deputy Chair): The Chair has taken some liberty with the description of agreed-upon or not-agreed-upon meetings. I would like to support my colleague here, who's suggesting that we get on. The next item on the agenda is to hear from B.C. Ferry Corporation. But in the absence of any workplan agreed to by this committee -- and I will refer the Chair to the letter of January 19 from the Clerk of Committees suggesting that it is the work of the committee as a whole to determine its agenda, its workplan. . . .

R. Thorpe (Chair): Yes, I agree with that. Obviously there's a difference of opinion. Members, including the Chair, thought there was an agreed-to workplan, thought there was an agreed-to schedule. It's very interesting to the Chair that for individuals who want to move forward, you seem to have difficulty in us moving forward on this issue this morning.

Does anyone else have any questions of the auditor general?

M. Coell: Over the last couple of meetings, we've looked at your report. We've looked at, I think, mistakes that were made or things that weren't done to create the problem. The more I read the information that's being presented to us and the more we hear it. . . . I just wonder whether, in your interviews with people, you found that the government's plan was indeed to do the Ferry Corporation's business in the way it was done -- that there hasn't been that many mistakes, as much as the plan was to build the ferries and not to worry about the cost. I just wonder whether, in your interviews, politicians or bureaucrats would have come forward with the suggestion that there weren't that many mistakes made. The plan was to spend as much money as it took to make these three ships.

G. Morfitt: No, I wouldn't characterize it that way at all. I think that people were pursuing a policy of building these ships in British Columbia. They wanted to pursue that policy, all right, but they wanted to do it in as cost-effective a way as possible. In the report, we set out the reasons why that cost-efficiency wasn't realized. I hesitate to start down the list, but there are a whole variety of reasons why it did not happen. I don't believe it was an open chequebook, though, at any time.

R. Thorpe (Chair): I have a question for the. . . .

M. Coell: Can I just follow that. . . ?

R. Thorpe (Chair): Oh, I'm sorry, Mr. Coell.

M. Coell: Just to follow that up, what I'm getting at is that in essence, it wasn't the plan to have an open chequebook or to spend as much as it took to make it their actual. . . . The overspending. . .are mistakes.

G. Morfitt: I think spending started before you had all the pieces in position. You didn't have your contracts signed with the people that were going to build the ships; you didn't have the design completed. So you didn't know exactly what the costs were going to be. You didn't have the checks and balances of governance in place to make sure that this project was looked after right from beginning to end. There are all sorts of reasons why the expenditures have gone up much higher than what they should have. They're all explained in here. They all contributed, and they all could have been avoided.

[ Page 1283 ]

R. Kasper: I have a question for you, George. Is there any information that you've heard from witnesses over the last series of meetings that would change the content of your report?

[1045]

R. Kasper: No, I said: is there any information. . . ?

G. Morfitt: No, there has not been any information.

R. Kasper: So you stand by your report as it has been submitted to the committee.

G. Morfitt: Fully, without change.

R. Kasper: And you've received no additional information that would change the content or the findings of your report.

G. Morfitt: No, we have not.

R. Kasper: Well, after hearing that, Mr. Chairman, I would move that the committee accept the recommendations of the auditor general's report -- report No. 5 -- and recommend the same to the Legislative Assembly.

R. Thorpe (Chair): Would you please write your motion out so that we have an official motion here?

R. Kasper: Yeah.

R. Thorpe (Chair): Thank you.

When we have a motion before this committee. . . . I'm sure all members do know that it is a debatable motion.

S. Orcherton: For the members of the committee.

R. Thorpe (Chair): For the members of the committee -- that is correct. I know non-members of the committee will respect that. There are just two different rules that I might let people know. Members can speak -- and, hopefully, without repetition -- as many times as they would like and for as long as they would like, if they wish to speak at all. Once we have Mr. Kasper's motion, we'll see what happens. In the meantime. . . . Yes, Mr. de Jong?

P. Calendino: There's a motion, Mr. Chair.

A Voice: Well, we're waiting for the official motion.

R. Thorpe (Chair): Yes, Mr. de Jong?

M. de Jong: As we wait for that motion, let me. . . .

S. Orcherton: As we wait for it, you'd like to speak on it. Is that how it works?

R. Thorpe (Chair): Excuse me, Mr. Orcherton. Could we let the speaker speak? Thank you.

S. Orcherton: Absolutely.

M. de Jong: I appreciate my colleague's guidance.

Mr. Chair, I'm not a member of the committee. So when I ask this question, if my colleagues want to seek a ruling on whether it's out of order or not, that's up to them. As I understand the motion that members of the committee are on the verge of debating, it would cut off debate. The witnesses that I was provided with notification would be providing evidence today would be precluded from providing that evidence. Do I understand the motion correctly that the committee's about to consider?

R. Thorpe (Chair): Having not seen the official motion that Mr. Kasper's proposing, I will answer that question once I have a chance to read it and confer with the Clerk.

I'm sorry, Jack. Did you want to say something?

J. Weisgerber: Well, it doesn't. . . . No, I'd just as soon wait until we see the motion.

M. de Jong: How much did you guys spend to get here today? Pietro, how much did you spend to get here today?

P. Calendino: I was here already.

M. de Jong: Were you?

R. Thorpe (Chair): Mr. de Jong, could we just please hold back on that? Thank you.

M. de Jong: What a waste -- like, just more money.

A Voice: Just relax, Mike.

M. de Jong: Just more money.

P. Calendino: You're not on the record, Mike, so keep your mouth shut.

M. de Jong: You guys are. Let's add it up. How much did we all spend to get here for ten minutes?

R. Thorpe (Chair): Excuse me. I'd like to read the motion being moved by Mr. Rick Kasper.

R. Kasper: Do you want me to print it?

M. de Jong: Only if you're able.

R. Kasper: Settle down; you're a guest.

R. Thorpe (Chair): I would. . . .

R. Kasper: You're a guest.

R. Thorpe (Chair): Mr. Kasper, did you want to hear your motion?

"I would move that the committee accept the auditor general's report on fast ferries, No. 5, and recommend the same to the Legislative Assembly." Is there any debate on that?

[ Page 1284 ]

Secondly, I think it's important to understand that the auditor general responded to Mr. Kasper's question on the basis of the information that he had heard here to date. I believe that we had agreed to hear from a number of witnesses. If the information that we've all received from Sam Bawlf is an indication. . . .

Interjections.

R. Thorpe (Chair): Excuse me, Mr. Weisgerber.

Could we just keep it down over there, so all members can hear? Thank you very much.

[1050]

I'm quite sadly disappointed in the government members' approach to this. You had an opportunity, members, earlier this week to simply dig in your heels and say: "We're not going any further." But instead, you've gone through an exercise that's brought people out, that's brought people here from around the province. Now you're attempting -- or perhaps will succeed -- to shut the committee down. That's pretty shortsighted. I really regret that we're not going to hear from people like Sam Bawlf and Bob Williams and Mr. Eaton. We'd agreed as a committee to hear from those folks. I don't know whether the government members didn't like what they've heard from other witnesses. I expect that in some cases they didn't. And I expect that in some cases you won't like what you hear from future witnesses, if they're called forward. But I think this is absolutely wrong, and I'm appalled at the kind of shenanigans that we're seeing here this morning.

R. Thorpe (Chair): Thank you, Mr. Weisgerber.

E. Gillespie (Deputy Chair): I would just like to again remind members of what the auditor general has said: there is nothing that he has heard to date that would change his mind about his report. What we have heard to date is that every witness who has come before this committee has agreed with the recommendations of the auditor general's report. There have certainly been differences about the findings of the report. But the recommendations are the forward-looking part of the report and the way in which government and agencies of government can actually bring about change that is going to result in better fiscal management.

I would submit to this committee that Sam Bawlf's report has been received. It has been received not only by members of this committee; it has been made public through the media. The auditor general has met with Sam Bawlf. They have discussed what Sam Bawlf puts forward in this report. There is nothing new here. There is certainly an interesting story here, but there is nothing new that the auditor general is not aware of and has not been made aware of throughout the information-finding in the preparation of his report.

M. Coell: I'd just like to speak to the motion, because it's an interesting motion, in that it's a closure motion gilded with approval of a set of recommendations.

You know, we've sat around here trying to get to the bottom of what is a financial mismanagement crisis for this government. We have, I think, come pretty close to seeing where the problems are, and why. To close off at this point without having some recommendations for government to act on by this committee is sad. I think that when you look at overspending of this magnitude, you have to look at patients and students and seniors and programs that were robbed of hundreds of millions of dollars because of mismanagement. We're going to stop debate; we're going to stop research into why, what the reasons are and who is responsible for the theft of hundreds of millions of dollars out of health care and education and seniors, by evoking closure, by running.

You can run, but you can't hide from this one. Your government is responsible and must take the responsibility and prove itself to the people of this province. If you just run and hide now, then what do you say to the people who we took that money from? That money has disappeared. It's disappeared out of services that people need. We're going to leave it, close the book and walk away; that's not good government -- simply not good government.

[1055]

Now, on listening to Mr. Kasper, he asked the auditor general if there were going to be any modifications or any changes to the report. The auditor general stated clearly that, no, there is not, nor will there be. He is very confident that his report in fact has been thorough and that any questions, any discussions -- people that he has met, groups of people that he has talked to -- have in fact been adequate.

