SELECT STANDING COMMITTEE ON
PUBLIC ACCOUNTS
Tuesday, February 20,
2001
9:00 a.m.
Douglas Fir Committee Room
Parliament Buildings, Victoria
2000 Legislative Session: 4th Session, 36th Parliament
SELECT STANDING COMMITTEE ON PUBLIC ACCOUNTS
MINUTES AND HANSARD
|
SELECT STANDING COMMITTEE ON Tuesday, February 20,
2001 |
|
Present: R. Thorpe, MLA (Chair); D. Miller, MLA (Deputy Chair); S. Orcherton,
MLA; E. Walsh, MLA; M. Coell, MLA; G. Farrell-Collins, MLA; V. Roddick, MLA; R.
Kasper, MLA
Unavoidably Absent: P. Calendino, MLA; A. Petter, MLA; D. Streifel, MLA;
J. Weisgerber, MLA
1. The Committee was called to order at 9:14 a.m.
2. The Committee considered government efforts to develop a provincial
Drinking Water Protection Plan and to address previous recommendations on
Protecting Drinking Water Sources. The Committee heard from the following
witnesses:
Ministry of Environment, Lands and Parks:
� Derek Thompson, Deputy Minister
� Jim Mattison, Director, Water Management Branch
Ministry of Health:
� Andrew Hazlewood, Assistant Deputy Minister
� Bob Smith, Director, Public Health Protection Branch
3. The Committee heard testimony from the following witnesses regarding
implementation of recommendation No. 8 (on insurance issues) in the committee�s
report, �Earthquake Preparedness in British Columbia�:
Ministry of Finance and Corporate Relations:
� Leon de Wet, Director, Financial and Corporate Sector Policy Branch
� Carol Anne Rolf, Director, Streamlining Initiative
4. The Committee considered its draft report to the House on �British
Columbia Ferry Corporation Fleet and Terminal Maintenance Management and
Operational Safety � Follow-up Report.�
5. Resolved, that the Committee accept and adopt the draft report as
presented. (G. Farrell-Collins, MLA)
6. The Committee considered its draft report to the House on �Preparedness
of the British Columbia Government in Dealing with the Year 2000 Problem �
Follow-up Report.�
7. Resolved, that the Committee accept and adopt the draft report as
presented. (M. Coell, MLA)
8. The Committee considered its draft report to the House on �Standards
of Conduct in the Education and Health Sectors.�
9. Resolved, that the Committee accept and adopt the draft report as
discussed. (M. Coell, MLA)
10. The Committee considered its draft report to the House on �Government
Financial Accountability for the 1998/99 Fiscal Year.�
11. Resolved, that the Committee accept and adopt the draft report as
presented. (D. Miller, MLA)
12. G. Farrell-Collins, MLA, raised a point of order to the effect that
the matter raised by D. Miller, MLA, regarding an article by Jeff Bray in
today's Times Colonist was out of order on the grounds that the topic was
outside the Committee's terms of reference. The Chair stated that the point of
order was well taken.
13. Resolved, that the Chair deposit copies of the reports adopted by the
Committee with the Clerk of the House pursuant to the Committee's terms of
reference. (M. Coell, MLA)
14. The Committee adjourned to the call of the Chair at 12:08 p.m.
| Rick Thorpe,
MLA Chair |
Craig James |
The following electronic version is for informational purposes only.
The printed version remains the official version.
TUESDAY, FEBRUARY 20, 2001
Issue No. 94
| Chair: | * Rick Thorpe (Okanagan-Penticton L) |
| Deputy Chair: | * Dan Miller (North Coast NDP) |
| Members: | Pietro Calendino (Burnaby North NDP) * Steve Orcherton (Victoria-Hillside NDP) Andrew Petter (Saanich South NDP) Dennis Streifel (Mission-Kent NDP) * Erda Walsh (Kootenay NDP) * Murray Coell (Saanich North and the Islands L) * Gary Farrell-Collins (Vancouver-Little Mountain L) Val Roddick (Delta South L) Rick Kasper (Malahat-Juan de Fuca NDP) Jack Weisgerber (Peace River South Ind) |
* Denotes member present
| Clerk: | Craig James |
| Committee Staff: | Richard Morrow (Committee Researcher) |
| Witnesses: | Geoff Stagg (Office of the Auditor General) Wayne Strelioff (Auditor General) Owen Trist (Office of the Auditor General) Arn van Iersel (Comptroller General) Jim Mattison (Ministry of Environment, Lands and Parks) Derek Thompson (Deputy Minister of Environment, Lands and Parks) Leon de Wet (Ministry of Finance and Corporate Relations) Carol Anne Rolf (Ministry of Finance and Corporate Relations) Andrew Hazlewood (Ministry of Health) Bob Smith (Ministry of Health) |
[ Page 1695 ]
The committee met at 9:14 a.m.
R. Thorpe (Chair): We now have a quorum. Perhaps we could get started. The first bit of business
W. Strelioff: Thank you very much. Good morning, members. I'd like to advise you that with us today are three special guests from the national audit office of the People's Republic of China. They are with our office for an eight-week period on a co-op program that has them working with us. I'd like them to rise. They are Ms. Wei Lu, Mr. Rong Zhongsheng and Mr. Chen Tong. Again, each of them joins us from a resident office of the national audit office of China. Wei is from the Taiyuan resident office, Ronnie from the Jinan resident office and Chris from the Zhengzhou resident office.
[0915]
These auditors have been assigned, along with 25 other auditors, for training in Canada. This training is being conducted at Malaspina College, where they have been undergoing audit training in North American audit methodology since September. Their work experience with our office is the end of their training. They have 25 other people within B.C. right now. The three with us are currently taking part in three financial audits within our office and are meeting with our staff to learn more about compliance in performance auditing.
So I'd just like to note that we have these special guests. They're from the national audit office of China, which was established in 1983. So it's a new development there, and they're relying on lots of Canadian advice on how to get going. Part of that Canadian advice is bringing people to Canada to get some experience as to how we do things and, as well, share with us how they get their audit work done -- which is interesting, to say the least, in terms of different practices. Thank you very much.
R. Thorpe (Chair): Thank you very much, Wayne. And on behalf of the committee and all members of the committee, we would like to extend a warm welcome to you. We hope your studies and your experience here are a good experience, and we wish you all the best in your training and studies. Welcome to British Columbia.
The next item that I'd just like to do
Kelly, as a small token of our appreciation, I would like to present a gift to you. But I'd also like to formally introduce our new committee researcher, Richard Morrow. I know that Richard is looking forward to his work with the committee, and we wish him all the best as he begins his work.
Kelly, if I could just present this to you. Thank you very much for all your efforts. We appreciate it.
If we could now move on to the agenda, the first item on it is protecting drinking water sources. I understand that we have witnesses from the Ministries of Environment, Lands and Parks and of Health.
I don't know who is speaking first. Is it Derek Thompson?
D. Thompson: Yes, I'll speak first.
R. Thorpe (Chair): Okay, Derek, if you'd like to present.
D. Thompson: Thank you, Mr. Chairman, and good morning, all of you. My name is Derek Thompson. I'm the Deputy Minister of Environment, Lands and Parks. With me today on my left, your right, is Andy Hazlewood, the assistant deputy minister in the Ministry of Health. Next to Andy is Bob Smith, director of the health protection branch, who I think many of you know already. On my right is Jim Mattison, director of water management branch in my ministry who, again, I think you all know very well. Bob and Jim have appeared before this committee several times in the past two years presenting the progress of the directors' committee on drinking water as they implement the government response to the auditor general's report, "Protecting Drinking Water Sources."
Today we want to take you beyond that to introduce you to the work that we have underway now. Since our last report to the committee in November 2000, work has continued to address the auditor general's recommendations relating to source-water protection, and we look forward to providing a detailed report on that progress later this year. Today we're here to advise you of the significant progress that is being made in our joint work -- the ministries here and others -- to develop a drinking water protection plan for the province.
[0920]
As this committee knows, the auditor general's 26 recommendations focused on protecting drinking water sources. This is an important aspect of ensuring that drinking water is safe. However, government's responsibilities go beyond source-water protection. They include regulating water treatment and distribution systems. Finding a balance between source-water protection measures and water treatment is the challenge that we now must meet. The proposed drinking water protection plan proposes a number of new tools to ensure that this balance is found. Today we want to inform this committee of our progress in preparing and finalizing this plan, and on our continuing partnership with the Union of B.C. Municipalities in this work.
Andy is now going to give you some background on the drinking water protection plan itself, and then I will look at the consultation processes that we have underway. So over to you, Andy.
A. Hazlewood: On October 27, 2000, at the UBCM annual convention, the Premier committed to a drinking water protection plan -- including new authority to protect
[ Page 1696 ]
drinking water -- and directed the Minister of Environment, Lands and Parks to work with the Minister of Health and the Union of B.C. Municipalities and other stakeholders to determine the powers and resources needed to protect drinking water in British Columbia.
In January 2001, the "Drinking Water Protection Plan: A Discussion Document," was announced by government, a copy of which was forwarded to this committee last month. The document outlined a plan to increase the public's confidence in our drinking water through government action to ensure access to safe, good-quality water. Consultations with stakeholders and the public were initiated on the four components of the plan, which are all based on a demonstrated health need. Those include assessments, community planning, local influence and authority, and general water quality measures.
An assessment is an inventory of existing and potential problems and risks to drinking water. It is proposed that all water purveyors be required to conduct such an assessment, which would include gathering of existing information on both water sources and the water treatment and distribution system. These assessments would be done in order to inform purveyors and the local community about their drinking water sources and their systems. Assessments would determine whether consumers are adequately protected and what remedial action may be necessary. Routine actions by existing authorities should resolve most of the issues identified in these assessments. It is recognized, however, that new resources will be needed to support purveyors, particularly the very small ones.
Should the assessment and follow-up efforts demonstrate that land use conflicts or problems with the water supply system are too complex to be resolved using established regulatory tools, the community may choose to consider a new community planning provision.
Where assessments demonstrate a potential or existing risk to public health associated with drinking water and existing regulatory mechanisms are inadequate to resolve the issue, a community may wish to undertake a planning process for a designated area. A local stakeholder committee would apply to the province for designation of such a planning area. A multi-stakeholder process could be used to address issues and achieve consensus.
Planning outcomes could lead to the community identifying the need for water system infrastructure investment, modification of land use practices, increased pollution prevention and enforcement, setting local water quality standards, and initiating and monitoring program. The plan would be subject to cabinet approval. If granted, provincial agencies would need to consider the plan in decision-making. Provincial financial and technical support would be required to assist in this planning process.
In order for communities to effectively manage drinking water from the source to the tap, they need appropriate influence and authority. Influence depends on access to reliable information and the ability to participate in meaningful planning processes. Work is underway to more effectively consider drinking water in existing planning processes. Additional authority may be warranted where there is a demonstrated capacity to deal with the associated responsibilities. Such authority might include conducting inspections or monitoring programs, issuing orders to protect water quality, coordination of bylaws among several municipalities or more influence over land use decisions affecting drinking water. Consultation with the UBCM is underway to identify the type of influence and/or authority most suitable for local government. To date the indications are that local governments prefer increased influence; however, they are divided on their wishes for more authority.
[0925]
We're also proposing a number of general water quality provisions to help protect drinking water and support the assessment and planning components of the drinking water protection plan. These include new standards for minimum monitoring frequency for all waterworks systems; monitoring of source water; the quality of water sources, which would be site-specific; the qualification of operators of waterworks systems, for well drillers and pump installers; and well design, construction, capping and closure requirements.
Development of meaningful standards and guidelines to protect water sources and ensure effective water treatment depends on good science. Studies are required in B.C. to address local conditions and needs. Government will continue to support a number of important research initiatives in B.C.
