Finance and Government Services — Issue No. 16 — Wednesday, November 30, 2005 (HTML)

2005 Legislative Session: First Session, 38th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

4. Resolved, that the Committee meet in-camera to discuss the Request for Proposal process for Audit Services for the Office of the Auditor General. (Dave S. Hayer, MLA)

5. The Committee met in-camera from 3:15 p.m. to 3:33 p.m.

6. The Committee adjourned at 3:34 p.m. to the call of the Chair.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES



CONTENTS

		Page

Office of the Auditor General		367
	W. Strelioff
	E. Price
	S. Shum

Office of the Chief Electoral Officer		381
	H. Neufeld
	N. Western
	L. Johnson

Office of the Ombudsman		394
	H. Kushner
	L. Hubbard

Office of the Conflict-of-Interest Commissioner		404
	H. Oliver

Chair:	* Blair Lekstrom (Peace River South L)
Deputy Chair:	* Maurine Karagianis (Esquimalt-Metchosin NDP)
Members:	Harry Bloy (Burquitlam L) * Dave S. Hayer (Surrey-Tynehead L) * Gordon Hogg (Surrey–White Rock L) * Richard T. Lee (Burnaby North L) * John Yap (Richmond-Steveston L) * Leonard Krog (Nanaimo NDP) * Jenny Wai Ching Kwan (Vancouver–Mount Pleasant NDP) * Nicholas Simons (Powell River–Sunshine Coast NDP) * denotes member present


Witnesses:	Lanny Hubbard (Office of the Ombudsman) Linda Johnson (Elections B.C.) Howard Kushner (Ombudsman) Harry Neufeld (Chief Electoral Officer) H.A.D. Oliver (Conflict-of-Interest Commissioner) Errol Price (Office of the Auditor General) Su-Lin Shum (Office of the Auditor General) Wayne Strelioff (Auditor General) Nola Western (Elections B.C.)

B. Lekstrom (Chair): Well, good morning, everyone. I would like to call the Select Standing Committee on Finance and Government Services to order this morning. I would like to welcome all the committee members as well as our guests.

We have concluded one portion of our work as a committee. We have submitted our report based on the budget to the Legislative Assembly.

We do have further work that we have been asked to do by the Legislative Assembly, which is to review the statutory officers of British Columbia. We are beginning that review here today. We have four reviews slated for today, and we will conclude with two tomorrow as well.

We're going to begin today with the Auditor General. Wayne, I would like to thank you for coming. I'd like to thank you for supplying the committee with the information prior to today. It makes a great deal of difference so that committee members can go through it.

The process I would like to follow today is that upon concluding my remarks here this morning, I will turn it over to you, Wayne. I would ask you to introduce the staff you've brought with you and then to go through your report and your presentation, following which time members of the committee can ask questions for clarification.

It will be our intent, following the statutory reviews that we do over the next couple of days, to put our committee together to come with our report and recommendations to the Legislative Assembly. We'll begin that process following the reviews of each statutory officer.

With me today is Errol Price, who is my Deputy Auditor General. Su-Lin Shum is a director in our office and is responsible for our corporate planning, and Christine Davison is in charge of our back office in corporate services.

I'd like to start by thanking you for meeting with me first thing in your sessions, because it does allow me to attend a meeting later today at UBC and then tomorrow with the First Nations Summit. So thank you very much for that. On the other hand, of course, first off is first off, and it always provides some amount of healthy tension.

The purpose of this meeting is very similar to meetings that are taking place across Canada, North America and other parts of most of the world, where those responsible for governance meet with their auditors to discuss how they can support each other. In my case, it's how I can support your responsibilities — of course, in this forum the key one is to oversee the performance of government — and in terms of asking your support or carrying out your responsibility to ensure that you have an auditor that has sufficient capacity and access to all the information that is required to carry out our responsibilities. Certainly, it's a growing, essential feature of earning public confidence in so many parts of the world right now.

You have our strategic direction and funding proposal. For us, the Auditor General Act sets out who's responsible for working with our office in terms of the governance groups that are represented by the Legislature. On page 2 it sets out the responsibilities. The Public Accounts Committee is generally responsible for reviewing our reports and our financial statement coverage plan. Yesterday they met to review that plan and did endorse the recommendations that we put forward. Those recommendations are provided to you in appendix B.

This committee is assigned the responsibility for recommending to the assembly an annual appropriation for our office as well as the basis on which we charge fees. We have two sources of funding. One is the annual appropriation, and a second source of funding is where we charge fees primarily for audits of individual government organizations related to the reliability of their financial statements.

Last year when we met with this committee, it recommended that our appropriation be increased by $600,000 in this current year, and it did not recommend any additional increases for 2006-2007 and then 2007-2008. Then, of course, as happens every year, we come in to this committee to discuss that decision and what should happen in the future. I prepare this report to facilitate that discussion.

In this report I am requesting a voted appropriation of $8.97 million, which is about a $1.3 million increase over the current voted appropriation. There are two components to that. The $800,000 increase is consistent with what I proposed last year, which allows the office to sustain the capacity it currently has and to deliver a base workplan. I'm also requesting an additional $500,000 to enable a modest expansion of our workplan. Of course, this report explains why and what we'll be using that money for.

In addition to our appropriation, we expect to recover about $1.9 million from fee-for-service work. That's slightly less than last year, and the main reason for that reduction is that we're no longer doing the financial statement audit of B.C. Investment Management Corp. So that means that our fee-for-service recoveries go down accordingly.

On page 4 it recognizes the important oversight responsibility of the Legislative Assembly, which I'm sure you know full well. The assembly certainly has the key responsibility of overseeing the performance of government. That's an onerous responsibility as the

B.C. provincial public sector continues to get more complex and deals with far more important issues as well as during a period where there has been some significant restructuring of how government delivers its programs. Of course, when restructuring occurs, there's increased need for governance groups to carry out a stronger scrutiny of management — in this case, the government. One of the mechanisms they use to scrutinize the performance of government and management is through their auditor, which is our office.

At the same time where the complexity of government is increasing, the public's expectations of governing groups — auditors — are also increasing significantly. We now clearly have to earn the public's confidence, trust and respect almost every day. Certainly, you're well aware of the importance of demonstrating a strong, rigorous, independent scrutiny of the performance of government.

Our office helps you do that. We provide you independent, objective, rigorous assessments and advice on accountability and the overall performance of government. These assessments cover the financial statement reporting practices of government as well as examinations related to performance and accountability practices. The recommendations that we make through our work for you and the public do provide opportunities for government to improve its management accountability practices — and do so.

For years we've moved on the generally accepted accounting principles for government. That actually has taken place. It's been a significant change. Everyone is proud of it, and it represents a significant achievement by many. Of course, that started with significant recommendations by our office. More recently the general reporting principles for performance reports that you receive from all provincial public sector organizations have been put in place and endorsed by legislators, by government officials and by our office, and are beginning to result in improved, more robust performance information from provincial public sector organizations, which is provided to you to help you guide assessing and making decisions related to government.

We do have a unique role. For you as legislators, we're one of the sole sources of independent assurance, advice and examinations of the performance of government, where you know that the examinations will be carried out in an independent manner and that the group doing it will carry it out in a rigorous way and has the capacity to get access to the information necessary to carry out that work.

We also issue our reports publicly. We determine what to examine, to a great extent, and what to report when. Of course, our reports are subject to significant scrutiny along the way and also are provided to legislators — mainly referred to the Public Accounts Committee — where they lead to a holding-to-account and, over the years, to good, constructive change on how government manages, governs and accounts for its use of significant public resources and its carrying-out of significant public responsibilities.

We do have significant expertise in our office, with wide-ranging skills — primarily a core of financial skills but also, increasingly, information technology, health management, legal, program delivery experience. This helps us make sure that we carry out our examinations in the best way possible and provide the best advice that we can to you in carrying out your significant governance responsibilities.

On page 6 we review some of the accomplishments that have happened in the three lines of business that we use to carry out our responsibilities. On the financial statement side I've mentioned the move to generally accepted accounting principles. It sets the stage now for ministries themselves to prepare their own financial statements and manage with a strong financial framework. That has not happened yet, but it's certainly something that needs to happen in the future. It also ensures that you finally have robust measures of costs related to health and education. Prior to the implementation of GAAP, you didn't have that. You had incomplete measures of costs of health and education when you made your resource allocation decisions. It's a significant step forward.

The performance reports that we work on and your endorsement, through the Public Accounts Committee, of those general reporting principles that have guided government managers and officials in preparing their own service plans and service plan reports are a significant step. We also attest to and give separate opinions on several performance reports related to the Workers Compensation Board — WorkSafe, I think it's now called — and the public guardian and trustee. We're now working with the B.C. Assessment authority.

We also, in terms of providing assessments and assurance on performance reports, have been working with the government organization called Partnerships B.C., attesting to a couple of their value-for-money disclosure reports. One is related to Abbotsford hospital. The one we're working on right now relates to the Sea to Sky Highway. We're also beginning an examination of the RAV line performance report.

As you might remember, when these major projects are undertaken and when an agreement is struck to decide how best to carry out these projects, the organizations prepare a value-for-money disclosure report setting out what decision is made, the procurement process and the results expected to be achieved over the life of the project. Quite often it relates to costs and miles of highway or a new health care centre or a new transit line.

On our risk audits, which examine how well government is managing its programs. On page 8 we list a number of significant risk audits that we've done in the past. Each one has had a significant impact on the system, a very significant impact on how managers manage, on relationships between ministers and chairs, on how information is relayed in a public way, ranging from the health care system — that first one, where the government for the first time put in place performance agreements between the Minister of Health and the

chairs of each of the health authorities…. The first time they did that was two or three years ago. We examined whether those agreements were robust and have continued along the way to make sure that it's clear who's responsible for what and what success looks like and that it's continually upgraded and strengthened.

The chronic disease one related to diabetes out there is a very significant cost driver in the health system. Our examination, I think, has helped foster a better understanding of the implications of diabetes in our health system as it relates to chronic disease and our aging population as well as to our more sedentary lifestyles, including our children's. Other examinations related to wild salmon, to how well the work environment is being managed, to the Lottery Corp. and how it makes sure there's integrity in the casino system, and to the Olympics.

Two years ago when the bid was presented to the IOC, if you remember, we presented a report two or three days later setting out whether we thought that adequate due diligence had been done in preparing the bid. We also set out our understanding of the financial undertaking that was put on the table by the government.

Right now we're doing a follow-up of that, and we're hoping to provide you with another report — I think it's scheduled for February or March — comparing what was planned to where we are now in terms of the finances, scope of the projects that were promised and the timetable — a significant issue and the first time ever in the world where an Auditor General reported on a bid as it was being presented to the IOC. Of course, we worked with the Olympic organizing committee to make sure they did their due diligence in carrying out that bid and properly described the total financial undertaking.

So that's a range of the issues we've done in the past in terms of serving your governance needs. Of course, they cover a wide range, and I think each one is important in terms of making sure that our system of government is as strong as possible.

On page 9 we describe some of the challenges facing our office. You could view these as our own risk management in identifying what risks we need to manage, internal to our office, to be successful in terms of achieving our goals and objectives. We've identified five. The first one is our credibility — making sure that we do the required due diligence before setting out a public report, providing you assurance that the surplus deficit measures are proper or the Olympic undertaking is done in the required manner.

Those credibility issues are getting more difficult for us because the standards expected of auditors have increased dramatically, mainly because of all the complications resulting from Enron, WorldCom, Livent, Parmalat and a number of other major issues that have happened over the past few years and that go to the heart of the relationships between governing groups, management and auditors. As a result, the auditing profession has stepped forward and said: "Auditors, we expect you to demonstrate far more due diligence in carrying out your examinations." That is rippling through our office as it's rippled through all the other auditors across B.C., Canada, North America and elsewhere.

My understanding, in terms of what other auditors have been saying across North America and elsewhere, is that it's increasing the costs of audits about 10 percent to 20 percent. Now, as you know, we're not proposing a 10 percent to 20 percent increase in our costs related to standards, but it's a major impact going on across the professional auditing world.

The second one is independence, making sure that we maintain our independence from government so that when we come out in a public way you can rely on us — that it's an independent source of information, not someone working for government. It's an independent source whose responsibility is to the Legislature, not whose responsibility is to government. We make sure that we ride herd on that independence relationship, but we also want to make sure that we have conflict-of-interest guidelines internally to our office and that we rotate staff so that they don't get too familiar.

Relevance is a third key risk. We want to make sure that what we do is relevant. Certainly, you, in terms of legislation, have provided us guidance on what to focus on in terms of the importance of robust financial information, a results-focused performance-reporting emphasis throughout the system and important issues right across the provincial public sector.

I know in previous meetings of the Public Accounts Committee when we talked about the relevance of our work and the focus, every once in a while a member would say: "We should focus all our work on health. The whole office would be well served if we just focused all our resources on one program."

Once in a while I think that's probably good advice. On the other hand, you've given us responsibility for a wide range of issues, not only health. So we organize our programs and work responsibilities accordingly. Sometimes smaller programs of government — for example, the Ministry of Environment — may spend a small amount but have such a significant impact on B.C.

Our capacity as a force, risks that we manage…. That is just making sure that we have the skills, experienced people, to carry out our work. Over the last four years that I've been here — or the last four years; I've been here five and a half years — we have experienced a significant change in our organization, our capacity — a significant turnover. We lost a lot of experienced people.

Our ability to handle, address, complexity has been affected — and to recognize complexity as well. We've lost people primarily due to early retirement packages and early retirement, a hot market for skills that we have in our office and of course constrained funding from you as legislators. On the other hand, the people that we have in the office are getting stronger. They own the responsibilities. They're very diligent and carry out our work in the best way they can.

Our last risk that we manage is to make sure we have a strong work environment. Although our last survey indicates a high employee engagement, we still need to manage that to make sure that everybody is charged with energy and is heading in the right direction and does the best work possible.

Our workplan has several screens to it. First is in the context of our three lines of business: examining the reliability of financial statements; examining the quality of performance information that is provided to you; and examining how government manages its key risks, how it manages its programs.

A second screen is that we have a small office. We have to make choices. We're not examining just health, but we still have to make choices. We've organized our office in terms of four key focuses — health, education, finance and natural resources/transportation — providing us with a starting point in terms of deciding how best to allocate our resources.

The third screen in the office is saying: "Well, within those areas, what's going on? What should we make sure we're examining?" First nations issues. Alternative service delivery initiatives, when there's outsourcing or P3s or a change in the structure of service delivery, like going into regional health authorities. Key economic cost drivers, like diabetes, Pharmacare. IT systems — much is going on in the complexity of new information systems; federal-provincial programs.

In this case, we're initiating an examination of the administration of treaty negotiations, and that's why I'm going to the First Nations Summit meeting tomorrow to brief the summit on that examination. That examination, by the way, is going to be done concurrently with the Auditor General of Canada. So we're doing the examination in a more robust, concurrent way, which I think will serve you more and serve your interests better.

Human resource management issues. The Public Accounts Committee, I think, next week will be dealing with our report on the work environment within the public service. It's our second assessment of that. It's an important part of how the provincial public sector performs. Sustainability issues can relate to drinking water, wild salmon. We're moving on one related to agriculture. All are important issues in looking at where we should position our resources in serving your responsibilities.

On pages 13, 14 and 15 it describes in more detail what our plans are for this coming year or two. Then on page 16 it discusses or sets out our organizational structure in terms of the four sectors. It provides an overview of the costs of our office. It sets out on page 18 a ten- or 11-year summary of trends of our office, which are interesting in the sense of the relative size of the appropriation that we've been funded and the staffing levels of our office over the last ten or 11 years at the time when, of course, through new legislation — a new Auditor General Act — you're asking us to take on additional responsibilities when you've moved to a broader reporting entity. The generally accepted accounting principles now include the financial results of schools, universities, colleges and health authorities, which are about 90 additional organizations added to a total of about 150.

On these pages we note that most of our costs are staff; over 70 percent are staff. We do hire or contract with a lot of public accounting firms or individual contractors to carry out our work. For example, when we carry out our audit of UBC — that's the meeting I'll be going to this afternoon — we contract with Pricewaterhouse to help us carry out that audit. In other cases, at the year-end when March 31 comes in, there's a lot of work that has to get done in a very short period of time. So we have about 20 to 25 individual contractors that come into the office for a short period of time to help us carry out that work. That covers about 10 percent to 15 percent of our funding.

On page 20 it sets out the funding proposal in a little bit more detail, and then on page 21 it reiterates some of the issues that I have discussed and also why it is important as a governing group to have serving you, in carrying out your government's responsibility, a strong auditor. Certainly, the purpose of this meeting is to discuss with you how we can better serve you to make sure that we're meeting all your needs and for me to discuss with you to make sure that you know the extent to which you have an auditor that has the necessary capacity to carry out responsibilities.

On page 22 it sets out a new feature in the Auditor General Act, and that is that standing committees now have the legislative authority to direct my office to carry out specific examinations. The way I've positioned this funding proposal is that when those committees — if those committees — do ask me to carry out work, I would come back to the committee setting out what the request looks like in terms of the audit objective that they're directing me to fulfil, the scope of the audit, the timetable and the resources required to carry out that type of examination, and then ask for funding from that committee.

In general, I've gone through the funding proposal and now would welcome the opportunity to answer any of your questions.

B. Lekstrom (Chair): Thank you very much, Wayne. It is certainly an in-depth document you have put before us, and I again thank you for the work you've put into that.

L. Krog: Wayne, you mentioned a fairly high rate of staff turnover. Has that increased in the last few years, or is it a fairly stable turnover in terms of that 20-percent figure?

W. Strelioff: It has increased, but where it's increased is senior people. Just in general, in the last four

years about 12 of our very senior people have left, most through early retirements and some that have taken other kinds of responsibilities within the provincial public sector. That's where the significant turnover is, but it also is right across the office. For example, last year at this time we had a group of articling students — I think there were five or six of them — who were waiting to receive notice of whether they'd passed their CA exams. The week before they received the results, they advised us that they had taken jobs in Vancouver for public accounting firms at significantly higher pay.

We are a training office, so we do have regular turnover like that, but there's been significant turnover. My main worry the last few years has been at the more senior level.

M. Karagianis (Deputy Chair): I do have a couple of questions. The $200,000 for capital expenditures that is kind of separate item — can you elaborate a little bit on what exactly those expenditures would be?

W. Strelioff: Yes, members. It relates mainly to IT acquisitions — computer equipment — and furniture and those kinds of things that are a regular part of just maintaining an office.

M. Karagianis (Deputy Chair): So the IT expenditures…. Is this part of a kind of ongoing expansion? I'm aware that many of the kind of programs you might be using often need to be upgraded — probably equipment upgrades and that kind of thing?

W. Strelioff: Christine Davison, who's in charge of our corporate services, was speaking, but she's not here to speak on the record.

It mainly relates to servers that we acquire — IT servers and IT equipment — that are required just to make sure that our corporate service capacity works but also that our auditors, when they're in the field examining IT issues and electronic information systems, have the capacity to do their job.