I would suggest that to say anybody is running and hiding is wrong, simply because the auditor general, I'm sure, hasn't run and hid from any of the presenters or those people he has spoken with to ensure that his report was thorough. I would suggest that that is wrong. I would suggest that the recommendations that the auditor general has put before the committee to be accepted have been thorough. I trust that any recommendations or any additions that the committee may look at furthering have already been talked about. They've been discussed.

So I'm in favour of accepting the auditor general's recommendations. They have been thorough. I have every faith that as the auditor general, he has done the work that was required of him. I can't see that this committee in fact should be saying that the auditor general, through whichever method or through whichever way, has neglected to look at something

[ Page 1285 ]

J. Weisgerber: Having listened to the rationale for closing this down, I'm struck with the notion of the question: "Why do we meet at all?" Why did we spend hours and days and days looking at the auditor general's report on drinking water? It's an important issue, but one that was a very safe area for the government members. You could carry on with discussions on drinking water ad nauseam.

Why did we spend days and days looking at the auditor general's report on Y2K? We were all there to. . . . At the end of the day, we accepted the recommendations. But we wanted to hear what Finance was doing; we wanted to know what Hydro was doing; we wanted to know what the Ministry of Health was doing; we wondered about social services -- how they would deal with a crisis. That wasn't to challenge the auditor general's report. It was simply to seek more information. Government members seemed quite keen in those circumstances to pursue that matter, meeting after meeting after meeting. There was no question of, "Gee, has the auditor general changed his mind now that we've heard from the Deputy Minister of Finance on what they're doing on Y2K?" -- not a bit of it.

This is simply a group of people who've been embarrassed by this fast ferry project, who have been embarrassed by the witnesses that have come forward -- most of them put in place by your own government -- and a group of people who are afraid that they're going to be further embarrassed by the testimony of witnesses yet to come. I think if you're going to do that, if you're going to shut it down, you might as well just get on with it. I'll tell you, you're just digging a hole for yourselves with this argument you're making that further testimony is redundant. You've heard testimony. That's what this committee is all about. Why don't you just move to disband Public Accounts and get on with it?

J. MacPhail: Like your government did.

R. Kasper: Question.

R. Thorpe (Chair): Order, please. Mr. Weisbeck, please. We will go through the order of speakers. Thank you, Mr. Kasper, for your assistance.

J. Weisbeck: Thank you very much, Mr. Chairman. I guess I'm absolutely, completely disappointed with the contempt that these government members have for this committee and the process that we're involved in. My understanding of this whole process is that we're trying to find information. Yes indeed, we do have a report before us from the auditor general, and yes, we agree with some of the recommendations. But I think there's an opportunity to enhance that report by hearing from different people.

[1100]

Frankly, last night I read the submission from Sam Bawlf, and I found it fascinating. I just thought that it was a whole different approach to the information we've heard to date. I was looking forward this morning to asking a few questions of Mr. Bawlf, because I think that he's opened a different line of questioning and probably a way of giving us further enlightenment.

So, Mr. Chairman, I'm disgusted. I just think that I agree with Mr. Weisgerber. I mean, if we're going to continue just to shut down these committees and call closure on every debate just because it happens to embarrass the government, I think it's sad, because you could really learn something by this and maybe make this a better province by listening to these people.

E. Gillespie (Deputy Chair): The Chair might like to remind members to speak through the Chair.

This is not a motion of closure. This a motion of confidence in the auditor general and in the recommendations that the auditor general puts forward. Every person who has made a representation before this committee on this report has agreed with the recommendations of the auditor general. The way in which the Public Accounts Committee can work and can move forward is to work with the recommendations.

The work that we have been doing on this particular report is quite different from work done on other reports, in that it is backward-looking rather than forward-looking. We have heard from B.C. Ferries, we have heard from the Crown corporations secretariat, and we have heard from the Ministry of Finance as well, about the response to the recommendations of the auditor general's report. That is where we should be focusing our attention, and that is the intent of this motion.

S. Orcherton: Pardon my voice. I've got a bit of a cold, so I hope I can be really clear here.

We've had two reports on this issue: one from the auditor general and one from an independent group -- the Gordon report. We've heard a number of witnesses come forward on this issue. Most enlightening for me was at our last meeting, when we heard from Mr. Rhodes and Mr. Ward -- issues being a little more clear for me around what did happen in respect to this issue in the Ferry Corporation and CFI. Indeed, the very things that were laid out in the auditor general's report around what went wrong in terms of this project were confirmed by those witnesses.

The auditor general has been very clear in saying that nothing he has heard to date from any of the witnesses would change his report. I submit that this is not surprising. The auditor general has met with all of those individuals, and that formed the basis of this report. That's what we're here to deal with: the auditor general's report.

I know that members opposite want to make political hay of this issue; I understand that. I understand, as well, that members of this assembly who are not members of the committee have been issuing their business cards to B.C. Ferry worker employees, saying: "In 30 minutes I want to have a report on why the fast cat didn't run last time." I want to submit to this committee that that kind of process is completely unacceptable.

[ Page 1286 ]

With that, Chairperson, I move the previous question.

[1105]

S. Orcherton: Chairperson, there's a motion before you to move the previous question.

R. Thorpe (Chair): I'm not entertaining the motion, because there has not been enough debate on this issue, thank you very much. The ruling of the Chair is it.

S. Orcherton: Chairperson, it's interesting. . . .

R. Thorpe (Chair): I call a recess of this committee right now for 15 minutes. Thank you.

S. Orcherton: Point of order.

R. Thorpe (Chair): It's a point of order.

S. Orcherton: Chairperson, when we started with your tenure as the Chair of this committee, I think you had the support of all members of this committee. What you're doing here is acting in an arbitrary fashion. I would submit to you that you are rapidly losing the support of the members of this committee. Your role is to act as the Chairperson of this committee, not to unilaterally push your view or the views of any member of this committee to the committee.

I've moved a motion. The motion is that I call the previous question. I believe the motion is in order. Chairperson, it is not for you to determine to call a recess to do any other business in front of this committee. I believe the motion is in order, and I would challenge your ruling on this position.

R. Thorpe (Chair): I'm sure that all members know that the ruling of the Chair cannot be challenged. Secondly, personal attacks on the Chair are out of order. And thirdly, the current mood and the motion before this committee. . . . I believe it is in the best interests to continue debate for a while on this issue.

J. MacPhail: Point of clarification, Chair.

R. Thorpe (Chair): Yes, Ms. . . .

J. MacPhail: The debate will continue on what issue?

R. Thorpe (Chair): Mr. Kasper's motion.

J. MacPhail: Well, I'd like some assistance, if I could, please, just on procedure here. I thought moving a previous question was a non-debatable matter -- you had to test the House.

R. Thorpe (Chair): The Chair has the discretion to put the question or not. And in my view, at this point in time there has not been enough debate, and the question will not be put at this point in time. Debate will continue.

J. MacPhail: Excuse me -- just a point of clarification. I'd like a citing for that, please.

R. Thorpe (Chair): The member may want to put that motion later.

A Voice: Sorry. What motion are we talking about?

S. Orcherton: Point, Mr. Chairperson. I agree with Ms. MacPhail.

R. Thorpe (Chair): Surprising.

S. Orcherton: What rules are you relying on to make this determination?

R. Thorpe (Chair): My decision has been made on the rules and standing orders of this House. Thank you.

S. Orcherton: One further point. Can you direct me to the section of Standing Orders that you're relying on?

[1110]

S. Orcherton: Thank you.

J. Weisgerber: Are we recessed? Is that what I understand?

R. Thorpe (Chair): No, we're not going to.

Are there any other members that want to make any comments?

I want to make some comments on this issue. It's very, very sad for me that the government members are trying to put the auditor general's very, very good office into question here by their actions.

Some Voices: What?

R. Thorpe (Chair): The members talk about their confidence in the auditor general. For the last five to seven years the auditor general of British Columbia has been attempting to put in a new auditor general act, and he has been stonewalled at every opportunity by the current government.

The other thing that is very, very shocking and disappointing to me is that witnesses were called for today. One witness that was to appear after lunch. . . . That time was given to him at his request, and I believe that committee

[ Page 1287 ]

With respect to the recommendations by the auditor general, since I've been involved with this committee -- and I know under the very good leadership of our former Chair -- we started to adopt some follow-up procedures. None of the recommendations put here for the auditor general include any follow-up recommendations. Based on the government's actions today -- and of course the auditor general is only recommending -- I doubt very, very much if this government has the courage or the ability to put these recommendations into place.

For the record, I want to be very clear that there was an agreed-to workplan with dates established. In fact, it has been the government side who has repeatedly cancelled meetings -- most recently December 15, January 18 and January 19. If those meetings had taken place, we no doubt would have concluded our much-needed work on this fast ferry fiasco. There was a process undertaken to ensure that all members had fair voice in which witnesses could be called to appear by this committee. For the record, let me read. . . . I won't read those letters into the record, but the record clearly states that there was a letter received from Mr. Weisgerber, Mr. Gary Farrell-Collins and Ms. Evelyn Gillespie. The bottom line is: this committee did agree on who would appear before it. But some people seem to be forgetting who has to carry the cost of the fast ferry fiasco: it's hard-working British Columbians -- namely, the public. It's folks from all over British Columbia -- some of them from Cranbrook, some of them from Victoria and some of them from Comox -- who are going to have to pay the bills for this fast ferry fiasco.