Some of the provisions, such as assessments and community planning, would not apply to individual domestic water users. This includes people on private wells, individuals who draw water from lakes or streams, plus some very small commercial operations. These people and businesses, however, need to have a good understanding of the quality of their water source and the risks posed by human activity and wildlife. They also require reliable information on options for water treatment. A comprehensive education program is proposed to fill this need.
And with that, I'll turn it back to Derek for "Consultation."
D. Thompson: Thank you, Andy.
So looking at the consultations, then, that we have undertaken and are undertaking
In addition, a series of regional consultations sessions with stakeholders and the public have been held during January and February in the following communities: Nanaimo, Abbotsford, Kelowna, Cranbrook, Smithers, Williams Lake, Prince George, Fort St. John, Vancouver and Kamloops. In total, approximately 925 stakeholders attended the 15 daytime sessions -- workshops, really -- and approximately 775 people attended the ten evening public sessions.
Early feedback suggests that there is general broad support for the plan from public health officials, municipalities, the UBCM itself, purveyors and the public. Specifically, many have expressed strong support for a lead agency for drinking water, a desire to see drinking water better represented in
[ Page 1697 ]
planning processes. There was also support for most of the water quality measures, such as the certification requirements for water system operators and well drillers. There has not been widespread support for increased local government authority. Questions were asked regarding how the interests of small domestic water users will be met -- in particular, individuals.
Environmentalists expressed a strong concern about forestry activities and stated a desire to see protection of watersheds. They have also proposed a lengthy list of provincial standards for tap water. The resource sectors are concerned that land use activities, such as logging, could be affected. However, they are very pleased that the plan assures multi-use in watersheds.
The notes taken from the meetings, the comments sheets submitted, and other verbal and written submissions are currently being reviewed and summarized. That feedback from these sessions will be published on our website shortly and made broadly available to all.
As you know, government, through the efforts coordinated by the directors' committee on drinking water, has undertaken to address the auditor's 26 recommendations relating to source-water protection, as outlined in our November submission. Implementation of workplans for these recommendations is underway.
Having reviewed your February report and the submissions from the deputy provincial health officer, Shaun Peck, and having discussed the entire project with Dr. Peck, who has been actively involved with us, I believe that we are making substantial progress. In fact, the drinking water protection plan supports and goes beyond the auditor general's 26 recommendations in many instances on protecting drinking water sources.
Specifically, it is addressing recommendations that government should provide meaningful representation of drinking water consumers and suppliers in integrated management processes, clarify lead authority for drinking water interests, report annually on protection of drinking water sources and ensure information availability, address the rights of resource access of drinking water suppliers, issue guidelines for good drinking water to better inform decision-makers and the public, improve the management of groundwater, and address the vulnerability of small water systems. More importantly perhaps, the plan will enable government to provide a more comprehensive management framework for provincial drinking water issues, in that it will address issues from source to tap.
To summarize and identify the next steps, this is an action plan based on an appropriate response to a demonstrated health need and interest, theretofore. In January, when the Premier announced this initiative, he directed my minister to undertake consultations, which we have now substantially completed, and to prepare legislation for this spring. The results of stakeholder consultations are being addressed in the development of the drinking water protection plan, and the intention is for the legislation to be introduced into the Legislature in the spring session. We look forward to providing a report on government's progress on the drinking water protection plan and the implementation of the auditor general's 26 recommendations relating to source drinking water in our upcoming progress report this spring. Thank you for your continuing interest. We'll be happy to receive and, hopefully, answer your questions.
[0930]
R. Thorpe (Chair): I have a question, Derek. The committee has spent a lot of time on this subject over the past couple of years. I just wonder why the committee had to find out about the "Drinking Water Protection Plan: A Discussion Document" in the newspaper. Why wasn't the committee advised of what was going on and where it was going to take place? Why wasn't the committee given that courtesy?
D. Thompson: Two answers, perhaps, to that. First of all, the committee received the discussion paper as soon as we had it and released it. Secondly, we thought that coming to the committee here today was the most effective way of working with yourselves, and I would apologize if you would consider that inappropriate.
R. Thorpe (Chair): Quite frankly, I can't speak for other members of the committee, but as the Chair of the committee I found it most inappropriate. In the future, if we're trying to solve provincial issues and -- someone, a committee -- a group of people have been working on it for some two years, perhaps we could be a little bit more forthcoming with our communication. You know, perhaps the committee would have wanted to have the opportunity to attend some of those public meetings around the province of British Columbia. This Public Accounts Committee has travelled extensively around British Columbia on issues that are important to British Columbia. So you may just want to consider that as you go forward with some of this stuff.
My second question is
D. Thompson: I'm informed that February 27 is his intended release date now.
R. Thorpe (Chair): Why has that report on such an important issue been delayed so long?
D. Thompson: I can't really speak for Dr. Peck, except what he told me last week when I asked him something similar in question. He said that he wanted to have an opportunity to hear what people had to say in our sessions.
R. Thorpe (Chair): Mr. Smith is here. I understand we were going to have a course for small water operators. Has that taken place yet, because
[0935]
B. Smith: The first course will be held on March 1 and 2, next month.
R. Thorpe (Chair): And that's been booked, Bob?
B. Smith: Yes, it has been booked. The next one will be held on March 13 and 14. The one on the 1st and 2nd will be in the lower mainland; the one on the 13th and 14th will be in the Creston area -- Kootenays.
R. Thorpe (Chair): Does anybody else have any questions?
[ Page 1698 ]
G. Farrell-Collins: I appreciate you coming and making your presentation. I too was intrigued to see a project that this committee had been working on for some time suddenly sort of pop up again -- or, I should say, finally pop up -- and be addressed. Can you tell me how much of the work that's included in this discussion paper -- how much of the consultation, how much of the work that's in here -- had been done to prior to January, or October for that matter, before the announcement was made?
D. Thompson: An interesting question, because one of the things that is very clearly apparent to all of us is how we're trying to take the work that's been going on for the last two or three years and roll it into here. One level could answer that in fact the work has been underway for all of that time. In terms of the specifics around it, essentially inside of my ministry we began working on our component of this work early last summer, in terms of the background discussion papers and analyses, and brought it forward in the latter part of the fall.
G. Farrell-Collins: The auditor general did his report. I'm trying to think of the exact date; I think it was almost two years ago. Yeah, that's '98-99. What work was done between the time the auditor general issued his report and last summer when you began to work on this process?
J. Mattison: Well, as we've reported to the committee before, we had prepared 33 workplans in response to the auditor general's recommendations, and those are ongoing. And work on those workplans continues, throughout the period when we started preparing the drinking water protection plan. So much of the work to address the auditor general's specific recommendations is still ongoing.
G. Farrell-Collins: Okay. I guess maybe I'm not putting it all together. But I'm trying to understand what is different in this plan as opposed to what was underway in response to the auditor general's report some two years ago.
J. Mattison: The primary difference is that the auditor general focused on source protection only. When we started examining the activities with regard to source protection, we realized that much of protecting -- providing -- safe drinking water involves a balancing between source protection and appropriate treatment. As well as to ensure safe drinking water, there's a necessity to ensure that the distribution systems are well maintained and appropriately managed. The events in Walkerton really
So after the events in Walkerton last summer in July, we took a step back and examined our approach. As Derek said, we started working on a broader approach. We recognized it was a human health issue, got more involved with the Ministry of Health in terms of the whole spectrum -- from source to tap -- and tried to find the appropriate balance between source protection and treatment and the other pieces that are required to ensure safe drinking water.
D. Thompson: In some ways, when you reflect on it, perhaps the message that came from the auditor general's original report that is being even more clearly heard and understood in the last few months is this notion of the two principal agencies -- Environment and Health -- working much more closely even than they were already in the directors' drinking water committee to some sort of single entity, in essence.
[0940]
G. Farrell-Collins: What work was being done
J. Mattison: Well, we were, for instance, developing the course for small system operators. That was work that's not particularly directed at source, which was ongoing before the fall. I'm not sure I fully understand your question.
G. Farrell-Collins: Sorry. If I can, just another
A. Hazlewood: Maybe I can try to answer that in a global sense. I think, historically, we viewed drinking water in this province as really the responsibility of two ministries primarily. The Ministry of Environment had a mandate and a responsibility to deal with the source protection and source protection issues and that. That involved an awful lot of other ministries as land use and other uses of that watershed would occur. The Ministry of Health was responsible for the drinking water, once a decision was made, in order to take that source and convert it into a drinking water supply.
I think what the auditor general's report
So I think what this reflects now is certainly a much better understanding that drinking water is a system, that what you do to the source water does affect treatment and that the type of treatment you choose to provide may in fact influence the type of watershed activities that you would allow.
G. Farrell-Collins: Right. So I guess my question was: what work was being done on the treatment side prior to the summer last year?
A. Hazlewood: Well, there is a safe drinking water regulation under the Health Act right now that is administered and managed by the medical health officers in the province. The standard that is set is a monitoring standard,
[ Page 1699 ]
mainly for bacteriological content on a regular basis. The medical health officer does have a responsibility to ensure that the water is safe.
G. Farrell-Collins: I'm sorry. I don't want to interrupt, but I guess what I'm looking for is what new work was being done on treatment, in response to the auditor general, between the time of his report and last summer.
A. Hazlewood: Oh, okay.
B. Smith: I think one of the things that we were working on quite consistently was trying to educate the public that chlorination is actually a positive thing as opposed to a negative thing. There's a public perception in a lot of areas that it's a bad thing. So one of the focuses that we have been trying to do is an educational component to raise the level of acceptance.
G. Farrell-Collins: Is that as a result of the auditor general's report?
B. Smith: It's been ongoing, but we've stepped it up as a result of the auditor general's report obviously.
G. Farrell-Collins: Was there any other action taken?
B. Smith: I think that historically, health units have been progressively trying to enforce the safe drinking water regulation since 1992, when it first came out. The number of boil-water advisories fluctuates around 200, and that's basically a result of lack of treatment. Most of those are small water systems. Right now we're on a bit of a hold pattern in enforcing, and what we hope to do is come out with a stronger enforcement of the safe drinking water
We're on a bit of a hold pattern right now, pending the results of the Erickson improvement district issue. Right now that has put the medical health officers in a bit of a dilemma of taking action when there's a matter presently before the courts and a trustee has been appointed. So they've been stepping back for almost a year now, honestly, because of the time and the consideration that this exercise has put them through. So there's a bit of a
[0945]
There has also been research on treatment. A lot of research has gone on in the level of treatment and the necessary treatment. Microfiltration is a new treatment component that's been installed in Revelstoke. That's under review. There have been reviews of ultraviolet
G. Farrell-Collins: The final question. Your discussion paper quotes the auditor general as requiring a single voice for drinking water protection, and I notice that there are two ministries here today. We're always glad to have you. But in this report, as well, there are references to situations
D. Thompson: We'll try and sing in complete harmony. Yes, in this committee, I observe, both in the previous discussions as well as extensively in the public sessions, the issue of a single voice has come forward. Of course I notice that we bureaucrats then valiantly answer in terms of: "Well, Environment has a role in the source, and Health has a role in the tap system." As we're discussing this between ourselves as we move forward jointly, we're recognizing that there needs to be a point that the public can access and know that that voice, that place, is accountable for this. That's something that we are definitely looking at as we bring the next phase of this forward -- and to make the health issue the focus.
G. Farrell-Collins: Isn't it more, though, than just somebody that the public sees as being accountable? Isn't it actually that there should be one person speaking for or one agency speaking for the protection of drinking water that actually manages it? Is that not what the auditor general intended in the report -- not so much that it appears on the surface that there's somebody you can contact but rather that there in fact is one agency that's actually managing and protecting that resource?
D. Thompson: I certainly agree with you in terms of the accountability focus and that that extends beyond just being a voice, a mouthpiece. However, the challenge that we face is that British Columbia, as we all know, is a very complex place, and water permeates -- to use an intentional pun -- the very fabric of all of our interactions with resources as well as the people of the province. It isn't as simple as saying that one person will be completely accountable for all transactions in water. That's what we're trying to work with: how to respond both to the auditor and to the public's desire for a real clear accountability on water and for it to be based around health. But it is quite complex.