M. Karagianis (Deputy Chair): I do have several other questions, if I may continue. Excellent.

In the risk analysis portion of your presentation you actually cover kind of a vast number of topics, and I see that you've added some new responsibilities to that risk analysis. In the case of things like cost overruns that we're seeing with situations like the RAV line and much of the major capital construction that government's involved in, there are sort of natural cost overruns occurring because of the shortage of construction equipment and personnel. In cases like that, and maybe just generally, what kind of recommendations do you make, and how are those implemented? Is there an oversight afterwards on the implementation?

W. Strelioff: Good, difficult question. Our main work on the capital construction side has been to ensure that management provides a clear description in a public way of what their financial commitment is at the planning stage so that when they do so, then there is a basis for comparing what the actual results are.

On the Olympics side we have asked, through our original Olympic examination, to make sure management is clearly explaining and publicly reporting on its costs, and we've used that as a mechanism for helping to ensure that those projects are managed in the best way possible. We haven't carried out a recent examination of a complete capital construction project.

W. Strelioff: It's a time-intensive audit, so in terms of utilizing our scarce resources, we've positioned our expertise at trying to ensure that if a government organization will report in a robust way on how it's managing its capital…. Pushing that button, it's more likely that it will be managing its capital construction projects in the best way possible. Taking the premise that if an organization can report in a robust way on how it's managing — a very robust, forthright way — it's more likely that it is actually managing it well. But in terms of the resources required to carry out extensive examinations of specific capital projects, we just don't have the capacity to do so.

M. Karagianis (Deputy Chair): So under this new budget, then, Wayne, are you looking at ways to expand your capacity to do exactly that — to carry out more in-depth analyses of things like these capital projects, of government expenditures generally? You know, there's some criticism, certainly, in the public around government's ability to manage, I guess, and publicly report out on some of these cost overruns or projections of cost overruns. Will some of this increased funding for you give you more capacity to do that?

W. Strelioff: It will give us more capacity, but the main strategy we're using and seeking advice from you on is to focus on the quality of the performance information that is being provided publicly on the planning of projects and all the way along to the completion of projects. Again, the premise is that if an organization is reporting to you and the public in a robust way on how it's managing its costs so you know whether the plans are being fulfilled and to what extent, it will more likely be managing those projects better.

M. Karagianis (Deputy Chair): Just two further questions, one pertaining to this.

In the case of where you would be doing ongoing risk analysis, do you in fact make recommendations to projects or the government ministries saying that there do need to be some significant changes or re-evaluation of projects because they are going to run into serious cost overruns or have not appropriately planned for

changing conditions within the marketplace? Do you make those recommendations along the way rather than at the end of a project?

W. Strelioff: Yes, we do. But most of our focus has been on programs rather than capital projects — for example, where we did an examination of chronic disease focusing on diabetes. We were focusing on what you need to do to make sure that cost is managed in the future in a stronger way.

When we looked at the alternative payment program to doctors…. The alternative payment program means that doctors get paid in two ways. One is fee-for-service, and the other is payments for more time-intensive services. We concluded that the information systems and program management within the ministry was archaic and inadequate and needed to be strengthened to make sure that the alternative service payment program was managed in a way that the results expected to be achieved were being achieved in a cost-effective way.

Our focus in the most recent past, and certainly the projects that are underway now, is more related to the programs of government rather than to capital projects. On the capital projects side, again, we're focusing more on trying to ensure that government reports its plans and its performance, thinking that if it does so in a robust way, it's more likely that it will be managed well.

M. Karagianis (Deputy Chair): My last question is with regard to one of your earlier statements about cost recovery, that you were no longer auditing B.C. Investment Corp. That has definitely affected your cost recovery. Can you elaborate on that a little bit for me?

W. Strelioff: The reason we're not is…. We have been their financial statement auditors since its inception. We do, in general, have a policy of rotating, which means moving from one organization to another. In the case of BCIMC, I found that the audit was straining our capacity. It was about a 5,000- to 6,000-hour audit, and it has a March 31 year-end. I was finding that because there were so many resources required at a specific time of the year, we really didn't have the size of office where we could continue that examination. So I met with the board there, the audit committee, and suggested that they tender it out to a private accounting firm. We worked with the BCIMC to make sure that the tender was as robust as possible. Then I've stepped away from it for now.

I'd like to talk about charge-outs. I understand that one way you can fund your operation is through charge-outs, which are basically recoveries of your costs. In your budget you propose that it'll be $1.94 million, slightly below what it has been in the past, and the various reasons for it. In your note in your funding table you say that revenue from recovery funds are worked on, on a fee-for-service basis at market rates or rates set to recover costs, whichever is lower. How often do you review your recoveries, your charge-outs? What is the rationale for the policy of the lower of…? Would we not want to recover at market rates as far as possible?

W. Strelioff: Members, we review them every year, and in most cases those reviews take place, at the end of the day, with a meeting with the audit committee of a board of directors. By the way, that's one of the reasons I'm going to my meeting this afternoon. It relates to reviewing the audit fees.

The rationale between lower of costs or market. We try to keep our costs at market so that if a school board or a university or a college is having us as their auditor, it's a similar cost to hiring somebody else. So we try to keep it at market. In cases where our costs are lower than what we understand as being the market, we charge less because, in general, we're not there to make money. We're there to recover our costs and make sure that we do the best job possible. In some cases our charges are more than our understanding of market. Sometimes they're about the same, and sometimes they're less.

J. Yap: To follow up on this, how much control do you have over the charge-outs? Are you able to up-sell an increase on your recoveries so that audit committees would continue to use your service as their auditor?

W. Strelioff: In almost all, I think, of our individual financial statement audits, the fees that we have been charging are increasing. Almost every time…. I don’t know if it's every year, but certainly every two or three years we go into the audit committee meeting and say, "Here's our proposed costs, and here's why they have changed from last year," and almost without exception they are increasing.

J. Yap: I acknowledge that you're not a profit centre, but would you say that there is potential for your office to increase its source of funding in this area — that if you were to take a more aggressive approach to your charge-outs, the uplift in appropriation may be reduced?

W. Strelioff: In general, because we're the Auditor General's office, we'd probably have quite a bit of leverage in terms of determining what the prices are. But we want to have the least costly audit as possible in the most effective way so that organizations are paying for the service they're receiving. In terms of the underlying philosophy of the office, we don't use the reputation of the office as a way of charging more. Our charge-out philosophy is to recover our costs.

E. Price: Perhaps I can add to that answer. Because of the impact of the new standards that Wayne referred

to in his presentation…. As those filter through the system — and they will take a number of years to really kick in — they will have the impact of putting, I think, considerable upward pressure on our costs and on the fees that we charge in any event. I would expect that over the course of the next few years, there will be considerable pressure and, likely, uplifts in the fees because of the impact of those new standards.

W. Strelioff: But our costs will increase as well. That's why the fees increase.

S. Shum: Popular question. Our cost recovery is only for a very small aspect of our business, so we're talking 1.9 across a $10 million budget. If we were to contemplate that approach, there's only so much you could increase it to, to deal with the overall work of the office.

J. Yap: So you're asserting that as far as other opportunities for cost recoveries from other audit work — work that you're doing for entities within the GRE — you're maximizing the opportunity for cost recovery.

W. Strelioff: In general, when I step back from this issue, I often go to a position where we shouldn't be charging fees at all. We work for the Legislative Assembly. We don't work for management. Charging fees at the various organizations has the awkward relationship that you're working for management rather than for you as legislators. In many offices across the country all the audit costs are provided through an appropriation of the Legislative Assembly. That strengthens and keeps in place that independence issue.

Now, our fee-for-service arrangements are not that large, but in managing that, I'm always wary of the relationship between my senior staff and the board or management. So when I step back from this issue and try to think through the role of a legislator, I'd be worried if your auditor was more and more developing fee-for-service arrangements with management groups, because the dynamics are different then. Who you work for is different. You need to make sure that to the extent possible the person you work for in terms of parliament — the Legislative Assembly — is who pays.

The reason we put in play the fee-for-service arrangements across the provincial public sector was mainly to make sure that as management groups or boards are experiencing choices between our office and, say, a public accounting firm, there would be as little cost difference as possible. We didn't want one organization to have a sort of unfair advantage because the Legislative Assembly paid for the costs of the audit at UBC, whereas at Simon Fraser, Simon Fraser had to pay for that.

Just keep that in mind when you're thinking fee-for-service, because certainly, as the auditor, I'm always wary about the extent to which our relationship with management groups is changing.

J. Yap: Focusing on the lift that you're looking for — $800,000 to maintain capacity and $500,000 to expand the scope. On the $800,000, how much of that would you be able to identify as status quo that you have to have to maintain your present level of coverage?

W. Strelioff: Members, I apologize a little bit for my not being able to immediately respond. Yesterday the other committees put me through a lot, and I don't know how you do it in terms of constantly answering questions in public forums. But regardless….

Primarily, the $800,000 is to allow us to maintain the capacity that we have and, really, to make sure that we're addressing all the quality control issues that are increasingly happening. But it's also to provide more timely examinations related to how well government manages — for example, the ability to examine, to do the Olympic update or IT audit examinations. It primarily relates to maintaining the capacity we now have and to do so in a strong, robust manner.

J. Yap: That sounds like more than status quo. You refer to "more robust" and "more timely." Let's assume that we are going to look at a modest increase, as opposed to acceding to the total request. I guess what I'm asking is: what is your must-have to maintain your current service level?

W. Strelioff: We broke up our funding proposal increase into two components: the $800,000 and the $500,000. The $800,000 is to maintain the capacity, and the $500,000 is to be more of service to you. In general, if you decide not to provide an increase to our office, where we will not do work relates to the work in financial statements related to the quarterly reports. I think that's an important initiative for the future, but we wouldn't move on that.

Related to the performance reporting, we have in our plans intentions to begin to examine the accuracy of information in performance reports. So when you do receive a service plan or a service plan report, let's begin to examine whether the indicators, the measurements that are in there, are accurate.

On the risk audit side, for next year we wouldn't do an update on the Olympics. We would pull back on our intention to examine the integrity of the forest revenue system and delay work on climate change and how it relates to the pine beetle infestation. In our follow-up work we would delay and defer.

So that, in general, if we don't have the capacity, is where we will move back to. In terms of sustaining the capacity to carry out the work, the $800,000 was designed to do that.

In the last couple of years you've asked for capital budgets of $200,000, and your usage has been within that. So you have, roughly, in the last three years almost $110,000 in unused budget. Of the $200,000 you're requesting now — you mentioned technology, etc. — do you think that you would need the full $200,000 or, as in recent years, somewhat less than that?

W. Strelioff: Our best estimate is the $200,000. It doesn't envision significant change in capital. It's just making sure that when servers break down or that we timely replace servers and IT equipment…. To the extent to which the appropriation is not used, we would return it. As you can see in our general appropriation in some years — in quite a few years — when we didn't make use of those funds, we'd return it.

J. Yap: It just looks like you have a history of living within your budget, which is a good thing.

J. Yap: Or one could say that you're asking for more than you need. But we'll leave that for now.

W. Strelioff: Well, when you get an appropriation, you have to make sure that you manage within. For example, some of the returns on the general appropriation — the unused funding — was making sure that we knew halfway during the year that, say, next year we were going to get reduced funding. What we did was not build an infrastructure of people during the year so that next year we don't have to let them go. So at the end of the day, we return unused money. The capital is just mainly an estimate of what the routine office furniture and IT equipment needs are. It is an estimate, and if we don't use it, we return it.

J. Yap: My last question, Auditor General. I understand that your office does not have an internal audit program. That came to my attention through the recent process that we've gone through in terms of reviewing the appointment of an outside auditor for your office. Without an internal audit program how do you, as the Auditor General, assure yourself that you have a sufficient level of internal controls over the sizeable operation that you have — $9 million–plus budget, 90 employees — and that your group is performing as effectively as they should be?

W. Strelioff: Good question and always a constant concern for me. We are a group of auditors. The extent to which we second-guess and challenge what we do and how we do it is just some days beyond belief — in a good, healthy way. But we are a group of auditors. Errol Price, my deputy, is in charge of quality control within the office. We have a professional practice person whose sole responsibility is to make sure that our work is carried out within the required due diligence. We have a strong corporate services group that challenges what processes we use and are constantly trying to improve.

We also have put in place a continuous improvement in the quality of our own performance reporting, so we're always trying to make sure that we're leading by example in terms of how we report on our own performance. As you know, part of the RFP request is the requirement to actually audit our own performance report. That will move us in terms of challenging our own practices.

In addition, the Institute of Chartered Accountants of B.C. licenses us to train students and carry out our practice. They do performance reviews of our audits. They've just finished one this fall and have said that our practices are sound and strong and were quite complimentary in terms of how we carry out our examinations.

We also have peer reviews where another Auditor General office will come in and review our practices to make sure they're as strong and sound as possible. We do walk the talk in terms of examining our own practices, but we don't have the size of an office that would justify an internal audit group. It's not a sufficient size, so we use different kinds of mechanisms to make sure that we're doing the best job possible.

J. Kwan: I also have a number of questions, and then I have some comments as well. Then, of course, at the appropriate time I'd be ready to make recommendations for the committee based on the Auditor's presentation today.

First, I want to actually go back to the question that was first asked about recruitment and retention and the issues related to it. I note from last year's reports to the Finance Committee that part of the issues are recruitment and retention. Last year it was at 25 percent. This year it has dropped to 20 percent in your presentation. The 25-percent turnover in all the staff was a result of reduced funding, the early retirement of senior executive officers and the loss of experienced professional auditors recruited by the provincial public sector and elsewhere. So this year it has actually dropped slightly to 20 percent, it appears to me. That's probably a good thing.

Related to that, though, I'm wondering. In the case where you have lost people, whether it be to early retirement or to other sectors — and particularly to the private sector — is it the practice of the office to re-engage these individuals on a contract basis? Is that something that your office has undertaken?

W. Strelioff: Yes, we have that, particularly related to our work on the financial statements at March 31, where there's a lot of work in a very limited period of time. We have engaged former staff people who retired a couple years ago, and we also engage people on a continuing basis. Each year they come back for that, and that has been very useful to us. In other cases people have left the office to gain experience in other or-

ganizations and have come back to be re-employed in our office, which has been very valuable as well.

E. Price: I was just going to say that the significance of the turnover — and it fluctuates from year to year, but I think it has been at about the 20-percent level for the last three or four years — is that it's becoming increasingly difficult to replace people. Again, as Wayne referred to, it's a very hot market, particularly for accounting professionals across North America. So we're having to work increasingly hard to attract people to Victoria. Certainly, we have the benefit of a great location, a great environment, but that only goes so far. That's really where the concern is. It is now and will in the future be a significant challenge to replace people.

J. Kwan: Is the recruitment-retention issue primarily related to benefits packages and salary packages, or is it some other reason?

W. Strelioff: There are a number of reasons. There are the salaries. Victoria has a limited…. If you move here, there aren't that many other opportunities to move around, compared to Vancouver or Toronto.

J. Kwan: I'm just wondering, you know, in terms of the factors. Certainly, I can appreciate the issues around growth opportunities. Mobility, if you will, may be an issue as well.

Okay. I'd like to just canvass some questions related to the issue that you mentioned in response to Maurine, I believe, around government's capacity to manage capital projects, in your words, in a very robust way. You were suggesting, if I understood you correctly, that if government manages capital initiatives in a robust way, then chances are that they're managing effectively. Therefore, the issue around audits from your office with respect to capital projects, aside from the resource question, may not be as pressing, because if government's doing a good job, then the requirement for audits may be lessened.

From that perspective, can I just ask this question: is it your view, then, that the government is in fact managing the capital projects that the province has undertaken in, in your words, a very robust way?

W. Strelioff: Members, what I was trying to explain was that if government publicly reports clearly how it is planning and managing capital projects — if it explains itself in terms of how it's managing inflation risks, project timetable risks, in a very clear way, in a public, forthright way — and we as an office challenge the way they report how they're managing their responsibilities so that their public reports are as clear and robust as possible…. By positioning our energies and resources in that way, we think it's more likely that the organization or government is actually managing the projects well.

In general, if you're able to explain your performance and how you carry out your responsibilities very clearly and do so in a public report in a very robust manner, our experience is that it's more likely you're managing your responsibilities well. But it's not going directly at whether they are managing their projects well. It's trying to get a lot of leverage out of fewer resources in terms of positioning our resources.

The experience that we have says that if an organization can report on its performance in a good, clear way, that's a really good signal that it's likely managing well. If it can't explain its performance, that's probably a good signal…. If it's reluctant to or if it's vague or if it has incomplete information in its performance reports, it's likely that there's a problem in the management side. So it's taking that tack.

I know we also have examined how capital projects have been managed in a direct sense, and those examinations are very resource-intensive and require a lot of skills to be brought to the table. That's where we're positioning…. Now, as a result, I cannot say that I think government is managing its capital projects well.

J. Kwan: Okay. That brings me, then, to this question, because capital projects and cost overruns are huge issues, looming issues, from a variety of places with a variety of factors, whether it be the skills shortage issue, whether it be increased costs in terms of actual material costs and so on. There are significant numbers of capital projects that are out there, not the least of which is the Olympics — a variety of Olympics capital initiatives.

Most recently I read talk in the paper about the need for increased provincial dollars to be invested in the Olympic Games. As committee members know, the province is on the hook for pretty well everything. We have indemnified everyone in spite of the fact that issues were raised around that. We can go, I suppose, knocking on doors with the federal government, but they could pretty well just tell us to go fly a kite, because they're not responsible. Ultimately, the province has indemnified everyone, and we're on the hook.

Based on your report that came out of, I guess, the earlier look into the Olympic bid, the contingency dollars that were assigned and had been allocated to the project…. Perhaps you haven't had the time to review this, but I wonder whether or not…. Do you have an opinion at this stage on whether or not the dollars assigned out of the contingency for the Olympics would actually be able to cover the projected cost overruns? Alternatively, if that hasn't been evaluated — and I fully understand if you haven't had an opportunity to do that — is your workplan going to be such that it would include that work so that the taxpayers will actually have a sense of where things are at?

If the premise is that we want to assess how well the government is doing in managing on these issues — whether or not they're managing robustly — then it needs to be public. We know that the Olympics and all the goings-on with the Olympics are not public. None of that information is available, and none of it is actually accessible through FOI, which is why, with the previous committee, we very much urged the government and wanted you and the office to be the auditor on that so that there is public accountability. We don't have that right now, because the government chose not to do that.

In any case, though, you do have the authority to go in to review these matters. I'm just wondering: with the issues around cost overruns related to capital projects and the concern that has been flagged around the government's reluctance in public accountability with respect to the Olympics, what is your view on the contingency side of things?

B. Lekstrom (Chair): Members, I'm going to try and bring us back. We are on a time frame today and trying to focus, actually, on the presentation that the Auditor General has brought before our committee and our responsibility here. I want to make sure we can get through the questions from the committee members. I think we're straying somewhat.

The presentation that was put forward, we have been asked by the Legislative Assembly…. We're going to review this presentation by the Auditor General. We will review the dollars requested, the lift in the budget, the reasons you've put forward. The committee will have full discussion on that and make a recommendation to the Legislative Assembly. I do believe we're straying somewhat from the mandate of our committee at this point.

With time looming, I'm…. Jenny, if you'd like to, respond, but I'm going to try and move this committee forward.