This committee is known as Public Accounts. By closing the debate down, which you are effectively doing, this government is denying the public of British Columbia the very right to know what went wrong, who is responsible, how it can be avoided in the future and why something which was supposed to cost $210 million is now estimated to cost $475 million -- interestingly enough, an overrun of some $265 million. As the member for Peace River South noted, we spent hours and hours and days on Y2K, which cost the taxpayers of this province $250 million. You know. . . .

[1115]

S. Orcherton: Off-the-cuff statement.

R. Thorpe (Chair): No, some of your actions are fairly predictable.

Let the record show that the public interest is not being served, and rest assured that those who do vote for closure, in my opinion, will have their day of reckoning. I am particularly troubled, though, that Mr. Curtis Eaton had agreed to appear before this committee and advised the Clerk's office that he would be available in mid-February. I am troubled that Mr. Bob Williams wanted to appear before this committee and said that he too would be available in mid-February. And Mr. Michael Goldberg. . .

Interjections.

A Voice: In March.

R. Thorpe (Chair): . . .indicated that he wanted to appear before this committee at some time. Yes, and I do believe he indicated March.

Interestingly enough, I'm very troubled. I know that other members of this committee have had telephone conversations with the gentleman we were to have before this committee this afternoon.

Interjection.

R. Thorpe (Chair): I also know -- and I'm very, very concerned -- that that particular individual was seriously considering asking this committee for an in-camera meeting. I can only conclude that government members must know or have a very strong leaning towards what that individual may or may not have wanted to have to talk to. I am absolutely shocked at the total disregard of the government members for wanting to get to the bottom of this issue and am very troubled that they are portraying it as a vote of confidence in the auditor general. You have failed the public of British Columbia, in my opinion.

E. Gillespie (Deputy Chair): This is the Chair of the committee -- the impartial Chair?

A Voice: And these are the words of the Chair -- the impartial Chair?

R. Thorpe (Chair): This is the Chair.

Interjections.

R. Thorpe (Chair): I see no more debate at this point in time.

Motion approved.

J. MacPhail: Chair, I am interested to know whether we will be having a discussion about. . . . I think you made an offer about the way this committee operates. I know that the role of the Chair is a very special role, and I think that needs to be discussed in light of the Chair's remarks.

R. Thorpe (Chair): I would be more than pleased to entertain such a discussion.

Since we were scheduled to be here all day to listen to people and to hear from the auditor general, who specifically made a request, I would ask that this committee reconvene to hear the auditor general at 12:45, as we were originally scheduled to hear other witnesses. I would also like to suggest that after we hear from the auditor general, we will get some formal agreement in Hansard as to how we're going to move forward and when we're going to move forward with respect to the outstanding reports.

J. MacPhail: Oh, can't we do it now?

A Voice: Why can't we do it now?

E. Gillespie (Deputy Chair): I would suggest we do that now.

J. MacPhail: Yeah, so that we can get on with the business this afternoon.

[ Page 1288 ]

E. Gillespie (Deputy Chair): No, this is committee business.

R. Thorpe (Chair): No, we're talking about his corporate plan.

E. Gillespie (Deputy Chair): That's on the agenda for today.

R. Thorpe (Chair): That's exactly what's on the agenda for today.

E. Gillespie (Deputy Chair): No, do the agenda planning now.

J. MacPhail: Maybe some people can be available this afternoon.

S. Orcherton: Yeah, let's plan the agenda for how we're going to proceed over the next. . . .

R. Thorpe (Chair): The Clerk's office doesn't have all the documentation ready here. I mean, we were. . . . We will recess until 12:45. We will hear the auditor general, and then we can spend the rest of the time, if you'd like, on developing a workplan so that we can move forward. Is that not acceptable to all members -- since the Clerk's office does not have all of the information?

E. Gillespie (Deputy Chair): I would like to make sure. . . . Rather than leave it to the end of the day, when all of the opposition members have walked out and left, I would like to make the first order of business a half-hour on agenda planning for the next couple of months, move on to the auditor general's corporate plan and then, if time, move on to the auditor general's report on FRBC.

[1120]

Anyhow, yes, let's get together at 12:45, do the workplan, spend half an hour to 45 minutes on it and then move on to the auditor general's. . . .

E. Gillespie (Deputy Chair): The other item of business that is of concern to this committee, of course, is the selection of the new auditor general. I would want to be sure that the subcommittee is meeting either today or tomorrow to pursue that.

R. Thorpe (Chair): It would be my intention, as I discussed with you earlier -- if we have time today -- to move on to that and have an understanding on that.

E. Gillespie (Deputy Chair): Fine.

R. Thorpe (Chair): So we're adjourned till 12:45. Thank you very much.

The committee recessed from 11:22 a.m. to 12:54 p.m.

[R. Thorpe in the chair.]

R. Thorpe (Chair): Just to get back to work here, before we go through the auditor general's workplan and business plan here, we're going to talk about forward planning and forward meetings. I understand. . . . Has everyone received a copy of this, Kelly?

K. Dunsdon: Yes.

R. Thorpe (Chair): Everyone has a copy of what is outstanding, what has to be followed up and draft reports that have to be considered. Those who would like to speak or who have some thoughts on this, let's get going.

[1255]

The other thing that this committee has to do, sitting under a different title, is select a new auditor general. We have set aside a number of days for the interview and selection process. I'm concerned that we haven't gotten to that at this point. I believe that there's an urgency on this matter that this committee needs to take into consideration in terms of its planning for future meetings.

R. Thorpe (Chair): First of all, this committee will recommend a new auditor general. We will not appoint a new auditor general.

E. Gillespie (Deputy Chair): Thank you for the clarification.

There's that item of business of the special committee, which is separate from this committee but, of course, concerns the same committee members. I think we need to take that into consideration in our discussions.

The other thing that I would like to put forward for consideration is that we've been receiving this kind of rolling agenda of weekly meetings without there being any agreement to weekly meetings outside of session. Practice in the past has been monthly perhaps, sometimes as frequently as biweekly, but certainly not weekly meetings out of session. Given the distances that members have to travel, that presents a lot of difficulties. We have discussed, as a committee, the idea of less frequent but longer meetings. Perhaps two days' duration once a month would serve the committee and then the Legislature better than this weekly agenda which has been put forward.

R. Thorpe (Chair): In fact, we have had back-to-back days scheduled, and for a variety of reasons those have had to be altered, as you're quite familiar with. I don't think we

[ Page 1289 ]

I think one thing we have to also agree on is that the hours we work during a day should perhaps be increased, so we can get a full day's work done instead of perhaps four or five hours. I'm more than willing to listen to other members so that we can move forward and get through the work we have to get through. To the members: does anyone else want to say anything?

J. MacPhail: What are you proposing?

R. Thorpe (Chair): Evelyn, what are you proposing?

E. Gillespie (Deputy Chair): I would propose that this committee meet for two days consecutively in February and two days consecutively in March and then, given those parameters, that we establish the business we need to conduct at those meetings.

R. Thorpe (Chair): You've done that, taking into account the list of seven outstanding reports, two follow-up reports and nine committee reports that have to be drafted. You're suggesting that we can get all of that done, including our FRBC hearings, in four days between now and the end of March.

E. Gillespie (Deputy Chair): I would suggest, hon. Chair, that there hasn't been seen to be any hurry to move through these reports. What I am suggesting is some set dates for the next two months, and then we can organize our work around those days available. In addition to those dates, of course, we have to sit as the special committee to select the new auditor general, and there is definitely urgency on that front.

R. Thorpe (Chair): And that would be in addition to those four days that you're suggesting?

E. Gillespie (Deputy Chair): That's correct.

R. Thorpe (Chair): Does anyone have. . . ? Yes, Mr. Kasper.

R. Kasper: I just need a clarification here. In the item that says: "Consideration of committee draft reports. . . ." It's my understanding that the committee has already made motions or subsequent motions to these reports that have been approved by the committee and that the only thing that's left to do, through the Clerk's office, is to finalize the written draft reports so that the committee can give final resolution to those draft reports. Is that correct?

C. James: Essentially, yes.

[1300]

I would just like to add that based on history, having chaired a committee of selection to make recommendations for an auditor general, it does take up a lot of time. I'm sure Mr. Weisgerber would attest to that, because he served on the committee that I chaired. In my mind, that does have some higher degree of ranking, as far as the role of committee members who were on the other select committee.

M. Coell: I have just a comment. I think it's unreasonable to think that we could get through all of that in four days. There are some that you could probably hold over until the Legislature is sitting and concentrate on the ones that are more important, and I'm thinking. . . . Forest Renewal and social housing are probably more important than some of the other ones. Try and do a good job of two or three, and hold over a number of the ones that are more housekeeping until the Legislature is sitting.

R. Kasper: Mr. Chair, I would echo that comment. If we could rank, perhaps. . . . If it's agreed by general consent, perhaps that could be part of the motion -- that we would deal with those two particular items at the scheduled meetings.

R. Thorpe (Chair): If I could just interrupt, Mr. Kasper. . . . As you know, if we go into a new session and things are not cleaned up, then they effectively go by the wayside. You are aware of that, are you?

R. Kasper: Well, that's true. But then the rules of the House are that this committee can in fact table a report with the Clerk's office while the House is not sitting. That is deemed to complete the committee's work. I would stand to be corrected, based on the advice of the Clerk's office. But that's normal business. The committee can in fact file a report with the Clerk.

