The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE 
ON PUBLIC ACCOUNTS

WEDNESDAY, NOVEMBER 8, 2000

                                                  * Denotes member present

 

Other MLAs present:

Doug Symons (Richmond Centre L)

Clerk:

Kate Ryan-Lloyd

Committee Staff:

Kelly Dunsdon (Committee Researcher)

[ Page 1665 ]

The committee met at 9:08 a.m.

R. Thorpe (Chair): Good morning. We'll get started. The first item on the agenda is the review of the fast ferry program, consideration of the draft committee report which was distributed to members on November 2. I realize we have new members, and with some of the transition it may have been difficult to catch up to the documents. Hopefully, everybody has one now.

Let me just say a couple of opening comments here. This report was drafted at a previous meeting. It was agreed that copies would be given to both myself, the Chair and Deputy Chair to review and then get back to staff with amendments. I was able to get my comments back in. It's my understanding that the former Deputy Chair did not get her comments back in. I just wanted to give that background to the new members on the committee and the new Deputy Chair, and to also welcome our newest member, Andrew. Welcome.

Kelly, if you could walk us through this draft report.

K. Dunsdon: Yes, thanks.

D. Miller (Deputy Chair): Well, first of all, Mr. Chairman, as the new Deputy Chair, I received the report yesterday, read it and noted at least one glaring error in the report, which I advised you of.

R. Thorpe (Chair): Yes.

D. Miller (Deputy Chair): So just to make sure the record is straight, the Deputy Chair has notified you that there is a significant error in the report. I assume it's been corrected. Now, there may be others. Obviously I looked at it very quickly yesterday, so there has not been a lot of time to study this report.

[0910]

R. Thorpe (Chair): Yes, maybe I erred. I was referring to the former Deputy Chair, not the current Deputy Chair.

D. Miller (Deputy Chair): Exactly right.

R. Thorpe (Chair): With respect to feedback, yes, you made a comment with respect to the directors of CFI yesterday. Other members had made reference to -- I believe it's right near the very end of the report -- the ownership of the ferries, how that's recorded in this draft report.

What we've done in the past, just to make sure everybody's up to speed, is made changes to these draft reports. That's why they're called drafts. Our hope today would be to work through this report, to see if there are any other changes that are required. I don't know; I haven't been advised by staff if other committee members have advised her of things that should be considered for change or in fact have changed, and she's done some work. So we'll let her walk us through that, and then we can take it from there, if that's acceptable to you.

D. Miller (Deputy Chair): Well, it may or may not be. We'll have to see what proceeds and what issues might arise through discussion.

K. Dunsdon: This will be the committee's ninth report of the fourth session. The report contains a discussion of the committee's work done in November 1999 and January 2000. At that time the committee heard from numerous witnesses and received a large number of documents and correspondence. Information presented in correspondence to the committee has also been included in this draft report. Lists of all witnesses and documents are in appendices 1 and 2 of the draft report.

The draft report is broken down into seven sections, including the introduction and conclusion. These sections are background to the project, project management, governance, outcome impacts of the project and recent developments. I'll just lead committee members through those sections in more detail now.

The introduction on page 1 provides a brief chain of events related to the project, including the announcement of it, approval of the budget and the creation of a B.C. Ferries subsidiary, Catamaran Ferries International. The scope, timing and conclusions of the auditor general's review are discussed on pages 1 and 2. At this point I should mention that this draft report does contain revisions that were suggested by the Chair. The Chair received the report quite some time ago, and all of those revisions are underlined in the report. I have received some comments back from others, as well, but was hoping to get through the meeting today and receive your comments today and then make all of those changes at one time.

The committee's review and committee process are found on page 2 of the draft report. A section dealing with the background to the fast ferry program begins on page 3, including the genesis of the concept in B.C., the MITS study -- the mid-Island transportation strategy -- and the B.C. Ferries ten-year capital plan. You'll see that information from the written submission of Mr. Bawlf is included in this section.

Page 7 is the starting point for a discussion of project management. This encompasses information relating to risk analysis prior to construction, project management during construction and opportunities for re-evaluation during the course of the project.

Particular issues relating to risk analysis prior to construction are found at pages 7 to 10. These include cost analysis, analysis of the ferries' suitability for the route, vessel design and power requirements, construction schedule, labour productivity and export potential. Similar topics are discussed in a subsection relating to project management during vessel construction at pages 10 to 16, including budget and cost management, construction schedules, the impact of scope changes, and labour and materials contract management.

Opportunities for re-evaluation during the course of the project are discussed at pages 16 to 19. Also included in this section is the committee's discussion of external audits of B.C. Ferries and CFI and information received by the committee from KPMG relating to those audits.

The section dealing with governance issues starts at page 19 of the draft report. This section includes a discussion of evidence the committee received relating to the role of the joint CEO, the Crown corporations secretariat, and membership on CFI's boards of directors. Also, much of this section discusses the information flow between the executive, boards and central agencies. There is also a discussion of the Ferry Corporation at page 25.

[ Page 1666 ]

[0915]

A brief section on the outcome and impacts of the project starts at page 26. It includes a discussion of the impact the project has had on the profitability of the route, and regarding service expectations and public policy goals. There is also a discussion of testimony that the committee received about the positive impacts the project has had on B.C.'s shipbuilding industry in terms of infrastructure and training. Recent developments, since the committee did its work in January of this year, are discussed at page 27. Just to note that the government has acted to provide the Ferry Corporation with a new financial framework, and to mention the Capital Management Process Review done by Deloitte Consulting. . . .