J. Kwan: With all due respect, Mr. Chair, the document and presentation before us deal with the Auditor's budget. That ties into his workplan and his capacity to do the work. Our view, the legislators' view, ought to be whether or not he has the capacity to do the work required, and that's to ensure that accountability is in place on behalf of all British Columbians relative to the government's work.

This question, I think, is central to that. There are huge dollars being invested in the Olympics. I think British Columbians have the right to know whether or not there's accountability there with respect to that. If we're going to be talking about the Auditor General's budget, we need to know whether or not his workplan can include some of the items that I think need independent scrutiny. I'm not confident that is necessarily the case, so therefore, I'd like an opinion from the Auditor General to advise this committee accordingly so that this committee makes a decision on the recommendations and the budget for the Auditor General's office with eyes wide open.

B. Lekstrom (Chair): I would certainly hope any committee enters into discussion with their eyes wide open to make the decisions on behalf of British Columbians. That's key.

Wayne, if you can address this in a timely manner, but we are going to move forward. I have a list of speakers. I have Gordon, Richard, Dave and Nicholas yet to get through. We have three other officers today to be brought before the committee to discuss their plan. It is the intent of this committee, as I indicated at the beginning of the session today, that we will hear from all of our statutory officers. We will then reconvene a meeting of the committee at a future date to discuss and make recommendations based on what we've heard.

W. Strelioff: Members, currently we are carrying out an examination of the Olympic project. We're planning to report in February or March. What we will be reporting is: compared to the plan tabled two years ago, I think, where are we in terms of costs, project scope and timetable?

J. Kwan: Then, to continue on the question around the budget, will the budget increase which you're seeking through this presentation allow you to do the work that is required, more particularly in the area of capital projects and the oversight of capital projects — whether or not the government is managing well with respect to capital projects and potential cost overruns?

W. Strelioff: Our current workplan does not envision much extensive examination of capital projects. I mean, I'm hearing that you members as a committee want us to do so, and accordingly, we will listen and consider how that can impact our future work program. But currently, our work program does not include extensive direct examinations of how capital projects are being managed.

W. Strelioff: The Olympics. We will be carrying out an examination now on what the costs are, the scope and timing, but we will not be examining whether the projects are actually being managed effectively. We want to make sure there's a clear accounting of where they are.

We're doing that now, and if you do approve our recommended funding, we'll also be doing another examination of that next year and then the next year and the next year, until the Olympics are finished. Once the Olympics are finished, we'll do another examination of what happened in terms of what was planned and what ended up.

J. Kwan: In your presentation to committee members you talked about the importance of doing reviews

on a timely basis. For certain things time is of the essence, and if you can actually catch them, you could potentially make a significant difference in terms of which road it heads down. Would the Olympics not be one of the projects where you want to ensure that the oversight is in place and that government is managing the project effectively, as it is far out in 2010, so that we don't end up in the situation where, after it's all said and done, 2010 has come and gone, and then we discover an array of problems associated with it. Therefore, in your workplan relative to this budget, does the budget allow you and give you the capacity to do that?

W. Strelioff: Yes, it does. It does give us the capacity to do annual reviews of where we are on the Olympics compared to plan. The plan said that the total financial undertaking was going to be X hundreds of millions of dollars or billions of dollars. Here's where it is as of December 2005. Here's how it is December 2006, 2007, 2008, 2010, and when the dust settles, here's what actually happened in terms of the financing and project costs and scope and timetables once it's complete. So we do plan within our work program to carry out these examinations of the Olympics.

J. Kwan: Okay. And if you don't get approval for your funding request, then it's safe to say you would not be able to carry out the work that's required.

W. Strelioff: This examination we're doing now relates to '05-06. It's the ability to do another examination in '06-07 and '07-08. We have reorganized the office so that we are carrying out the examination of the Olympic undertaking right now. That's for '05-06. This financial proposal talks about '06-07 and '07-08.

I certainly do agree with you that continuing monitoring of this Olympic undertaking is important. That's why, at the outset, we got involved in the bid itself. We wanted to make sure there was a clear description of what the promise was so that there would be a basis for everyone to hold those responsible accountable.

J. Kwan: Just to be clear, based on last year's report, the appropriation that was requested was $7.67 million. That was to offset…. Actually, I'm just going to quote the report directly here:

Building on that, with this funding request — just so that everyone's clear — what it would allow for is for you to maintain the work that you're doing now within your office and, in addition, allow for limited scope of expansion into other areas — namely, the aboriginal issues, alternative service delivery initiatives, economic cost drivers and electronic information systems.

W. Strelioff: Yes, the proposal is primarily to rebuild the capacity that we have lost and to make sure that the current scope of work that we do is done, continues to be carried out.

J. Kwan: And the capacity that you've lost was as a result of the budget cuts and was reduced by approximately 15 percent since '02-03?

W. Strelioff: Part of the capacity loss is the funding. It's also losing experienced people. That's also a capacity problem that we're rebuilding — and providing experience for new people to become more experienced.

G. Hogg: With the independence of your position and your ability to develop your own workplan, I assume that with whatever resources you're given, you have a hierarchy of programs that you want to address and you place some value, some judgment, applied by your office to determine what those projects might be. I assume that you have within your workplan a list: here are the things that I think are most important with respect to government, second most, and that hierarchy goes on. Wherever the budget line is, you do those which are of greatest importance. Is that a fair interpretation?

G. Hogg: Well, as I go through those and look at those, I'm struggling to try and find some reference points for me to make some judgments with respect to your budget applications. There are some principles laid out within this, and I've looked at those principles. I'm also interested in whether or not there are some reference points that might be able to be applied.

As an example, we often look at reference points within other jurisdictions — perhaps other western democracies that utilize the Auditor General position. Are there standard scopes that might be applied within those? I recognize that the nuances of different jurisdictions and what occurs in jurisdictions will temper or change those to some degree, but are there reference points in other jurisdictions that would say with a budget of $41 billion, or in that range, that we would look at this range of things? If you used goal attainment scaling, a low might be here and a high might be here. Is there some reference that we can apply other than the principles which you have given to us?

W. Strelioff: There's no standard benchmark on what to do, but we can provide you, I think even now, a comparison of the funding of our office compared to other Auditor General offices across Canada on the basis of two benchmarks: (1) as a percentage of government expenditures; and (2) on a per capita basis. That's one way of assessing: to what extent does this office have the appropriate capacity? It doesn't provide a magic or automatic answer, but it gives you a reference point. Would you like me to provide that to you now?

G. Hogg: Perhaps you could circulate it, and I could continue the question, then.

Secondly, you talked about the $800,000 to maintain current capacity. As I heard you describe that $800,000, it seemed to me, consistent with my previous question about you having a hierarchy of work that you would do, that somehow that $800,000 exceeded the current workload, because you talked about new areas that you would venture into.

Can you help me to understand the $800,000 and how that affects current workplans, or is my interpretation wrong? As I heard you describe it, it sounded to me like you were saying, "Here are the new things we would take on," yet you were describing it as maintenance. I had a little bit of a disconnect with respect to that.

W. Strelioff: I think the disconnect might be that each year, particularly, our risk management audits change. Right now we're looking at Pharmacare and managing drug costs, while next year we're going to be looking at how the government manages or administers treaty negotiations. It has a similar quantum of work, but it's refocusing to try to move through all the different areas of government.

Another area that we're planning to examine this coming year is children and youth mental health programs and how we're managing those programs, whereas in the current year we're examining how the health system is managing infections. In terms of a quantum of work, it stays the same, but it's redirecting to different areas of government so that we examine as many possible areas of government over a period of time. Does that help?

G. Hogg: No. I'm sorry. I must be missing something in that. My question was about the $800,000 and your description of the $800,000 and saying there was a baseline of work that you were going to be able to do — that the $800,000 was going to allow you to work within that baseline. Yet as I heard you describe that, you described the quantum of things that you were going to add to. So my disconnect was your saying: "This is a baseline — $800,000 — to get the baseline." Yet you said there were a number of things you were going to do on top of that. So that's my disconnect, or that's the part I didn't understand.

E. Price: Last year when we proposed a series of uplifts over a three-year period of $600,000, $800,000 and $600,000, the fundamental concept behind that was to allow us to rebuild our capacity to where we'd been prior to having the 10-percent and 5-percent budget cuts that we had, recognizing that over the period of that three years, to get back to where we were — there had been some changes in professional standards — we had to run faster.

In terms of getting back to the capacity that we lost, we talked about the impact of professional standards. We talked about wanting to do more in the way of risk management audits. Now, in terms of is that new work that is really…. Again, it's trying to get back to the capacity that we had three or four years ago.

G. Hogg: Let me see if I'm understanding this. What you're saying is that you might be doing an audit of…. You referred to diabetes and the issue of diabetes. Because of the changed standards, because of the quality of the standards under GAAP or the principles you're applying, there is a more rigorous application of the work necessary to be done within that framework. Therefore, to do the same thing because of a new application of standards, there is more work. Is that a fair interpretation of what you're saying?

What is the test you apply to determine what types of audits you're going to do? So there are lots of things flowing around in a $41 billion budget. At some point, I guess, you must sit in your office, and you need that independence to be able to make the determination of what type of audits you're going to do.

What are the tests you apply? Or are there standard tests that are applied in the Auditors General world that say: "These are the things we're going to look at, and here's why"?

W. Strelioff: The tests are described on pages 12 and 13, where we described them as decision screens.

The first decision is to have three lines of business, in terms of examining financial statements, quality of risk management and the quality of performance reporting. So that sets the first screen. The second screen is that we can't cover all parts of government; we're just not big enough.

G. Hogg: Sorry to interrupt, but how would that screen help me decide whether or not I wanted to do a review of diabetes treatment?

W. Strelioff: The second screen is that we organized our office in a way that covers the main programs of government: health, education, finance and natural resources. So now we're moving into health. Within health, we look at key issues that relate to health. It could relate to, in this case, aboriginal dimensions, alternative service deliveries, economic cost drivers…

G. Hogg: So, say, the Olympics, which I think all of us think is a big issue. You have the independence to go and look at that. How would you make a determination that: "Yes, I should look at the Olympics, or maybe diabetes is more important"?

What are the tests? Those screens don't help me to understand: "Gee, this is something I should look at." How do Auditors General decide that this is really important to the people of this province and to the Legislative Assembly to understand this? How do you look at that?

W. Strelioff: To you, to legislators, to the public — to understand what risks that will have to the future financial capacity of the government, to the future public confidence that government is managing well. We listen. We see that the Olympic issue is on everybody's mind, so we step back and say: "Is there something we can do to make sure that this is managed as well as possible?"

G. Hogg: I understand how you listen to us. That's probably one of the hazards of your job, having to do that. How do you listen to the public? Do you do polling? Do you read the newspaper? How do you know what's going on out there? We often have trouble knowing what's going on out there, and I'm just wondering how you're able to determine that.

W. Strelioff: Well, the way we determine what's out there is because we have an office that has quite a bit of experience right throughout the provincial public sector. We are actively involved in all sorts of relationships with boards of directors and government managers and officials, and we do constant environmental scanning. That informs how we adjust our plans and priorities. Quite often during the middle of the year we'll change plans. We'll say: "Well, just a minute. Something new has come up. On a judgment call, it is significant. Let's redeploy our resources to get there."

G. Hogg: Are these environmental scans formally done? Are they a subjective process by just…?

G. Hogg: It's not a formal environmental scan as we might see often done by governments or by polling groups that will do an environmental scan. It's much more: what are we hearing, and what's going on?

W. Strelioff: We do look at the performance reports and plans of organizations, so that teases out what the risks are facing these organizations. That comes into the list of potential issues that perhaps we should examine. I do have annual meetings with legislators, asking them what issues they think we should examine. But you're right. At the end of the day it's a judgment call on what the key priorities are.

In the past we also had external advisory groups, pertaining to education and health in particular, advising us on what the key issues are that really need to be managed well and that perhaps an Auditor General can contribute to.

G. Hogg: You say on page 19 that you know the office is producing high-quality audits. I assume you know that as a result of…. Maybe I shouldn't assume. How do you know?

W. Strelioff: The main reason is that our recommendations are almost always supported, and they're implemented. When management comes to the table and explains what they think about our conclusions, findings and recommendations, they do so in a public way. Almost always they come to you and say: "Yes, what the Auditor General has recommended makes sense, and we're actually beginning to implement it." So in that feedback sense, we get a sense that what we're doing has had an impact on better management of public resources.

G. Hogg: Following that, you say that you're concerned about how little you're accomplishing in relation to size and scope of government-direct and government-related operations. I'm assuming that what you've passed out to us gives us a reference point for that. Are there other ways that we can understand what that means?

It seems to me that the crux of the decision you're asking me to make is about comparing the issue of baseline data maintenance and trying to understand the $800,000 versus maintenance. I think I'm starting to

get a handle on that. The other issue is about size and scope, and I need some reference points or some comparators. I don't know whether there's something in generally accepted accounting principles or comparators to other western democracies that will help me be able to make a judgment with respect to that. So far it seems pretty subjective in terms of that, and I'd like to have at least a reference point for the subjectivity or the values that reflect those.

W. Strelioff: There are three, I think, that you might think about right now. That is the information we gave you just now. It gives you a bit of a sense of what's going on across Canada in terms of legislators' support of their auditors.

The trend line on page 18 gives a sense of what has happened in the office. You have your own understanding of the complexity of government and how that's changed and the ongoing more focus on oversight of programs rather than delivery of programs, which emphasizes an even more dramatic need for an auditor office.

The other dimension that hasn't been discussed too much today is that our third line of business relates to the quality of performance reporting in government. We're just exploring now to what extent we should be providing you assurance that the performance reports of government are robust and credible. That's an area where in the future, you'll see a change in the scope of the work of the office. Right now it's just in its exploratory stage. The first two are in terms of the trend lines for our office and in terms of how it compares to other Auditor General offices.

G. Hogg: I assume we may have to pick up on this and come back again. My final comment would be that I've sat on the boards of directors of a number of non-profit societies, 15 or 16 of them. I've always looked at my responsibility within that, not knowing the vast array of services that might be provided yet knowing that I was accountable for that as a member of the board of directors. I'm trying to draw some comparators between that role and this role.

One of the things we've done in the majority of the non-profit societies I sat on was move towards models of accreditation so that I could have some sense that there's an external reference that was coming in and looking at the services being provided. As a member of the board of directors, I could say: "Yes, the services being provided meet some international standards with respect to that."

I see that in some ways what you're doing is providing us with some of that type of assurance as legislators, because we can't know what's going on in great detail in this $41 billion worth of expenditures that exists out there. Is that a comparator that is looked at, or a fair analogy?

W. Strelioff: I think so. Comparing the responsibility of a member of a board — a governing person who has responsibility for the performance integrity of an organization — it's very similar to your responsibility here and wanting to make sure that your external auditor, your independent auditor, has the capacity to help you to do so, so that at the end of the day there will be as few surprises as possible in terms of what you should have known before making decisions.

B. Lekstrom (Chair): Well, members, we are actually over time right now. We do have three questioners left: Richard, Dave and Nicholas. I'm going to look to the members, and if it is possible, if your questions have been answered, or if you have…. I guess I'm looking for the time commitment that you'll need. If we do need further in-depth questioning, I think we're going to have to reschedule yet another meeting with Wayne.

B. Lekstrom (Chair): Wayne, I'm going to have to thank you. I think we're going to have to set up another time, rather than rush it. These are some significant decisions the committee makes on behalf of British Columbians and certainly on behalf of your office — the recommendations we'll have to put forward to the Legislative Assembly. So I want to make sure that members of the committee have enough time that they're comfortable their questions have been answered. We will work towards setting up a time that works for all of us. I know that time is important right now.

N. Simons: May I suggest that we consider a conference telephone. I don't know if that's possible under the rules.

B. Lekstrom (Chair): I think we'll probably come back together. We will have to have further deliberations after our discussions here today. Dave, you had a comment?

D. Hayer: I'd just like to say that with something like this, it's very difficult to do conference calling. If we just wanted to discuss only as members, I have no problem. If we have a witness, then we have to have a personal meeting rather than a conference call.

B. Lekstrom (Chair): It's certainly my intent as the Chair to bring us together — to have Wayne and your group, Wayne, come back before us.

With that, I want to thank you for taking the time this morning. I want to thank the members for their questions. It's certainly a worthwhile endeavour for our committee to be involved in this and hearing from you.

With that, Wayne, Errol and Su-Lin, thank you so much for coming out. We look forward to our next meeting. I'm sure you're looking forward to it as well.

W. Strelioff: Yes, I will be, actually. Thank you very much, and good luck in your other deliberations.

B. Lekstrom (Chair): All right. Thank you. We will take a five-minute recess and reconvene with our next statutory officer before us, which is our Chief Electoral Officer, Mr. Harry Neufeld. We stand in recess for five minutes.

B. Lekstrom (Chair): All right, we will reconvene the Select Standing Committee on Finance and Government Services and begin the next part of our daily agenda, which is the Chief Electoral Officer of British Columbia.

Mr. Harry Neufeld has joined us to go over the requirements put before our committee, which is the financial request for the statutory office.

Harry, I would like to thank you for being here today, and certainly, we apologize for the slight delay in time frame. But thank you for accommodating our committee with that. I will ask you to introduce the people that you've brought. The process we're using today, Harry, is that you will make your presentation before the committee, and then questions from committee members will be put back to you, if there is clarification needed or ideas that they have. Again, thanks for coming, and I'll turn it over to you.

On my left, on your right, is Linda Johnson, Deputy Chief Electoral Officer. Linda has been with Elections B.C. since the early '80s and is regarded by everyone who works at Elections B.C. as the walking, living corporate memory.

On my right, your left, is Nola Western, who is the director of electoral finance and corporate administration. She deals with all of those issues associated with candidates and political party financing rules, the spending limits, the disclosures, as well as everything to do with our organization's expenditures of funds on administration and the issues of dealing with our physical space and so on.

We're very pleased to meet with you and go through my office's budget requirements for the coming fiscal year. The format that we had in mind is that I'd like to give some introductory remarks to give some context for that 2006-2007 budget proposal, which is a document that you should have in front of you. It's a printed version of the same file that was distributed, I understand, late last week by the Clerk of Committees office.

For your reference, we've also provided a printed copy of our most recent three-year service plan and our most recent annual report. Those documents were provided to all members of the assembly when they were tabled in the Legislature on September 13 and October 3, 2005, respectively.

Following my general introduction, I will pass things over to Nola Western. She will begin a walkthrough of the pages in our budget proposal and will provide some further background information and explanation of the figures that are contained.

About two-thirds of the way through that document Nola will pass the discussion over to Linda Johnson. Linda will describe the fiscal implications of what I believe are the urgent electoral event–related priorities of the coming year.

Once Linda is finished, I will provide an overall summary of our fiscal requirements for 2006-2007, and then all three of us will be happy to answer any questions that members may have. Even allowing some time to go back and get some more lunch, I think we're going to have 45 minutes for questions and an open discussion. I trust that this format is acceptable to the Chair.

H. Neufeld: I realize that the electoral events of May 17 may be starting to seem like a distant memory to the members of this committee. But I assure you that for the staff of Elections B.C., the 2005 election and referendum aren't over yet. Personnel in our warehouse are unpacking the last few dozen of over 300 shipping containers of electoral supply materials that were sent back from the 85 temporary field offices we had open from April through June earlier this year.