R. Thorpe (Chair): The other thing I'd like to say, based on. . . . I will acknowledge, Mr. Kasper, that you've served on this committee a lot longer than I have. But I would suggest that reviewing the committee's draft report is a little bit more complicated than my interpretation of what would maybe be perceived as a rubber stamp. I do recall that we've had lengthy debate and additions and changes, etc., to draft reports in the past, but that's just a matter of opinion.

Do any other members. . . ?

J. Weisgerber: As I'm trying to decide how much time is going to be involved in these various reports. . . . Do I understand now that we will only hear from witnesses whose testimony is likely to change the auditor general's report? Given the last motion, it would seem rather futile to spend a lot of time trying to identify and bring witnesses to this committee if the only relevance of that testimony would be to encourage the auditor general to change his position with respect to a report. If that's the case, if those are the only people we're going to hear from, then I'd suggest that we'll probably whiz through these rather quickly.

[ Page 1290 ]

R. Thorpe (Chair): You certainly can, Mr. Kasper.

R. Kasper: I don't think this committee has ever had the influence or authority or power to change an auditor general's report.

J. Weisgerber: I agree wholeheartedly, and that's why I was confused about the rationale for the motion before we broke for lunch.

[1305]

R. Kasper: It's pretty straightforward.

J. MacPhail: You're trying to think back to your days in government.

J. Weisgerber: Long before your time, Joy -- long before your time.

J. MacPhail: Correct -- when the committee served no useful purpose whatsoever.

J. Weisgerber: The good old days in British Columbia, as most people would have it.

R. Thorpe (Chair): Order, please.

J. Weisbeck: When we used to have some money.

J. MacPhail: When the government used their majority to not meet. . . .

J. Weisgerber: You don't know what you're talking about.

J. MacPhail: Yeah, absolutely.

J. Weisgerber: You don't have the faintest idea.

R. Thorpe (Chair): Ms. MacPhail, we are always pleased to have you here, but could you please come to order.

I think one of the things that we have to. . . . We're not here just to rubber-stamp the recommendations of the auditor general. We're here to understand them. Where this committee deems it appropriate, we can bring forward other recommendations -- as this committee has in the past. So I think we have to be very, very careful -- as a committee that is charged with serving the interests of the public -- that we're perceived to be limiting the discussion. Now, I don't know if that's the intent of the government members, so maybe they could clarify that. Is the intent to have witnesses come forward to this committee?

J. MacPhail: It's your committee.

R. Thorpe (Chair): I'm asking the members, because we kind of work together here.

S. Orcherton: It seems to me that we're sort of going from the topic item that we're dealing with around scheduling meetings back to our deliberations before lunch.

I mean, the auditor general gives us reports. We deliberate on those reports; we listen to witnesses. Mr. Kasper is right. We don't change the auditor general's report, but we may add additional recommendations from the committee that go forward to the Legislature. That may be what's decided. So I think there is value in hearing witnesses. In the earthquake preparedness issue, I recall that there were some additional issues that the committee thought were important enough to add to the draft report. So I think that the process is appropriate.

I think having two meetings a month is a good thing if they're back to back. I'm not speaking out of my own concern about attending meetings. I live in Victoria, and it's generally not a difficulty -- unless it's on short notice. But I think that there's some sense of productivity. Perhaps having a longer day scheduled would be helpful in being able to get through this work. The committee draft reports, I note, are almost all done or close to completion. I don't think there's a lot of rehashing over those, other than if there's some glaring errors that occur, and I don't predict that there will be. There haven't been in my time on this committee.

The other pieces of business we should get at. . . . I agree with Mr. Coell in talking about Forest Renewal B.C. and social housing issues. I think they're important, and I think there could be a sense of optimism that we could move through a number of these issues and deal with them more effectively if we have back-to-back meetings and perhaps extend our meeting time -- maybe into the evening or maybe start at nine in the morning, a half-hour for lunch. I think we could make our time more productive. So I think it's a good idea to schedule the meetings for February and for March -- schedule them back to back, perhaps extend the hours -- and then, if we get agreement on that, move and prioritize the issues that we need to move forward on.

J. Weisbeck: I'm just curious to know what sort of protocol we're going to be following for the selection and the calling up of witnesses. It appeared to me this morning that we had agreed upon a particular list of witnesses, and then it was the government's prerogative to be selective about which witnesses we could hear from. So for my own information, I'd like to know how these witnesses will be selected and whether we will get a chance, from both sides, to have input into that process.

R. Thorpe (Chair): Well, these are only my views, and other people could comment. What we attempted to do -- and, in fact, we did do. . . . We asked members for the ferries report to submit a list to the Clerk's office. Then, from that list, we attempted to move forward. To me, that seemed to be a good process, but I don't know if the government side wants to continue to use that methodology or not.

E. Gillespie (Deputy Chair): I think that the work of this committee is served best when we focus on the recommendations -- even when I look back to the work that we did on earthquake preparedness, where we went significantly broader than the auditor general's original recommendations. The witnesses we have been hearing from over the past three meetings have been speaking to their view of the circum-

[ Page 1291 ]

That's the focus I believe this committee should have. I apologize, perhaps, for being task-oriented in that way. That's the way I believe that we can best serve the Legislature and the public. In that spirit, I would like to move ahead. I will even suggest dates for meetings for February and March, and perhaps we can come to agreement here whether or not that's suitable to members of this committee.

[1310]

I would also accept Steve's thought of. . . . And I realize it's difficult and would take some guidance from members. If it's difficult for them to get here in the morning, but they're prepared to work later in the night, then I think that could be something to facilitate the efforts. I would like to suggest four days in February and four days in March, with the understanding that if we move really aggressively in February, we can back off a couple of those days in March. Then we've got a good leg up on the work. That's what I'd like to suggest.

E. Gillespie (Deputy Chair): I don't hear you addressing the concern about the special committee to make recommendations on the auditor general. That is a significant workload, which this committee is also charged with.

R. Thorpe (Chair): Yes, I'm sorry I didn't mention that. I'm committed to doing that also.

E. Gillespie (Deputy Chair): Within those four days.

R. Thorpe (Chair): No. If additional days are required, they're required. I mean, we're challenged with doing some work here.

J. Weisbeck: Mr. Chairman, I'm very concerned. We seem to be putting time restrictions on this thing. Look at this report from FRBC. It's got a number of recommendations in that report, and probably we'll require quite a number of witnesses to be called forward to get some clarification. I just feel that now, as we start restricting it to two days a month, we're putting time restrictions on things. We're not allowing the proper process to take place.

P. Calendino: I've been on this committee for three and a half years, Mr. Chair, and I know that in the off-session, we seldom met more than twice a month. In fact, in a number of months, we didn't meet. The previous Chair seemed to manage to go through the reports that we had to. They were never. . . . I shouldn't say never, but frequently we didn't get through all the reports before a session started, and we continued going through reports while we were in session. The work does not end here in March, once we start the session. We used to meet almost every week when we were in session, and those were the most productive times that we had, though it was only for the morning.

Suggesting that we must have four days in February and four days in March. . . . The agenda doesn't seem to be that heavy, and I know that from my own calendar, it makes it difficult for me to have to cancel other meetings to come to this particular one. I'm on several other committees, and I have other duties as well. I think we can look at starting with the two days. I'm sure that we can look at flexibility. If more time is needed, we can discuss that when the time comes.

R. Thorpe (Chair): I'm just wondering if. . . . I don't mean to put you in a difficult spot, either Arn or George, but given the work that appears to be before us, could you give any input -- if you choose not to, I also appreciate that -- on what kind of time frame you think, just based on your experience with the committee?

G. Morfitt: Well, I wouldn't comment on that, because it varies depending on the interests of the committee and the particular subject matter. But I would like to just make everybody aware of what sort of reports we're talking about that have been issued or are to be issued.

On the list that Kelly Dunsdon has circulated, you'll note the financial administration of vote 1, sitting at the fourth bullet there. . . . I would like to clarify what's happening with that report. It's being issued very shortly. It's being issued directly to the Speaker, as chair of LAMC, because the audit is being done under the provisions of section 5(7) of the LAMC Act. We have an undertaking from the Speaker that that report will be released as soon as it is received. But I don't think that the discussion of the content of the report lies with this committee particularly. I think it lies with LAMC, which is an all-party committee. So from my perspective -- and I've conveyed this to Craig, and it's more or less suggested here -- this is probably not one for this committee.

[1315]

Interjections.

G. Morfitt: Is it there? I'm sorry -- it is there. That report has not yet been issued. It will be issued imminently; it's currently with the Queen's Printer.

The other report that will be coming out in February is "Accountability Reporting by Government: A Status Report," and what that's intended to be is sort of a wrap-up report by me as to the state of public accountability in our current government process. That revisits the reports that we did in conjunction with the deputy ministers' council on accountability for results: how are the managers doing in being accountable for results? It will also review the financial accountability situation at this point in time.

So that's the only report, I suppose, that isn't mentioned here; I thought I should make that known. As to how much

[ Page 1292 ]

S. Orcherton: I'm at a bit of a disadvantage. I'm not on the subcommittee to select a new auditor general, and I don't think this committee's had a report in terms of that subcommittee's deliberations. I'm wondering: is there any sense of how many days the subcommittee's going to take to review applications? We're talking about two different issues here. One is the reports that we generally do, and there's the other piece of business around selecting a new auditor general. I'd like to know how many days the subcommittee is going to be involved in that. That will all have to be brought back, I guess. If there's panelling, I would suspect the entire committee would be involved in that process. I'm wondering if there's been some discussion around the time frame around that, because I think -- in the context of what we have to do over the next little while, in terms of the business that's before us in this memorandum -- it's an important piece. I don't have that piece of information.