The draft report wraps up on page 28, noting the current status of the three vessels based on information supplied to us by B.C. Ferries and attempting to summarize the various views offered to the committee about governance and management of the project. You'll see that on the last page, the Chair has suggested that the committee endorse the three recommendations made by the auditor general. I have underlined those.

I should also point out that I've received comments from B.C. Ferries and the auditor general about the draft report. Most of them are minor wording changes that I won't go into here; they're just very minor things. However, I will point out what Mr. Miller has just mentioned, and that is that the report will be changed to clarify the fact that the first CFI board was actually replaced.

R. Thorpe (Chair): What page is that on?

K. Dunsdon: It's on various pages of the report. Page 23. . . .

D. Miller (Deputy Chair): Page 12, page 20, page 23 and page 24.

K. Dunsdon: But I will change those to reflect the fact that the board was actually reconstituted for various reasons that were mentioned in the auditor general's report on page 34 of that report and were discussed during the committee's meetings.

D. Miller (Deputy Chair): Just to be very clear, the report that we're discussing says in effect that the directors of CFI resigned in April of '97 because they could not get information. That is completely inaccurate. The directors were changed as a result of an initiative by Mr. Rhodes at that time. It was accepted by the executive committee of B.C. Ferries, which arose out of Mr. Rhodes's interpretation of the Smith report on governance, because it made some references to governance with respect to B.C. Hydro. You can say what you will about the interpretation of that, and there is comment on that interpretation, but that was the reason why the board changed. It was done completely by Mr. Rhodes with no consultation at the political level. I think that is a very significant point. I'm amazed that that kind of error could get into this report.

R. Thorpe (Chair): Yes, from the auditor general's office.

E. Dolhai: Endre Dolhai, senior principal with the auditor general's office.

Mr. Miller is absolutely correct. And I have pointed out those three pages where the same issue appears. It's clearly stated in our report that the board was asked to resign for the reasons stated in our report and as it was stated by Mr. Rhodes when he appeared in front of the committee.

K. Dunsdon: Anyhow, I will ensure that point is clarified throughout the report on the numerous pages which it is mentioned on.

It has also been suggested by representatives of the auditor general's office that I amend part of the section on page 20 of the report, regarding information provided to the CFI and B.C. Ferries boards. Specifically, the list on that page will be changed to make it clear that the auditor general's report actually listed three main conclusions about the flow of information to the boards. The other information that's been included in that list is information that has come from other witnesses, such as Gavin Cooper, the former chief financial officer of CFI. So I will try to rework that section to make that more clear.

[0920]

Finally, I should just note that I've received comments about the report from the Crown corporations secretariat, and I'll just go through those briefly now. CCS has indicated its disagreement with statements contained on the fourth paragraph of page 5, which is an underlined sentence, and there's a similar comment made on page 16. Those indicate that the B.C. Ferries capital plan, including the fast ferry project, was approved in principle only on the condition that more specific information be provided at a later date and that that more specific information was not forthcoming. The CCS is of the view that the auditor general's review focused more on the fact that while information was forthcoming, it did not include reasonable analysis. A review of the draft report by the auditor general's office did not seem to take issue with the statement in the report.

R. Thorpe (Chair): Did the auditor general's office want to make a comment?

E. Dolhai: Could you just clarify that for me, Kelly? It's page 5, the underlined sentence that says the auditor general has already indicated that information of a more specific nature was not forthcoming.

K. Dunsdon: Yes, it's the underlined last sentence in the fourth paragraph. CCS disagrees that that information was not forthcoming and disagrees that your review concluded that. They are submitting that your review actually concluded that the information was forthcoming; it just did not provide reasonable analysis.

E. Dolhai: Mr. Chairman, I have to take a closer look at that and also our report. When I was reading it, it didn't strike me as something that we disagreed with. Clearly there was a problem of information -- of getting the right information in the right detail and also analyzing that information that we have found.

D. Miller (Deputy Chair): Well, I think the point, Mr. Chairman, may be this: it's taking issue with the sentence in our report, not the auditor general's report, over the issue of

[ Page 1667 ]

whether or not, having given approval in principle, any subsequent information was provided to Treasury Board. I think the conclusion generally, and I'm paraphrasing, is that, yes, there was more information, but it wasn't good enough. Or it wasn't specific enough with respect to the conclusion of the auditor general. It may be a small point, but with these kinds of reports you want to try to be accurate.

R. Thorpe (Chair): Accuracy will no doubt have to stand the test of interpretation by those who are dictating some accuracy and what accuracy is. Perhaps what we have to do here and what we should ask the auditor general and researchers to do, if it is a point of contention, is go back to the Hansard -- there are extensive records on this -- and get what was actually said in the hearings for those witnesses we did have before us, instead of us guessing here. So if the auditor general's department with the research staff could do that, I think that would be most helpful to the committee.

E. Dolhai: I will undertake to take a close look at it and also the comments. . . . I would like to get the comments of CCS so that we can make sure that we know what we are talking about and that what is here is accurate.

D. Miller (Deputy Chair): Mr. Chairman, I don't want to get hung up here, because I think that with some change, we could complete a report. But you can understand the sensitivity with respect to this. I'm not participating in these discussions here, and I don't know how fruitful they've been. But while it may appear to be minor, the fact is that there's a bold statement here that no information was forthcoming, and in fact it was. It may not have been of the quality that was desirable in the opinion of the auditor general -- fair enough; that's fair comment -- but to suggest that there was no information is not correct.