Approximately 380 financial disclosure reports, out of 712 required reports that were all received from registered political parties, candidates, constituency associations and advertising sponsors, are still under review as we await additional information from financial agents.

Earlier this week all the material for the first draft of my statutorily required report on the election and referendum was collected. I'm advised that it will be shaped into something ready for my edit review over the Christmas holidays. In two weeks' time we are meeting with representatives of the four political parties represented on the election advisory committee to begin formal discussions on recommended changes to the Election Act. Reaching detailed agreement on the full range of amendments that party representatives and senior personnel in my office believe to be necessary for the next election will require a series of meetings and many in-depth discussions. However, we're

aiming to have a report on recommended Election Act amendments tabled in the Legislature not later than next March. In fact, we're working hard to wrap up all aspects of the referendum and the election by the end of the fiscal year.

In the past two months much of the attention of my senior management team has been diverted to analysis of the far-reaching impacts that Elections B.C. will face arising from four commitments made in the September 12, 2005, Speech from the Throne.

First, the throne speech committed to the creation of an Electoral Boundaries Commission, of which I am a member, to determine new boundaries for up to 85 electoral districts in the province.

The Boundaries Commission is also mandated to determine the boundaries under a proposed B.C. single transferable vote system and to specify the number of members to be elected in each of the multi-member ridings according to design features set out by the Citizens' Assembly on Electoral Reform.

That work is set to formally begin next month, although I have not yet been advised on the appointment of the other two members of the commission. All of the work associated with setting out the boundaries under the current single-member-plurality system, as well as the BCSTV system, must be completed by February 15, 2008.

Second, the throne speech outlined that the proposed boundaries under BCSTV will form part of a new debate on electoral reform, leading to a provincewide referendum, which is to be conducted in tandem with local government elections scheduled for November 15, 2008. Government-funded "yes" and "no" committees will help inform the public debate, and the presence of such groups will be a first in British Columbia referenda. The threshold for adoption of the new electoral system will remain at 60 percent of the popular vote, with majority support required in 60 percent of the province's current 79 constituencies.

Third, the throne speech commits to the conduct of a full enumeration of voters prior to the scheduled 39th provincial general election on May 12, 2009. And finally, fourth, the throne speech mandates that the 2009 general election in British Columbia be conducted under either the single-member-plurality system or under the proposed British Columbia single transferable vote system, depending on the outcome of the referendum.

The reality that my organization is dealing with is that Elections B.C. needs to build the capacity to run a full enumeration of voters, conduct a provincewide referendum on electoral reform, fully implement a boundary redistribution under two different electoral systems and be ready to administer a provincewide general election under two very different sets of rules. Because there will only be four months between when the referendum is concluded and the writs of election are issued, comprehensive advance preparation for both scenarios will be necessary.

It is because of the significant implications of the work associated with these four throne speech commitments that we are unable at this time to provide three years of spending estimates in the budget proposal we have provided to you. A great deal of research, planning and legislative development will be necessary before Elections British Columbia will be able to provide accurate estimates of the impact to our core annual operating budget as well as the budget for the various electoral events that we will deliver in the current electoral business cycle. We must undertake that important preparatory work as soon as possible, but my office needs additional resources to fund this work in fiscal year 2006-2007.

At this point, it is probably useful to describe, especially for the benefit of new members to this committee, what the distinction is between our annual ongoing operating budget and electoral event budgets. Our annual ongoing operating budget is what would be needed in a fiscal year if there were no electoral events to administer or to make significant new efforts to prepare for. Basically, this budget reflects the core costs associated with having electoral administration infrastructure in place, ready to run elections, referenda, initiative and recall petitions and plebiscites.

However, it is actually quite infrequent that a full year goes by without some kind of an electoral event occurring. In fact, my staff have trouble remembering the last steady-state, event-free year. On average, there is at least one by-election every two years. A year from now, recall petitions will again become a possibility. An initiative petition could be started at any time.

If we know what electoral event is coming — that is, it is a calendared event such as a general election or a referendum — we provide estimates of the expected costs of the pending events at the annual budget review we have with this committee. For the past four years the annual budget review for this committee has been scheduled for late November.

When an on-demand event comes along, such as a by-election or an initiative petition application, I write to the Chair of this committee and advise as to what the estimated costs of administration will be. Following each electoral event, it is required that I submit a report to the Legislative Assembly that outlines the proceedings, the results and the costs of that event.

In the past there have generally been follow-up meetings with this committee to review the budget associated with on-demand events that required additional funding, although sometimes this has happened after the event administration was complete. Legally this does not present a problem, as the Election Act provides statutory authority for my office to spend in order to meet the requirements of the act. However, the preferred process is to have this committee review event budgets in advance of us spending money associated with their administration and to recommend to the Legislature an appropriation vote sufficient to meet our changed fiscal requirements.

I'll now pass things over to Nola Western, and she can provide you with some further information to as-

sist your understanding of what is and isn't included in our annual ongoing operating budget.

N. Western: Good afternoon. As you've heard, the budget proposal document in front of you only includes the next fiscal year. Due to the significant impact of the electoral events and the throne speech projects, we're unable at this time to responsibly and reasonably estimate what we're going to need beyond fiscal '06-07. Other than that, it is only for the next fiscal year. The format of the budget proposal document is very similar to that of the prior few years.

Page 1 shows our statement of operations for the past two fiscal years. This statement summarizes the budget and actual spending for the last fiscal year and the actual spending for fiscal '03-04 by standard object of expenditure, or STOB. The actual expenditures include the costs of administering eight recall petitions in '03-04, planning and preparing for the recent general election, targeted enumeration and the referendum on electoral reform in '04-05. The '04-05 budget includes the $6.508 million ongoing operating budget and $7 million that was provided for those electoral events.

Since these numbers include the budget and expenses for the electoral events, it's to be expected that there are variances between the budgeted amount and the actual expenditures. Our detailed project plans for those events had not been prepared when the '04-05 budget was established in December of 2003. Even so, the $311,000 funding returned at the end of '04-05 represents a surplus of only 2.3 percent.

The summary ongoing financial outlook begins on page 2 of the budget proposal document. It shows the forecasted ongoing expenditures for the current fiscal year and our planned ongoing operating expenditures for next fiscal. As you can see, we are assuming no change to the funding level for our base operations. As this budget reflects our base ongoing budget, it does not reflect costs associated with the recent general election, targeted enumeration and referendum. In fact, we are still incurring some expenses in relation to those events as we continue and finalize our post-event processes. The costs of those events will be reported in the report of the Chief Electoral Officer on the 38th general election, which as Harry said, will be published in the late winter.

We have again shown the $6.508 million base operating cost by major line of business. Administrative costs such as salaries and benefits, amortization, building occupancy charges, office expenses and corporate information systems which support all business activities are shown separately. Notes on page 3 describe the nature of each of those business activities.

As you can see from the information on page 2, generally the planned expenditures are very stable. I have adjusted most items by 2 percent to reflect inflation, and 2 percent is the inflation assumption recommended by Treasury Board staff. Other changes to the budget between the current and next fiscal years are possible because of the reduction in amortization costs for '06-07.

At the end of this fiscal year most of the original investment in our electoral information system, or EIS, will be fully amortized or depreciated. EIS is comprised of the provincial voters list, the register of political parties and candidates, and other electoral information. It was built with 1998 technology and is clearly several years out of date. In fact, the software components of the electoral information system are no longer supported by the major software vendors.

We need to invest in migrating the system to a new platform in order to continue relying on it. However, technical innovation has meant that we will be able to change the EIS platform without having to redevelop the entire system. In fact, we believe that once EIS has been migrated to a new, fully supported platform, we will be able to use most of the system for the 2009 general election.

By minimizing the capital investment required for the re-platforming, we're able to lower our amortization costs and will thus be able to continue meeting the base budget target of $6.508 million for a third consecutive year. The reduction in amortization costs will allow us to absorb increased costs due to inflation, a salary increase for the Chief Electoral Officer, which has been approved by the Legislative Assembly, and to invest in additional staff resources. The increase in salaries and benefits shown on page 2 is partially due to the 2-percent inflation factor I discussed a few moments ago and partially due to a planned increase in our base staffing levels.

In 2001-2002 we began an office reorganization, which was completed last year. As a result of the restructuring and workforce adjustments, several positions were eliminated, and many staff took one of the government's voluntary departure plans. Our complement of full-time-equivalents — or FTEs — was reduced from 48 to 30.

We've since concluded that we have to invest in additional positions. Essentially, we reduced too much, and the risk is too high when the knowledge and experience is invested in too few individuals. Therefore, our salaries and benefits estimate for 2006-2007 includes funding for eight key additional positions. These positions will fill fundamental gaps in the organization. Building occupancy charges are planned to increase, based on the lease costs provided by the B.C. Buildings Corp.

You will also notice that office expenses and telecommunications will increase by more than 2 percent. This is due to a need to increase staff training and development, which has been cut over the last few years, and to continue development of an electoral technology accord with the other Canadian electoral jurisdictions. Excellent progress on developing common data models has been made to date, and we hope that the technology accord will allow us to share technologies with the other electoral agencies and, in doing so, realize efficiencies and effectiveness.

District electoral officer fees are currently $50 per month per DEO. DEO appointments expired six

months after general voting day, so for this fiscal we were only paying them for part of the year. Next year we return to the full year of expense.

During 2005-2006 our ongoing address and boundary maintenance work slowed down as resources were concentrated on delivering the three electoral events. However, '06-07 will again see an increase in that work, and so you see a planned increase of $50,000 in that area.

Voters list maintenance costs will actually decrease next year as a result of rehosting the electoral information system. The rehost will allow us to stop paying for support of a UNIX environment for EIS, and our overall common information technology services — or CITS — mainframe charges will be reduced significantly as we reduce the reliance on the mainframe for the provincial voters list system and reporting.

As I advised last year, costs for political entity registration and reporting will increase in 2006-2007 because of the need to hire additional and temporary staff to review the annual financial reports of political parties and constituency associations. Those reports must include all of the election-related transactions, so they will be more complex and more time-consuming to review. Also, we have found in past years that investigations into the financial affairs of political entities are higher in the year immediately following a general election, so the amount included for investigations in political entity reporting is higher in 2006-2007.

With regard to the officer salary and benefits, the Election Act ties the salary of the Chief Electoral Officer to that of the Chief Judge of the Provincial Court, and the Legislative Assembly has approved an increase effective April 1, 2006.

As I noted last year, we have increased the voter education budget by $10,000. Section 12 of the Election Act requires the Chief Electoral Officer to provide public education on the electoral process, and in recent years we've had to decrease our work in that area. But it is now necessary to invest in public education, and our school kits for grades five and 11 need updating and restocking.

Our ongoing capital budget is shown on page 4 of the budget proposal. You will notice that our forecasted capital expenditures for the current fiscal year are significantly lower than the budgeted amount. By working with our technology partner, EDS Canada, we have been able to change our plans regarding the migration of the electoral information system to the new platform and minimize the related capital investment.

However, in 2006-2007 we do need to undertake some enhancements to EIS and to the on-line voter registration system. Other capital plans for 2006-2007 include a replacement server for the integrated digital electoral atlas, since the current one is nearing the end of its useful life, and for an on-line database of political contributions and replacement of some of the office hardware and software.

On page 5 of the budget proposal you'll see a pie chart which illustrates the type of ongoing operating expenses we will incur in the next fiscal year. The only significant change to the chart from last year is the reallocation of amortization dollars to salaries and benefits. The rest of the expenses remain very stable.

Our ongoing operating budget by standard object, or STOB, is shown on page 6. This information is provided to ensure completeness of the budget proposal, but we believe that the summary financial outlook on page 2 provides more useful information for you, as it's the one that illustrates expenditures by business activity. Please keep in mind that if you do review the budget by STOB, salaries and benefits shown in that budget include temporary employees, whereas for the summary financial outlook, salaries and benefits of most temporary employees are included in the relevant business activity line. So you won't be able to reconcile salaries and benefits between those two pages.

At this point I will turn the table over to Linda Johnson, who will address our funding needs as a result of the recent throne speech.

L. Johnson: Good afternoon. It's always a pleasure to appear before this committee and tell you about all the exciting challenges we have facing us. We actually thought this might be kind of a dull year, but this throne speech has proved us wrong.

The focus of my presentation will be on the items in pages 7 and 8 of our budget proposal. These items deal with the specific funding requirements related to the items contained in the September 12 throne speech. On page 7 we have listed eight separate items that we'll be focusing on in the coming year. On page 8 you will find notes related to those. These items and the associated costs are separate from the activities and budget requirements that Nola has just described. These are additional requirements based on the throne speech elements.

As Harry mentioned earlier, government has committed to holding a referendum on the B.C. single transferable vote in tandem with the local government elections in November 2008. The throne speech also indicated proponent and opponent groups — the "yes" and "no" groups — would be funded. Additionally, the Electoral Boundaries Commission has been tasked with recommending two sets of boundaries: one to support the current system and one to support BCSTV.

The results of the referendum will be known early in December 2008, only four months before writs for the 2009 general election will be issued. The electoral map of B.C. and the electoral system under which the 2009 general election will be conducted will not be known until that time. We clearly can't wait until then to prepare. Regardless of the outcome of the referendum, we have to be ready, and we must begin now.

There is very considerable work to be done between now and the 2009 general election, and we are a very small team of specialists. Knowledgable resources to support this work are few and far between. The items we have identified for fiscal 2006-2007 are focused on research and planning. They will lay the

groundwork for the subsequent fiscal years when the preparation and delivery of these events will occur.

The mandate of the Citizens' Assembly on Electoral Reform was limited to how votes translate into seats. Obviously, there is a whole host of other matters that must be addressed to fully describe this electoral model: campaign finance rules, the nomination pro-cess, how ballots will be printed and how voting opportunities will be available. Elections B.C. will be conducting research during the coming year to support the development of a legislative model for BCSTV. The $250,000 we have identified for this item will cover the costs of research, consultation with STV experts and administrators from around the world, analyzing best practices, identifying areas of public policy issues, and preparing materials to design conceptual and procedural frameworks to support the development of a request for legislation.

The second item on page 7 deals with the legislative framework for the referendum. As the 2008 referendum will not be conducted in conjunction with a provincial general election, the regulations in place for the referendum of this year will need to be replaced with a legislative framework that can stand alone.

The addition of the funding of "yes" and "no" groups also needs to be addressed legislatively. We have identified a need for $60,000 next fiscal year to support the work associated with research, issues identification and preparation of materials to support the development of a legislative framework for the 2008 referendum.

The third item on page 7 is an implementation plan for BCSTV. The intent here is to get Elections B.C. to the same level of knowledge and capability with BCSTV as with the current system. This is not being election-ready. That will come later.

This item includes figuring out how BCSTV will work on the ground — the logistics of voting administration and counting, the development of a ballot-printing plan and designing processes and forms and guides to support them. This is a very complex process, and we must proceed carefully with this. There's no room for error or omission in this work.

We estimate that in the coming fiscal year, $1 million will be required to research and define methodologies and to develop a functional procedural design that can be subsequently used in future years for planning a general election. We want to be sure that we achieve the appropriate level of knowledge and preparation without spending public funds unnecessarily. However, some aspects of BCSTV, such as the process for counting votes and tabulating results, could take a very long time to fully design, build, test and train on, and we need to begin exploring our options next year.

Item four is also a preparatory item to address a possible future need. Public education is an essential aspect of successful implementation of an electoral system. During the coming year we anticipate spending $150,000 to explore the best approach to educating voters on a new electoral system and to develop a plan for educating voters on how BCSTV works.

This is not intended for use by Elections B.C. during the referendum. As you know, our role during referenda has traditionally been to focus on the administrative aspects of the event and not engage in public discussion about the referendum issue. However, if the referendum passes, there will only be four months during which we do have to educate voters on how the new election will be conducted, and we will have to have a plan in place.

Should government choose to establish an independent referendum information office, as they have done in the past, that office could potentially benefit from some of our work in this area as well.

The fifth item on page 7 is related to the development of a referendum plan. As the legislative framework is developed, a procedural plan must also be developed. We estimate that $80,000 will be required in the coming fiscal year to develop detailed process flows for voting administration, design an administrative process to manage the funding and reporting of yes-no groups and develop a draft communications plan to support the referendum.

Item six is an enumeration plan. The throne speech indicated that government intends to launch a provincewide enumeration prior to the 2009 general election. The Election Act establishes that the Chief Electoral Officer is responsible for determining the timing, scope and method of enumeration. During the coming year we will require $140,000 to assess the value of various external data sources and the effectiveness of enumeration methodologies to develop an enumeration model.

Item seven is related to the outcome of the work to be performed by the Electoral Boundaries Commission. The commission will not complete its work until February 2008, and which set of boundaries will be in place for the 2009 general election will not be known until after the referendum.

This leaves very little time in which to establish new voting area boundaries within the proposed electoral district boundaries and convert all residential addresses and the associated voters to the correct electoral district and voting area. Mistakes in this area can result in controverted elections.

We must ensure that we develop a workable plan for this very important project. We require $680,000 for next fiscal year to identify the best approach and appropriate tools to do this work for both possible electoral systems. We need to assess and improve the quality of our data and implement the province's new Digital Road Atlas.

We may need to upgrade some of our systems, and we also need to develop a plan for the deregistration of the current 164 registered constituency associations and the registration of their replacement organizations under the new electoral map.

The final item on page 7 is an electoral management plan. The very considerable challenges we face as a

result of the throne speech commitments will require the establishment of some new roles and headquarters, both to assist us in research and planning and to backfill some existing roles to ensure our ongoing operations can continue.

We will need a recruitment strategy, position descriptions for new roles and support in the selection process. BCSTV will require a different field management plan than the current one, and new staff — even temporary ones — require space, computers and telephones. We will need to develop risk management plans and further invest in our planning framework to ensure that we manage these multiple priorities well.

The electoral management plan is estimated at $580,000 for the coming fiscal year. The total estimated cost for these eight items for fiscal year 2006-2007 is $2.94 million.

I will now turn the microphone over to Harry, and he will summarize our budget requirements and make his closing remarks.

H. Neufeld: I'd like to focus the committee on a summary of our budget requests, which appears on page 9 — the last page, appropriately — of the document you have in front of you. The bottom line is that we're requesting a recommendation to the Legislature that Elections B.C. receive a total budget appropriation of $10.278 million for the coming fiscal year.

As Ms. Western has described, our requested ongoing operating budget for 2006-2007 is $6.508 million. This is exactly the same as it has been for the past two fiscal years. This core appropriation represents a 35-percent reduction from what the ongoing operating budget for Elections B.C. was in fiscal 2001-2002.

We have worked very, very hard to achieve this reduced state of annual expenditures and have used it to define what our steady-state environment involves. However, the throne speech has made it very clear that we will need to establish a new baseline. Our annual operating budget must cover amortization costs of any capital projects we undertake.

For 2006-2007 we are requesting a capital budget of $830,000, with the understanding that our annual operating budget must pay that back over the defined life of whatever the assets are that we create or purchase. Usually, that's three to five years. This brings our annual ongoing operating budget request to $7.338 million for fiscal year 2006-2007.