R. Kasper: I don't know if my question was answered. Mine was going to be: who is going to be the lead agency? We still haven't got an answer as to who would be the lead agency to deal with drinking water. Without getting into the details of proposed legislation, it appears that it's an initiative being brought forward by the Ministry of Environment -- i.e., the plan or that process by which the whole question of drinking water from source to the consumer would be addressed. But it still does not indicate who would be the lead agency. So without breaking a parliamentary tradition, is it envisioned that the legislation would actually spell out who the lead agency is?
D. Thompson: That's a good way to ask the question. The short answer is: I would hope so, yes. I stress that it is a joint initiative of the Ministry of Health and the Ministry of Environment. It happens that our letterhead is on things, but we are joined at the immutable hip.
[0950]
R. Thorpe (Chair): Is that it, Rick?
R. Kasper: I guess so. I guess I'm not going to get an answer. [Laughter.]
[ Page 1700 ]
D. Miller (Deputy Chair): I recognize that recommendations are occasionally made on questions of this nature. It seems to me that the committee ought to be looking a little bit more deeply into the reality of the structures and systems that we have to deal with various issues, in this case roughly separating the sort of land use issues and whether that be forestry or other land uses and the impacts that might potentially have on water sources versus the system, if you like -- the system of collecting water, distributing water, ensuring there is adequate monitoring and testing, treatment, those kinds of things. It seems to me that they are clearly two separate issues, and potentially the recommendation for a single agency could in fact be quite problematic and unworkable. For example, should the Ministry of Health be the approving agency for logging plans, harvesting plans? There are any number of other scenarios that you can throw into that question. I suggest that would be inappropriate and unworkable.
So I don't believe it's a simple matter, Mr. Chairman. I don't know if the auditor has any comments on this or not. Perhaps I'm misinterpreting the recommendation -- or at least as I interpret from the questions here. I don't think it's a simple issue of just saying: "Well, the one ministry is the lead." You have to recognize the structures that exist within government and, indeed, not just government at the provincial level but other levels of government as well -- municipal, regional -- to understand that coming up with a single voice, quite frankly, in my opinion is probably the wrong way to go. But even if you believe that, I think you'd have to accept, given the complexities that I've described and the interaction between various ministries, that it's simply not a simple matter.
I wouldn't mind hearing from any of the people here this morning -- Derek or others -- on that question. I think it's something that you've probably gone around a fair amount yourselves. Quite frankly, if the auditor had any comments on that, I wouldn't mind hearing those as well.
D. Thompson: Thank you, Mr. Miller -- as usual, more incisive than I, in terms of laying out this complexity
What we're grappling with is how to make accountability for clean water clearer and to give an accountability centre for that without disrupting the approvals processes and the business process around the use of resources in the province, whether it be for forestry or agriculture or grazing or whatever we're talking about. And we're hopeful that we're going to be able to put something forward to government that will respond to the auditor's suggestions, to the public concern, without disrupting the system.
R. Thorpe (Chair): Wayne, did you want to make any comments?
W. Strelioff: I'll just reiterate what we've said in previous meetings. We're looking forward to progress on making sure that there is a clear recognition that our water system is one integrated water system and that we need a place to make sure that there is strong coordination of all the different trade-offs that are involved. It sounds like there is progress coming.
D. Miller (Deputy Chair): Just to follow up, Wayne, given what I had to say with respect to the structures of government, would you agree? Or do you have any comments on that? For example, I've seen other attempts to integrate ministries around a single issue -- land use planning being the one that bedevils all British Columbians most often. I suspect that will continue.
[0955]
And it hasn't always worked. I recall, in Clayoquot, an attempt to put the Ministry of Tourism on an equal footing with Environment and Forests. And it didn't work, because quite frankly, the Ministry of Tourism had no expertise and would have required a huge increase in spending to duplicate existing bureaucracies. So you can appreciate
This, I think, falls into that category. It would be unadvisable, in my view, to have the Ministry of Health attempt to become a land-based agency. I think there's always going to have to be a very clear distinction between the roles of various ministries. Really, the issue is coordination, I think; you've used the term "coordination."
Wouldn't you agree that essentially one of the interpretations that people who are not, perhaps, going through this exercise might take is that there should be one ministry, and they're in charge, and therefore they have to deal with every single issue that might arise in a water system, including whether or not it's acceptable to harvest in a certain way or
W. Strelioff: The lead agency recommendation is centred on making sure that there is a coordination of people coming to the same table, where all the different trade-offs are clear, and that the accountability for our integrated water management system becomes a clearer focus. Yes, it involves different perspectives, not just one perspective, at the table. But because it's an integrated water system, we concluded that one lead agency is very important in bringing those views to the table and then expressing the government of the day's policies and management strategies in a public way.
D. Miller (Deputy Chair): I can't see how it would work, but
V. Roddick: I'd just like to comment on the integrated
[ Page 1701 ]
D. Thompson: I'm afraid we don't have the list of all the people who were invited to the workshop. We had an extensive list of stakeholders who were invited, particularly from the agricultural sector. We've had separate discussions with agricultural interests in the lower mainland generally, but we'd have to get back to you on the specific list of exactly who was invited. But it was a very broad, geographically split list throughout the lower mainland.
V. Roddick: Well, I really would appreciate that. And I think that shows from the start of today's meeting that the group here probably should have been informed of these, rather than having to find it in the paper, so that we could have made sure -- for instance, in my particular riding -- that there were people involved who attended the meeting in Abbotsford.
[1000]
D. Thompson: I appreciate, in particular, the Chairman's comment, but I would point out that we did inform the committee directly at the outset of the process.
R. Thorpe (Chair): Anything, Val?
V. Roddick: No, except that I think this is a perfect example of how a single voice has to come to pass. Somebody has to be accountable and responsible for our water system.
M. Coell: I wonder whether either the auditor general or any of the ministry staff could comment on this. You know, basically water is the most important thing to human existence. So I'm a little concerned that we can't find a solution. Has the ministry or have the ministries thought of taking the parts of each ministry out of that ministry and putting them into a new one -- a safe drinking water agency -- and just taking the pieces of the ministries that are responsible and putting them into an agency that would be the main source? I mean, I listened to some of the other comments about slowing up approval processes or hampering business. I don't see that necessarily as an outcome of that. It may even work more smoothly. I'd be interested in whether the auditor general has considered that, or any of the ministries present.
D. Thompson: The answer that you can get from myself is that in the last 18 months that I've been Deputy Minister of Environment, we haven't been contemplating taking the agencies apart and putting them together in a different way along those lines. And what Jim assures me is that the directors' committee, when they've been looking at it over the slightly longer time frame, has veered away from that path because of the difficulty and complexity issue.
I don't know, Jim, if you would like to add
J. Mattison: One of the things we did in part of our research in looking at this was look across Canada as to how it's done in the other jurisdictions. And everywhere across Canada there's a line drawn somewhere between the responsibilities of the health agencies and the responsibilities of the agencies such as environment or natural resources or whatever the responsible agency is in the other provinces -- somewhere between the activities in the source and those activities around treatment and distribution and monitoring and ensuring safety of drinking water. One of the difficulties if you were to pull the pieces with respect to drinking water
So we looked at how we can provide a better job of coordination and better information flow within government. It was our conclusion that that would be a more effective way of managing this without disrupting other activities. The auditor general's report was with regard to source water. And we realize that there needs to be a better job just on the source side of managing how water is considered in all of the land use decisions, whether it be -- as Mr. Miller has suggested -- a forestry approval
One of the things that Environment does with respect to forestry activities might be to look at protection of habitat or waste management activities or other activities that Environment manages. So bringing Health in would be adding another agency into the approval process. We felt that the division was probably right, with Environment in the source and Health in the treatment and distribution side, but we recognize that that interface has to be more efficient. We're taking steps to improve that. We also recognize that the auditor general had some concerns about the role that Environment played with respect to managing the land use activities and raising the profile of water in those land use decisions. So we think if we fix that and work on that interface, it's more effective than trying to do a wholesale government reorganization that would be required to put all of the water activities into one agency.
[1005]
B. Smith: If I can make a comment on that too. I think if you look at the situation in Ontario, that's probably as close to one agency as you're going to come, and Health was excluded from that agency. I think that was part of the communication breakdown, and I think that's where we have the advantage over Ontario. We have that ability to have Health principally involved at the health end of it, so that they're aware of any potential consequences of that.
And if you look at setting up another agency, that may be a similar problem. Even though you suggest bringing other groups into it, it may not have that connection locally that it would have on a provincial level. When you look at the regional health authorities, they're not provincial employees anymore. So that may be a bit of a weak link in that kind of a process too, if you wanted to look at one agency. It might be a weakness. I'm not saying it would.
R. Kasper: I think that in many respects Health, by default currently, could be viewed as the lead agency if there is a problem with both the source and the distribution system, in regard to the consumer or the person who turns on the tap. If you look at it from the tap and go backwards through the system, through the purveyors, through local governments that have a role, and then get through to the source, Health is very much involved.
If there's a turbidity issue, Health will issue a boil alert because they have a concern. If there's a coliform issue, Health will then step in and issue an order to take corrective meas-
[ Page 1702 ]
ures and advise the consumers. If there is any form of industrial activity that could have an impact on the water source, knowing full well that there are consumers who are going to drink this water, Health will have a role in assessing if there is or is not an impact on the people who are consuming the water. It was my understanding that that was the purpose of the exercise when the auditor general embarked on the report. The study says: "Protecting Drinking-Water Sources." And in my mind, Health
Now, I'll use this as sort of a microsystem or example of where Health had a major role: the greater Victoria water district and the previous role that it played and the partners that actually ran that system
[1010]
Now, the Ministry of Health -- and I use that label because the chief medical health officer, by statute, is empowered to take Health legislation to ensure that purveyors of water meet the Canadian safe drinking water standards, to ensure that there are steps taken to treat the water if need be -- had a great deal of say as to what measures should in fact be taken. And these were suggestions that other agencies, be it the Ministry of Environment, be it regional government, took action to ensure that water quality was first and foremost.
So I don't think we're dealing with rocket science here. I think: bite the bullet, and deal with why you're even contemplating doing all these measures. It's to deal with protection. And when it gets down to the protection element, people go running to Health. People go running to the experts who are going to test the water, who are going to give rational, good comments to the purveyors as to what methodology they should use to protect their customers.
Really, my suggestion, for what it's worth, is: make Health the lead agency. Don't restructure. You don't have to go through that exercise. You don't have to reinvent the wheel. But when it gets down to accountability to ensure that the people who are going to consume that water have faith in whatever system you have in place, it's Health who is going to ensure that.
Sorry to ramble, but I think it had to be said.
D. Miller (Deputy Chair): This is an interesting topic, although some might not agree.
I want to go back. In part of the testimony given earlier, there was a reference to the mandate of the medical health officers in various regions of the province relative to water. Perhaps someone could describe to me what that role is and what set of consistent standards or criteria are used by all medical health officers, regardless of where they are in the province, in carrying out their responsibilities. I'm assuming here that it's for the quality of the water -- in other words, the safety of the water.
And after I hear that
A. Hazlewood: Under the current system we do have a safe drinking water regulation, which is enacted under the Health Act. That empowers and requires the medical health officer for the region where he or she has got that geographic responsibility to ensure that all water that's purveyed
As Bob mentioned earlier, part of the advantage we think we have here is that all of the tests that are taken to monitor community systems are directed directly to the medical health officer for his review. Most of the testing that's done now is on a bacteriological assessment of the water. And I think most of the outbreaks that have historically been associated with drinking water in this province have been bacteriological rather than the chemical parameters, although those are important. Medical health officers rely on the advice of a set of Canadian standards, the set of guidelines that's produced through a federal-provincial process that lists a whole host of both bacteriological and chemical parameters that they use on an individual basis to assess each individual water system to ensure that the system is safe.