R. Thorpe (Chair): Well, it's a very important issue. My own thought on that -- and I'm sure the Deputy Chair would have her thoughts on it -- is that the subcommittee should be able to deal with that in a day to a day and a half. I don't think it's going to take a whole bunch of time, personally.

E. Gillespie (Deputy Chair): Pardon me?

Interjection.

R. Thorpe (Chair): I thought I was expressing my opinion.

Interjections.

R. Thorpe (Chair): I was talking about the subcommittee. A maximum of a day to a day and a half, and then there's interviewing after that, which would be, depending on how many people you interview. . . . If you interview six, it should take you a maximum of two days. Those are things that we still have to do, but that's a total of three to three and a half days, in my opinion. But we are supposed to be meeting on that either later today or tomorrow.

E. Gillespie (Deputy Chair): You know, the work of any committee can expand to fill the time that is available to the committee. When I go back to my notes of November 4, we had agreed to two committee meetings on the fast ferry program, and other committee meetings that were scheduled were scheduled on other topics. So clearly, unless we try to restrain ourselves somewhat and perhaps discipline ourselves somewhat to maintain a schedule, this committee will not get its work done. If there is a commitment from members to a particular schedule, then we will get the work done.

I will point out to the Chair that at our last meeting of this committee on January 12, government members sat well over the appointed time of the committee in order to hear out all of the questions of all of the witnesses, and opposition members left -- left before the final item on the agenda, which was to discuss future meetings. I would submit that we are prepared to do the work. I once again put forward a suggestion for two consecutive days in February and two days in March -- that would be February 16 and 17 and March 14 and 15 -- and that we organize. . . .

[1320]

E. Gillespie (Deputy Chair): February 15 and 16 and March 14 and 15. I'll put that forward as a motion, so that we can then. . . .

R. Thorpe (Chair): Well, with some respect, it's nice that you know your forward calendar at this point in time, but I'm not sure that every other member here knows their forward calendar. I don't know who has what booked. That's not the way we've acted in the past.

E. Gillespie (Deputy Chair): No, and that has led to an agenda that has been set by the Chair without consultation with the committee.

R. Thorpe (Chair): I believe you're a member of the Agriculture committee. So you will not be attending the February 16 and 17 meetings of the Agriculture committee? Is that what you're advising?

E. Gillespie (Deputy Chair): I am trying to put forward some dates that will work for this committee.

R. Thorpe (Chair): We've heard those two dates. I personally do not have my schedule in front of me. I can't make a commitment one way or the other. I can commit to get back to the Clerk's office this afternoon or tomorrow morning. I don't know what other people have.

But I did notice that we have a guest here -- Mr. Abbott. Does anybody have any objection if. . . ? You wanted to raise a point, Mr. Abbott? Does anyone have an objection?

E. Gillespie (Deputy Chair): On the workings of the committee?

Interjections.

R. Thorpe (Chair): He can, if the committee doesn't object. So do you object?

E. Gillespie (Deputy Chair): I do object. We're talking about the scheduling for the Public Accounts Committee.

R. Thorpe (Chair): Okay, that's fine. No, Mr. Abbott, you can't speak. The government objects.

J. MacPhail: I'd be curious to know on which of the reports you think you may want to add recommendations to the auditor general and therefore would require witnesses. I would be curious. I have my own preference for what reports I see as appropriate work for this committee, urgently. But clearly the opposition members have read the reports and would like to call witnesses, I believe, based on the fact that you want to add recommendations to the work that the auditor general has done. Have you done. . . ?

R. Thorpe (Chair): I don't know that you could reach that conclusion, but if you would tell us which report you're interested in, I'm sure we could pursue those.

[ Page 1293 ]

R. Thorpe (Chair): Let us just start with the first report, then. Let us work through that. How much time does anybody think we're going to require to do the Forest Renewal B.C. report?

J. MacPhail: A day.

R. Thorpe (Chair): Just one day? Okay.

A Voice: Four days. At least four days.

R. Kasper: Well, could I just comment?

R. Thorpe (Chair): I'm just asking the question. One day? Four days?

J. MacPhail: Okay. We've read the report, and we understand the witnesses that have to be called, so perhaps you should put forward what witnesses you want to call. What witnesses do you want to call?

R. Thorpe (Chair): I have no idea who wants to call what, Joy. That's not the way we've done it in the past. People have submitted independent lists to the Clerk's office. They've been collated in the Clerk's office, and we've gone from there. That's how it worked the one time we did it in the past. Now, are you proposing a change?

J. MacPhail: No, I'm just trying to understand what the mission of the committee is. Far be it from me to go into the history of the committee beyond 1991. But in 1991 the committee took a decidedly different turn with the election of a new government, where there was a real role for the opposition to play. It was not prevented from doing so by the government members. Then the committee evolved so that the government actually permitted the committee to sit regularly out of session. That was a breakthrough as well.

I assume, based on all of this, that the opposition has a mission for how this committee is supposed to operate. I also took it from this morning, where there was some view that the committee has a role to add to the auditor general's recommendations and that that's the basis on which we need witnesses. Otherwise we rely on sharing of information and learning from the auditor general.

A Voice: What?

[1325]

R. Thorpe (Chair): What would be your interest, Ms. MacPhail?

J. MacPhail: My particular interest, in terms of the timing of the future business of government, is in the pulp and paper mill effluent permit monitoring. I think it's appropriate that there be follow-up on the standards of conduct and education in the health sectors as well. I also know that everybody has an interest in FRBC, which, to me, we could get to this afternoon. It says: "Originally scheduled for January 25, 2000." Isn't that today?

R. Thorpe (Chair): Yes, but other things were scheduled for December 15, January 18 and January 19. If we could just try to tone down a little bit and try to move forward. . .

J. MacPhail: Those are my suggestions for moving forward.

R. Thorpe (Chair): . . .I think it would be very constructive.

J. MacPhail: Those are my suggestions.

R. Thorpe (Chair): Thank you very much. Do we have agreement?

S. Orcherton: I just went and got my calendar. I made the long trek down the hallway to determine what I was doing in February. I note that I actually have pencilled in my book here "February 15 and 16, Public Accounts." Why don't we just do that, seeing as everybody's been advised? I guess everyone was advised that we had these dates set.

R. Thorpe (Chair): Well, that's not what the Deputy Chair said. I have February 15 and 16; I thought you were proposing February 16 and 17. Is that correct or incorrect?

J. MacPhail: She was in the last millennium.

E. Gillespie (Deputy Chair): You know what? I just put forward those dates for discussion so that we could move on with this. Whether it's the 15th and 16th or the 16th and 17th, you know, let's make a decision. I think it's important for the auditor general and the comptroller general to be able to invite. . . .

R. Thorpe (Chair): I don't want to be seen as unfair, but Evelyn, I'm going to remind you of a discussion that you and I had before about booking forward dates. You did say: "I wish we could get our caucus dates booked in advance like you folks can, because that keeps changing our schedule." Now, when we agree to dates, whatever they may be, are they going to go ahead no matter what?

E. Gillespie (Deputy Chair): I would hope that we would come to some agreement in this committee about when we are to meet. I continually receive, on an almost daily basis, an update on the schedule of this committee. This is not appropriate and not okay in terms of trying to plan all of the work that all of us are involved in. I'm suggesting now that we set aside two days in February and two days in March for the Public Accounts Committee and that in addition to that,

[ Page 1294 ]

R. Thorpe (Chair): No question about that.

Jack, do you have any further comments on this? I mean, we'll go around this thing forever.

So we're looking at setting the dates of February 15 and 16. Is that correct?

J. MacPhail: Right.

R. Thorpe (Chair): We will start work at -- what? -- 9 o'clock in the morning. Is that convenient?

J. MacPhail: Work in the evening.

R. Thorpe (Chair): We can take a half-hour for lunch, as Evelyn suggested. How late do you want to go -- 5 o'clock?

J. MacPhail: Or in the evening, if we need to.

R. Thorpe (Chair): Do you want to go till five and then. . . ? I'm for that, Joy.

J. MacPhail: I heard at lunchtime that where the high cost of this committee. . . . The media reported it from a person who's not even a member of the committee. Once again, it was interesting reporting. But I assume that cost is a concern, and we should sit in the evenings if necessary.

R. Thorpe (Chair): I appreciate that comment, Joy. But one of things I'd like to do is get an agreement here, because if necessary, then we get into the agreement of who deems it necessary. So can we say that we're going to work till five, break for an hour and then come back and go to eight? Is that fair for everyone? That will be the first night. Do you want to do that the second day too -- both days? Is that what we want to do?

J. MacPhail: No.

R. Thorpe (Chair): Just the one day and then go till five the second day. Does that seem okay?

J. MacPhail: Yeah. I think that's the most cost-effective way of doing it, so members who have to travel can travel home that night.

R. Thorpe (Chair): Okay, perfect. Do we have agreement on that?

Now, do we have agreement that the dates are March 15 and 16?

P. Calendino: Oh, no -- of February; March 14 and 15.

R. Thorpe (Chair): No, I assumed we've already agreed on February 15 and 16. We're trying to move. . . .

[1330]

R. Thorpe (Chair): The 14th and 15th, Evelyn?

E. Gillespie (Deputy Chair): Well, it's a Tuesday and Wednesday, and given that our meetings are. . .

S. Orcherton: The 14th and 15th?

E. Gillespie (Deputy Chair): Yeah. And I would say with consultation with the office of the Clerk with respect to other committees.