As both Nola and Linda have outlined, there's a great deal that we do not yet know with regard to our future ongoing budget requirements beyond the coming fiscal year. Until we've done the research and the planning that we propose to do in the next year, we can't even really guess at what our ongoing funding requirements are going to be.

For example, it may be that we will need two full warehouses to stock supplies under two different electoral systems. We may need three different sets of electoral officials trained in the field: one to conduct the referendum under the current boundaries, another to run an election under the single-member plurality boundaries and a third set to be ready to run an election under BCSTV if the supermajority thresholds are upheld during the referendum.

We know that we will need new computer systems to collect and calculate voting results and to support the administration of BCSTV, but we do not yet know if any of these can be purchased or if they will all need to be custom-created.

All of these items have significant implications for our ongoing infrastructure costs, both in terms of amortization and operating costs. Those costs have traditionally been covered out of our annual core appropriation.

Ms. Johnson provided you a description of the throne-speech-event-related research and planning work that we wish to undertake next fiscal, and the estimated cost of this work is $2.94 million. This represents less than 5 percent of what I would consider the most minimal scenario associated with preparing and delivering the scheduled enumeration, referendum, boundary redistribution and general election.

As Cardinal Richard Cushing once said: "It pays to plan ahead. It wasn't raining when Noah built the ark." We need to start planning and getting ready now to avoid the risk of drowning in work later. Adding $2.94 million in event funding to our requested ongoing operating budget of $6.508 million and adding to both of those our capital budget request of $830,000 totals $10.278 million.

That is the total funding request that Elections B.C. has for this committee for fiscal year 2006-2007. A year from now we would expect to be in a position to give you estimated costs of our anticipated expenditures for the following three years. At this point, to pass things back to the Chair, with your agreement, Mr. Lekstrom, we'll proceed to answer questions that members may have.

B. Lekstrom (Chair): Thank you very much, Harry, Linda and Nola for your presentation. Certainly, you've highlighted some of the challenges, as you've indicated, with what's coming in the future of British Columbia.

M. Karagianis (Deputy Chair): I do have a number of questions, most of them very specific to the budget for your throne speech events, as you've entitled them.

It would seem to me that the process you've described for us is of such enormous complexity that first and foremost, before I get into specific questions around the budget and some aspects of how this pro-cess is going to be carried out, I would ask how the budget was determined, given the fact that this is such a new and unusual situation. How, in fact, did you determine what your overall budget was going to be, given so many unknown complexities?

L. Johnson: I actually think these numbers are conservative. When we first presented them to our management team, some of them were saying that's not going to be enough, but we're a small organization, and we can only do so much in a year. There are only so many projects we can undertake and manage well.

What we did was look at our past experience. I've been there for quite a while, and implementing new legislation, implementing new programs, what's involved in researching a new approach to something…. For example, our on-line voter registration system that we implemented this past year gave us a bit of a model for how long it takes to scope out a project of that nature. We did a quick scan of what was available in the way of existing research on STV around the world and saw where the gaps were. There has actually been some good work done on this in Scotland recently.

Based on our past experiences, our current understanding of what's out there and how BCSTV differs from other systems, what's involved in planning a referendum or enumeration, what's involved in developing a legislative model: that's how we develop these estimates.

M. Karagianis (Deputy Chair): I know that in the past there have been events that occurred, such as boundary redistribution, that would give you some criteria. I'm concerned, as well, about the time line, which I think all of you have alluded to throughout your comments here this morning — in having to create sort of a dual system and then look at a very rapid implementation period. It would seem to me to be completely at odds with how the past systems worked. Electoral boundary redistribution was not done in a four-month period.

In fact, again, given so much of that unknown, do you think a conservative budget at this point could be subject to revision, even within the first year? Are you expecting to have to rethink this as you move through this?

L. Johnson: I don't think so. This is why there's a one-year budget, because we feel that the responsible and logical approach to this is to invest in research and planning in the first year — feel out into the corners of how big these things are and what is doable. That, then, will put us in a position to cost out various models for quick implementation of boundary redistribution, if in fact that's possible, or to develop a plan for a staged implementation prior to the referendum, and then we switch on whichever model we need. It will give us time to actually do the investment necessary in stocking the warehouse for a referendum or a general election and so on. That's why our complete focus in the first year is on research and planning.

I don't think we'll be coming back asking for more money. When our senior management team first challenged the numbers we put before them, they went back and did a reality check. We've adjusted those numbers based on their input. At this point I think they're based on what we know right now and will give us the information we need to come forward next year with future year budgets with some degree of certainty.

Linda, given the fact that STV is not the most common method of proportional representation, and in fact has only been implemented in a few countries…. You mentioned that you've basically looked to those other countries for some of your basis for budgeting and planning. Have you also looked at countries that have rejected the system or have spent some time looking at implementation and have realized the pitfalls of this?

L. Johnson: What we've looked at so far is actually the available research on STV. Our understanding is that the international foundation on electoral systems, which is based in Washington D.C., is actually putting together a team of experts on STV. While Harry Neufeld is back east on other business next week, he's going to make sure he touches base with them to see whether that could be a resource for us.

BCSTV is unique in the STV world. It has aspects of it that other countries aren't using. One of our concerns is that we need to do our research very early on to figure out what the implications of that are. For example, we know that in Scotland they currently have a very ambitious request for proposal out there for software that can manage counting for multiple electoral systems, including STV. So we'll be watching what happens there and hoping to build on what they learn. We have had some discussions with staff internally about how they see the complexity of counting and reporting under this system.

The STV piece is the big unknown here. As you said, we've done boundaries implementation before, so we've got a pretty good sense of what's involved there. It's the timing that's the issue. Similarly, with referendum and enumeration planning and so on. The big investment in research on an implementation plan on BCSTV reflects the fact that that's the unknown for us right now.

M. Karagianis (Deputy Chair): I can certainly appreciate it. It does beg…. I've got a whole list of a dozen questions here, but I know the committee probably does not have time to indulge each within that. So I'd like to be able to meet with you at some time to further explore some of these issues.

Certainly, the uniqueness of the BCSTV program is of great concern — about how that's going to be implemented. I think you talked before about a compromised election. I think we have to be very, very careful about making sure that this system is adequately funded and researched.

Do you have any concern about implementing this referendum in conjunction with the municipal election, when historically the turnout for municipal elections is

Secondly, how are you going to determine riding overlaps with municipalities? Often municipalities may share several different electoral boundaries. How are you ever going to determine the distribution of those votes so that they are applicable to those constituencies?

It would seem to me that trying to manage this around a municipal process is extremely challenging. Can you comment on that?

L. Johnson: It is challenging. There's no question about that, both from the perspective of timing and the fact that we compete for the same officials and the same space. There are some logistical issues to be addressed.

We haven't even looked at the turnout issue. The concern is that the rules under municipal voting and provincial voting are different. I don't see municipal officials managing the referendum. We would have to manage that separately. Number one, that helps address the differences in boundaries. Number two, there are a number of municipalities and areas of the province where municipal elections are not held. There are acclamations, unorganized areas or native reserves, for example. So we would have to have a separate model in place.

The only similarity may be that in some locations it's possible for the municipal election and the referendum to happen in the same building — or in the same room, if there was enough space. Certainly, though, we would need to manage it as a separate process. Qualifications to vote are different. The voting opportunities are very different under provincial law than under municipal law.

The risk isn't in the actual physical administration. I think the risk is in competing for the same resources — the timing is pretty tight for us — and also in managing potential for voter confusion or inconvenience between the two different processes being held at the same time.

M. Karagianis (Deputy Chair): Just one final question, and then I'll let other members have questions. The budget that you've presented to us here right now, $2.9 million, is really for a one-year research project.

M. Karagianis (Deputy Chair): That is really all that this is going to cover off at best. Then you will be looking to bring back budgets that, as I gather…. You're going to have to actually budget for dual systems in place. Come the spring of 2009, you throw one or the other batch of preparations aside.

L. Johnson: Potentially. Some of what we're asking for in this $2.9 million does in fact involve data cleanup and analysis and so on. It isn't all research. There will be tangible benefits besides the knowledge coming out of this investment, depending on which project it is.

The goal and the challenge for us is to achieve an appropriate state of readiness without unnecessarily expending public funds. We don't want to have to throw away a warehouse full of material. We don't want to have to develop a computer system and then write it off. That's the challenge: to come up with a plan to the extent possible, while managing the risk, that we don't unnecessarily invest, but we have a plan in place and we're ready to go.

The worst-case scenario is, absolutely, complete overlap of two warehouses, two sets of maps, two systems, two sets of trained officials ready to go.

M. Karagianis (Deputy Chair): One last question. How long does it currently take you to prepare for a provincial election under the current system?

L. Johnson: Under the current system, about a year and a half of solid preparatory work.

R. Lee: I've got a very specific question on the amortization. In the service plan, page 4, the capital spending for 2005-2006 was $3.6 million. The forecast expenditure on 2006-2007 is also $3.6 million, so it's very much on target on the capital spending.

In the service plan in 2006-2007, the amortization is $1.13 million, yet on the 2006-2007 budget, the amortization is $716,000. So it seems that the amortization has been adjusted downward.

H. Neufeld: Maybe I can speak to that generally, and then Nola can give you some specifics.

What happened was that the world changed. The service plan came out in May. This summer we had a technological breakthrough. Things that we experimented with worked, and our end-of-life on operating systems made by Microsoft and Oracle were proven, after some extensive testing…. There was a migration path out to a newer version, and we wouldn't have to rewrite our entire system. We didn't know that in May when we tabled our service plan, but we knew it in August. As we prepared our budget, going forward, and we reviewed the experience of the election….

I'll tell you quite frankly that if I hadn't had senior personnel from Elections Manitoba, Elections Ontario and Elections Canada here to help, we would have faced some pretty serious disasters in administering the election referendum. I had to bring those people in, through the good graces of my colleagues in other provinces and federally, in order that we had the core resources we needed. So the focus of the management team was: "We don't want to be dependent again in the future on having to borrow resources from other jurisdictions in order to manage our own electoral events. Okay, let's take the money that's freed up from amortization and put it to staffing."

R. Lee: Yeah. What are the plans for the next five years on the amortization?

H. Neufeld: I don't know whether we need to invest $5 million or $50 million in new computer systems. I don't really have any understanding yet of what it's going to take to fully implement STV, and we won't know unless we do a lot of very hard-nosed research about what our options are. I would absolutely be guessing to give you a figure right now.

R. Lee: Yeah. Usually, the amortization…. My understanding is that you would just take the capital, your equipment, and then over a period you depreciate that. That's what my understanding of amortization is.

It seems that if the equipment is there already, there should be a plan to depreciate the value of that equipment, and that should be known right now.

N. Western: Yes, it is. For the equipment that we have now and the equipment and software that we plan on developing and acquiring next year, we know what the amortization is. That's why we can say that the amortization for next year is $715,000, but as Harry said, after that we don't know what we're going to have to invest in as a result of these throne speech projects.

H. Neufeld: If I could come back to a comment that the Deputy Chair made: would we be coming back? If our research tells us that we have to custom-build systems in order to accommodate the voting process, the counting process, with the weighted inclusive Gregory method involved with single transferable vote, which is not implemented yet anywhere else in the world, we may come back to this committee and say that we need to start now on a capital budget of starting to build these systems.

I'm not willing to wait until December of 2008 to have those systems tested and to be fully aware of their capabilities and know that we've got a solid plan in place to do training on them, to do the rollout, and that they're going to be dependable. You know, the reality is that with the timetable that's set out in the throne speech, we are going to have to invest tens of millions of dollars on a system which may or may not be used, but I cannot predict the result of the referendum. We have to get ready.

R. Lee: I guess my question is not on the new equipment. My question is on how much value we still have in the old equipment.

N. Western: A lot of it is almost fully amortized, or it will be by the end of this fiscal year. You can see that where our forecasted amortization for this fiscal is $1.8 million and next fiscal is just over $700,000. At that point, by the end of March this year, we'll have almost fully amortized the existing electoral information system.

J. Yap: You're looking for $2.9 million, and you've broken it out to different categories as best you can. I understand it's a challenge because this is a new area. It's kind of going into uncharted territory. But I'd like to drill down a little bit and maybe hear from you where the expenditures will come. Is it going to be in new hires, contract hires? Is it going to be in travel? You say research. Are you hiring people? Are you using your own people to do the research? What will be the main cost components?

L. Johnson: All of the above, depending on the project. For example, for the referendum plan, which is item five there, most of that probably is temporary staff time and the use of a consultant to develop process flows and support the development of a procedural plan.

The referendum legislative framework. That, again, is primarily temporary staff time to support the request for legislation and the supporting documents.

The enumeration plan involves a bit of data work, so some systems costs, but again, primarily staff time, acquiring documents and consulting with other jurisdictions. A little bit of travel may be involved in that as well.

The legislative framework and the implementation plan for STV includes travel, to bring experts to us or for us to go to them. So there is some travel money there. There is both contracted resource time and temporary resource time in there to support the research, the cost of acquiring some materials. We also anticipate that we will have to have our technology partner or some other system development house explore options with us and do a review of existing vote-tallying software in other jurisdictions.

The boundary redistribution plan and data preparation. A lot of that is actually data cleanup work and integrating the new DRA2, the new digital road atlas that the province has developed, into our system and…. What's the term?

L. Johnson: Conflating. Making sure that our lines match up with their lines and doing some address resolution work, as well as some potential contracted time in evaluating existing redistricting software and some travel costs to consult with other jurisdictions who have similar challenges.

J. Yap: Thank you for that. Have you gone through your list of eight categories totalling $2.9 million and done a prioritization of what you really, really have to do as soon as possible over the next year and what could be delayed a year? Have you looked at that, or

L. Johnson: Because we're such a small organization, unless we get this research and planning and preparatory work out of the way next year, we won't have enough cycles to then manage the development processes that will flow out of this — the actual preparatory work and so on. We're so small that we need to stage this out. We believe that we need to do all of this in '06-07, or we will simply run out of time and people to catch up in subsequent years.

J. Yap: Okay. A couple more questions. In your ongoing operations, I believe you mentioned that your FTEs were at 48, and then you went down to 30, and you're proposing to go back up by another eight. Going from 30 to 38 is a fairly healthy increase. I did hear that it's needed because you reduced your workforce too far. What would be the mix of the eight people? Will it be middle management, junior people? What would be the mix?

H. Neufeld: I've got a list here in front of me: two office admin-support personnel, a communications officer, a warehouse supervisor, an electoral finance officer, a help desk admin-support person for our IT group, a business analyst and a director of strategic planning and partnerships.

With the referendum and your gearing up and preparing a budget, did you look at the Citizens' Assembly and the work they did and if any of the work they did can be incorporated into what we're proposing here? I'm not intimate with the details of what came out of the Citizens' Assembly as far as operational aspects, but was there any of their work that can be used here instead of "reinventing the wheel"?

H. Neufeld: I assigned Linda as our liaison between our office and the Citizens' Assembly, and she attended every single meeting — every single public meeting, at least — that the Citizens' Assembly had. Linda, maybe you could answer about the reusability of that information.

L. Johnson: For the most part, the scope of the Citizens' Assembly work being so focused on how votes translated into seats, we're left with all those missing pieces of an electoral system. Although that's certainly where the legislative and procedural framework will be drawn from for how the ballot is to be rotated randomly and the fact that the weighted inclusive Gregory method is to be used for transferring surpluses — you know, some of the really technical details around translating votes into seats — there's not much else there to give us that 360-degree view of an electoral model that we can use. That's why there's so much research and development work that needs to happen, because they didn't address all those other pieces.

They did develop some excellent animations and public education and information materials about BC-STV. I know that the referendum information office used a number of those resources in the '05 referendum, and certainly, many of those could be recycled, but they were not designed as a public education program. They could certainly be incorporated as elements into a public education program. They were just designed as information pieces that they put up on their website.

There's some that we can reuse. We're already using a lot of that in our early discussions about a conceptual plan for BC-STV, but there's not enough substance to offset what we're looking at here.

J. Yap: Last question with respect to the operating budget. You've presented an outline of what you'd like for 2006-2007, but I don't see in here any kind of prioritization of what you have to have to maintain the status quo or to improve operations on an ongoing basis. I'm just wondering if you have that but you just haven't presented it to us.

H. Neufeld: I would suggest that staying with the same operating budget for three years indicates that we've already established our base level. I think the three of us have outlined the fact that that base level is going to have to increase. I don't think it's a question of: what can you do without in your base operating budget? I don't think it's a question of: what don't you have to do in this list of projects to get ready to implement STV? I think it's a question of understanding that this is a very, very big challenge to a very small organization.

We've tried to be very responsible. I think we've been conservative in what we've requested. To suggest that there might be a line that's short of what we're asking which will be enough — I'm not really interested in entertaining that discussion.

We have taken a very, very hard line with asking for what we realistically believe we need. If you disagree, we'd be happy to come back and explore it in further detail. But it's not really an issue that we asked for the moon and that we're quite willing to settle for a smaller slice.

J. Yap: At the end of the day, though, the committee would make the recommendation. If in the committee's deliberations and wisdom…. For example, if we felt that an increase you've requested in salaries and benefits seemed more than the committee was willing to support, still, an increase of some level, whether it

was two-thirds or three-quarters — somehow you would find a way to make that work. I presume this.

H. Neufeld: If you want to cut us further from the 35-percent cut that we went through in the last four years and the budget level we've been at for the last three years, I guess we'll have to find a way to cope. But I want you to know there are very, very real risks associated with that.

The eyes of a lot of parts of the electoral world, I know, will be on us in 2008 and 2009. I don't want British Columbia to be embarrassed.

J. Kwan: I can certainly say that I fully appreciate the task that's before you. Aside from the fact that we wouldn't want the electoral world to be watching us and fail, perhaps closer to home, as an elected official I certainly would expect that British Columbians would not want to see this fail. All eyes are going to be on you from all aspects. Let me just say that — not to heighten the anxiety that I'm sure you already feel about this.

Let me just ask some questions, though, just by way of comparison, because I am worried about the scope of the work that you have to undertake, the short time frame which you're faced with to engage in all of that work and to make sure the outcome is such that it meets expectations and, of course, our standard of democracy as expected here in Canada. To that end, first of all, just to break it up for me…. I should know this information, and I apologize. I haven't had time to fully research the information — if you could sort of provide this background for me and, I'm sure, for committee members as well.

Historically, we do engage in practices of having to do the boundary work to re-examine the boundaries — therefore, the Boundaries Commission. Historically, what's the budget associated with that work? I note that in this presentation here, that's all put together, because you now have the STV component and also the regular Boundaries Commission work under the existing system that needs to be undertaken. Just to get a sense of it and to break it down a little bit, historically, what is the pattern in terms of the amount of expenditure and staff levels required to undertake that work? Of course, noting the time frame you had before as well.

H. Neufeld: The last boundary redistribution, which was conducted in 1999, took the better part of a year and cost $2½ million in my office's expenditure. That's, of course, in 1999 dollars. Under this scenario, we have two boundary redistributions to perform. It looks like maybe six months.