R. Thorpe (Chair): Well, quite frankly, Dan, my read does not say that there's no information. It says "no specific." Again, we can interpret the words we want in the way we want to interpret them, for whatever reasons. Can we agree. . . ?

[0925]

D. Miller (Deputy Chair): Did you write this?

R. Thorpe (Chair): I don't know if I wrote that part or not.

D. Miller (Deputy Chair): I understood that all the underlined sections were written by you.

R. Thorpe (Chair): Okay, then I wrote it.

D. Miller (Deputy Chair): Okay.

R. Thorpe (Chair): So then you would agree that it would be good if we had the auditor general go back and look at it.

D. Miller (Deputy Chair): No. As I indicated, I think it's possible to get a report. We've got to be able to resolve these kinds of points. I don't think there's any question about the first point that Ms. Dundson talked about -- in other words, the inaccuracy. These simply, I guess, are more nuances with respect to how it's written and what interpretation can be obtained from those words.

R. Thorpe (Chair): And I'm sure you heard, as I heard, the auditor general's staff say that they had reviewed it and didn't see anything glaring there. And that's why I thought it would be useful if they just went back and double-checked it, because obviously I wrote mine based on my recollection.

D. Miller (Deputy Chair): Well, there you go for memory.

R. Thorpe (Chair): Well, we'll see. Shall we move on, Kelly?

K. Dunsdon: Crown corporations secretariat has also expressed a concern that the report does not mention on page 15 and page 20 that fast ferries were identified only as one of a range of options. CCS takes issue with the statement that when they became involved in the development of the ten-year capital plan, fast ferries became identified as the best solution. The final comment from CCS is to note that since the Deloitte review of the B.C.'s capital management processes, amendments to, I believe, the financial administration have occurred. They just wanted to point that out as well.

R. Thorpe (Chair): That's it?

K. Dundson: Uh-huh.

R. Thorpe (Chair): Do members have any other comments?

R. Kasper: Yeah, I do. It deals with the underlined sections -- page 2, page 4, mainly those which go through the history where. . . . I'm assuming it's your recommendations as to a process by which members or witnesses were to appear and subsequently not appear. One of the things that I would strongly recommend and that is glaringly absent is the testimony that we had received from the former auditor general when he was specifically asked if hearing further testimony from witnesses would change the content or conclusions of his report or his findings. And I think that has a great deal to do with the decision that was voted on by the committee not to hear further witnesses.

It's mentioned that a government member made the motion. I'm surprised that what's not in the report is that a government member who is now an independent member made the motion, for God's sake. I am concerned about the fact that if we're going to get into all of the nuances and the kind of subjective overview of what did or did not happen when the committee deliberated on this report by the auditor general, then I guess you might as well be all-inclusive with statements that were made by the auditor general. I'm kind of surprised that. . . .

[0930]

I think there are three references that Mr. Sam Bawlf did not appear before the committee as a witness. So what? That has no bearing on the auditor general's findings or the report that was submitted to this committee. I feel there is no value in having this here, and I guess if there's any finger-pointing as

[ Page 1668 ]

to what did or did not happen on January 25. . . . Well, I guess you can point the finger at me, because I made the motion, and the majority of the committee members voted for it. I clearly stated what the rationale was for making the motion that hearing further witnesses would not change the opinion of the auditor general's office or change the content of this report.

Now I'd like to be proven wrong, based on Hansard; I'm going by recall and memory. So, you know, if we're going to do a report. . . .

Interjections.

R. Kasper: I'm not trying to point fingers at anybody here, and I'm not trying to imply any motive. But if the committee is truly going to take an objective overview in the analysis of the report, why are we getting into all the details of who did what, why, where, how and when, and reading in underlying currents as to the fact that certain witnesses did not appear? I counted Sam Bawlf's name in here twice, but it could even be three times. So I just throw that out as a gesture of. . . .

If we're now going to go back to the auditor general's office for them to go over this and submit some more information as to what the final draft should be, then you might as well open it up. I'm very concerned about these additional sections that have been put in. In fairness to the good committee work, I think there's enough meat in here, and the fact that the committee agreed to adopt and recommend to the Legislative Assembly all of the auditor general's findings. . . . That says a heck of a lot. So I will leave it at that, Mr. Chair.

R. Thorpe (Chair): Just let me make a couple of comments. First of all, thank you for your comments. Second of all, you may recall that at a previous committee meeting on this issue, it was agreed that the draft report would be given to the Chair and Deputy Chair in advance -- as a matter of fact, I believe it may even have been your idea -- to work through this and attempt to find a drafting that was going to be acceptable to the committee. Subsequent to that, it was given out to all committee members. I realize that we have some new committee members, but we have some longstanding committee members, and to the best of my knowledge we didn't have a lot of feedback on a timely basis from those members.

What I have attempted to do is put in -- in my recollection -- what actually happened. I am not trying to rewrite history; I'm just trying to put in what happened, how it happened, how it unfolded. As you know, everyone knows this is a very, very contentious issue. That's why, with the independent member, the Deputy Chair and a member of the official opposition, I asked for lists of witnesses that we could agree to and that we could proceed through on. That's how all that happened. I believe that to be a very important part of the history of this report, and that's why I have put that in.