R. Thorpe (Chair): I think -- if I could suggest this -- that we're making a commitment for this committee, and the other committees can go work around it or do whatever they have to do. But we as committee members here should be making the commitment to lock these things in here now. Do we agree to that?

J. Weisgerber: Agreed.

R. Thorpe (Chair): Now what we have to do is establish what the priority of the reports is.

R. Kasper: I'd like to see Forest Renewal be first on the agenda, and then I think Mr. Coell had suggested an interest in. . .

M. Coell: Social housing.

R. Kasper: . . .social housing. I agreed with that. I didn't hear anybody opposed to that. If we can manage to work out some additions to that, great.

R. Thorpe (Chair): Are we also agreeing that there'll be no. . . ? I'm not suggesting anything, and there's not a plan. We're not limiting debate on the subjects -- is that correct? We're going to do due diligence on the work before the committee. Are we agreeing to that, Mr. Kasper -- or other committee members too?

E. Gillespie (Deputy Chair): In a forward-looking manner.

R. Kasper: Well, let's hear the presentation from the auditor general and the response from the organizations, as we have in the past.

R. Thorpe (Chair): But is anyone here suggesting limiting debate on reports of the auditor general that appear before this committee?

Interjections.

R. Thorpe (Chair): Excuse me, we're trying to work forward here, and that happens to be a concern I have.

S. Orcherton: I'm very pleased that we were able to agree on two dates in February and two dates in March, particularly when people didn't have their calendars here. I think that setting the priorities is an important issue. I think what we have to do is hear what the auditor general has to say and then deliberate on how long we're going to take in terms

[ Page 1295 ]

If we can work on the 15th through till 8 o'clock in the evening, I think we can make great progress on these issues. As I said earlier, the agenda is large. I think we have to work diligently on this. If we prepare ourselves properly for the committee and for the reports, we can make progress. I predict we could well be able to finish all of the work in front of us before the House is called back to session. If there are times, Chair, where witnesses are unable to attend at particular times, maybe yourself and the Deputy Chair could deal with some of the draft reports that need to be approved in those intervening times. For instance, if we have an hour left in the evening until 8 o'clock, there are some of these reports that we could go through and deal with. So I would encourage you, as the Chair, to work with the Deputy Chair to establish the agenda, so we can move through in a productive fashion.

R. Thorpe (Chair): Thank you very much. I too encourage all members to read the reports.

J. Weisbeck: I'm curious now: at what point in time do we decide whether or not we're going to want witnesses to come forward? Does it happen after that initial meeting? Do we then put forward a list of witnesses we may require? Or does that happen prior to that first session? Because obviously if we wait till that session, it's going to take us time to get these witnesses together. It will just simply drag out the whole process.

R. Thorpe (Chair): Since we've agreed now on the dates in February, and Mr. Kasper put forward that we would deal with Forest Renewal B.C. first and social housing second, I think it would be incumbent upon all members of this committee, if they feel that they may want witnesses on any of those two reports, to please submit those witness lists to the Clerk's office as quickly as you can, so they can be considered. Is that a fair approach for everyone?

E. Gillespie (Deputy Chair): The process that we undertook in the review of the fast ferry report was quite different from what has ever occurred in the past. In the past the auditor general discussed his report with us. Then the audited agency replied with their observations on the report and the work that they have done to either meet the recommendations of the auditor general or the recommendations that they would make for change.

To put forward the idea that the Public Accounts Committee is wide open for any witness from any sector to respond to these reports is perhaps misleading. I think that we should look carefully at the way we're selecting witnesses to respond to the reports, in order that we can do our business.

[1335]

E. Gillespie (Deputy Chair): Once again, just to satisfy my need to be task-oriented and to complete the work, I think we need to do this, acknowledging the time that we have available to us.

R. Thorpe (Chair): I know you'd agree that we shouldn't be limited by the time. We should make sure we get all of the work done in a thorough way and not be limited by a clock. I know you'd agree with that. So we're going to do that on those four days. Is there any other discussion?

J. MacPhail: Chair, just to remind you, I did put forward the priority. . . . I know that some of you may snicker, but the report on the pulp and paper mill effluent permit monitoring is an important one for future government activity. I also listed the standards of conduct in the education and health sectors. So I would like the committee to consider those as well.

R. Thorpe (Chair): So you'd like that to be No. 3. How's that?

J. MacPhail: Right. Thank you.

R. Thorpe (Chair): See how easy it is to get along here?

A. van Iersel: Just a comment, Chair, if I could. In the past, with the exception of the fast ferry report, it's been my office that has been tasked with lining up the witnesses from the audited agency. I'm happy to continue to do that. I guess I need some guidance from the committee in terms of what specific dates we're talking about. It doesn't need to be decided today, but in terms of lining up all the witnesses that you request, if you wish my office to continue to be involved, I'll need some guidance as to which days -- February 15 and 16 and March 14 and 15 -- those people should appear.

R. Kasper: It's my suggestion that on February 15 we're going to be dealing with Forest Renewal B.C., and it would bode them well if they had all the appropriate staff that they deem necessary to respond to any questions by the committee after the auditor general has completed his initial overview of the report. It would be good business for them. That's what I think should happen. They should be here in full force.

R. Thorpe (Chair): With the proviso, because we're going to be working late, that if there's some carryover the next day, they'd better. . . . Would you agree with that, Rick?

R. Kasper: Yes.

R. Thorpe (Chair): Okay. Does that give you some direction, Arn?

A. van Iersel: If I understand that correctly, Chair, then we will tell Forest Renewal that they'll be needed on the 15th and the 16th. Is that what's being said?

R. Thorpe (Chair): Yes, make themselves available.

R. Kasper: Is there a motion, or have we agreed by general consent?

[ Page 1296 ]

R. Kasper: To what we've just outlined.

R. Thorpe (Chair): I hope we've all agreed, because it's all in Hansard.

R. Kasper: Great. Okay, now I have a question for the auditor general. Is it possible for you to start an initial overview of your report dealing with Forest Renewal B.C. today?

G. Morfitt: Originally we were going to endeavour to come here with the equipment needed and have the presentation ready. Because it was pulled from the agenda, we pulled back from that, and we haven't got it here.

R. Thorpe (Chair): We also gave the auditor general a commitment to have a presentation on his corporate plan, 1999 through 2000, which was deferred at the last meeting, I think. We made that commitment to him.

G. Morfitt: It also tends to work better for the committee, I think, if we make our presentation on the same day that you start to hear from them. If you have a two- or three-week hiatus between our presentation and what they have to say, you forget what was said.

R. Thorpe (Chair): Do we have agreement on that?

[1340]

R. Thorpe (Chair): Sort of like estimates, eh?

R. Kasper: Mr. Chairman, in the past, if we scheduled two or three items for this committee to deal with, all of the organizations that are responsible were always sitting in the audience -- all of them. It just comes with the territory or the turf. If the committee has not completed a particular task, then they're told: "Sorry. We didn't get to you today. You're going to have to come back next time." It's just the way business is done.

R. Thorpe (Chair): So we have agreement. Is there no other discussion on this?

We can then move on to the auditor general's presentation.

G. Morfitt: Mr. Chair and members of the committee, I always think that the committee should have a number of firsts. We should not rest on what has been done in the past. This is another first, and I'll explain why as I move through this. I'm not going to be overly long. This is material that's being presented to the committee for information. Consequently, that's why I'm speaking to it today. I didn't distribute it ahead of time, because I don't particularly expect questions or remarks from the committee -- although I'm very pleased to field them if they come forward. So let me move through my comments, and you'll see where I'm moving to today.

It's my privilege, as you know, to serve as an officer of the Legislative Assembly. I could put the comment forward, as I've done a few times in the past, that I am the only officer of the Legislative Assembly that has the privilege of being able to interact with an all-party committee of the House -- much to the concern, at times, of other officers of the Legislature. They put forward material and reports to the Legislature, and there is no convenient vehicle for most of them to be able to interact with the Legislative Assembly or an all-party committee of the assembly. That's an issue that I like to keep putting forward to members of the assembly from time to time.

The assembly asked me to provide it with regular assessments of the government's operations and programs. Are they being accurately and fully reported? Are they cost-effective? Do they comply with governing laws and regulations? Are they being carried out in an ethical manner? Do they take into account environmental considerations? Are they properly governed and managed? Is there appropriate risk management in place? At the same time, legislators request that in connection with those various assessments that we make, I make recommendations intended to make government, and the people that manage government, perform better in all aspects of its operations.

To carry out this role requires me to first clearly understand my statutory responsibilities and then to undertake an audit program that will properly meet those responsibilities. My office has this past year undertaken a process to achieve these purposes, and the results of this process I wish to share with you today.

[1345]

First, I have an obligation to the Legislature to be accountable to it for the carrying out of my statutory responsibilities. A first step in that accountability is to advise the Legislature, or a committee thereof, of my operating plans for the coming years. I can then be held accountable by the Legislature for the realization of those plans. Second, as identified by the budget process review panel, there is a need for transparency in the annual budget process. Accordingly, my 2000-2001 business plan and related requests for resources to carry out that plan should be provided to the Legislature either directly or through a committee of the Legislature prior to public debate on the government's estimates.