J. Kwan: You're asking for $2.9 million relative to $2.5 million in the work that was done before.

H. Neufeld: We don't know what we're asking for yet for boundary redistribution work. We're asking for work to research that and to come up with a workable plan that is as efficient and economical as possible. The boundary redistribution is only one piece of this large and complex puzzle.

L. Johnson: Just to clarify for the committee, the Electoral Boundaries Commission is not funded out of this budget. The Electoral Boundaries Commission is funded separately. However, as the Chief Electoral Officer is a commissioner, we continue to pay his salary. That's our contribution to the Boundaries Commission. The work that we do associated with the Boundaries Commission work is preparing for the implementation of their report, so that's what we're hoping to do some research and data preparation for in the coming year, as well as exploring how you can fast-track the implementation of a new boundaries act.

J. Kwan: My apologies. Yes, the work for the commission and the cost associated with it would have to come from a separate budget item. You're correct; sorry. Of course, there will be further deliberations around that, I'm sure. That would be the commission having to put forward two sets of implementation plans under two very different systems.

On the question around the education plan, where the proposed budget is about $150,000 for the new STV system, I'm wondering if that incorporates the capacity to educate in different languages.

L. Johnson: This is really the plan rather than the education program itself. However, we currently translate a number of our materials into 15 languages.

It's primarily to assist voters if they are voting from abroad, to explain how that process works, or where there isn't assistance available to them. We also have brochures in 16 languages explaining where you can register to vote and so on. Certainly, if we were implementing a new electoral system, we would follow that model and make sure there was information available in that suite of languages. Those languages represent the majority of mother tongues in British Columbia.

J. Kwan: When do you expect the plan to be completed so that we'll know, then, what work will need to be done within that plan — in the implementation component of that plan? When can we expect that to be finished?

L. Johnson: Well, this represents what we intend to accomplish during the coming fiscal year, but the implementation plan for BC-STV is actually a multi-year

piece. This is just the front-end research component. For example, developing the education plan is seen as a one-year project. It would all happen by the end of '07, and we'd be able to say: "Okay, if we were actually mounting public education on BC-STV between the referendum and election, it would cost this." We are hoping to achieve enough headway in all of these projects to come forward with a three-year budget a year from now, explaining how this will all stage out, subsequently.

The enumeration plan, I believe, is a one-year plan. The education plan is a one-year plan. The referendum legislative framework we'd want to wrap up in one year. The single transferable legislative framework is actually a multi-year plan. This represents all of the research piece to get as far as the request for legislation.

J. Kwan: I guess we won't know until we get the plan, but is it safe to say, though, based on your experiences from the past, even under the existing system, where the commission had undertaken this work — had actually gone out to a variety of communities and so on and so forth…? That will be a component of the plan, I would expect.

L. Johnson: Not the Boundaries Commission work. That will be separately funded. We don't involve ourselves in the consultation process around that. This doesn't incorporate any kind of public consultation beyond possibly some polling.

J. Kwan: Do you have any sense in your office, to date, that from the public's point of view, there's increased interest with the new STV system, and therefore, I would imagine, questions and inquiries and so on coming to your office would actually escalate?

H. Neufeld: Maybe I could answer that. The interest that I've seen expressed is with regard to setting out the boundaries under STV, which is the next big thing in the equation. Maybe it's because I'm the only known boundary commissioner that I've been getting a lot of these inquiries about it. Will it be single-member-plurality boundaries first established, and then accumulate those for STV boundaries? Or will the STV boundaries and the single-member-plurality boundaries not necessarily match, and these sorts of things?

There has been, actually, an unprecedented amount of interest in those issues. I've had a lot of queries come in. With regard to generally, my sense is that we haven't been overwhelmed with people asking questions about this referendum that's coming and so on — not yet, anyway.

J. Kwan: Thank you. I certainly look forward to the work that you're going to undertake and to seeing what the plan is going to be. Of course, subsequent to that, the implementation of that plan would, of course, be key. I fully appreciate the task that's before you.

D. Hayer: I appreciate all the information you have provided. There are a few questions I have. One, when you look at a new system, regardless of what that system is, do you think you're looking at it so the votes are counted by machines, like in a municipal elections, where a chance of someone having a mistake is much less because if you actually haven't marked it the correct way, the machine tells you right away, so you go back until you have it right before it accepts the ballot?

H. Neufeld: This is going to be very much part of our focus. I am told by election administrators who have actually administered STV elections, including some who've been doing it in Ireland for many decades, that they think counting the votes for a single electoral district manually would take two weeks. I've also heard from a number of members of the assembly and from members of the media that they don't think that's acceptable. In the absence of a legislative framework, I'd say we're probably going to be put in a position where we have to look at some automated means.

The Citizens' Assembly was, I think, correctly concerned that there be an audit trail. They wanted to see the use of paper ballots. I have seen some demonstrations of technology not dissimilar to what some of the municipalities use, where the ballot is fed into an optical scanning device. There's a tally that's used, and it's put to a memory card; it's backed up different ways.

There is a potential for using that kind of technology in STV. In and of itself, that's a very large investment for the province to make. I would be interested in dealing with the municipal government organizations to see whether there may be something we can buy — if there are ballot-tallying machines that can be used for both municipal and provincial purposes, if we end up going that route.

There are very practical questions about: do we have to buy these machines in advance of knowing the results of the referendum? These are specialty manufacturers. Can we rent them? Can we lease them? What do we do about obsolescence of technology? You know, anybody who buys a personal computer knows that four years later you have problems getting software to run on it and so on. These are the kinds of questions that we really need to investigate in some detail in the coming year.

D. Hayer: Thank you. When you have elections, the confidence is the most important part. The longer you wait for the results, the more the problems come in.

Let me give an example. In my own riding, some of the persons who had ballot boxes didn't show up the next day in the morning. Our people were really getting excited about it, because they closed the whole station down. We were saying, "Call the police," to find out.

What happened, we found out later on, was that one person decided to go out of town, and the second person decided that he — I don't know if it was he or she — didn't want to go to the polling station. They

had to send somebody there from Elections B.C. to knock on the door and pick up those ballots. Until they were counted, we had a concern about it, because that's a lot of votes that you can have. This was just only one day. If you're looking at ten or 12 days, and something goes wrong, somebody gets sick, that's a new type of challenge that comes into the system.

Those are some of the things that you have to take a look at — the quicker the results, the better it is — and make sure there's a hard-copy trail there, because you don't want to rely on the computers 100 percent. The city of Surrey or other ones have a hard copy.

The other question I have is your budget. Is it possible to get a three-year budget saying: "Look, if nothing must really change other than what is expected, like the Boundaries Commission we have, these other minor things which we already know about, some of the stuff you've known for the last ten years…"? Every ten years there's a review of the Boundaries Commission. May we have some sort of budget saying, "This is what it would normally be," so that the ordinary taxpayer can say: "This is what the normal expenses are, but here are the extraordinary expenses, because we have introduced this legislation to see if we maybe want to change to a different electoral system"? At least they could compare some sort of information about what it is costing.

Maybe you said that it's going to be $50 million to put up a new system. Maybe it's going to be less. You don't know yet. On the other hand, they will still be able to say that normally they would have $6 million or $7 million or $10 million — right? You have a three-year plan with notes in there saying they're real expenses but unknown yet.

H. Neufeld: I did provide some summary sorts of figures a year ago, when I came in front of the committee. The indication at that time was that electoral administration comprehensively for the four-year cycle had cost $75 million or somewhere in that zone. We can probably come up a year from now with a figure of what it's going to be, what the difference of inflation might be. Then we might have a sense of what the net new costs are.

The challenge that my staff are constantly giving me is: when is it going to get normal around here? We don't really know any more what the steady state is. It's a constantly evolving environment. We have amendments to legislation. We have new types of electoral events. You're caught in this situation where it's a little bit of comparing apples and oranges.

I understand where you're coming from. I promise you that I have an interest, as well, in seeing if we can't identify what it was before; what it would have been if nothing had changed, except maybe the factor of inflation; and what we're looking at as a result of the challenges that are being presented to us as a result of what's in the throne speech.

D. Hayer: Just one more question. To implement the new system, you had more than six months — right? You say right now it gives you four months, because November is a municipal election and May is a provincial election in 2009. Would there be certain costs that would be much less than otherwise? Is there any savings in that? Have you ever looked at that?

I'm just asking, because some of my constituents might ask the same question. Since we have the Chief Electoral Officer here, I'll maybe ask it.

H. Neufeld: It's a fair question. Mr. Krog is on public record saying that the turnout at municipal elections is quite low. The referendum held Monday of this week in Prince Edward Island on electoral reform didn't have a very good turnout either, and it was a stand-alone. We had about 60,000 people fewer vote in the referendum in conjunction with the election than voted in the election, but the turnout there was in excess of 60 percent of registered voters.

The easy answer is: give us more time to implement, let us know earlier which system it is that we need to get ready for, and we'll save taxpayers money. The difficult part of it is: how do you ensure that there's adequate information, that there's been a public information campaign, that there's been a good debate and all the rest of it?

I think the throne speech solution to the dilemma that the result of the referendum presented was a very elegant solution, except that from an administrative point of view, it presents some real challenges. We're not shying away from those challenges, but the reality is we're concerned that we have to come up with a plan that minimizes the unnecessary expenditure of taxpayer dollars in order to be ready to turn on one system and turn off the other.

B. Lekstrom (Chair): Okay, if this could be the last one…. We're going to have to move forward here.

When people on the voters list…. Some people got these cards saying they're eligible to vote. They were not Canadian citizens; they were immigrants or some people just staying for a long time on other permits. Is there any way you can check their birth records and citizenship, since you're going into the computer system, and compare the two? Can they get compiled to make sure that people on the list are actually either Canadian citizens or born here so that people can have more confidence in the system?

H. Neufeld: You're persistent on this question, Mr. Hayer. You asked it, if not last year, the year before.

To date there is no single list I know I have, which I even know exists or I have access to, that says these are all the people in Canada who are citizens. The voters list is made up of people who fill out registration applications either with us, with Elections Canada or through some way where they wilfully say: "I want to

be registered as a voter, and I meet the criteria." We don't have rigorous tests to absolutely determine whether or not people are Canadian citizens. If we wanted to pursue having the ability to put those tests in place, I think we'd have to do some research on how we would make that happen. I understand the concern, but there's not an easy solution.

B. Lekstrom (Chair): I will, possibly, wrap this up with one question, Harry, if I could. I think it was something that John was alluding to before, under the salaries and benefits. When you look at that number, although the core appropriation has remained the same — I think you do a wonderful job with the budget you've had…. You look at the $2.125 million to $2.836 million, and it's roughly a 33-percent increase — 33-point-a-small-portion.

Now, you talked about additional employees in there. Would you have a breakdown? Was it eight new employees you looked at, with a total cost of roughly — I'm going to ballpark — a $60,000 average, $40,000 average? I guess what I'm looking for is….

That will be part of the discussion of this committee. I mean, when we try and make sure we can maintain that core appropriation, discussions like this will take place, I'm sure, within the committee. I think it would help the committee.

N. Western: These eight employees — their salaries range hugely because the office admin support are at the very low end of the scale for government employees. The director of strategic planning, which hasn't been classified yet…. We don't know yet how much that will cost. We're estimating that by the time you add 24-percent benefits for employees, these would be costing $55,000 to $60,000 on average. Again, there's a huge range in there. The salaries and benefits number for '06-07 also includes the 2-percent inflation factor that I added to almost everything on here.

B. Lekstrom (Chair): All right. That was just for my own clarification. I think it will be part of the discussion, so rather than have to try and get a hold of you for further clarification…. I want to thank you. Questions, Jenny, or…?

B. Lekstrom (Chair): I actually have a list now of second questions, so rather than do that, I know we have our next statutory officer waiting.

I'm going to at this time, Harry, thank you and Linda and Nola for coming and presenting to our committee. If we do need further clarification, we will certainly be in touch with you, but it will be our intent to put our recommendations forward as soon as possible. We will have to meet in the coming weeks to develop our report and put our recommendations forward. We'll certainly give all due consideration to what you've brought forward today. I thank you.

H. Neufeld: Thank you. We'll be happy to answer any questions. We've done this process before. We have a good relationship with Josie in terms of exchanging correspondence.

B. Lekstrom (Chair): At this time we'll reconvene the Select Standing Committee on Finance and Government Services and carry on with our next review of statutory officers' financial plan. Joining us is Howard Kushner, who is our Ombudsman, along with Lanny Hubbard, who is the director of corporate services. Good afternoon and welcome.

What we've been doing is going through the process. What I'll do is pass the microphone over to you for the presentation. Following the presentation, members of the committee will have questions, I'm sure, at which point we will go through that. The committee's agenda will be to conclude our work with the statutory officers and then convene a meeting of our committee to put our recommendations forward. We have to present them to the Legislative Assembly with the requests and recommendations put forward from this committee.

H. Kushner: I would like to thank the committee for the opportunity to meet, to report on the operations of my office and to present our budget proposals for the three-year period beginning with 2006-2007.

Today I am accompanied by my director of corporate services, Lanny Hubbard, who has assisted me greatly in the preparation of our budget submissions. You will become very familiar with Mr. Hubbard, as you will receive an encore performance from him tomorrow when he will appear with both the Information and Privacy Commissioner and the Police Complaint Commissioner, for whom he performs a similar role. He is a living embodiment of our shared service agreements with those two other offices.

I provided to you a copy of our submission. I'll go through that submission and highlight some of the points and will then be happy to respond to any questions.

It was in October 1979, 26 years ago, that the Office of the Ombudsman first began to take complaints from

persons who felt they were being treated unfairly by government. Initially, the jurisdiction of the office was limited to provincial government ministries, provincial Crown corporations and provincial boards and tribunals, which I would characterize as a traditional provincial Ombudsman's jurisdiction — what every provincial Ombudsman has jurisdiction over. Every province in Canada, except Prince Edward Island, has a provincial Ombudsman.

However, in the 1990s the jurisdiction of the office was expanded, beginning in 1992 with schools and school districts and then in 1993 with hospitals and health authorities, universities and colleges and the self-regulated professions: lawyers, teachers, doctors, nurses — i.e., the Law Society or the College of Teachers or the College of Physicians and Surgeons — and lastly, in 1995 with local government.

This group of authorities is unique to British Columbia, although some provinces like Manitoba, Nova Scotia and New Brunswick have jurisdiction over some of the authorities within this group, such as local governments. In fact, the extent of the authority of the British Columbia Ombudsman is the broadest of all ombudsmen that I'm aware of in the sense that the jurisdiction over the self-regulated professions is unique to British Columbia.

I have characterized these authorities as the extended jurisdiction, and traditionally these authorities have made up about 15 percent of our case volume. Unfortunately, due to budget restrictions, our ability to accept and investigate complaints about the extended jurisdiction authorities has over the past three years been restricted — a point I will return to later.

The Ombudsman is an independent, impartial investigator of complaints of government administrative unfairness who can, when appropriate, recommend changes to resolve the unfairness. We provide an opportunity for individuals who feel that they have been treated unfairly to bring their complaint to someone who is prepared to listen to their complaint, who may choose to investigate their complaint and who, at the end of an investigation, may make findings and recommendations to change or alter a government practice, policy or decision.

The establishment of the office is a recognition by the Legislative Assembly that, as stated by some commentators, there is a large residue of grievances which fit into none of the regular legal moulds and are nonetheless real. A humane system of government must provide some way of assuaging them, both for the sake of justice and because accumulating discontent is a serious clog on administrative efficiency in a democratic country.

In the modern era thousands of administrative decisions are made each year by government or its agencies, many of them made by front-line staff. If some of these decisions are arbitrary or unjustified, there is no easy way for the ordinary citizen to obtain redress. Our office looks at administrative unfairness or maladministration, terms which can encompass a wide variety of sins: delay, indifference, rudeness, negligence, arbitrariness, oppressive behaviour, arrogance and unlawfulness. I expect that as MLAs, you too are familiar with the types of complaints we receive, because MLAs often receive similar complaints. In fact, you play an ombudsman role. We all play ombudsman roles in respect of the complaints that constituents bring forward, and on occasion your constituency offices will refer cases to us.

Some of the complaints we receive may also be addressed through courts, generally at some expense to the complainant and generally taking a longer period of time. Our office offers an alternative route to seek redress, one which is relatively quick in most cases, confidential and at no expense to the person bringing the complaint forward. When we review the actions, procedures, practices, policies and decisions of an authority from an administrative fairness perspective, we are not engaged in a process of second-guessing an authority. We are not a court of appeal. Given our broad scope of jurisdiction, we cannot and do not claim to be experts in the various areas and disciplines for which we have oversight responsibility. In fact, there are something like 743 authorities that we have jurisdiction over in a broad sense, and then if you look at subsets, it ranges in some number of 2,000.

Instead, we are experts in administrative fairness. We look to see if the individual who came to us has been treated fairly, which is a different question from whether we agree or disagree with the decision. We focus on fairness issues such as: have those affected by a decision been provided with an opportunity to express their views, to provide information and evidence to the decision-maker? Have decisions and actions occurred within a reasonable time? Have reasons or explanations been given for a decision or action? Have individuals been advised about any existing appeal or review procedures? Are people being treated with respect? For the most part we focus on service — that is, the service that the individual has received from the public agency.

In addition, we consider matters such as: was there a mistake of law or a mistake of fact evidenced in the decision or action? Were only relevant considerations taken into account and irrelevant considerations ignored? A more detailed listing of grounds of unfairness is found in section 23 of our act and in our public report number 42, Code of Administrative Justice 2003, which outlined our interpretation of the sections under section 23.

We take care to point out to both the persons accessing our office and the authorities we investigate that we are impartial, that we are not advocates for the complainant nor apologists for authorities. We determine, within the framework of our act, which complaints we will investigate and which we won't. We determine how we will conduct the investigation, advising both the person who filed a complaint and the authority that our process is confidential, not a public inquiry process. We ask questions of both the com-

plainant and the authority. Although we have the power to compel production of documents and to subpoena witnesses, we rarely need to do so. Authorities are generally prepared to reply and respond to our requests and to cooperate with our investigations.

At the end of an investigation we make our own determination as to whether there was any unfairness and, if so, what an appropriate remedy would be. I'm not able to order an authority to change its process, practices, policies or decisions. I can only make a recommendation. However, it is rare that an authority refuses to accept our recommendations. In fact, one of the performance measures we use to measure the work of the office and its effectiveness is the number of times over the year that authorities have refused to accept a recommendation. In 2005 to date, it has only happened once.

Although our process is confidential and the results of our investigations are generally publicly released, I have the ability to make results of any specific investigation report public through the annual report or by way of a special or public report. I have also on occasion made public announcements about initiating an investigation or advising of an existing investigation.

In brief, our office is one method of responding to concerns about administrative abuse. Openness, fairness and accountability are core principles embraced by democratic governments. By establishing and maintaining the Office of the Ombudsman, the Legislative Assembly demonstrates its commitment to these principles.

I'd like to just do a short overview of our activities over the past year. We issued our 2004 annual report on June 6, 2005, and I have brought additional copies for your convenience, for you to look at if you've not had an opportunity. The annual report provides an opportunity for me to publicly discuss and highlight some of the major activities of our office in 2004. It also contains — and I've been told that's the most interesting part of the report — a number of case illustrations of the work of the office.