Now, if you want to take Mr. Bawlf's name out in a couple of locations because you believe it's repetitious, I don't have a problem with that. I personally think that the parts I've put in there, or proposed to put in on the committee's review, factually reflect exactly what happened.

A Voice: In your opinion.

R. Thorpe (Chair): Well, I believe it's factual, but if there are facts that are wrong, I'd be pleased to correct them. So, Rick, that's what I was attempting to achieve there.

M. Coell: Just following on Mr. Kasper's comments that if we're going to deal with this, maybe we should reopen it again. . . . With new members on the committee, I think that would be appropriate -- to reopen and listen to the witnesses that we had suggested we call before. And I think maybe that would help the new members understand the draft. So I'll move that we reopen the discussion and hear witnesses for the fast ferry program.

[0935]

R. Thorpe (Chair): We have a motion on the floor. Any discussion on that motion?

D. Miller (Deputy Chair): Mr. Chairman, I was going to seek some clarification on the process of the committee. As I understand it, this is a summary of the proceedings as the committee sees it, I guess. Is that the standard procedure with respect to issues that appear before the committee, or is it. . . ? Perhaps you could enlighten me on that. Do we normally provide a narrative? Or do we simply say, in some instances, that we accept the report of the auditor general and recommend it to the Legislative Assembly? What is the process with respect to this?

R. Thorpe (Chair): We've had a variety of processes. Some of those processes have been very, very comprehensive, depending on the nature of one.

Let me give you an example: the report we discussed yesterday on social housing and the governance of social housing and rent subsidies. A month or so ago we had an extremely detailed and comprehensive report. When it came before this committee, some committee members thought that it was way too much. Therefore it was sent back, and what we reviewed yesterday was a revised, boiled-down version.

We have had, on other reports, depending on the subject matter -- earthquake preparedness, for instance -- exhaustive consultation. So there is no set template; depending on the nature of the subject, the reports have varied.

D. Miller (Deputy Chair): Okay. I'll go back to my initial comments, then, as Deputy Chair, and that is that we ought to try to get a report we can accept. We've been discussing some elements of that. I think that should continue to be the focus of our discussion. I don't think there are a great number of issues. We've corrected one, which is the error. There's been some discussion around, I guess, language and what it portrays. If people have specific suggestions on amendments, fair enough, but I don't see any reason why we can't deal with these kinds of issues and accept the report.

R. Thorpe (Chair): As you and I talked yesterday, you and I expressed a common interest of trying to move this report forward. We do have right now, though, a motion on the floor. Let me just repeat the motion put forward by Mr. Coell: "I move that the committee reopen the process to hear from the witnesses for the fast ferry program."

Any debate on that?

S. Orcherton: First of all, I'd like to ask a question of the Clerk. I'm not sure in my mind whether this motion is in

[ Page 1669 ]

order. The committee's already dealt with this issue. There has been a motion passed by the committee to agree with the recommendations of the auditor general and recommend same to the Legislative Assembly. We're here today dealing with the report characterizing our discussions with the auditor general and others. I think what we're doing here is effectively revisiting an issue that the committee has already dealt with.

I'd asked some guidance from the Clerk as to whether the motion is in order or not. My sense is that it is not.

R. Thorpe (Chair): Thank you for your question. I've checked with the Clerk, and the Clerk advises that under standing order 54, the motion is in order.

S. Orcherton: Okay, that's fine. I thank the Clerk for that information. If you're entertaining the motion, as I suspect you are, I'll speak against it.

We have gone through this issue exhaustively. The member for Malahat-Juan de Fuca raised good questions prior to moving a motion to accept the auditor general's report. I asked the auditor general if indeed there was any value to going over it again with the folks he'd interviewed in the course of his deliberations and the preparation of his report. My recollection -- as that member's is -- is that the answer was no.

[0940]

I think we're going back into a situation that this committee doesn't need to go back into. We already have a report. The committee's taken a position to agree with the auditor general in respect to the fast ferry issue. I think we should move on from this point. As the member for Skeena says, there are some areas in here that require clarification in terms of our report to the assembly, and I think we should deal with those areas and move forward.

J. Weisgerber: I certainly can appreciate the sensitivity and the political interests that are involved around the table. The fact of the matter is that we should get a report. I, as you know, have argued on a number of occasions that our report should be as concise as possible, that we should avoid attempting to repeat information that's included in the auditor general's report. I think those people who have an interest in any topic, whether it be fast ferries or safe water, would go to the trouble of reading the auditor general's report and need not read that information again in our reports.

I must say that I'm also a bit puzzled by the notion that we wouldn't hear from witnesses if in fact they weren't going to change the auditor general's report. If indeed that's the position of our committee, then I think we should have some relatively simple screening process that would probably eliminate 95 percent of the people who come before us. I don't recall, as a result of the deliberations I've had on this committee, the auditor general deciding that he's going to go back and rewrite his report on the strength of the information we've been able to bring forward by way of witnesses. I think their clarification is sought and obtained, and that's one of the purposes of our report: to extend the information that was originally available in the auditor general's report.

Having said that, I think we should in fact get on with the report, and we should attempt to make it as concise as possible. I would suggest that perhaps the Chair and the Deputy Chair at some point in the next little while could put their heads together and come up with some wording that was satisfactory to both sides, and we could move on.