[1015]
What I think has been frustrating for medical health officers is that their kind of mandate and responsibility is with the purveyor and the treatment that they can impose on that purveyor, based upon assuring safe drinking water. What they haven't been involved with
What the medical health officer is saying is that his only responsibility is to have a look at the raw water that's going to be purveyed and dictate the type of treatment that is required to render that water safe -- hasn't had any involvement or input into land use issues and adverse impacts that may have a water quality problem on the raw water that's going to be purveyed. So there's been this kind of artificial dividing line, which I was mentioning earlier there. It's a system, and we need to involve all parties in the system.
Have I answered your question?
D. Miller (Deputy Chair): Yeah. Let me paraphrase. Essentially, then, the protection of the public or the best guar-
[ Page 1703 ]
antee the public has that, when you turn that tap on, you're not going to kick the bucket a little while later is that there's a medical health officer who administers the regulation and ensures that the appropriate treatment is applied to water if it's required -- really, that the water's safe.
Do the medical health officers as a group, I mean, have
Is there any particular body of expertise within the Ministry of Health or medical health officers on those kinds of questions? And in fact, from your perspective, do they necessarily want to be put in that position?
A. Hazlewood: I think, in general, they're similar to what we're hearing from local government. They certainly are interested and want some influence. But I don't think any of the medical health officers in this province would feel that they've got the capacity or the technical expertise to be the decision-maker of whether or not logging should continue and what kind of safeguards you would put into place. What they can assess is, based upon those decisions, the potential impact that that operation -- that logging operation or that mining operation -- might have on the source water. They do have the expertise to then determine: "Well, based on that scenario, here is the type of treatment that you as a community will be required to provide."
In some cases that's very expensive technology. It's a balancing act. You may decide that the treatment that's required is so overwhelming for the community that it's best for everybody concerned to do a better job of protecting the water supply. There may be some other trade-offs where some raw water supply degradation can be well mitigated with the appropriate treatment. And that's a decision of the collective community.
I think what we're saying is that medical health officers, like municipalities, want some influence and want to be involved in the process, but I don't think they're saying that they should have the veto or the decision-making about those land use issues.
E. Walsh: I just wanted to say first, off the top, that the public hearings that were held in Cranbrook were really well attended, without any kind of input from myself. I was really pleased about that, because I know that the constituents in my region read the papers and heard it on the radio. I was really pleased to see such a good attendance in my area.
Just listening to the practicality of any lead agency, I don't know that it is even practical. For one thing, there are so many diverse interests throughout
[1020]
One of the areas, though, that I was a little bit concerned about, because I do come from an area of smaller communities, is the pilot workshop -- hearing or program -- that's going to be held in Creston and some of these other places that we were just talking about earlier. What does that deal with specifically? I know that, listening to what some people have to say and just reading some of what the auditor general's report also
B. Smith: The intent of this is to provide a training workshop for operators of small waterworks systems with the intent of raising their knowledge of operation safety and factors that would affect their system. It's proposed to basically lead towards a certification program for small waterworks operators in communities such as what you're suggesting. It's a training workshop, information session.
E. Walsh: I know, though, that there was some confusion, too, with regard to smaller areas because of their dependency on groundwater versus surface water.
B. Smith: Yeah. There'll be no differentiation between surface or groundwater. First nations will also be invited to attend if they wish.
R. Thorpe (Chair): One of the things I just wanted to make sure, because Jim made a point through Derek
I guess my other point -- just quickly, and then we can wrap this up
W. Strelioff: Members, no, we did not.
R. Thorpe (Chair): Again, unless anybody else has any questions, thank you very much for taking the time to update us. We look forward to this being aggressively pursued by all parties involved, because this is a very, very important issue for all British Columbians. Thank you.
B. Smith: Thank you, Mr. Chair.
R. Thorpe (Chair): We'll just take a five-minute break, if that's acceptable. The Clerk's office will be circulating some information for the next item.
[ Page 1704 ]
The committee recessed from 10:23 a.m. to 10:39 a.m.
[R. Thorpe in the chair.]
R. Thorpe (Chair): I call the committee back to order, please.
The next item on the agenda is earthquake preparedness -- insurance issues -- and we have a couple of witnesses from the Ministry of Finance and Corporate Relations. Perhaps you could introduce yourselves and go ahead with your presentation. Thank you very much for coming.
L. de Wet: Good morning, members of the committee. My name is Leon de Wet. I'm the director of the financial and corporate sector policy branch within the Ministry of Finance and Corporate Relations. I'm joined today by Carol Anne Rolf, who's the director of the streamlining initiative within the ministry.
[1040]
Last May I appeared before the committee to provide feedback on recommendations 8.1, 8.2 and 8.3 in the committee's report, "Earthquake Preparedness in British Columbia." The committee requested that I provide a further update in September last year and that the insurance industry representatives be invited to attend the meeting. That meeting has been rescheduled several times for various reasons, including the unavailability of insurance representatives as well as the delay in the release of a report commissioned by the Institute for Catastrophic Loss Reduction, which is an initiative of the insurance industry and others. I understand that each member of the committee has received a copy of that report.
The committee's three recommendations are as follows:
1. The provincial government should determine the regime that would best ensure that earthquake insurance is affordable, available and contributes to the adoption of effective risk mitigation measures.
2. That the provincial government consult with the insurance industry and other stakeholders to clarify the issues around the fire-following and shaking damage coverage.
3. That the provincial government require insurers to take appropriate steps to draw policyholders' attention, on the face of an insurance policy, to the scope of the coverage available respecting earthquake-related damage.
I'm pleased to inform the committee today that the ministry has responses to each of those recommendations. With respect to the first, the ministry is of the view that the current market provides sufficiently affordable and available earthquake insurance for British Columbians -- particularly in the high-risk areas of the lower mainland and Vancouver Island.
Respecting mitigation, the Minister of Finance and Corporate Relations has accepted the recommendation of the provincial emergency program officials that the Seismic Safety Committee is best positioned in government to undertake mitigation initiatives that will involve many agencies, including those responsible for the Building Code, as well as the private sector, such as the insurance industry and financial institutions.
Respecting the committee's second recommendation, the issues around fire-following and shaking primarily focus on a request by the insurance industry for an amendment to the Insurance Act that would enable insurers to package coverage for fire-following damage with coverage for shaking damage in a separate earthquake insurance policy.
From our analysis, it is not clear that the proposed legislative amendment is justified at this time. However, the Minister of Finance and Corporate Relations has agreed to publish a draft regulatory impact statement on the proposal, to give consumers and the industry one more opportunity to help clarify the implications of the legislative amendment proposal.
Respecting the third recommendation, the ministry is preparing new regulations that will require disclosure of the scope of coverage available respecting earthquake-related damage. I will ask Carol Anne to provide greater detail behind each one of those responses. Carol Anne has been working on this project since May, but her familiarity with the earthquake insurance issue dates back to the time when she was the director of the branch that I currently head up.
C. Rolf: In responding to the Public Accounts Committee recommendation regarding the best earthquake insurance regime in B.C., we looked primarily at two aspects: whether or not there should be public sector insurance or whether the private market was functioning and the contribution to mitigation.
To get an idea of earthquake insurance takeup and public attitudes toward other aspects of earthquake insurance, the Ministry of Finance commissioned a random survey of households last September. We surveyed 700 households in the high-risk areas of the province -- the lower mainland and Vancouver Island. The focus of this analysis has been on the residential market, as is the case in other jurisdictions. Commercial buildings and major apartment complexes are covered by earthquake insurance -- this is what the industry information supports -- and commercial insurance tends to be sold with a flood and earthquake component.
We have tabled with you a table of comparisons with other jurisdictions. If I could draw your attention to that table, these are fairly rough estimates, but they show that British Columbia compares very favourably to other private earthquake insurance jurisdictions in terms of takeup, premium and deductible rates. If you look at the last column in the table, earthquake insurance takeup, we looked at jurisdictions that are close to British Columbia along the Pacific coast and also in Canada -- in Ontario and Quebec, where there is a high earthquake risk. In Alaska the insurance regulators told us that they really didn't know how many people had earthquake insurance and that they weren't very concerned about it.
[1045]
In British Columbia, based on our survey, 45 percent of all households have purchased the earthquake shaking supplement; 63 percent of homeowners have that supplement. In Washington what's reported is around 30 percent takeup. That is statewide; we don't have a breakdown for high-risk, lower-risk areas. The same is true of Oregon. In California 17 percent of homeowners are reported to have the earthquake supplement, and 30 to 40 percent of homeowners in the Bay area. That was an example we took of a high-risk zone in California. The only reports we could get from Ontario and Quebec were that takeup was very low, so we don't have any figures to show.
Again, in terms of the earthquake premium I would just point out that British Columbia, at 50 cents per $1,000 of
[ Page 1705 ]
coverage, is very competitive and actually lower than the American jurisdictions. Those figures are in American dollars for the American jurisdictions. The earthquake deductibles, again, are very comparable. They range from 5 to 10 percent in British Columbia.
These takeup rates are supported by insurance company estimates of what they sell in B.C., as well as insurance broker estimates. If you talk to a broker on the street, you get similar kinds of reports. The takeup is also higher in Richmond and Delta, where we were concerned that earthquake insurance might be less available and affordable. It's also higher in the capital region on Vancouver Island.
The survey now gives us a benchmark for assessing any changes, if we are to make changes to the regulation or to the law, as requested by the industry. Based on those results, we think that the private earthquake insurance market in B.C. is providing affordable, available insurance and that it would be difficult to justify public sector insurance, as they have, for example, in New Zealand at this time. However, measures should still be taken to increase takeup. Because earthquake insurance is considered affordable and available, the provincial and federal disaster financial assistance program does not provide any coverage to people without earthquake insurance. None of the costs or expenses are eligible for assistance. However, the provincial emergency preparedness officials tell us that the guidelines
Our survey also showed that increased public awareness and education about both the risk and the benefits of insurance would be necessary to increase takeup. In some instances people who responded to the survey did not know they lived in an earthquake zone or did not believe that. So as Leon mentioned, PEP officials have recommended that the Seismic Safety Committee take on this public education and increased awareness work -- that it fits with their overall communications campaign. But in the meantime, insurance agents and brokers are a very useful vehicle for getting some information out to homeowners. The Insurance Council plans to remind brokers of their duty to raise the issue of earthquake insurance. As well, insurance agent education about the government disaster financing regulations and the guidelines will be stepped up and, if necessary, backed up by regulation.
In terms of the mitigation aspect of the insurance regime, because earthquake insurance is a form of catastrophic insurance, by definition it carries a higher premium and higher deductibles than standard insurance. However, even if you have insurance, you might be financially strapped or even homeless because of the high deductible. Therefore, the awareness of the provincial financial disaster guidelines, as well as mitigation, appear to be critical.
[1050]
Only a small percentage of households in our survey -- 15 percent in the high-risk areas of the province -- had reported having undertaken any earthquake proofing. That was primarily not structural measures; it was more fixing bookshelves to walls. Both the literature and the auditor general's findings, which were endorsed by the Public Accounts Committee, indicate that insurance has a role to play in mitigation. Our survey shows that people who buy earthquake insurance tend to do more earthquake proofing. Again, the numbers are low, though -- 19 percent, versus 11 percent of people who don't buy earthquake insurance.
They also said: "Yeah, sure. A lower deducible in return for mitigation would be a great idea." But this is very much just indications of attitudes. The Insurance Bureau of Canada has indicated
Again, the PEP officials have suggested that the Seismic Safety Committee would undertake residential mitigation initiatives. They've been doing some comparative work with Seattle and cities in the Bay area, and they would involve many agencies in doing this, including the insurance industry and financial institutions.