Heretofore my business plan and resource requirements have been made known only to the government. I believe this is a process that should be followed each year in the future. I gratefully appreciate having this opportunity to present these documents and speak to their content. As I say, the committee only has to receive them and need not discuss or approve them. However, I would be happy to answer any questions that might arise.

[ Page 1297 ]

After getting past the mission, the vision and values of the office, which are important, of course, we set out, on page 5, the three core activities that we follow as an office: assessing government accountability and performance, advising on government accountability and performance, and performing effectively as an office. We then go, in this document, to discuss the core of each of those three core activities and under each core activity give an explanation of what it is and what we're trying to do, the objectives that we have for the activity and the strategies for carrying out those objectives.

I don't intend to go through those in detail. I just want to let you know that this document is here. It exists. It's quite explanatory, and it talks about the fact that we give assessments of government accountability and performance both by reviewing government accountability information and by reviewing programs of government directly and whether or not those programs are providing decent accountability information.

We are committed to this program; we believe that it's the right program for an auditor general's office. It's going to give the future auditor general a template by which he or she can pursue the work of the office. Of course, this is a rolling corporate plan, so any new auditor general would certainly put their own stamp on it and produce a future corporate plan as a result of their deliberations.

[1350]

In talking to this document, I thought I would just speak to the message at the front from the auditor general. As with all of my various reports, including these, the message at the beginning of the report tries to capture all of the salient aspects of the report itself.

As I say, looking at page 1 of the business plan, it lays out the operating plans for 2000-2001, describes the challenges and suggests ways of dealing with the challenges. Over the last several years, I've been increasingly concerned -- and I've voiced this concern with Treasury Board -- about the widening gap between the audited coverage that I think the legislators need to fulfil their governance obligations and the audit coverage they receive. I believe the current level of audit coverage, as I've said already, is insufficient and leaves legislators at significant risk.

I believe that public confidence in our political institutions depends in large measure on the ability of the Legislative Assembly to properly demonstrate that it's holding the government fully accountable for managing provincial finances with integrity, spending money wisely and conducting business properly. I, of course, serve as the accountability relationship from an audit point of view between the Legislative Assembly and the government. I think a robust and effective audit process assists legislators in meeting their governance responsibilities by providing information and assessments about the fairness of management representations on performance or about actual performance where management does not make representation.

The work of my office has become more and more challenging, because the government keeps moving into new models of service delivery such as regionalization, public-private partnerships, contracting for service delivery and e-commerce. Downsizing in various areas of government has resulted in weaker systems controls, and each of these factors has increased the need for audit.

Over the past few years, constraints placed on the resources available to my office have eroded its ability to provide audit services to the assembly. The level of coverage needed today is considerably greater than the level being provided. I believe that current audit levels do not provide the information or levels of assurance necessary for Members of the Legislative Assembly to discharge their governance responsibilities. I've estimated that the annual incremental investment required to provide an acceptable level of audit coverage to be $1 million -- $1.08 million to be accurate. This would restore our overall funding from both appropriation and fees to a level that allows us to resource to the extent we were able to ten years ago. In other words, an improvement in the appropriation provided to the office of $1.08 million would provide the level of resourcing and the level of activity that the office was able to conduct ten years ago.

[1355]

I've also become concerned about the ability of the office to maintain and protect its human capital. We're experiencing a high rate of turnover in the entry- to mid-level ranks, and we're finding that the talent we've attracted and are training is moving not only out to other government jobs but also out of government completely and, in all cases, to higher-paying jobs. In the meantime, our senior staff is moving slowly but surely towards retirement. Many will be retiring within the next five to ten years. So we're quite concerned with succession planning at the moment, and we're devoting a lot of time and effort to that.

[ Page 1298 ]

I know it's a problem all around government. But in my view, when government has so significantly increased its size over the last ten years, it's important that the level of resources for my office be at least equal to, if not greater than, what it was ten years ago.

On page 11 -- and I'm just picking out bits and pieces here for your interest -- we've set out the number of audits carried out by sector. These would be value for money and compliance audits by sector from 1993-94 to 1998-99. You'll see that we've done six audits in the health sector; that's one a year. We've done three in the social services area, which is one every two years. We've only two in education, and so on. Our view is that this is quite insufficient. Taking the health sector, for example -- and page 13 provides some detail on that -- here is $7.6 billion of annual expenditure, and we're performing one audit of one program in health per year, relative to this $7.6 billion of expenditure. It's really subminimal, in my view.

At the latter part of this document we show a couple of things. Firstly, on pages 24 and 25, we set out the accountability aspects of the office's reporting, setting out the outputs and outcomes that we expect to provide as an office to the Legislative Assembly, and we will be reporting back on that at the end of the fiscal year.

In appendix A on page 26, we give a listing of the financial and management systems that we consider mission-critical. This is similar, if not identical, to the list that was prepared for Y2K purposes by Stuart Culbertson's group. There are 69 systems here, and we look at three or four maximum a year with the resources that we have. Again, I think it's subminimal coverage on behalf of the Legislative Assembly.

[1400]

Those are the points I wanted to make, Chair and committee. As I say, it's for your interest and information. It gives you a bit of a status report, as I see it at the moment, about the resourcing of our office and what our office's objectives and activities are.

R. Thorpe (Chair): Thank you very much, George. Does anyone have any questions or comments?

S. Orcherton: Just a couple. Thanks for the report. This is the first time I've seen a report of this nature. Is it not normal practice to submit this kind of report directly to Treasury Board?

G. Morfitt: Yes, that's right. One of the issues that I mentioned at the start is that historically this has only gone to Treasury Board. Treasury Board, of course, is a government committee. Therefore, when the legislators receive the estimates and are debating the estimates, other than Treasury Board members there are no members of the House who really have knowledge of the business plan or the resource requirements that are tendered by the office to the government.

S. Orcherton: So this is the first time we've seen this kind of process where you've brought your business plan forward to this committee.

G. Morfitt: Yes. As I said in my opening remarks, there's an expectation from the budget process review panel and others that all parts of the estimates process be made more transparent, so everybody knows what's happening and what's being looked for by various entities in and around government. Then they can be debated openly.

S. Orcherton: I've got a few more questions here. You said that your office's ability to provide audit services, then, has been eroded. I looked through here and I may have missed it, but I'm wondering how many audits you did for government, say in 1996 or '97 or '98 or '99, as opposed to. . . . It seems to me that at this committee we certainly receive a lot of reports and a lot of audits done by your office. It seems to me that we seem to get more every year, not less. I wonder if my sense of that is correct. Your office does a tremendous amount of work. I haven't seen the work that's coming out of the office decreasing.

[1405]

One of the interesting aspects of periodic reporting -- as I may have commented on before -- is that, as you mentioned, in earlier years there used to be a single report from the auditor general issued once a year in March. It was one volume, and it contained reports on all of the audits done for the whole fiscal year. Actually, the content of that report included as many or more audits from a performance perspective than is the case today. Because of periodic reporting, you get a whole series of reports, and it appears to be more in volume, but it really isn't. Now, as far as the number of value-for-money or compliance-type audits, we're at the same level or fewer than we were -- in fact fewer than we were -- ten years ago, because instead of having close to 95 people, we only have 86.

S. Orcherton: I don't want to get into the value-for-money audits, because we've had these conversations before. I think it's very subjective. It's tough to be objective when you're looking at value for expenditures, because the rollups are very difficult to measure.

[ Page 1299 ]

G. Morfitt: No.

S. Orcherton: I'm sure Treasury Board will be reviewing it in detail. But on page 36 -- your employee salary and benefits, on the last page of the binder you gave us; I think it's appendix C -- it shows that salaries are going down, you're predicting, from 2000 to 2001. I don't know if you could comment on that. And other things, you're predicting, are increasing. I wonder how you got. . . . I mean, if we've got a problem in retaining people, how do we end up with less salaries and benefits in your projections? I would think you would be budgeting for more, not less, particularly when you're trying to make an argument to Treasury Board for a $1.08 million increase in funding to your office.

G. Morfitt: This projected operating financial statement is based on no increased funding from the government whatsoever, as you can see from the source of funds and fees. That's on the basis of a status quo position. There's a 2 percent dollar lift in salaries in this coming fiscal year, as you know, to all civil servants. So this reflects employing fewer staff to be able to manage the office.

S. Orcherton: Maybe part of the problem is that there's no 1999 budget referenced here.

G. Morfitt: That's what we had to budget to, to stay within the appropriation. I'll also, Mr. Orcherton, show you page 17, which talks about the staff turnover. We've done a bit of a review of. . . . I think this is typical across government, by the way, for professional people. We're having great difficulty attracting people into government, because the private sector is offering what we've estimated to be about a 15 percent differential in salaries and benefits. It is a problem right across all of government. Also, we're finding that a lot of our staff are moving into government and getting a higher categorization within government.

R. Thorpe (Chair): Mr. Orcherton, I think that if you look on page 5, you can see some previous year appropriations.

S. Orcherton: Okay. Thanks. I have one other question on page 36. These are arguments you're going to have to make to Treasury Board; you're just giving this to us for information, really. You're going to have to go before Treasury Board and make the case, I would suspect.

G. Morfitt: Yes.

S. Orcherton: If your office is predicting that this is what's going to occur if there is no increase. . . . You've got salaries going down, and you've got travel, professional special services, the auditor general's salary and benefits, and general expenses going up. I mean, it just strikes me. . . . If you're having trouble keeping people working in the auditor general's office, which I believe is likely true -- I'm aware of the statistics on the private sector as well -- how do you come to make these kinds of arguments?