D. Miller (Deputy Chair): Just picking up from Jack's point, and to repeat myself a little bit: I think the report that we're considering reasonably captures the issues that the committee dealt with and that were the subject of the auditor general's report and other reports as well. I just want to support Jack in saying that I think we can resolve some differences. Having dealt with the substantive issue, any other issues really are questions of wording and how those might be interpreted. I don't think there's a great deal of difficulty in trying to fix that, and I suspect that most committee members would like to adopt a report and move on to the other issues we've got to deal with.

Certainly the broader issue is one that's been canvassed extensively publicly. I suspect that the work we're doing now is really just kind of wrapping up the work of the committee. The broad issues have been debated publicly. I think there's a fair conclusion out there as to what took place with respect to this significant project, and it's captured by both the auditor general's report and the narrative we have before us. So maybe we could continue to get this out of the way and continue to try to find where those differences are and whether or not we can come to terms with some language that resolves any differences and accept the report.

P. Calendino: Taking up on what Jack and Dan have said, it's a procedural question here. I've been on the committee probably longer than most of you here. The first few years that I was on the committee we didn't have researchers reports to recommend to the Legislative Assembly. It was a question of accepting the auditor general's report and making recommendations or adding other recommendations. In the last couple of years we're getting reports that tend to be as long or even longer than the auditor general's report.

[0945]

With respect to Kelly, she's been asked to do the research, and she's doing that. But we end up spending days and days arguing on the researcher's report rather than on the comments of the auditor general, and I think this committee should go back to the basics and debate the auditor general's finding and not the researcher's finding.

So let's get on with it. Let's have reports that are no longer than two or three pages from now on -- not 30 pages -- and basically recommending or not recommending the findings of the auditor general.

R. Thorpe (Chair): First of all, the purpose of this committee is not to serve as a rubber stamp committee of the auditor general.

P. Calendino: That's not quite what I'm saying.

R. Thorpe (Chair): I listened to you very patiently, actually. Secondly, you are factually incorrect in the fact that this committee has not put forward for a number of years comprehensive reports with respect to the subject matter.

Back to the motion. I agree with the Deputy Chair. I agree with the member for Peace River South that we want to move

[ Page 1670 ]

forward. But we do have a motion on the floor. Again, let me move that motion. Does everybody know the motion? I call the question on the motion.

Motion defeated.

Interjection.

R. Thorpe (Chair): With respect to the motion, Mr. Symons, you're not a member of the committee and have no vote.

We now have this report before us. Do you want to go through it page by page? Let me just -- again, because I'm getting a little irritated here. . . . Members of this committee receive these reports. They're couriered to your office; they're e-mailed to you; they're sent to your legislative office. And time and time again, people don't take the time to read the reports and get their feedback back to the staff as requested. That's why, in part, we go through some of these exercises. Perhaps members who have comments -- constructive comments -- from time to time could get that feedback in so that we could move forward. So if there are some items, Dan, that you'd like to go through and make some clarifications, ask some questions, let's do that, and let's move on.

D. Miller (Deputy Chair): I was struggling with the issues raised by Mr. Kasper, I believe. I could be mistaken now about who raised that specific question on the statement on page 5, the last sentence of the fourth paragraph under "B.C. Ferries Ten-Year Capital Plan." I was just trying to change that somewhat.

It seems to me the issue there was the one we canvassed. In other words, does this sentence, in and of itself, suggest that no more information was forthcoming with respect to Treasury Board's subsequent dealing with this issue? The auditor general's report says, in a paragraph. . . . In essence, it says that yes, more information was forthcoming but that it wasn't adequate. So I'm just wondering if some minor change in language with respect to that last sentence could accommodate that difference. And if it can, then I suspect we probably could do that. . . .

R. Thorpe (Chair): What would be your proposal?

D. Miller (Deputy Chair): Well, I was just starting to write that the auditor general's review indicated that while more information was provided. . . .

R. Thorpe (Chair): Additional information?

D. Miller (Deputy Chair): It was not, and then taking the language out of the auditor general's report. . . . The statement out of the auditor general's report says: "However, in our opinion, none of these reapprovals was supported by reasonable levels of information and analysis." You can see the subtle nuance there. So if we wanted, perhaps the researcher could. . . .

R. Thorpe (Chair): That's fine with me. Do people agree with that?

D. Miller (Deputy Chair): I don't think we've gone beyond that. I haven't heard if there are other specific language or wording changes where other members may have suggestions, but if there are we should hear them. I think with that, we could probably. . . .

R. Thorpe (Chair): I totally agree.

R. Kasper: I just want to follow up on. . . . It just seems redundant, you know, when it's said that Mr. Bawlf, although. . . .

R. Thorpe (Chair): Could you make reference to the pages, Rick, so that people can follow along?

R. Kasper: Page 5. It's underlined: ". . .although not appearing before the committee in person. . . . " I just don't think that's relevant.

P. Calendino: It's details in another form.

R. Kasper: Again on page 4: "Sam Bawlf did not appear before the committee as a witness." I don't think it's relevant.

[0950]

D. Miller (Deputy Chair): Well, Mr. Chairman, let me. . . . The fact is that Mr. Bawlf did not appear.

R. Kasper: That's true, but say it once.

D. Miller (Deputy Chair): At the same time the report does include references to Mr. Bawlf's opinion, which I think, on balance, are useful in terms of anybody wanting to read this report. I don't know that we should get hung up necessarily on a sentence that said he didn't appear. In fact, it's factually correct. Notwithstanding that, there are some references throughout the summary document to opinions that Mr. Bawlf expressed, which I think may be more in keeping with the opinions of some members of this committee. You appreciate, Mr. Chairman, that I don't think we should get hung up on that point.