With regard to the second recommendation made by the Public Accounts Committee, the clarification of the fire-following coverage
One result is that we have two regimes operating in British Columbia. With the majority of companies, when you buy your standard fire insurance policy, you're covered for fire following an earthquake. You have to buy an extra supplement to get coverage for earthquake shaking. With this, with at least one company, you're not covered. They tell you at the time of sale and give you an opportunity to buy an earthquake supplement that includes fire-following coverage as well as shaking.
The industry had initially argued that the law be changed to allow them to sell this more comprehensive product in order to help them better manage their earthquake risk and exposure. But since the financial capacity issues seem to be resolved -- and in the brief that the industry has provided you this morning, I think they do confirm that they believe the financial capacity issues have been resolved -- their arguments turn on benefits for consumers, less confusion over coverage and the potential for differential treatment following an earthquake depending on the nature of damage.
They haven't been able to provide us with any consumer perspective or any real indication of the kind of product they might sell. And it is very difficult to get consumer input on this issue, which is why we did the survey. But the amendment would make British Columbia unique in common-law
[ Page 1706 ]
jurisdictions that don't have public sector insurance. California and Oregon regulators have told us they would prohibit any such exclusion and that the industry in those jurisdictions has not even raised the issue.
From a business and a regulatory perspective and maybe a consumer perspective, the comprehensive package might be clearer and least confusing, but it's not clear whether the benefits would justify the costs. Under the comprehensive package, consumers would have to pay for earthquake insurance to maintain their existing coverage. So 96 percent of homeowners in the high-risk areas have standard property insurance. A significant number of those homeowners would now no longer be covered for fire-following and would have to purchase additional coverage.
The deductible for fire-following could be significantly higher for most consumers, although some companies are now charging a higher deductible for fire following an earthquake than for fires caused by other sources. And premiums could increase. As you can tell by the table, the British Columbia premiums for shaking-only damage do seem lower than in other jurisdictions.
We know that the extent of fire-following coverage is likely to fall if we do the amendment -- possibly significantly. Because we have 96 percent of homeowners and 43 percent of tenants now covered for fire following an earthquake, "If the peril were removed," we asked people in our survey, "what would you do?" About 40 percent of those who don't buy earthquake insurance -- which is interesting -- said that yes, now they would buy it. So about 48 percent of people who don't buy it
[1055]
So fire-following clearly plays some role in people's earthquake insurance decisions. But at the same time, about 40 percent of those who do buy earthquake insurance said: "I don't know if I'd renew. It might cost more." We know that more homeowners would be at risk for that peril, but we really don't know how it would net out.
Now, if fewer properties were insured, more of the risk will be transferred to the insured and to the government. The risk management branch in the Ministry of Finance and Corporate Relations advises that if we did the legislative change and the result was that earthquake insurance was no longer affordable or available, then the financial disaster assistance program -- both provincially and federally -- would be amended. That would leave the provincial government with an $18 million exposure. That's how much the provincial government has to pay before the federal financing kicks in after a significant disaster.
Some of the expected reduction in coverage could potentially be offset by increased public education, and particularly if fire insurance is an incentive to buy earthquake insurance and if the public became more aware of the fact that if you don't have earthquake insurance now, you won't get help in a disaster. If you have it, you might get some help with your deductible.
As Leon mentioned, it's not very clear whether the legislative amendment is justified at this time. I think we're in a position of: if the system ain't broke, maybe we shouldn't try to fix it. But the minister has agreed that we should publish a draft regulatory impact statement that would allow us an opportunity to set out some of the implications of the change and give consumers and the industry one more opportunity to tell us what they think the implications are. The industry -- the Insurance Bureau of Canada -- has told us they support this publication of a draft regulatory impact statement as a necessary and critical step in this policy work.
With respect to the third recommendation, the clarification of the scope of earthquake insurance coverage, as I mentioned, we now have two regimes going on in B.C., and we agree it's very important for people to understand the coverage that they have. The additional disclosure requirements have been in abeyance. The industry really wanted to focus on this legislative amendment, and we had agreed that we should probably do that. I think that we think -- now that we know that there's more than one regime operating and that if we did make the legislative amendment, there still may be more than one regime operating -- we should proceed with regulations that would require the disclosure.
Thank you.
[1100]
R. Thorpe (Chair): Thank you, Leon and Carol.
Hopefully all of you have received copies of the February 16, 2001, letter from the Insurance Bureau of Canada. Let me just read the covering letter into the record. It was addressed to me.
I would ask that we table this document and that the Clerk's office take the appropriate measures to ensure that it's attached to the minutes and to Hansard."On behalf of the Insurance Bureau of Canada, I would like to thank the Public Accounts Committee for the opportunity to appear before it. I regret that, due to a previously scheduled commitment, I am unable to appear in person. I therefore enclose our brief as well as a copy of the recently completed report: 'Assessment of Risk Due to Fire Following Earthquake, Lower Mainland, British Columbia.'
"Should the committee have any questions, I would be very happy to meet with you at a future date."
"Yours truly,
Lindsay Olson
Vice-President, Pacific Region
Insurance Bureau of Canada"
With respect to your presentation, when will the draft regulation impact study be released?
C. Rolf: We're expecting it will be ready sometime in April. The Insurance Bureau is holding an earthquake seminar, based on that report that they've tabled with you, on March 23. We would like to have the benefit of that before we finalize the draft RIS.
R. Thorpe (Chair): When that's completed, could you please make sure that the committee receives that report through the Clerk's office.
C. Rolf: Yes.
[ Page 1707 ]
R. Thorpe (Chair): Could I just ask: the survey that you talk about -- is that also available for the committee, and has that survey also been shared with the Insurance Bureau of Canada?
C. Rolf: We've shared the results informally. Now that we've briefed our minister, we're able to share it more widely. I do have a copy; we can table one if you would like.
R. Thorpe (Chair): That would be greatly appreciated. Thank you.
It was my sense in previous meetings that the relationship between the Insurance Bureau representatives and senior officials of government wasn't working as well as it possibly could. I'm just wondering: as we work through these very complex issues, are you folks meeting on a very regular basis with them, and are we working in a cooperative spirit to find an equitable solution here?
L. de Wet: Yes, we have been meeting fairly frequently with them -- as recently as last week, in fact. The insurance industry indicated to us several weeks ago that they would not be able to make today's meeting and offered to meet with us to share their submission with us. We met and discussed their submission. In addition to that, we indicated what type of recommendations we would be making to the minister, and they indicated that they would be very happy, particularly with the regulatory impact statement approach. I would sum up by saying we have a cooperative working relationship with the industry on this.
R. Thorpe (Chair): Is this issue still a top priority, Leon, on your workload?
L. de Wet: As I said at the last meeting, it's one of my several top priorities, Mr. Chair. Yes.
R. Thorpe (Chair): I realize what you said at the last meeting. At least in this report that I have -- the federal regulator's evaluation of the results of the program with respect to financial capacity -- they say the federal
L. de Wet: The B.C. regulator has largely adopted the approach that the federal regulator has taken with respect to regulating companies operating in British Columbia that sell earthquake insurance. The primary reason for that is that the overwhelming majority of property and casualty insurance companies that sell earthquake insurance in British Columbia are federally chartered and are therefore regulated jointly by the federal government and the provincial government.
R. Thorpe (Chair): Does anyone else have any questions? Does the auditor's office have any comments?
W. Strelioff: No, we don't.
R. Thorpe (Chair): Did you receive the Insurance Bureau documents?
W. Strelioff: Yes, today.
[1105]
R. Thorpe (Chair): Okay, good. Seeing no other questions, thank you very much for coming. I appreciate it.
Okay. The next item on the agenda is the committee's consideration of the draft report: "British Columbia Ferry Corporation Fleet and Terminal Maintenance Management and Operational Safety Follow-Up Report." Richard, would you walk us through this report, please?
R. Morrow: The committee last discussed these audits in May 2000. This draft report reflects the key points of the committee's discussion at that time. As well, the auditor general's staff conducted their most recent follow-up review of these audits in November 2000, and the draft report incorporates information from that review. I'll just clarify that the follow-up was conducted in November, and the report on the follow-up was issued in December. The two performance audits in this report were conducted by the office of the auditor general during the period from October '94 to January '95. The office issued its original report in February '96 and has issued three follow-up reports since, including the follow-up report issued in December 2000.
When the committee met on May 9, 2000, it received a brief update from the auditor general's staff and a progress report from representatives of the B.C. Ferry Corporation regarding recommendations previously made by the auditor general and by the committee. Because of time constraints at that meeting, the committee subsequently forwarded some questions in writing to the corporation.
In June 2000 the corporation provided a written response and various attached documents, such as the B.C. Ferries five-year capital plan. These were forwarded to the committee members at that time.
Now I'll just walk members of the committee through the draft report. The introduction on page 1 describes a very basic chronology of reports issued since 1996 by the auditor general and the committee regarding the audits on fleet and terminal maintenance management and operational safety. It also indicates how many recommendations have been implemented, partially implemented or substantially implemented according to the auditor general's November 2000 follow-up. Finally, the introduction notes that the office of the auditor general intends to do further follow-up with respect to the maintenance audit, but this is not required for the operational safety audit.
Pages 2 and 3 deal with the fleet and terminal maintenance management audit. Page 2 starts with a brief restatement of the purpose and conclusion of the original maintenance audit. This is followed by a section which reports which recommendations have been implemented or partially implemented, according to the most recent follow-up. Page 3 covers some key areas of the committee's discussion from May 2000: the corporate maintenance management system, the useful life of the fleet and the capital plan, a section on the budgeting process for maintenance and, finally, reporting to the board of directors.
I'll just draw the committee's attention to the fact that since the committee last discussed these audits, the corporation has decided to replace the Immpower software system -- that is the software underlying the corporate maintenance management system -- with another software package called Maximo. Representatives of the corporation reported in May that the corporation was contemplating changing software
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systems due to perceived lack of support from the new vendor of the software. The decision to move to the new software is noted in the auditor general's follow-up report and is described here under "Corporate Maintenance Management System."
A small change in some of the wording within this section has been proposed by the corporation through the comptroller general. In the first paragraph on page 3, under the heading "Corporate Maintenance Management System," line 5, the proposal is to insert the words "on-line/real-time nature of the" before "software called Immpower." The sentence would therefore read: "The committee learned that the delay was in part related to difficulties with ship-to-shore communications and with the on-line/real-time nature of the software called Immpower underlying the system." The change was proposed to clarify that the issue wasn't the software per se but the difficulty in applying it in a mobile marine environment. So unless there's an objection from the committee, I'll make that change.
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R. Thorpe (Chair): Any objections? No. Good.
R. Morrow: Auditor general's staff have indicated they don't object to that change.
The section dealing with the operational safety audit, on pages 4 and 5, follows the same format. Given that there have already been numerous reports issued on these audits, detailed background information for each recommendation has not been included. Instead, the write-up on page 5 focuses on the main aspects of the committee's deliberations in May 2000: the international safety management program, the risk management program and safety-related staff training. And, of course, updated information from the auditor general's follow-up in November is also included.
Lastly, I'm just going to note that the draft report doesn't contain any recommendations, but the committee may want to consider whether to include any.
R. Thorpe (Chair): Arn, is there anything you'd like to say?
A. van Iersel: No, thank you, Chair. I did share this report, as all reports, with the people that are most affected. As we'll see in a couple of other cases, wording has been suggested. But in this case there are no concerns by B.C. Ferry Corporation as represented by Rob Clarke, vice-president, so on that basis I don't have anything further to add.
R. Thorpe (Chair): Thank you, Arn.
Auditor general's
W. Strelioff: As Mr. Morrow indicated, we have discussed this with them, and we have no further comments to add.
R. Thorpe (Chair): Does any member of the committee have any comments? Seeing none, well, one of the things we have to do is just
G. Farrell-Collins: My reading of our report is that every single recommendation that's come from this committee and the auditor general so far has been implemented, with the exception of one which has been substantially implemented. I'm not sure that it requires another follow-up unless somebody else feels strongly otherwise.