I would draw your attention in particular to some of the cases we've reported on — at page 17, where reasons were required for recovery of overpayment; page 18, involving income assistance, serious health problems and the assurance that the ministry would be able to provide adequate financial assistance; and page 21, a historical note on police records, which were preventing an individual from graduating and the actions that our office was able to have to ensure that the individual was able to finish his course.

On page 23, "Fairness after wrongful imprisonment," is an interesting case where an individual was wrongfully detained in prison because of an error made by court officials as to when he was supposed to attend in court. He was remanded over to one date, and the court officials made a mistake and marked a different date in. When he didn't show up on the date they had marked down, a warrant went out for his arrest. He ended up staying in jail over a weekend, and he was seeking compensation from the Attorney General's department for that. Eventually, through the actions of our office, we were able to achieve that.

Pages 30 and 32 involve Workers Compensation Board complaints, modifications of existing policies to ensure appropriate compensation is provided. At page 39 is a case comment involving a pension plan, ensuring that the pension plan equalizes retirement benefits for out-of-province members.

In 2005, in addition to the annual report, we also issued special report 26 in February, entitled Report on the Insurance Corporation of British Columbia's Minimal/No Damage Low-Velocity Impact Program. As a result of concerns raised by my office, ICBC changed its program to establish new criteria for considerations of claim under this low-velocity-impact program — criteria which would more closely approximate a review on the merits. ICBC had previously applied a number of criteria which proved hard to interpret and apply in a uniform and consistent way.

Our investigation of the program and our referral of a number of claims back to ICBC for review resulted in payments of over $1.2 million to persons whose claims had initially been denied under the program but upon review were subsequently adjusted on their merits.

Although ICBC revised this program, we also recommended that ICBC review claims that were previously closed under the program if individuals approach ICBC maintaining that their claim was not fairly decided. We were concerned that there might still be individuals who had been treated unfairly and who had not received appropriate redress. While ICBC was not prepared to formally accept this recommendation — and that's the one recommendation, which I referred to, that wasn't accepted in 2005 — and was not prepared to open all their old files which had previously been closed, especially those with signed releases, it did agree to look at the matter on a case-by-case basis if individual cases were brought forward.

In 2004 we had 1,747 new cases assigned to investigators out of a total intake of 8,563. Our call coordinators logged approximately 3,120 requests for information, and our complaints analyst closed approximately 3,650 files. The notes say 3,150, and that's a typo. It should say 3,650.

Although our overall intake has been decreasing over the years, the largest drop is in the request-for-information category. In 2004 we closed 6,772 files at intake and 1,600 by investigators. We had 405 open files at year-end, December 31, 2004, compared to 278 at year-end 2003 and 50 files in the holding queue. I'll come back and talk about our closing files and the holding queue when I talk about our finances.

At the end of September of this year our intake to date was 5,863. We had closed 4,523 files at call coordinator or complaints analyst stage. Our investigators had closed approximately 1,400 files, and we had 342 open files and 59 files in our new holding queue.

Let me explain a little bit about our holding queue. In order to respond to the budget cuts of 35 percent

over three years, we instituted a number of measures. One of those was to review the extended jurisdiction authority, the one that I described as local government, schools and universities, colleges and hospitals, and the self-regulated professions.

In 2003-2004 and again in 2004-2005 we decided to limit the cases we would investigate in respect of local government complaints and self-regulated professions to those extraordinary cases — not just any case that would normally come in the door, but we would look at them more closely and only investigate those extraordinary cases. The caseload from that group used to make up about 10 percent of the volume of the cases that came in the door.

In 2004-2005 we also decided to create a holding queue for complaints related to schools and school boards, hospitals and health authorities, universities and colleges. So that's the other part of that extended jurisdiction. These complaints would not be assigned directly to an investigator as they came in the door, which the other types of complaints would be, but would be held in a queue and assigned as workload capacity permitted.

With the budget cuts, our office went from an office of 50 to an office of 32, and so we had to find out how we were going to be able to deal with the volume of complaints that were coming in. The decision was to restrict the investigations in regards to local government and self-regulated professions and, secondly, to create this holding queue with respect to schools, universities and colleges, hospitals and health authorities.

Last year when making my budget submission to this committee, I requested funding for two additional investigators to allow us to eliminate that holding queue. The committee agreed to my request, and I am pleased to report that in this fiscal year, 2005-2006, we eliminated the holding queue for schools, hospitals, universities and colleges. These complaints are now assigned directly without going through a queue. In addition, instead of not investigating local government and self-regulated-professions complaints, we established a holding queue for local government and self-regulated-professions complaints. So what we were previously not accepting except in extraordinary situations, we're now taking, and we've put them into a holding queue. This queue currently has in excess of 70 complaints on hold. I'll talk about how we want to deal with that when I talk about finances.

Approximately 60 percent of the files closed to date in 2005 relate to provincial ministries — Employment and Income Assistance, Children and Family Development, and Public Safety and Solicitor General being the top three of that 60 percent; 17 percent relate to Crown boards and commissions — Workers Compensation Board representing about half of that. Another 10 percent are represented by Crown corporations — ICBC and B.C. Hydro being almost 90 percent of that 10 percent. The extended jurisdictions represent about 13 percent.

Two other matters occurred in 2005 which I wish to make mention of. First, I continued my practice of travelling to other areas of the province. In June 2005, along with two staff, I travelled to the northeast part of the province. We went to Fort St. John, Dawson Creek, Tumbler Ridge, Chetwynd and Hudson's Hope. I think it's fair to say that in the 200 years that Hudson's Hope has been around, it's the first time an Ombudsman had ever appeared in Hudson's Hope.

We set up a mini–intake office in each centre with the assistance of the local government agent. This allowed individuals to attend to meet with an investigator and to file a complaint in person. I also met with representatives of various authorities in each centre, including government staff or officials, school staff and board members, ministry staff, hospital staff or board members. I was also interviewed by local TV, radio and newspaper reporters. I made presentations to the local chamber of commerce in Fort St. John and to the Lions Club in Chetwynd and Hudson's Hope.

Over the past five years I have travelled around most of the province — to the East and West Kootenays, including Fernie, Cranbrook, Trail, Nelson and Creston; to Prince Rupert east of Prince George, including Terrace, Smithers, Houston, Burns Lake and Vanderhoof; to Kamloops and Kelowna, including Penticton, Princeton, Merritt and Hope; and to the top of Vancouver Island at Port Hardy to Victoria, including Campbell River, Courtenay-Comox, Nanaimo and Duncan.

I find that these trips serve a number of useful purposes. They make both the public that we serve and the authorities that we investigate more aware of and familiar with our office and the role we play in resolving complaints of administrative unfairness. These trips also reinforce the fact that although our office is physically located in Victoria, we serve and are concerned about the whole province. It also allows individuals that rare opportunity of being able to talk with someone face to face when filing a complaint or raising a concern about administrative unfairness.

Perhaps most importantly, it reminds me and my staff of the value that people place on the work of our office and the respect held for the office by the public. It makes us appreciate even more the importance of the office and the good fortune that we have to work for the Office of the Ombudsman. It is truly a humbling experience to go out on those trips.

The other matter I wish to bring to the committee's attention is the fact that our office has entered into an agreement with the Alberta Ombudsman's office for the lease and maintenance of the case-tracking system for that office. We have developed a very sophisticated case-tracking system. We have sold that to a number of ombudsmen or ombuds-like offices, including the city of Detroit and the military ombudsman. This past April we entered into an agreement with the Alberta Ombudsman's office for the use of the case tracker, but in addition we are providing the technical support needed to maintain the system. So not only have we sold them the case-tracking system, but we're also providing the technical support to maintain that system.

This allows a small revenue stream that assists in our office being able to maintain an expert, knowledgable IT team which serves not only our office but also the Office of the Information and Privacy Commissioner and the Office of the Police Complaint Commissioner.

We have also sold the system this year to the ombudsman's office for the Cayman Islands — I wanted to go down and deliver it personally, but that just didn't happen — and we are in negotiations with the Saskatchewan Ombudsman's office to sell them the system as well.

Finances. In December 2001 this committee recommended a three-year budget reduction of 35 percent — 5 percent, 10 percent and 20 percent — which reduced our budget from $4.5 million to $3.1 million.

We undertook a number of initiatives to achieve those financial targets, including closing the Vancouver office as a public access office, sharing space and services with the Office of the Police Complaint Commissioner in both Victoria and Vancouver and the Office of the Information and Privacy Commissioner in Victoria, reduction in our staff from 50 FTEs to 32 FTEs, establishment of six telecommuting positions in the lower mainland and introducing a mobile intake in the lower mainland.

We also initiated measures to control the volume of intake in order to ensure timely, quick and thorough investigations.

As I've indicated, in '03-04 and '04-05 we declined to investigate complaints against local governments and self-regulated professions unless there were exceptional circumstances. In '04-05 we established the holding queue. These measures were adopted to respond to concerns about increased caseloads on individual investigators and the danger of the increased backlog of open cases. Our year-end open-file count began to climb in 2004 from 278 at the end of 2003 to 405 in 2004. We were seeing a volume of cases, which was of concern because we had consistently dropped between the years 2000 to 2003 from 964 to 278 carryover cases at the end of the year.

Last year before this committee I asked for additional moneys over and above the $3.1 million previously proposed. I asked for those in three specific areas. I asked for a $67,000 increase in our base budget to $3.167 million. This increase was sought to maintain current levels of service in '04-05 for fixed-cost items like higher employee benefits chargeback, higher telecommunication costs and higher building occupancy charges. This was approved, so my base budget moved from $3.1 million to $3.167 million.

I asked for a one-time increase of $35,000 to assist in the continuation of our mobile intake pilot project. This project has proved to be very successful and very popular. Because we had closed the Vancouver office, we were concerned about continuing to provide access to people in the lower mainland to our office, even though we have a 1-800 number and we're accessible over the Web. We wanted to be able to provide face-to-face access, so we developed this mobile intake. We travel to six different sites in the lower mainland, including Abbotsford, Burnaby, Surrey, Port Coquitlam, Richmond and the North Shore.

As of the end of September the number of persons accessing our office through the mobile intake exceeds the number who previously accessed our office directly in Vancouver. We've had more people come through the mobile intake than had previously come to our Vancouver office. Currently, the mobile intake represents approximately 3 percent of our total intake and 6 percent of the files assigned to the investigators. The reality is that the mobile intake…. Because there are appointments made, there's some prescreening that occurs, and therefore the meetings generally result in an actual file being opened, as opposed to merely being an information session of some sort.

We've also begun to experiment with the mobile intake on the Island, having held one in Nanaimo and another in Parksville. In both of those we were warmly received. Lots of people were interested in attending.

I believe that this initiative is worth maintaining and should receive funding on a continuing basis, so I'm asking the committee to increase our base funding — from $3.167 million — by $50,000 to permit this initiative to continue.

Last year a one-time increase of $189,000 was given to allow the hiring of two additional investigators for one year to address the backlog in cases and to assist in reducing the wait times for the schools-hospitals-universities holding queue. Again, this initiative was very successful. With the addition of these two investigators we were able to eliminate that holding queue, so those complaints now get dealt with in the same way as any other complaint with the respective provincial ministries.

I would ask that the $189,000 for those two investigators, provided in '05-06 as one-time funding, be added as an increase to our base budget to permit our keeping those two investigative positions and allow us to remove that school-hospital-university holding queue permanently. So we won't have that queue. I'm asking for that one-year funding that I got for two investigators to see how it would work. It was a success. It allowed us to get rid of the queue. I would like to be able to keep those two additional investigators.

In May 2005, with the removal of that holding queue, we established the holding queue for local governments and self-regulated professions. Rather than turning those complaints away, we said: "Okay, let's put them into a queue and see what we can do with those." We now have in excess of 70 complaints in this holding queue and more than 120 total intakes. I would ask for two additional investigators on a permanent basis to allow us to remove this queue and to allow us to handle complaints about these authorities — local government and the self-regulated professions — in the same manner and the same way as all other complainants. That would be an additional increase of another $189,000. In effect, I'm asking for four additional investigators: two, which I got last year on a one-time

basis to get rid of one set of queues, which was successful; and two more to allow me to get rid of the other queue that we've created.

The effect of that is that we would be able to do all of the authorities that the office is authorized to do. We're back in business, so to speak. We're not restricted.

In addition, I'm asking for an increase in the base budget of an additional $146,000. This is made up primarily of a statutory salary increase for the Ombudsman's office. By statute, my remuneration is tied to the remuneration of the Chief Judge of the Provincial Court. A salary increase was established for the Provincial Court as of April 2, 2006, and accordingly, my salary will also increase, or the salary of the Ombudsman. It's automatic. It happens by way of the fact that as the judges' salaries increase, the salaries for the officers increase. It's an amount of approximately $58,000, including benefits, that's needed. So that's part of that.

A $50,000 increase to cover the cost of an additional systems person. That would be substantially recovered from the $45,000 we receive from the Alberta Ombudsman's office as part of our contract involving the use of the case tracker. So we need $50,000 to pay that person. We're only going to get $45,000 so really it's $5,000 more net.

Then $38,000 for general operating increases in respect to matters like travel, publication, increases in costs, supplies. The reality is that if we get more investigators, we need more supplies, more telephone lines, etc.

In summary, for fiscal 2006-2007, I'm asking for a revised budget of $3.693 million, an increase of $305,000 from the budget approved last year. That represents approximately a 20-percent cut from the $4.5 million that we originally started off with.

I'm not asking to go back to where I was three years ago. We found efficiencies. We're operating in an efficient manner. The reality is that with these four additional investigative positions, I think the office can effectively perform the job it's asked to do. There's obviously more stuff we could ask for, more we could maybe do, but I believe in an incremental approach, and that's how we've been proceeding. We cut our budgets in an incremental way, and now we're moving back into a situation where, I think, with the $3.693 million, it would allow us to do the work of the office.

There may be a need for additional moneys to cover potential budget impacts which cannot be quantified at this time. For example, if there ends up a general salary increase for members of the public service, obviously, that will impact on our staff. I can't address that and would simply point out that I would ask the committee to make some notation of that in their recommendation so our budget would be adjusted accordingly.

For fiscal 2007-2008 and 2008-2009, at this time I'm asking that the base budget of 2005-2006 — that is, $3.693 million — be approved.

B. Lekstrom (Chair): Thank you very much, Howard, for your presentation here today.

M. Karagianis (Deputy Chair): I do have a number of questions here. I noted that the graphs at the very back of the budget submission are actually quite indicative, I think, of the current workload. So do you want to make any comments, first, on the…? On page 35 I see that the number of open files by age distribution shows a significant number of files that are still open for children under the age of five, particularly for infants under the age of one.

H. Kushner: Sorry. Those are referring to the age of the file as opposed to the age of the complainant.

M. Karagianis (Deputy Chair): Oh, are they? So these have nothing to do with children. It's simply the age of the….

M. Karagianis (Deputy Chair): Oh, I see. Putting this, then, into perspective with your discussion on your holding file and how you've determined your workload, do you want to talk about the increase and decrease of this? Obviously, from 2000 down to 2002 there was a dramatic reduction in the number of files that were recent. I see that actually now growing. Can you comment on that?

H. Kushner: Certainly. That's part of the concern. When I came into office in 1999 we had a substantial backlog. I wanted to address that backlog, so we began to address it in a very strong way. We established performance measures for the office. We established standards with respect to our expectation to how long files would be open. For example, we set standards that 70 percent of the files would be closed within three months, 85 percent within six months, and 90 percent within one year. We began a very concentrated effort. With the resources we had and the number of staff we had, we were able to deal with that.

There was also a somewhat decreasing intake. If you look at the volume coming in, it was going down.

What happened with the cuts is that we went from 28 investigators down to 12 investigators so that we had to try to control that intake in some way and recognize, as you can see, that with fewer investigators, it takes longer to go through the investigations of the total number of files coming in. They just hang on longer. It takes a longer time. If we looked at that number of files open at year-end, you could see by the chart that they were going down. At the end of 2003 we had 278, and in 2004 we had 405. That's including the fact that we were investigating local governments and the self-regulated professions. We had that increase that was coming into effect.

With the addition of the two investigators — so we had 14 investigators during this fiscal year — you can

see that that number is already beginning to come down because the two more investigators allow us to go through the files. You can obviously assign more files out. You have two more staff. So we brought it down right now to 342 open files.

With two more investigators, our hope would be to get back…. You're always going to have X number of files carried over — any files coming in late in the year and so on. But it looked like that number should be in the range of 275 to 300. That seemed to be our experience. We're at 405, and our concern was if we hadn't received additional, we would start seeing that increasing.

The other chart over, the open and deferred files in 2005, you can see that. You can see how many we're investigating, how many are being deferred and how many we're not even investigating. Hopefully, with the additional resources, if the committee's prepared to grant that, we won't be in a position of saying: "We're not going to investigate anything anymore." Hopefully, we'll be in a situation where we're not even deferring. That chart next year would simply show only open files without files being deferred.

The impact was that the cut in the resources…. The concern had always been that we wouldn't have enough staff to be able to do all of the work that we were tasked to do. We adopted measures to deal with that. The concern had always been that that number of open files at the end of the year would start to build up again on us. That was what our experience was in this time.

M. Karagianis (Deputy Chair): Okay. I think that makes sense, then. Out of the last chart here on page 37, where obviously the new files assigned to investigators in 2005 are considerably lower than in previous years….

H. Kushner: It's certainly beginning to find that range, which would look about where the mid-range is. It looks like we'll be able, maybe, to have the right number of files being assigned.

My last question, then, is…. I do note that in the news today there's discussion about the fact that you are declining the child death review process.

H. Kushner: I'm not declining. We announced that we were doing an investigation. We initiated an investigation into the Ministry of Children and Family Development in August in addressing the concern about what the practice standards were that the ministry had in place; how they were being assured that the delegated agencies, who had been delegated the child protection responsibility, were in fact meeting those practice standards; what monitoring processes were in place; and if they hadn't been, what has changed in the time?

We initiated that investigation in August. We didn't make any public announcement at that time, because it's not my practice to announce an investigation. In September, again, there was a lot of interest in the matter being raised, both in the House and in the press. I felt, as an officer of the Legislature, that I should let the MLAs and the public know that we were doing this investigation.

When I announced that investigation on September 22 the only investigation that had been announced up to that date was an investigation that the Attorney General had asked of the child and youth officer to look at the terms of reference of the director's review. In my view, that wasn't broad enough in order to address all of the issues.

Subsequent to our announcement, there has now been a series of other reviews announced and initiated. Those reviews — by the child and youth officer, the coroner's office and Mr. Ted Hughes — look to me, from looking at all of those reviews, that they are going to cover the issue, in particular the issue of the policies and procedures. How the ministry assures that the delegated agencies are, in fact, complying with those, and what audit procedures or standards they have to make sure that they're being obeyed — these are going to be looked at in the context of those reviews.

Our practice, though, when government initiates a review to a question that we're looking at, is that we tend to say: "Okay, let that review take place." We're an office of last resort. So we have suspended the file — we've not closed the file — and we've said: "Let those reviews occur." When the outcome of those reviews has been reported out, we will look at this and say: "Has it answered the concerns we had which caused us to initiate our file?" If it has, that's fine. We'll not go any further. If it hasn't, then we can recommence our investigation.