G. Morfitt: Well, what's happening is that instead. . . . You see, for most of our years, if not all of them, we've been at a very, very low level for contract staff. We've been fully employing staff 12 months of the year. When they're not doing financial statement audits, they're doing financial and systems reviews and so on. We're finding that we can't hire people on a full-employment basis. We can't attract them. We went out to the marketplace just last month, and we got a very dismal response. That's been twice in a row now that we've had very few decent people come to us.

[1410]

S. Orcherton: Just a final comment. I'm not sure how Treasury Board is going to react to that, but I think I may have flagged an issue for you. I'm not sure, but it just strikes me as a tough argument to make when you have a bunch of areas going up, in terms of your predictions, while employee salaries and benefits are going down -- and you're making the argument that it's hard to keep employees there. I think your office is going a good job, and we should be supporting you. Those will be deliberations for Treasury Board to make. Anyway, that's my comment.

G. Morfitt: I appreciate that very much. We have had discussions with. . . . As you know, every office, every ministry, has Treasury Board staff analysts discussing these things with them. We've had long discussions with them, so we know what their questions really are.

J. Weisgerber: I wonder if, sort of on the eve of your retirement, you've got any thoughts on the mechanism for funding the auditor general's office. I wonder, quite candidly, whether it's appropriate for the auditor general to have to go, cap in hand, before the government, before Treasury Board staff -- who may have a whole series of biases within their own membership. Within Canada or within the Commonwealth parliamentary systems, are there different mechanisms for funding auditor general offices? Are there formulas?

G. Morfitt: Oh, very definitely. What the draft auditor general act proposes is that the annual resourcing of the office be dealt with by an all-party committee of the Legislature. This is not news. I think everybody knows that that's what we've been proposing for a long time. That is in place in a whole variety of other jurisdictions.

That doesn't mean that Treasury Board doesn't have a strong role to play. Treasury Board would still be at those meeting and would have their input into the deliberations as well. But what it does is make it an appropriate accountability mechanism, where if the auditor general is going to be an officer of the Legislature -- the auditor general is part of the legislative branch -- then the resourcing of the auditor general should, in the end, be undertaken by the legislative branch -- the same with the Clerks, the same with the other officers of the Legislature. It's small dollars in the great scheme of things. You know, this budget represents one three-hundredth of 1

[ Page 1300 ]

P. Calendino: Thank you for the report, George. I imagine that your needs are not much different than the needs of other departments in other ministries. I was looking at pages 4 and 5, out of curiosity, and perhaps some information may not be there. You're saying you have 84 full-time employees, and yet on page 4, under "operational," you're saying that you provide 52,000 hours for test audits, 31,000 hours to audit performance and then 6,000 hours of advisory services. That's about 89,000 hours for 84 people, which amounts to about a little over 1,000 hours per employee per year. I wonder if there's something else that's not stated there, because to my knowledge most employees work about 1,400 to 1,500 hours a year.

[1415]

P. Calendino: So these are the hours of the auditors only.

G. Morfitt: Direct audit hours, yeah.

P. Calendino: You probably have the others here somewhere else.

G. Morfitt: Yes, we would. I don't know if it's totally in the report. But it would be 86 people times the number of hours they work during the year.

R. Thorpe (Chair): George, how do you arrive at the audit fees that you independently charge to groups? How are those fees arrived at?

G. Morfitt: What we do is determine what we believe is a reasonable number of audit hours to spend on a particular audit, whether it's being done by ourselves or our private sector auditor. We then cost out that number of hours at a fully loaded per-hour rate, using a mix of audit staff that are likely to be on that particular audit. For example, if it's the University of Victoria, we would determine what we feel is a reasonable number of audit hours that would be undertaken to do the audit of that entity, price it out at the mix of staff that we would put on that audit and bill the university accordingly. Of course, we agree with the university on what that billing should be.

R. Thorpe (Chair): Are those fees that you charge generally lower than what they'd have to pay in the marketplace, or comparable with the marketplace?

G. Morfitt: On a per-hour chargeout rate, they would be quite a bit lower. Now, we might undertake as an audit office to do some more systems work than what an independent private sector auditor would do. So the number of audit hours we might devote to looking at their processes might be something we would add on, which the private sector auditor wanting to give a bare-bones audit opinion might not undertake. But on a per-hour chargeout rate it would be lower.

R. Thorpe (Chair): So in fact you're subsidizing some of those entities if they had to go to the marketplace.

G. Morfitt: A bit, yeah. Now, what we do is rotate them, of course. As you know, our process is to undertake certain audits for a five-year period, then move them out into the private and get private sector competitive bids.

R. Thorpe (Chair): Does anyone have any other questions of the auditor general on this point? George, do you have any questions of the committee?

G. Morfitt: Because I'm sitting here, I would just tell the committee that I think the office has some excellent people in it. They do first-rate work. You're well served by the people that are in the office. I know that the new auditor general, whoever he, she or it is, will be moving into an office that will be operating in a very effective way. The only issue at the moment is the ability to obtain and maintain capable new staff and the numbers of resources in the office.

R. Thorpe (Chair): Will your accountability status report reflect any concerns that you may or may not have in the current and longer-term funding and operation of your office?

G. Morfitt: I wouldn't think so.

R. Thorpe (Chair): Okay. Thank you. No other questions? Thank you very much, George. I appreciate it. Good luck tomorrow.

P. Calendino: Chair, are we adjourning?

[1420]

J. MacPhail: No.

P. Calendino: Is there other business?

R. Thorpe (Chair): No. Well, the subcommittee is going to meet; the subcommittee will meet.

J. MacPhail: Oh, okay. I'm sorry, Mr. Chair. I'm just not clear on. . . . I'm not on the subcommittee, and I had planned. . . . I thought we had work scheduled on the auditor general for the rest of the week. So could we have some clarification on that? The subcommittee is meeting this afternoon.

R. Thorpe (Chair): The Deputy Chair and I agreed that if we had time -- which we obviously do -- to get together, it would be. . . . It's personally my intent to work through that

[ Page 1301 ]

J. MacPhail: Just for child care reasons, if we are moving forward tomorrow, could we agree on a time to start tomorrow? Is it 11 o'clock?

R. Thorpe (Chair): Is that. . . ?

J. MacPhail: I don't know. Don't take it as if I'm saying what I think is right. I'm asking you.

R. Thorpe (Chair): Actually, I thought it was a little bit earlier.

J. MacPhail: Okay. Well, when?

R. Thorpe (Chair): I don't have the schedule right here in front of me. Do you have it, Kelly?

J. MacPhail: Where is our staff?

R. Thorpe (Chair): Kelly, what's the schedule for tomorrow, please?

P. Calendino: Mr. Chair, it says 11 to four on the e-mails that we got.

R. Thorpe (Chair): Is that what it says? I don't have it here.

J. MacPhail: But we can meet earlier. I'm just asking.

R. Thorpe (Chair): Are you here tonight? Do you want to start earlier?

J. MacPhail: Yes, I'm here tonight.

R. Thorpe (Chair): Okay. Well, we can discuss that. We'll be finished in an hour, and you can advise your members.

J. MacPhail: Okay.

E. Gillespie (Deputy Chair): I've just talked to one of the members of the subcommittee, who has asked that we recess and come back together as a subcommittee at 3:15.

A Voice: Why?

E. Gillespie (Deputy Chair): Pietro has another meeting.

P. Calendino: Not of the subcommittee. I have to go to a. . . .

R. Thorpe (Chair): You're on the subcommittee. . . ?

P. Calendino: Yes.

R. Thorpe (Chair): And you have to go to another meeting?

P. Calendino: I appreciate it, because I have. . . .

E. Gillespie (Deputy Chair): Who else is on the subcommittee? Jack. . . .

R. Thorpe (Chair): Well, Jack and Gary. Gary is not here today.

J. MacPhail: So 3:15. Evelyn will just tell us about. . . . All right. That's good.

A Voice: Okay?

J. MacPhail: Great. Thanks very much.

J. Weisgerber: I'm sorry, Mr. Chair. What's the schedule, other than. . . ?

R. Thorpe (Chair): We're going to meet at 3:15, Jack -- the subcommittee -- to see if we're going to push forward.

J. Weisgerber: This is with respect to. . .

R. Thorpe (Chair): . . .the auditor general replacement.

J. MacPhail: We had planned to meet tomorrow in the big committee for the auditor general.

J. Weisgerber: Okay.

J. Weisbeck: What do we plan to do tomorrow, then?

E. Gillespie (Deputy Chair): I think it depends on what the subcommittee decides this afternoon.

J. Weisbeck: Are we ready for interviews? I was assuming that the next three days -- like Wednesday, Thursday and Friday -- were interviews.

E. Gillespie (Deputy Chair): Yes, but no interviews have been scheduled at this point.

J. Weisbeck: But my understanding is that we don't have anyone to interview.

P. Calendino: There are no interviews.

R. Thorpe (Chair): There are no interviews at this time.

Let me just ask this: is everybody staying here for the next little while? If the subcommittee meets at 3:15 and is finished by four, are people going to be around if we want to reconvene quickly?

J. MacPhail: Well, we can be reached.

R. Thorpe (Chair): You can all be reached? Okay. Why don't we do that?

A Voice: Sure.

R. Thorpe (Chair): In the interest of everyone's time, 3:15 sharp. Thank you.

The committee adjourned at 2:23 p.m.

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