R. Thorpe (Chair): Is that in fact the case with the auditor's office?
O. Trist: My name is Owen Trist; I work for the auditor general. I believe that the member's comments with respect to operational safety are complete and accurate. However, with respect to fleet and terminal maintenance management, the corporation has indicated that it has considerable work to do before it could represent that the recommendations have in fact been implemented.
G. Farrell-Collins: Sorry, Mr. Chairman. I misread that. I missed the unitalicized in the middle of the italics.
R. Thorpe (Chair): With respect to the safety portion, would it be the wish of the committee that the work is for all intents and purposes completed -- no recommendation? But with respect to the fleet terminal maintenance management side of it, our standard recommendation for follow-up would be put in place -- is that the wish of the committee? Do I have a mover on that?
G. Farrell-Collins: Sure.
Motion approved unanimously.
A Voice: What's next on the agenda?
R. Thorpe (Chair): "Preparedness of the British Columbia Government in Dealing with the Year 2000 Problem -- Follow-up Report." Richard?
R. Morrow: This draft report reflects the work of the committee done in May of 2000. At that time the committee heard testimony from the deputy minister of ISTA, also chief information officer for the province, regarding the final Y2K report of the Action 2000 office within ISTA.
In November 2000, auditor general staff conducted a follow-up review of recommendations outstanding from the auditor general's October 1999 report and the committee's February 2000 report on Y2K. Information from this follow-up review is also included in the draft report.
Written responses to questions at the committee's May 2 meeting regarding the breakdown of Y2K costs for health authorities and details about ICBC Y2K costs were received from ISTA in mid-May 2000. This information was forwarded to the committee at that time.
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I'll just briefly go through the report. The introduction on page 1 makes note of government work on year 2000 preparedness and previous reports on Y2K by the auditor general's office and by the committee. Government's work to address the year 2000 problem began in 1996, and a central agency for coordinating preparedness efforts -- that is, the Action 2000 office within ISTA -- was established in 1998.
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The introduction concludes by noting that the auditor general's November 2000 follow-up review indicates that all seven of the auditor general's recommendations from October 1999 and both Public Accounts Committee recommendations from February 2000 have been fully implemented.
The remainder of the report is structured by key areas of the committee's May 2000 deliberations: Y2K strategy and readiness, cost issues and the legacy of Y2K. The section on Y2K strategy and readiness on page 2 lists the strategic priorities of government in addressing year 2000 preparedness as presented by the deputy minister of ISTA and outlined in the final Y2K report of Action 2000. There are also comments about government's overarching goals and the transition to the year 2000.
The section on cost issues on page 3 includes information on the costs of Y2K preparedness from 1996 to the year 2000; points from the committee discussion of the costs of implementing recommendations contained in the final Y2K report of Action 2000; and also conclusions of the auditor general's November 2000 report regarding the process used to define public sector Y2K costs and to obtain information from ministries, Crown corporations and health authorities. The follow-up review concluded that a consistent definition of cost was established and that it is unlikely that any of the entities excluded from cost estimates would have incurred material year 2000 costs.
In May 2000 the committee also considered the legacy of Y2K efforts, including such things as establishment of all hazard business continuation plans across government. This is covered on page 4 of the draft report.
Regarding a committee recommendation from February 2000, in bold italics on page 4, auditor general staff concluded in their follow-up that there was evidence of government's efforts to continue to promote the completion, testing and ongoing improvement of all hazard business continuation plans in ministries, Crown corporations and government organizations.
However, the follow-up review also comments that semi-annual status reports sent electronically to the risk management branch by ministry business continuation plan coordinators were not signed off by senior management. As it says in the last paragraph on page 4: "In order to ensure continued management awareness and involvement, auditor general staff believe it desirable for the updates to be approved by management." I just bring that to the committee's attention.
Also, on the topic of legacy the committee discussed the government's InfoSmart strategy and integration of government information systems. There's a statement in paragraph 2 on page 4: "In the InfoSmart strategy government has set a target date of three years to establish full integration of government information systems." This had been my reading of the committee's discussion with the deputy minister of ISTA in May 2000, but I've been advised by ministry staff that if interpreted broadly, this is probably an overstatement.
It is true that some things will be integrated over this period, such as the government e-mail system, but full integration is a pretty broad statement. It would probably be more accurate to say that in the InfoSmart strategy government is working toward greater integration of government information systems, and I would recommend that change to the committee.
Ministries have been asked, as part of this strategy, to prepare one- and three-year plans to address four themes of information technology: electronic service delivery, corporate information management, common information technology infrastructure and recruitment, and retention of staff in this area. I believe the time lines involved with that were a source of the confusion.
Lastly, I'll just highlight one point regarding the conclusion on page 5. The last paragraph notes that ISTA has developed recommendations in four areas: emergency preparedness and emergency management, business continuation planning, emergency communications and information technology security. These are described in the Action 2000 final Y2K report.
The deputy ministers' committee on emergency preparedness is responsible for following up on these recommendations. However, the committee raised the question last May of whether the auditor general's office would be conducting follow-up of those particular recommendations. I thought this might be a good time for clarification around information the committee may want from the auditor general in that regard and also any plans that auditor general staff may have for conducting follow-up. No further follow-up of previous recommendations is considered to be required by the auditor general's office, according to the most recent follow-up review by the office, and no recommendations have been included in the draft report either.
R. Thorpe (Chair): Does the auditor general or the comptroller general's office want to make any comments?
W. Strelioff: Members, this report does reflect what we've done and said. We have no further comments.
A. van Iersel: The report was shared with Stuart Culbertson and Lois Fraser, and they are comfortable with the report, as I am myself.
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R. Thorpe (Chair): Can someone just bring me up to speed on where we are on the planning and implementation of business continuation -- either Arn or the auditor general?
A. van Iersel: I'll start, but it's clearly not my area of expertise, other than with
W. Strelioff: As far as our office is concerned, in terms of following up what business continuity plans are in place and whether they're working, I'll have to get back to the office to find out what we're doing in that area and get back to you. Is that sufficient?
R. Thorpe (Chair): That's fine. Does the committee want
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G. Farrell-Collins: I'm just hoping that this is the end of this. It's the year 2001, and we're now looking at how we prepared for the year 2000. One of the things that I would like this committee to do more of is actually dispose of issues and not continue to follow them up. I don't know if there's any further need to follow up on it. I mean, the auditor general can always do whatever he wants. But I'm assuming from this report with no recommendations -- including the amendment that was suggested by Richard -- that we're finished with this issue. Would that be a correct understanding?
R. Thorpe (Chair): That would be my understanding, yes.
S. Orcherton: Just to follow up on the comments, I agree wholeheartedly, but let me just take it a step further than that. It's more of an information question, really. We often, it seems in the last while, adopt reports and then request follow-up. And I think it's appropriate that we make sure that the things we've suggested have been acted upon in some fashion. I'm wondering if the auditor general or the comptroller can put a definition on what follow-up is. Is it simply that six months down the road there's a flag goes up on a computer on a certain file that says: "Did we receive information or should we have a quick look at it"? Or following up on the member's comment, is it a continuing process of having the report go on ad infinitum?
If it's simply flagging and making sure that things are done, I think that's appropriate. But if we're engaging the services of the auditor general's department in doing that to the exclusion of other things, I think there's a cost factor to that. I'm not sure how productive the end results are if we continue to have reports where we ask for follow-up and follow-up and follow-up. It causes me some concern. Yeah, we should monitor, we should know what's going on, but how much is really necessary?
G. Farrell-Collins: My sense is that it has to be a balance. I was on this committee in the early nineties when we reported, and the auditor general reported, and bureaucracy ignored it, and nothing was done. So I think that by putting some of that discipline and follow-up here, we have actually moved things along and, I think, given the auditor general a little more clout in trying to move things along with the bureaucracy. But I do think there are times when we go through way too many iterations. I think that's more discipline by the committee rather than anyone else. I think we have to be more disciplined in trying to reduce the amount of paper we produce and the work we force others to produce, as well, yet still maintain accountability.
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S. Orcherton: I don't want to get way off on the issue here -- and it's not my intention to do that -- but I really was asking a question of the auditor general. How much time is devoted to follow-up? Is it an inordinate amount of time? Is it causing that department some concerns as to staffing and those kinds of things? I agree that there's a point on reports where you can just say: "Well that's it. Thank you very much. We can move on to some other issues." But if we're constantly caught in a scenario where we're doing follow-up, follow-up as time evolves and things go on, my sense of logic would be that we'd be engaging in a whole lot of follow-up as opposed to getting into issues that are more current.
I wonder if you can respond to that. How much time and energy is devoted to following up at this point? And where do you see the future going?
W. Strelioff: Well, Members, thank you for the opportunity to talk about this. I think the principle of follow-up is very important. It was a good thing, in terms of coming into this committee, to note that the committee was asking officials to come back and say: "Well, we've recommended something. What has actually happened?" But then it does take significant resources.
We're working with the comptroller and the Clerk's office to come to this committee with a proposal on what the follow-up should be in the future with issues like when a follow-up should be triggered. Some of the confusion that has come about, at least in terms of our office, is to make sure that the follow-up happens after the committee reports rather than some time in the middle of dialogue, and there ends up being many follow-up reports without the committee finally having issued their first report. We're trying to make sure that in our proposal we have ideas on how that can be strengthened.
As well, do the recommendations have to be 100 percent implemented or more substantively implemented? That's the signal when we say: "Let's back away from the issue and move on to something else." So we have had concerns about the extent to which our resources are tied up in the follow-up process. On the other hand, we think it's a good mechanism, and we're working with the comptroller's office and Clerk's office to come up with a proposal that rationalizes it a bit, has some sort of reasonable personal judgment involved in it but making sure at the same time that the committee still has the responsibility to decide on when they want to follow up.
R. Thorpe (Chair): Judgment's important. Do we have adoption of the report as discussed?
M. Coell: So moved.
R. Thorpe (Chair): Thank you.
The next item on the agenda is "Standards of Conduct in Education and Health Sectors."
R. Morrow: This draft report reflects the work of the committee in March 2000. At that time auditor general's staff presented their review of the standards of conduct to the committee, and the committee also heard testimony from representatives of the Ministry of Education, the Ministry of Advanced Education, Training and Technology and the Ministry of Health. Further information has been provided by each of the ministries at the request of the committee, and some of this information is included in the report as well.
The office of the auditor general's review examines standards of conduct for board members, senior officials and staff in school districts, colleges, educational institutes, universities and health authorities. The introduction on page 1 of the draft report describes the work of the auditor general's office, and this is followed by a description of the committee's review and issues considered by the committee.
The structure of the remainder of the report mirrors the structure of the auditor general's report. Each section includes auditor general recommendations, a brief description of the findings of auditor general's staff, a summary of any relevant
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discussion of the committee and, in places, some updated information provided by ministries subsequent to the committee's March 2000 meeting.
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The section beginning on page 3, "What Standards Exist and What They Cover," includes many of the key issues discussed by the committee: how organizational standards of conduct compare to union and professional association standards that apply to some employees, how standards of conduct in the sectors under consideration compare to standards developed for public service employees, whether ministries possess authority to establish standards for institutions in their respective sectors and what cost implications are related to the implementation of recommendations in the report. Additionally, there is some information regarding the steps taken to implement recommendations from the auditor general's report. Written submissions have been received from all three ministries involved, as I mentioned, and this information has been forwarded to committee members.
As indicated at the top of page 4, in March 2000 the committee learned that the Ministry of Education had provided school districts with the auditor general's recommendations for their consideration and also sent copies of PSERC's standards of conduct for the public service to all school board chairs and superintendents. At that time the ministry did not expect that it would collect follow-up information from individual school districts regarding implementation of recommendations, but ministry representatives agreed to advise the committee of any follow-up actions with respect to recommendations.