R. Thorpe (Chair): I put those changes in personally to stress the fact that, factually, he did not appear before this committee. Those are the facts. Mr. Kasper, anything else?

R. Kasper: Going back to page 2, if we're going to reference some factual statements, this second paragraph: "However, on January 25, 2000, debate on the fast ferry project was curtailed by approval of a motion that had the effect of ending the appearance of witnesses before the committee on this issue. . . ." Well, you know, I think that if we want to add some more facts, then the researcher can actually include in that paragraph what the auditor general had to say in regard to hearing additional information from witnesses. That was a fact. I think it puts the motion and the decision by the committee in context. I think that's important.

Where was the other one. . . ?

R. Thorpe (Chair): So in balance to that -- I'm sure your purpose here is to look for balance -- would you like, then, that the process of how we agreed to have witnesses and the

[ Page 1671 ]

dates that letters with names of witnesses on them from different parties were tendered to the committee. . . ? Would you like that also included? Then we could put your motion. . . .

R. Kasper: All the stuff that you have there, starting with: "On November 4. . . ." I don't have a problem with that; that's factual. But I think, if we're going to get to facts and we also include comments as to why the committee wanted to hear from witnesses at that time. . . . It was brought up as to whether or not it would be of benefit to the committee to hear additional information.

R. Thorpe (Chair): Rick, I understand your point. But that was the auditor general's opinion, and the committee as a whole had agreed to some certain things. What do you actually want to amend here? What's your proposal?

P. Calendino: The original paragraph was just fine.

R. Kasper: I don't want to get into that. I'm just saying that if we have three new paragraphs that have been added -- the ones that are underlined -- what I would like to see included in that, based on facts, is a reference to the auditor general and his opinion on the validity. Or was it going to change? Or was he going to receive new information? I can't remember the exact wording. The Hansard will show exactly what it was that he said.

K. Dunsdon: Yeah, I just found that reference in here. You pose the question: "Is there any information that you've heard from witnesses over the last series of meetings that would change the content of your report?" And Mr. Morfitt says: "No, there has not been any information." You say: "And you've received no additional information that would change the content or findings." And he says: "No, we have not."

[0955]

R. Kasper: Was there anything further to that?

K. Dunsdon: Then you make your motion that the committee accept the recommendations of the auditor general's report and recommend the same to the Legislative Assembly.

R. Kasper: So, you know, I would at least indulge the committee to consider including that in there.

R. Thorpe (Chair): But the fact of the. . . . We can consider that, if that's what you'd like. But you're asking. You asked the auditor general specifically on witnesses that had appeared; you did not ask him his opinion on witnesses that had not appeared.

M. Coell: Chair, I think that's the point that Mr. Kasper is missing: we stopped hearing witnesses halfway through the process. The question he posed was: "Of the witnesses you've heard so far, would anything change?" And the auditor general gave his opinion; I suspect that may have been different had the committee had the ability to hear the witnesses that it wished to hear in its entirety. So I think we may be ruffling some feathers here, of that particular member. But realistically, he stopped the process halfway through its procedure. And that's the reason we need to have the draft before us today, setting out the reality of how the process was stopped and discontinued.

R. Kasper: Well, you see, Mr. Chairman, I think I'm not suggesting that we rewrite history. The auditor general had already heard from these witnesses. The auditor general had already heard from these people; he had already conducted interviews and had asked a whole host of questions of the people who were actually scheduled to appear before the committee. That is the reference and the context in which the question was asked. I think that has to be put on the record -- and the fact that the auditor general had already conducted interviews with the individuals that were scheduled to appear before the committee. The question was asked in that context. Perhaps the wording is not specific enough in the Hansard, but that is the context in which it was asked.

R. Thorpe (Chair): Unfortunately, the auditor general did not have the benefit of any of the questions that members may have had and the answers received. I'm sure the auditor general's questions were exhaustive. But there may have been one or two questions that perhaps hadn't been asked.

M. Coell: Just further, I guess the problem I'm trying to get through to the member is that the people's representatives in public did not get a chance to interview those witnesses. They were interviewed in private by the auditor general. I think this is called Public Accounts, where the people's representatives get an opportunity to ask questions of witnesses in public.

R. Thorpe (Chair): What I'd like to propose. . . . The Deputy Chair and I have had just a little sidebar here. I have a sense that we could continue here for a long time; I do not believe that is what the majority of the committee wants to do. I believe that if it's acceptable, the Deputy Chair and the Chair will meet in the very near future, get some agreed-to wording and bring back to this committee for December 5 or 6 the approval of this report. Is that acceptable to members?

Some Voices: Yes.

D. Miller (Deputy Chair): Mr. Chairman, I realize there's been a lot of water under the bow on this issue. [Laughter.]

R. Thorpe (Chair): And maybe more to come.

D. Miller (Deputy Chair): But as I said, I think that we ought to be able to clean up the language so that it's acceptable to all committee members. Hopefully, you and I can do that together. It's acceptable from my point of view.

R. Thorpe (Chair): Okay. So we'll move this and have it ready for, hopefully, final review on December 5 or 6, depending on the schedule. Did we have a mover on that motion?

S. Orcherton: So moved.

R. Thorpe (Chair): Steve, thank you.

Can we take a five-minute break, if members are interested in that? And then we'll reconvene on the pulp and paper.