We've got information. We have questions, and we're going to sit back now and let government, the child and youth officer, the coroner's office and Mr. Hughes do their reviews and report out, so we've suspended our operation. There's no need for everybody to be doing the same thing, in my view. Our office sits sort of at the top of that pyramid, and we're prepared to say: "Let those reviews occur." Obviously, it allows me to be able to deploy my resources differently now than I would have, but we've suspended our investigation, as opposed to having closed our investigation.

N. Simons: I was going to ask about that particular review as well. Perhaps what it signifies, in a more general sense, is what happens to the budget of a relatively small agency when large, structural investigations need to take place, as opposed to individual, case-by-case walk-in or call-in concerns. If something else comes along, where there aren't nine other investigations initiated, and the Ombudsman's office actually has to deal with a specific structural problem in government or in one of the other areas, how is that reflected in your budget proposal?

H. Kushner: We don't have any specific provision in the budget for that. We do some systemic reviews.

As a matter of course they may come up, and we just try to deal with them as we can with existing resources.

I think it's a really good question, and I'd made a note to comment. It may be that one way of dealing with those larger, systemic reviews would be a mechanism by which more than one officer may want to come back and recommend some sort of joint review. I note that the Auditor General raised this question. He says he's interested in looking at Maximus and at whether the government has got a fair deal, value for money, with respect to Pharmacare. Well, we look at Maximus in the context of the service delivery. We get complaints about that, about whether or not it's providing fair service in the sense of the quality of service.

There may be privacy concerns that arise, and it may be that it's appropriate…. Maybe what the officers should be doing when they're looking at sort of some of those larger systemic issues is bringing a joint proposal back and saying to this committee: "We want to do an overall look, say, at Maximus." The Auditor General will be looking at value for money. Did the government get a good deal? We'd be looking at service delivery and whether or not the service delivery is occurring in an appropriate way. The Information and Privacy Commissioner might be saying: "We'll look and ensure that the privacy issues are being respected." We're able to come in with a budget and say, "This is what it's going to cost us to do it," and provide some sort of joint proposal, rather than….

We do face that as a small office, as to how we're going to do it. Our resources are eaten up in our investigations. If we have additional investigations, how do we deal with it? I think it's an approach that could be used to ensure that when something is examined, it's examined from more than one perspective, using all of the officers as a resource for the members of the Legislative Assembly.

N. Simons: I'll probably follow up on that particular issue around your role in the Ministry of Children and Families, only because there still remains some obvious need for investigations. It's not the issue of this committee.

J. Yap: I appreciate the presentation and commend you on meeting your performance targets through some challenging times. I just want to be clear. With the additional two positions that were added on sort of a temporary basis, I take it that it allowed you to really make a dent in the backlog.

H. Kushner: It allowed us to do a dent in the backlog and to remove the queue that we were putting people in and saying: "Okay. You have to wait three or four months before we can actually assign your file for investigation." We were able to assign those files immediately, as indicated.

H. Kushner: Yes, with respect to the schools, universities and colleges. We've now created a second queue, or a new queue, for local government and self-regulated professions. I would ask, as I indicated, for two additional staff to allow us to deal with those. We have 70 complaints on hold right now, and if we get the additional staff, we can then begin to assign those out without having to go through a queue.

J. Yap: I just want to be clear in my mind. With the two temporary positions, what will their role then be, now that you're going to create sort of permanent, ongoing roles for them?

H. Kushner: If we don't keep the temporary positions, we recreate the queue for schools, hospitals, universities and colleges. So those two are needed in order to allow us not to have a queue for schools, universities, colleges. We then have a queue for local government and the self-regulated professions, and two more investigators will allow us to get rid of that queue. It's a question of whether we continue to have a holding queue, and whether we end up with two holding queues or one holding queue. The two positions we had this year allowed us to get rid of the one holding queue.

We weren't taking local government and self-regulated profession complaints at all, except in extraordinary circumstances. We then said: "Let's create a queue and see what that would look like." From the experience we had with those two additional investigators this year, it shows us that if we have another two investigators, we can handle that queue as well. In essence, with four permanent staff up from what we had two years ago — from 12 investigators to 16 investigators — we will be able to investigate all of the complaints that come in the door in a timely fashion. That's what the evidence suggests.

J. Yap: And 12 ongoing investigators if these additional two are added — is that right?

H. Kushner: We have 12 now. The additional two made us 14 for one year; the next additional two would give us 16. We're asking for 16 investigators.

J. Yap: These investigators — what's their profile, their legal background or…?

H. Kushner: Some have legal background. Some have a social work background. We have a KSA approach. Lanny runs our human resources and our recruitment process — our hiring process. We have quite a detailed hiring process. We had an eligibility list that we created from the last time that we did this, and we were able to find people from that eligibility list in order to slot them in. There's a wide background. Some of them are lawyers. Others are, as I've indicated, social

workers — people with experience in various ministries who've applied and been successful in the position.

J. Yap: With the current level, with the two that were temporary…. With this complement and the additional two that were put on, on a temporary basis, you were able to meet your performance targets?

H. Kushner: When we went from 12 to 14 we were able to meet the performance targets, but we weren't taking all the complaints that we should be taking or investigating. We created that holding queue, but we were able to meet the performance measure, with those additional two, to allow us to remove one queue. What I'd like to do is…. I think I can take in the complaints in respect to the self-regulated professions and local government and meet the performance measures with two more. It's a complement or an add-on of two from what I have this year, but it's making four permanent. It's a complement or an add-on of two from what I have this year, but it's making four permanent.

L. Krog: On page 3 of your report, you talk about 1,747 new cases being assigned to investigators in 2004. I'm not trying to pin you down on this, but you took a very dramatic cut in your budget. I daresay there's not a member around this chamber who would be able to handle a 35-percent cut in their annual family budget with comfort and ease.

Having said that, I'm just wondering: is it a situation where, in order to respond to that budgetary cut, you in fact have been assigning fewer cases to investigators than you would have in the past? In other words, have you had to be somewhat more rigorous — I won't use the term "ruthless," but more rigorous — in terms of assigning cases that, if you'd had that budget in place, you would have assigned previously?

H. Kushner: I think it's fair to say that we have been exercising a more diligent role in asking complainants: "Have you gone through all of the existing processes? Have you taken your complaint through whatever channels…?" Whereas before we might have said: "Okay. You've gone partway. We'll open a file. We'll assign it to an investigator, and the investigator may do some of that." We've been doing a bit more of that at that front end, again, as a means of trying to control.

Inviting the complainant to come back. But we don't know how many people we lose when we say to people: "Well, go through that process and then come back."

At the same time, it's consistent with our philosophy that we're an office of last resort, and we encourage people to go through it. But I think it is fair to say that we've been more stringent in that approach with the intake staff — we have dedicated intake staff who take the calls — in saying: "Have you taken your complaint through this process, or have you spoken to somebody at the authority?" Even if the authority doesn't necessarily have a review process, they often will say that they can call this supervisor or this manager.

We wouldn't necessarily identify that as being a recognized appeal process, but in this time we might say to them: "Why don't you give that person a call, and then, if that person doesn't provide you with a satisfactory answer, call us back."

I think it's true to say that we've been more rigorous in that approach, in encouraging complainants to make sure they've exhausted all internal processes before we've opened up an investigative file.

L. Krog: One other brief question. Before the substantial budget cuts, how many investigators did you have?

H. Kushner: We had, I think, 25 positions and 28 staff — because of part-time and so on — split between Vancouver and Victoria. We had two full offices. We had an office in Victoria and an office in Vancouver, and we reduced that. We went down to approximately 12 investigators — about half. We had six teams of investigators. We're now down to two teams of six investigators, roughly, on each team.

L. Krog: So essentially, in my rough math, you're asking, with the two additional FTEs, to be put to 60 percent of the number of investigators you had previously. Is that…?

L. Krog: You went from 25 down to 12, and you're asking to go up to 16. Roughly speaking, it's a little over.

R. Lee: I'm interested in the case-tracking system. I sense that you recover some of the development expense through the use of other officers. Do you think that is something that would be able to help MLAs' offices?

L. Hubbard: It's based on a system of tracking callers that come in through different stages of the process and the ability to attach notes to those individuals. I'm sure it could. In each case where we have sold it, we've customized it slightly, because in every office their business practices are just a little different. But the fundamental core of it is the same for everybody. Our own Information and Privacy Commissioner is using a variation of the system as well. That was part of the shared services thing.

The other offices that Howard mentioned, and certainly in the discussions we're having with the

Saskatchewan Ombudsman…. It's also their children and youth office. They are under one act, but they're two offices, so it's going to be a joint system for those two offices. Apparently, there's also interest being expressed about the possibility of their human rights commission. So it's any office that has to track complaints, keep track of what's going on with them. Yeah, it seems to be a good system.

H. Kushner: I suggested one year to the committee — and if the committee is interested, I'm certainly prepared to bring that proposal back — that if you gave us money for a representative, we could go out and market this item.

It is a remarkable system. When other offices see it, they are interested in it. They want it. We've had interest from some places in the United States. We sold it to the city of Detroit, but some of the states in the United States say they can't buy it because they're not allowed to go outside the United States in order to purchase it.

We've thought of marketing it, but that's not the business I'm in, so I can't take my resources and say: "All right. I'm going to take my resources and market it." But we have found a way of doing something like that by entering into this agreement with Alberta that provides…. Rather than simply selling it straight out and seeing all the money come one year and, in essence, most of it ending up going back into the consolidated revenue fund because it turns into being a surplus, we said: "Let's spread that out over five years. We can use that money in order to retain an IT person, because we're now providing them with the IT support. We're storing their data here." I mean, their system is running off our system; I guess that's the best way to explain it.

L. Hubbard: Yeah. Alberta is…. They connect in over a virtual private network to the system. There were obviously some issues that had to be worked through, but they're an even smaller office than ours. They had no internal IT support. So how to run a sophisticated system like that? They were looking at it costing them a lot of money. For us, it helps us to go beyond having…. We can maintain a critical mass of staff.

We need to have that expertise, or else we become very vulnerable. So that is a benefit to us and a benefit to them. It seems to be working very well. It's word of mouth that's sort of spreading. People are coming to us. We're not out there kind of beating the drum about this. We hope they just come in a fairly orderly fashion so that we don't get a big flood.

R. Lee: Thank you. But what I'm thinking is that since this system was developed using taxpayers' money from B.C., maybe the MLA offices can use that freely, because they help us to track our cases. There are many cases now.

H. Kushner: It's certainly something that could be looked at. We might even be willing to provide you with technical support, for a slight fee, to allow our office to maintain….

D. Hayer: I'm just looking at your total budget from 2005-2006, when you asked for it originally. It was up $224,000 to make it $3.388 million — right?

D. Hayer: Now, for 2006-2007 you're asking for $3.693 million, so that's about $305,000 — about 8 percent. I noticed that first you had about 6 percent, and now you're asking for 8 percent for next year. Then for years '07-08 and '08-09, it's stable. So you expect those three years to be really stable. Or will you be coming back probably seeking some other changes?

H. Kushner: I believe that with the budget we're asking for now for this year, we will be able to do the work that the office is required to do. The question then becomes whether or not there are extras that you would like the office to be doing. Are there systemic investigations that you think we ought to be doing over and above the ordinary ones that we are doing? Are there other things you want the office to do?

But from the question of whether the $3.693 million is sufficient to allow us to take and investigate the complaints that come in the door to do the basic, solid work of what the office is intended to do, for all of the authorities that we have, my answer is yes. That's what it is. My view has always been — and I was always upfront about it — that a 35-percent cut is too deep of a cut, that our office could not absorb 35 percent and do the work that was expected of the office. My position had been that about a 15-percent cut would have allowed us.

The reality is that it's about a 20-percent cut, because we found some savings. My view is that at 20 percent, from that original $4.5 million down to $3.693 million, we can do the work the office is required to do.

We've changed; we have telecommuters. I know my colleagues across the country look at me and say: "How can you have staff who don't work in your office? How do you ensure they're doing the work? What's going on?" Well, we have a very good set of performance standards. We know what we expect from our investigators. We know when the work is being done, and we know what the standards are. We can measure how that work is being done.

We don't have to be in the office, so to speak, to see that the work is being done. My view is that yes, $3.693 million will allow us to do what the office is required to do — to take the complaints about all of the authorities and do that investigation.

L. Hubbard: That's based on the current trend lines in terms of numbers of complaints coming in. Obviously, if for some reason there was some escalation that

started going up, then we might have to look at that. I don't know. I haven't seen any other organizations that have the kind of workload data that we're able to produce off of our systems. To the best of our ability, in order to do all of the work for all of the kinds of investigations we should be doing, those extra four investigators should do it — barring, as I say, a sudden increase in the complaint volume coming in the door.

B. Lekstrom (Chair): Howard and Lanny, I want to thank you for coming before our committee here this afternoon. I think you've put forward a very good report to our committee. We will take all of what we've heard today through the deliberations in the consideration and development of our recommendations. Again, on behalf of British Columbians, thank you for the work you do.

B. Lekstrom (Chair): Our next presenter will be here at 3 p.m. and is the Conflict-of-Interest Commissioner. I would like to, if we could, take a ten-minute recess at this time and reconvene, at which time we can possibly deal with an issue the subcommittee dealt with earlier this morning, which was the RFP for the Auditor General's auditor.

B. Lekstrom (Chair): At this time we will reconvene the Select Standing Committee on Finance and Government Services. We will come back to order. Joining us with the last presentation today from our statutory officers is our Conflict-of-Interest Commissioner, Mr. Oliver. Good afternoon, and welcome to the committee.

H. Oliver: Thank you for inviting me for my annual dog-and-pony show here. As you will see, our needs, as always, are modest. We conduct one of the leanest, if not meanest, operations of government. I consider every proposed expenditure as though I was spending my own money, which in a sense I am.

We continue to work within the constraints of our budget of $292,000 and hope to continue to do so for the coming year. We anticipate coming in well under budget once again, which has been my constant endeavour for the past eight years or so — firstly, because I'm a taxpayer and, secondly, because I think it may set a good example to others.

It must be remembered that our operating costs are demand-driven. Our budget is sufficient for our efficient daily operation as long as we're not forced to embark on a formal investigation. I remind members that the cost of a formal investigation starts at around a quarter of a million dollars. I avoid those like the plague.

I may say that the members of the present parliament, like their predecessors in the last House and with the encouragement and support of the Premier and the Leader of the Opposition, have availed themselves of the informal, confidential, off-the-record consultative facilities which we offer. A steady stream of members drops in or phones for advice or merely to discuss some potential problem, thus avoiding the problem from developing into some unwise or inappropriate action necessitating the formal intervention of the commissioner.

We know that far away to the east, all sorts of expensive commissions have been going on. We don't think it desirable to expend the funds of the taxpayers of this province for such purposes if it can be avoided. The fact that we're able consistently to avoid the need for formal inquiries is attributable to the cooperation of the members of the House, who enable my office to practise political preventive medicine, which is so much cheaper and more effective than the radical and costly surgery of formal inquiries.

We may, of course, be faced with some unexpected expenditures. Our salaries and benefits are not entirely within our control. My own remuneration is based by statute on that of the Chief Judge of the Provincial Court. I know that the last House did not view with favour the recommendations of the independent judicial remuneration committee which had been set up, whose findings were described by the then Attorney General, I think, as unreasonable and unfair. A little bird tells me that wiser counsel may prevail in the future, but of course, I'll say nothing about that because I might have a conflict of interest.

Other operating costs. We have shared offices for many years with the comptroller of the Legislature, whose department is going to vacate the premises with the comptroller. We will lose our copying equipment and shredding equipment. I've had my office check as to the cost of new copying equipment, which I find to be horrendous. I'm waiting with bated breath to see who moves in, because I shall endeavour to talk to them nicely to see whether we can come to some amicable arrangement to allow us to use their existing equipment at no additional cost to the taxpayer. When we're discussing budgets, I think one has to raise all these remote possibilities.

Really, I have no other problems. You will see that our budget proposals for this year, for next year and for the year thereafter remain unchanged. I had hoped to bring with me for all of you copies of our new annual report, which arrived from the printers today. But I'm advised by members of my staff that if I gave you copies, I might be in contempt of the Legislature because we haven't yet delivered it to Mr. Speaker.

There, Mr. Chair, you have, in brief, my report. I'll be happy to endeavour to answer any questions you

might have, always bearing in mind the old legislative saying that there's a distinction between question time and answer time.

B. Lekstrom (Chair): Well, thank you very much, Mr. Oliver. As usual, you have been very direct and have put forward your budget in a manner that I think is very understandable. I'll look to members of the committee to see if they have any questions regarding what you've said.

L. Krog: Thank you, Mr. Oliver. I take it that, apart from the potential statutory increase and whatever the public service contracts may result in or produce in terms of an increase next spring, you don't foresee any significant increase in your expenditures or any requirement to change your proposals with respect to your budget over the next couple of years.

H. Oliver: Theoretically, of course, my staff work for me and are not members of the public service. It is our general practice to follow in the footsteps of the public service, although if it should be decided to hold public service pay at its present level indefinitely, I may wish to consider whether my staff, most of whom have been with us for about 13 years, should necessarily have to be bound by the government's decision.

B. Lekstrom (Chair): Well, on a further note, noting the salaries and benefits, Mr. Oliver, it is my understanding that as of April 1, 2006, the adjustment will be in place for the statutory officers as well. I believe you are considered half-time in the position, which would reflect about a $29,000 variation there. We will confirm that, and with your indulgence, if that is the case, I think that will be brought into our consideration. If the number does increase…. I know this sounds quite unusual from a committee, saying that we may alter a budget to the high side. I think we would certainly entertain that. If it came back that the recommendation was rather than salaries and benefits at $205,000, there'd be an additional $29,000, it would be $234,000. It may very well reflect this — to accommodate the increase that I believe is slated for April 1, 2006, as far as Chief Justices go.

B. Lekstrom (Chair): With that, I see no further questions. Again, I want to thank you for taking the time to come before our committee here. It is always a pleasure, as I indicated. On behalf of British Columbians and on behalf of the legislators and our colleagues we work with, I want to thank you for the job you do.

Members, we do have another meeting scheduled for tomorrow to deal with the two remaining statutory officers, following which time we are looking at the schedule to pick a time to meet to conclude our discussions and put recommendations in our report forward to the Legislative Assembly.

Today the further issue we have to discuss is the issue of the request for proposals that was put forward. We did have respondents to that, based on the Auditor General's request to have an auditor appointed for his office to review or audit his office completely. Is there any other business to be brought before our committee in the open meeting prior to going in camera to discuss the RFP proposals? Seeing none, I would entertain a motion to go in camera. It has been moved that our committee go in camera.

B. Lekstrom (Chair): With that, just to outline what we discussed in our in-camera meeting, we went through the request for proposals that our committee had put forward and, based on the respondents, have reached a decision which will be reported on in tomorrow's public meeting.

Seeing no further information to be brought or issues to be discussed at today's public meeting, a motion to adjourn would be in order.

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Committee Staff:	Josie Schofield (Committee Research Analyst)

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SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

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SELECT STANDING COMMITTEE ON
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