In an April 2000 letter sent to our office the ministry advised that the recommendations had been discussed at superintendents meetings and that the ministry would remind boards and their senior staff of the auditor general's recommendations, apparently at regional meetings. In a September 6 letter to the office of the auditor general, forwarded to us at the ministry's request in November, the ministry further advised that copies of the recommendations had been sent to the B.C. School Trustees Association and the ministry's regional coordinators. In the same letter the Ministry of Education also reports on the implementation status of recommendations.
The ministry believes that it has fulfilled its responsibilities with respect to the implementation status of all recommendations. The primary reason for this, I think it's fair to say, is that the position of the ministry is that it does not have the authority to require school districts to implement a set of standards of conduct and that the responsibility for determining standards for trustees and employees resides with the school boards. Therefore the committee feels that it has fulfilled its responsibilities with respect to most recommendations by distributing the recommendations to school districts and others, providing copies of PSERC's standards and engaging superintendents and others in discussion as described above.
The actions described above have been included on page 4 of the report, but not the ministry's conclusions about implementation status. The Ministry of Advanced Education advised the committee in March 2000 that the ministry had distributed copies of the auditor general's report to post-secondary institutions, encouraging them to respond to recommendations as appropriate. This is indicated in the last paragraph under post-secondary institutions on page 4. At that time the ministry committed to follow up with institutions within its sector to determine where they were at in terms of implementation of recommendations.
The ministry requested a status report from institutions in the summer of 2000, and recently the results of this were provided to the auditor general's office and copied to the Clerk of Committees. This information was forwarded to members. I won't go through the details of the various responses from universities and colleges and institutes with respect to each recommendation. I'll just highlight that one of the ministry's general comments about the responses is that it appears that the auditor general's recommendations are already in place at or have been implemented by a majority of the post-secondary institutions which responded to the ministry's survey.
On pages 4 and 5 of the draft report, it is noted that a Ministry of Health representative advised the committee of various actions it intended to take to respond to the auditor general's recommendations. These actions included making the report available to health authorities, revising ministry policy to incorporate two of the recommendations, and expressing its expectation to health authorities that they take action with respect to two of the recommendations that the ministry considered their responsibility.
In November of 2000 the ministry advised that it had taken these steps, as indicated at the top of page 5. Similar to the Ministry of Advanced Education, the Ministry of Health committed in March 2000 to follow up with health authorities regarding steps taken by them to respond to recommendations 3 through 7. The ministry collected this information from health authorities and has provided a table of responses updated to January 19, 2001. With a response rate of 90 percent, the data collected indicates that 75 percent of health authorities reported compliance with recommendation 3; 67 percent reported compliance with recommendation 4; 60 percent reported compliance with recommendation 5; 15 percent reported compliance with recommendation 6; and 35 percent reported compliance with recommendation 7.
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The results of the follow-up data collection done by the Ministry of Advanced Education and the Ministry of Health have, of course, not been reviewed by the auditor general. For this reason, the information wasn't included in the draft report. I spoke to Ministry of Health staff last week, and they were a little surprised that this information was not included, given the considerable effort taken to collect and collate it. So committee members may want to consider whether this information should be included in some way or perhaps acknowledged in the report. As I've already said, however, auditor general staff are in the process of carrying out a follow-up review and expect to complete that review in March.
A. van Iersel: This was one of those reports where we seem to be slightly out of phase, in the sense that the ministry was doing a follow-up response at the same time that this committee was preparing its final report. Richard is correct; I too spoke to the Ministry of Health in terms of their concerns. What they were hoping for was that some of that follow-up information could somehow be included or appended to this
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report, such that it would show that they've done more than this particular report, which goes back in time. That was their key issue.
W. Strelioff: Members, Mr. Morrow is right. We are doing a follow-up now, and we plan to finish that sometime in March of this year.
G. Farrell-Collins: Do you have any preliminary sense of how that follow-up is going?
G. Stagg: In terms of the work we're doing?
W. Strelioff: With me is Geoff Stagg. He's been leading this job.
G. Farrell-Collins: No, more in terms of how
G. Stagg: That's correct. The review is of the ministry responses, which Richard Morrow has advised you of.
G. Farrell-Collins: So do you have a sense of how far along they are towards implementing the recommendations at this point? Do you have a preliminary sense of that at all?
G. Stagg: I haven't brought the responses with me. The health authorities and the universities and colleges are making good progress, it seems to me. We have no information about school districts.
G. Farrell-Collins: Is that because they're choosing not to respond or because we haven't asked them or
G. Stagg: Well, the Ministry of Education has not surveyed them.
G. Farrell-Collins: And they have no intent to do so?
G. Stagg: I believe they do not, but they haven't said that to me.
G. Farrell-Collins: Thank you.
R. Thorpe (Chair): I think it's very important that those who participate and do follow-up in the ministries that we're working with are acknowledged in the report -- that they are making progress and that their cooperation is appreciated by this committee. This is one of those items where we're crossed over here. So with the endorsement of the committee, I think we should add an acknowledgment of the work that the staff in the Ministry of Health have done in providing information on the recommendations. If that's the wish of the committee, I would like to suggest that we might want to do that, based on the information that Arn and the auditor general's department and our researcher have told us. Does anyone have any problem with that? Seeing none, I guess we could add to the report.
Secondly, I guess that in the past the committee -- because, again, we've got this overlap situation -- would traditionally have just accepted the recommendations of the auditor general -- please, somebody correct me if I'm wrong here -- unless we had exceptions, but I don't remember anybody having exceptions. So would that be the wish for the recommendation of this committee with respect to this report, so we can move it off the table here?
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M. Coell: So moved.
Motion approved.
R. Thorpe (Chair): Arn, could you work with Richard -- just because you've had the interface with the ministry people -- to make sure that their views are adequately covered in this report?
A. van Iersel: I'd be pleased to.
R. Thorpe (Chair): Thanks, Arn.
So the report is adopted as discussed. Thank you.
Now, if I can just see my agenda here: "Government Financial Accountability." Well, if you thought you were happy, Gary, talking about year 2000, you're going to be really happy about this one: government financial accountability for 1998 and 1999.
R. Morrow: First of all, I'm going to give credit for drafting this report to my former colleague, Kelly Dunsdon. Valuable feedback has also been received, of course, from the office of the comptroller general and the office of the auditor general on a previous draft of this report.
The auditor general released his report on the public accounts and debt reporting for 1998-99 in January 2000. The committee draft report on this audit reflects the work of the committee in May, June and October 2000, when the committee met to discuss the findings and recommendations arising from the audit. At that time the committee heard evidence from representatives of the auditor general's office, the comptroller general and representatives of the provincial treasury.
The auditor general's report is composed of two parts. Part 1 contains the auditor general's report on the 1998-99 public accounts, and Part 2 provides the auditor general's comments regarding the reporting of public debt.
Similarly, the committee draft report has two parts, and the subsections of the report also reflect sections which appear in the auditor general's report.
At the committee's meetings in early October 2000, various follow-up information was requested from the comptroller general. In response, a number of items were provided to the committee in early November: the provincial treasury's strategic business plan, which provides an overview of the provincial treasury's responsibilities, objectives and performance measures, including debt management; the summary of interest rate exposure, a document that provides an estimate of the impact of various hypothetical interest rate increases on debt service costs; information on the capital spending multiplier; excerpts of the various financial reports provided by the Treasury Board capital division related to the relationship between debt and capital spending; and, finally, an excerpt from the budget consultation paper regarding debt management planning.
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The information provided regarding interest rate exposure is incorporated into the section on interest rates, on page 8 in part 2 of the report. Additionally, in early October the committee requested information regarding indicators of financial condition recommended by the Canadian Institute of Chartered Accountants. The request arose in the context of committee debate around debt indicators and debt management. The auditor general and the comptroller general very recently issued a joint report on the province's reporting against the Canadian Institute of Chartered Accountants' indicators for financial condition. This has been circulated to committee members. I think it's on committee members' desks today.
Based on the length of the joint report, the comptroller general did not advise including this information in the report. However, as recommended on page 7 of the draft report, following the list of debt measures and indicators discussed by the committee previously there is a reference indicating that this information has been forwarded to the committee.
I'd like to advise the committee of a proposed change to this draft. As noted, an earlier draft very similar to this one was reviewed by staff at the comptroller general's office and the auditor general's office. Staff from these two offices have agreed that a sentence from a previous draft should be reinserted, with slightly changed wording, in the section on the reporting entity in part 1 of the report.
R. Thorpe (Chair): What page are we on?
R. Morrow: I think we're at the bottom of page 2, top of page 3.
At the end of the first paragraph of this section, at the top of page 3, the proposal is to add a sentence that reads: "Representatives of the auditor general's office also advised that at that time only three provincial governments in Canada -- British Columbia, Alberta and Quebec -- had yet to arrive at substantial agreement with provincial auditors regarding the composition of the reporting entity."
Lastly, I'll just note that there are no recommendations included in the draft.
R. Thorpe (Chair): Wayne, was there any significance there to that scratching of the head as Richard read that comment?
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W. Strelioff: Members, my head was itchy.
G. Farrell-Collins: Lucky you're not Alan Greenspan. The market could have
A Voice: We should have a follow-up report on that.
A. van Iersel: Originally we had provided comments, and Richard has included them. I had initially suggested that this sentence be struck, as I felt it wasn't timely, in the sense that it didn't represent what is currently the debate between the provinces and the auditors.
I have agreed to reinsert it, in the sense that it represented a point in time, going back in history. I will mention, though -- and I know that I've always been cautioned about bringing up the SUCH sector here too often -- that in Ontario I was recently in conversation with their comptroller general. And it now seems that there is an issue between the comptroller general and the auditor general of Ontario regarding SUCH, which is what led me to say that this is not current. But if it's a point in time, I'm prepared to accept it the way it was.
R. Thorpe (Chair): Any other comments? Yes, Gary.
G. Farrell-Collins: No.
R. Thorpe (Chair): Remember your earlier comments in the committee.
What recommendations, if any, would the committee like to make with respect to this report?
D. Miller (Deputy Chair): Mr. Chairman, not having had the benefit of previous debates on this issue, perhaps you might sum it up for me.
R. Thorpe (Chair): What -- the SUCH sector?
D. Miller (Deputy Chair): Yeah.
R. Thorpe (Chair): Well, I think it's a subject that is probably almost impossible to sum up. It has to do with what is defined as the entity and what some people choose to say should be included in detail in the financial statements of the province and what some others choose to say should not be included in the financial statements of the province.
Currently it's my understanding that the auditor general, who could speak to this much more eloquently than I could, has a qualification on the statements of the province of British Columbia, because the SUCH sector is not included in the financial statements. This discussion has been going on for a long, long time, and that's where it is. I understand PSAB, CIA, CICA have a view on it, which the auditor general bases his opinion on, and that there are ongoing discussions between the comptroller general's office and the auditor general's office as to what should be and will be consolidated in the financial statements of the province of British Columbia.
D. Miller (Deputy Chair): So there's a debate, then, between -- you use the term -- comptroller general and auditor general on the question. There appears to be a larger debate in Canada. Is that correct?
R. Thorpe (Chair): Jurisdictions are debating it. That's my understanding; that's correct.
D. Miller (Deputy Chair): For example, I think somewhere in here is says that other provinces that do not report were not qualified. Is that correct?
R. Thorpe (Chair): I can't comment on that. Is that the auditor general?
W. Strelioff: Members, that is correct.
D. Miller (Deputy Chair): In that circumstance where does one go? While debates are fine, people need to make
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decisions. I presume auditors are covered
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R. Thorpe (Chair): Wayne, would you like to comment on that, please?