[ Page 1672 ]

The committee recessed from 10 a.m. to 10:13 a.m.

[R. Thorpe in the chair.]

R. Thorpe (Chair): Okay, we'll get started. We'll deal with the pulp and paper report now. Before we get into the details of the report, let me first of all introduce our researcher, Richard Morrow, who has worked with Kelly on this report. Thanks for your work.

Secondly, it's my understanding that we have received comments back from the ministry -- Environment, I believe it is -- with respect to this report. Those comments have not been included at this point in time -- waiting for Kelly to share those comments with the committee and having the auditor general here together with us. What we could do now is have Kelly and Richard walk us through the report and bring some highlights to our attention.

K. Dundson: This will be the committee's tenth report for the fourth session. First off, I want to note that there's a little bit of an error at the bottom of each page of the report. There's a footer there that says "Management of the Woodlot Licence Program," which, as you know, was a previous report of the committee. What we've just done is. . . . There's a template that's been used.

A Voice: Where is that?

K. Dunsdon: It's at the bottom of every page. It's a footer. It was a formatting problem, but we'll correct that before the report is finalized.

This draft report reflects work done by the committee in March of this year. At that time, the committee received testimony from representatives of the auditor general's office about their audit, which was conducted during the 12 months prior to June 30, 1998, on pulp and paper mill effluent permit monitoring. The committee also heard evidence from the Ministry of Environment, Lands and Parks, in particular the pollution representatives of the pollution prevention program and laboratory management systems section. At that time, some undertakings were made by the ministry to provide the committee with further information relating to fines assessed against mills in the 1998-2000 period and to provide an update on a split-sampling protocol to be negotiated at the end of March of this year. Today I've handed out that information, which was just recently received in our office. So I'll just lead you through the report now.

The introduction provides a general background about the discharge of liquid effluent into waters by pulp and paper mills, including the legislation governing permitted discharges, the permit system, the ministry's programs and the number of mills discharging liquid waste into B.C.'s waters. This is an up-to-date number as of October 2000, as the number of mills in the province has changed slightly since the committee met in March.

[1015]

The audit and the committee's review of its results are briefly discussed on pages 2 and 3 of the draft report. Now, the rest of the paper is organized according to the activities conducted by the ministry to monitor the permits. The first of these activities is reviewing information submitted by mills for completeness and timeliness, and a discussion of this is found on page 4 of the report. This section talks about the parameters that are commonly monitored under permits, the processes mills use to monitor parameters and how the ministry reviews that information. There's also a discussion of the ministry's two databases, which are used to store the information submitted by mills. You'll see that the auditor general had three recommendations in this area, related mainly to the computer systems and the documentation of information review. Those are discussed along with the ministry's response regarding how those recommendations are being addressed.

The second activity conducted by the ministry to monitor permits involves reviewing data submitted by mills to determine whether permit limits are being complied with. There's a very brief discussion of this at page 6 of the draft report.

Two other important activities carried out by the ministry to monitor permits are mill inspections and obtaining assurances about the quality of effluent analysis done by mill labs. These were really the areas where the auditor general focused his recommendations and that the committee discussed in detail. The draft report deals with these starting at page 7. There's a bit of a background and introduction to the inspection and data quality assurance work done by the ministry, and there's also some information there about the International Organization for Standardization and its certification program that the ministry heard about during its meetings.

On page 8 is a discussion of mill inspection work done by the ministry.

Pages 9 to 13 of the draft report cover evidence the committee received about the sampling and analysis of liquid effluent, including the registration of labs, analyzing that effluent, how the ministry monitors methods used by labs in their analysis, effluent sampling, inspection of mill labs and review of mill records. In particular, lab registration is discussed on page 9, talking about how labs testing effluent have been registered in the past and how the old registration system has been replaced with a certification of proficiency program administered by the Canadian Association for Environmental Analytical Laboratories.

[1020]

Guidance provided by the ministry regarding test methods that labs should follow are discussed at page 10. Also on page 10 is a section about independent and split sampling, including a description of what they entail and what the auditor general's recommendations had been -- that the ministry require all regions to include split sampling as part of their inspection programs. As I mentioned previously, I've handed out a draft of the split-sampling protocol that was forwarded by the ministry. I should emphasize that that's just a draft; that still has to be approved by regional waste managers.

Page 11 of the report talks about reference sampling and the new certification of proficiency program and its ability to deregister labs that have consistently poor performance in their test results.

Page 12 of the draft report contains a discussion of mill sampling procedures and the committee's discussion of how sampling procedures may affect lab test results.

On page 13 mill lab inspections are discussed, along with the full accreditation program of the Canadian Association for

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Environmental Analytical Labs. Some labs in B.C. have voluntarily sought and received that full accreditation. I've been advised by the ministry that 14 labs have done that as of October 2000.

Page 13 includes a discussion of how the ministry reviews mill records. Actions the ministry has taken in response to the violation of effluent discharge permits are discussed at pages 14 and 15 of the report. This section includes information submitted to the committee about fines assessed against mills from 1998 to 2000. This was information provided directly in response to a request by the Chair, and I've distributed that today for your information.

Also on page 15 is a discussion of incentives offered by the ministry, or being considered by it, for the reduction of effluent discharge.

Finally, the role of the provincial and federal governments in monitoring liquid effluent discharge from pulp and paper mills is reviewed on page 16 of the draft report. There is a discussion about a federal-provincial agreement that expired in 1996 and is currently being renegotiated.

The draft report wraps up on page 17 by summarizing the areas of concern identified in the audit and acknowledging the actions the ministry has taken. There is also reference to the follow-up review being done by the auditor general, which I've been informed is expected to be completed mid- to late November.

Draft recommendations obviously are a matter for the committee to decide. But I can say that the ministry seems to consider eight of the 18 recommendations made by the auditor general to have been fully implemented. However, the auditor general's follow-up review will obviously confirm that.

I've also received comments back from the Ministry of Environment; some of them are minor corrections to do with wording and so on. But I also received some comments from Dr. Malcolm Clark, who is actually one of the witnesses that came before the committee, and I'll just go through with you his more significant comments. As I mentioned, a lot of them were just minor wording changes. For example, I refer to BOD as "biological oxygen demand." It's actually biochemical. So that's just an example of the type of changes that he has suggested.

He has suggested one more significant change; that is, he's provided us with a bit more information about the ISO's program and the ISO 14000 standards that the committee discussed at its meeting. He also mentioned that there's a new standard from the ISO to assure the validity of test data from analytical testing labs, a new standard called 17025. I could include that information in the report if the committee wishes.

[1025]

I also received some comments back from the regional ministry office in Prince George, who, I understand, are leading the initiative to address the recommendations made by the auditor general. They had just mentioned that the report does refer a few times to split sampling being considered the best way to obtain assurances about effluent data, and apparently there's some disagreement about that, which I don't mention in the report and which actually didn't come through in the meeting. But I can certainly qualify that statement if the committee wishes.

Lastly they mentioned that they had some concerns, I guess, about the fact that the QA-QC program, which is quality assurance, quality control -- apparently it's a program built into permits -- is not mentioned in our report. And they felt it wasn't a focus of the audit, as it should have been, according to them. So they wanted me to pass that on as well. I haven't made any of these suggested changes, but I will do so if the committee wishes.

R. Thorpe (Chair): I'm just wondering if the auditor general's department has any comments on these thoughts that have come forward from Prince George. Since the committee. . . . I hope by making these comments, I'm not unduly influencing your answer. But I just wonder. You know, it came up yesterday; it's come up today. At some point in time we have to move on. And I just wondered if you wouldn't maybe consider covering some of those issues in your semi-annual follow-up. But anyway -- your comments, please.

W. Strelioff: Members, we're reasonably comfortable with the contents of the report. We didn't have any substantive suggestions for change. The comments we had were more editorial. And the comments that Kelly has made today, we're okay with as well.

D. Miller (Deputy Chair): Well, I was going to say, Mr. Chairman, that I think the focus is fairly narrow. In other words, you're examining the process of obtaining information, etc. And I always like to look at the bigger picture as well.

It appears to me, based on my limited knowledge, that there has been a significant improvement over the decade in terms of the reduction in discharges into both the marine or water and air environment. And while you might argue that tougher standards and everything else have really led to that, I think you have to recognize that the industry itself -- the pulp industry and the people who work in that industry -- has made a tremendous contribution to reducing those discharges and, obviously, benefiting all of us. So I kind of like to put things like that in these reports. I'm sure some basic data can prove my point. I'm wondering if, in the recommendations, we might just put a sentence in there, recognizing that the work of the industry, the ministry, etc., has led to considerable improvement.

I say this because, while I think it's important to examine process and try to continue to make recommendations for improvement in process, you also have to keep people focused on the end goal. You have to recognize and congratulate people when they do a reasonably good job. I think this is an example of that; this is in a very important sector of the British Columbia economy. It makes a significant contribution to our GDP and employs lots of people. So if that's acceptable, a sentence that simply recognizes the improvement and recognizes that that's a result of both ministry people and the industry itself working together -- I'd certainly appreciate that.

R. Thorpe (Chair): That's a good thought.

M. Coell: I'd just like to agree with what Mr. Miller has said. I think that there has been, over the last decade or so, a lot of benefit to the environment from both the ministry and the industry working together. I think this report, from my perspective, has some very positive things to say about the

[ Page 1674 ]

future, if you look at what has been done, and what potential there is in the next ten years to make even more positive additions to the industry. And so I agree with what Dan said.

R. Thorpe (Chair): Does anyone else have any comments? So we'll make that adjustment, Kelly.

Under the recommendations, we need a motion to accept the recommendations of the auditor general.

[1030]

Interjection.

R. Thorpe (Chair): Thank you, Mr. Calendino. Are there any other recommendations other than the brief comments by Mr. Miller, supported by Mr. Coell?

I've got to call a question on Mr. Calendino's motion to put in the recommendations of the auditor general. I call a question.

Motion approved.

R. Thorpe (Chair): Now we need a motion to accept and adopt the report and to have the committee report presented to the House. Do I have such a motion? Mr. Miller, thank you.

Motion approved.

R. Thorpe (Chair): There are no other items on the agenda for today. So I'd like to thank people.

Dan, do you want to try to get together today on that? Do you have some time?

D. Miller (Deputy Chair): Yes, this morning, actually.

R. Thorpe (Chair): Is 11 o'clock a good time for you?

D. Miller (Deputy Chair): Yes. Okay.

R. Thorpe (Chair): Would you like to do it in the Clerk's office?

D. Miller (Deputy Chair): Fine.

R. Thorpe (Chair): Good, so we'll try to get that done at 11 o'clock. So seeing no other business to do here, a motion to adjourn.

The committee adjourned at 10:31 a.m.

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