W. Strelioff: Members, in my audit opinion on the government's 1999-2000 financial statements I note that the government reports that it is not following generally accepted accounting principles for governments as recommended by the Canadian Institute of Chartered Accountants, which is the independent standard-setting body for accounting by governments. That's the set of principles that I use or look to when I give my opinion.
When looking to those rules and seeing through the relationship between the government and health authorities or the government and school boards, I conclude that the financial results of organizations like health authorities and school boards should be within the financial statements of the government in order to comply with the recommendations of the Canadian Institute of Chartered Accountants.
In the financial statements of the government the government has chosen not to comply with those standards. So I am advising you as legislators that these financial statements don't provide a complete accounting, and I think they should. And my benchmarks are the recommendations of the Canadian Institute of Chartered Accountants.
D. Miller (Deputy Chair): In correspondence before us it appears that other provinces don't follow all of the CICA guidelines either. Do you feel it is a requirement for qualification? Or can there indeed be differences of interpretation between auditors?
W. Strelioff: The key difference is the relationship between the government and, say, school boards. It varies.
D. Miller (Deputy Chair): But I'm speaking to the larger issue. I'm trying to understand, first of all, what governs your actions -- or the comptroller general, for that matter. My question is: if in other provinces those guidelines aren't followed, either in whole or in part, and that doesn't lead to a qualification, then does that suggest that there's potentially a dispute between auditors?
W. Strelioff: My understanding of the differences in views across the country is that, for one, the relationship, for example, between school boards and the government will be different from one jurisdiction to another jurisdiction. So in one jurisdiction a government may not choose to put school boards in the financial statements, while it might be, for example, that in that jurisdiction school boards have the ability to raise revenues directly. That is evidence of a different relationship between the government of the day and school boards.
So when there are different views put on the table by auditors across the country, one of the key reasons is that the circumstances will be different from jurisdiction to jurisdiction. Some jurisdictions, for example, have elected school boards; some don't. That's a significant difference that will end up having a different conclusion expressed by auditors. So the first point is that there are different circumstances jurisdiction to jurisdiction -- to have me conclude that, in B.C., the school boards should be in the financial statements of B.C. In another jurisdiction an auditor may conclude differently but for different reasons.
D. Miller (Deputy Chair): It's all very confusing. It appears to me that there are differences between auditors on this question.
W. Strelioff: What I was trying to get at is that there are differences in the relationship between government and, for example, school boards from one jurisdiction to another jurisdiction, which end up leading auditors to conclude differently.
D. Miller (Deputy Chair): Can you help me out here, Arn?
A. van Iersel: I think it's a bit of both, in my opinion. There are no two regimes that are exactly alike, and there are differences in terms of the criteria of accountability, ownership or control that PSAB uses for deciding who's in or who's out. But we also know from our neighbouring province of Alberta that in that particular case, the auditor general has qualified what they call their departmental statements but has chosen not carry that qualification forward to the summary.
I think that's more, in my opinion, indicative that there may be a difference in views in jurisdiction from one to the other. As I said in my more recent discussions -- because I follow this up frequently -- in Ontario there's a different picture emerging there as well. Whereas once the auditor was comfortable in them not including any of the SUCH sector, that is no longer the case, and they are now starting to go through what we and Alberta have in terms of trying to decide.
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I should also mention that Alberta -- and I've said this before -- has written to PSAB asking the Public Sector Accounting Board to try and clarify its accounting guidance. In fact, two years ago both the comptroller for Alberta and myself made a presentation on behalf of all comptrollers, trying to get clarity. It is my understanding that PSAB is planning to have another look at its criteria, and something is expected within a year in terms of whether or not the rules will change.
D. Miller (Deputy Chair): It appears to me that as much as auditors may engage in debate probably similar to politicians -- my apologies, Wayne -- there is a lot of confusion about this. It seems to me that there's a bit of an onus on auditors and comptrollers to find a common solution, because it could leave the public confused. I guess it could also create artificial fodder for artificial political debates.
R. Thorpe (Chair): Do any other members have any comments? This report, as Richard has pointed out to us, has no recommendations attached to it. Does the committee wish to put any recommendations in this report?
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D. Miller (Deputy Chair): I hesitate to suggest that they get their act together, Mr. Chairman, but
G. Farrell-Collins: I would, if I were you.
R. Thorpe (Chair): Now, come on. It's been a great day so far.
No recommendations then?
M. Coell: I'll move approval.
R. Thorpe (Chair): Okay. Report as presented and discussed. Thank you.
We've basically done the items that were on our agenda for today. We have agenda items for tomorrow. We're starting at 8:30 -- 8:30 to 12:30. Are we going to have everyone here at 8:30 so that we can start tomorrow at 8:30?
A Voice: At 9:30?
R. Thorpe (Chair): Originally, the meeting was scheduled to go all day, because we've got a few things that I'm sure
W. Strelioff: I look forward to my presentation.
R. Thorpe (Chair): So what I don't want to do is lose time at the back end. If we're going to start at 9:30 to facilitate people's schedules, then if we can just make the commitment that we're going to go till 1:30, 2:30, whatever, to get finished
M. Coell: I'm not able to go to 2:30. I have meetings at 1 o'clock and at 2:15.
R. Thorpe (Chair): Then as long as we'll have a quorum here at 9:30, we'll make that.
Yes, Dan -- another subject.
D. Miller (Deputy Chair): Well, yes, Mr. Chairman, a new topic. Again, I apologize for my lack of familiarity with the committee process, and you can advise me if it's appropriate or inappropriate. There was an article in this morning's press, in the Times Colonist, that I think made some very, very serious allegations with respect to the public service -- the process of hiring, and all of those questions. The article was an opinion piece by, I believe, a person who is a civil servant. To quote some of the statements made in the article
G. Farrell-Collins: I have a point of order.
R. Thorpe (Chair): Yes, Mr. Farrell-Collins.
Point of Order
G. Farrell-Collins: It's clear that the member is about to engage in a political attack on a candidate for election. This is not the venue for that. That's not a matter on the agenda for today. It's out of order, and I would ask the Chairman to call the member to order.
R. Thorpe (Chair): Order, please, members. Could the member explain to the Chair how this item pertains to the agenda and to public accounts up to date, please?
D. Miller (Deputy Chair): My assumption was that the auditor general could be requested by this committee
G. Farrell-Collins: No, we don't have that mandate.
D. Miller (Deputy Chair): My assumption was that the auditor general could be requested to look into a matter by this committee. These are very serious allegations that have been made. There have been no instances, no proof tendered, and I find it rather disturbing.
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R. Thorpe (Chair): Excuse me, member. Order. I have been advised by the Clerk that no, it's not appropriate for us to do that with the auditor general. So unless it pertains to what we're discussing here today, I'd have to rule you out of order.
D. Miller (Deputy Chair): That's unfortunate. I would hope that the auditor general, having listened, might take some action on his own, because these kinds of allegations cannot go without investigation.
R. Thorpe (Chair): Member, order, please.
D. Miller (Deputy Chair): It's a pity. Your party likes to make the allegations
G. Farrell-Collins: I'd love a review on hiring practices, Dan.
D. Miller (Deputy Chair):
R. Thorpe (Chair): Order, member. Order, member. Order, please.
D. Miller (Deputy Chair): It's very, very interesting, Mr. Chairman.
R. Thorpe (Chair): Order, member. I know that you want the rules of this Legislature followed, and that's what we'll do on the advice of the Clerk. Thank you very much.
I would like to move a motion
D. Miller (Deputy Chair): I'm going to ask you myself -- you know, see if people are playing politics.
G. Farrell-Collins: I don't think they have the budget for it.
S. Orcherton: I have a procedural question to ask, really, and it's following up from my colleague's request to the auditor general. How is it that an issue comes to be investigated by the auditor general?
G. Farrell-Collins: It's his call. He should know that.
S. Orcherton: I'm not asking the member opposite; I'm asking the Chair and the Clerk. How is it that the auditor general decides to investigate or decides not to investigate an
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issue or a matter that may be of very heightened and serious concern to the people of British Columbia?
R. Thorpe (Chair): That's a decision that's made at the auditor general's office on a variety of issues. Perhaps the auditor general would like to be very brief and tell us how their office sorts through the list of priorities of assigning work and subjects that they do audit.
D. Miller (Deputy Chair): It's easy to make allegations, isn't it?
W. Strelioff: Thank you, members. In our legislation it does contemplate
S. Orcherton: Can I just get a point clear here, before we break? We oftentimes have different reports from the auditor general's office on different matters that affect the people of British Columbia. We've had reports on the public service and a variety of different aspects of the public service. And oftentimes -- as we've talked about earlier today -- we've had the opportunity for this committee to request follow-up reports on a variety of issues.
I think this an important matter. All I'm trying to do is find the proper procedural way to deal with this. It strikes me that this committee does have some authority -- and I'd ask the Clerk's guidance in this -- to request additional information regarding this particular matter that was raised by the member for North Coast. I think that we have a history of asking the auditor general to come back with pertinent information on matters that have been before this committee in the past. And we certainly have debated and discussed reports on the public service.
R. Thorpe (Chair): This item is not on the agenda. It's not a report. Therefore, on the advice of the Clerk, it's ruled out of order.
S. Orcherton: So the committee has no authority to request anything from the auditor general in terms of reporting mechanisms and those
R. Thorpe (Chair): Under the terms of reference from the Legislature that this committee operates under, no, it does not have that mandate to do that, as you just said. You can ask -- all members, including the public, can ask -- the auditor general to look into matters. All members of the public and all members
D. Miller (Deputy Chair): Well, that's fine, Mr. Chairman; I'll ask the auditor general.
R. Thorpe (Chair): Excuse me; you'll be recognized at the appropriate time. Mr. Coell, you had a motion.
M. Coell: I would just move that the Chair deposit the reports adopted by the committee today with the Clerk's office, pursuant to the committee's terms of reference.
Motion approved.
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R. Thorpe (Chair): I would also like to advise the committee that as the Chair, and pursuant to the committee's terms of reference, I will be depositing the following reports of the Select Standing Committee on Public Accounts with the Clerk of the Legislative Assembly.
They are: the fourth report, "Training and Development in the British Columbia Public Service"; the fifth report, "Management of Woodlot Licence Program"; the sixth report, "Retention and Disposal Authorities"; the seventh report, "Review of the Estimates Process in British Columbia"; the eighth report, "Forest Renewal BC: Planning and Accountability in the Corporation; The Silviculture Programs"; the ninth report, "Office of the Auditor General 1998-99 Annual Report: Auditing in the Public Interest"; the tenth report, "Social Housing: Governance and Management of Subsidies"; the eleventh report, "Pulp and Paper Mill Effluent Permit Monitoring"; and the twelfth report, "Governance and Risk Management of the Fast Ferry Project."
When the House next sits, I intend to present these reports to the Legislative Assembly of British Columbia.
D. Miller (Deputy Chair): Mr. Chairman, as a courtesy, just to advise you and other committee members, I will be asking the auditor general to pursue this. I think it's unacceptable that both sitting MLAs and would-be MLAs are making statements -- not backed up by any fact -- that cast aspersions on the honesty of civil service managers with respect to carrying out the hiring policies of the public service. I would hope that the auditor general would agree to investigate this.
I'm particularly interested to see whether any of those who have made those allegations have one whit of evidence to support the rather serious charges being made. I think it's very unfortunate that Liberal members of this committee are trying to block the auditor general from investigating this.
G. Farrell-Collins: Point of order, Mr. Chairman. This is completely
R. Thorpe (Chair): Order, order.
G. Farrell-Collins: The member is completely out of order. He's been here long enough -- perhaps too long -- and he knows the rules of this House and this committee. He's using it as an opportunity to wage a political war, which is far beyond
D. Miller (Deputy Chair): Talk to me about politics? Read the paper.
R. Thorpe (Chair): Dan, order, please.
G. Farrell-Collins:
R. Thorpe (Chair): Order, please, order.
No other business? A motion to adjourn.
The committee adjourned at 12:08 p.m.
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