Finance and Government Services — Issue No. 65 — Monday, November 26, 2007 (HTML)

2007 Legislative Session: Third Session, 38th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES



CONTENTS

		Page

Office of the Auditor General		1627
	J. Doyle

Office of the Conflict-of-Interest Commissioner		1633
	H. Oliver

Office of the Information and Privacy Commissioner		1636
	D. Loukidelis
	L. Hubbard

Other Business		1645

Chair:	* Bill Bennett (East Kootenay L)
Deputy Chair:	* Bruce Ralston (Surrey-Whalley NDP)
Members:	* Iain Black (Port Moody–Westwood L) * Harry Bloy (Burquitlam L) * Randy Hawes (Maple Ridge–Mission L) * Dave S. Hayer (Surrey-Tynehead L) Richard T. Lee (Burnaby North L) * John Horgan (Malahat–Juan de Fuca NDP) * Jenny Wai Ching Kwan (Vancouver–Mount Pleasant NDP) Bob Simpson (Cariboo North NDP) * denotes member present


Witnesses:	John Doyle (Auditor General) Lanny Hubbard (Office of the Ombudsman) David Loukidelis (Information and Privacy Commissioner) H.A.D. Oliver (Conflict-of-Interest Commissioner) Errol Price (Deputy Auditor General)

B. Ralston (Deputy Chair): This will be the annual review of the statutory officers' budgets by the Select Standing Committee on Finance and Government Services. Our first statutory officer here to present is the Auditor General. I'd ask him to proceed.

As you are aware, this is my first meeting with this committee, and I look forward to a constructive engagement over the next few years. Today I am presenting my estimate of resources 2008-2009, which details my office's resource needs for the next few years. The bottom line is that the office needs $15.25 million for 2008-2009.

I'm still in the process of assessing the structure of the office and how it goes about its work. This process will be complete in the spring of 2008 and will include detailed planning for the next cycle of coverage plans and the required resources.

This work over the next few months will also permit me to conduct a full review of the current arrangements, consider the impact of significant environmental changes that will be coming, assess the capacity of audit staff to adapt to the new situation and generally consider the level of assurance required to issue opinions and conduct audit work.

For this coming cycle — and we are already committed to working against the coverage plan — I have adopted a steady-as-we-go approach that acknowledges previous planning work and commitments. It is in line with the presentation made to this committee last year.

There are two exceptions. They are focused on the funding arrangements linked to independence of the office and maintenance of the capacity of the office to conduct work. Both will help set the direction of the office over the term of my appointment, but there may be other issues generated through the assessment process that will need to be brought to the attention of both this committee, if there are budget implications, and the Public Accounts Committee regarding the coverage plans.

I will now provide an overview of the estimate of resources 2008-2009 and explain in detail the need for change to the previously endorsed funding model.

On page 3 is a simple table that details the request's budget. Last year the office had access to $12.75 million. In 2008-2009, I will need a similar level of funding brought up to current price levels — in other words, inclusive of pay increases and price rises.

In addition, last year's submission to this committee and the coverage plan endorsed by the PAC included an increase in the basic level of resources, six FTEs, and these are still required. Together, this would bring the base budget to $13.75 million for the year. However, this would only be adequate if the external pressures that face my office and the profession were stable. They are not.

Thus, I am requesting a further sum to provide me with the ability to attract and retain qualified staff to conduct the work of the office. This sum is shown as $1.5 million and will enable me to adjust the compensation arrangements of existing and future staff.

The total requested is $15.25 million. The flow-through impacts of this level of funding are shown in appendix C, which is on page 26, along with the capital estimates. These changes include planned increases in staffing levels plus known changes built into pay awards.

Funding arrangements linked to independence. Generation of funds by invoicing agencies is not normal in Canada but is permitted by the Auditor General Act. Most offices have their full funding by appropriation. They are, after all, the auditors for the Legislative Assembly and have no other client, other than the citizens of the province.

I request that the funding for my office be by appropriation. I fully support each agency meeting the cost of audit work, but that does not have to be achieved by the issuance of an invoice by my office.

It is my intention to nurture a robust costing model within the office that will identify the cost of audit activity within and the actual cost of each engagement. The model would be used to test efficiency and compare internal costs to work conducted by others providing assurance services. I expect to be able to be efficient and to be able to demonstrate that I am efficient and cost-effective in all my future work.

Maintaining the capacity of the office. The office has experienced a 20-percent turnover of staff this year. The average for the public sector is about 4 to 5 percent. Staff move on. That is good, both for the staff and for the public sector as a whole.

However, the staff that have left are leaving for "the wrong reasons." We pay too little, even when compared to our colleagues in other legislative audit offices. As demand for staff grows, it is critical that the office maintains its capacity to grow staff. Therefore, we need the right mix of junior, senior, manager and above. We need to retain the culture of innovation and professionalism.

All the rules of accounting and auditing will change over the next few years, and we need to be responsive to that — I've got firsthand experience of that in Australia over the last few years and can see in advance what is likely to happen — and to deal with the rapidly approaching retirement of long-serving senior staff. Therefore, I'm looking towards a considerable loss of corporate memory.

Today applications are few. Many withdraw when money is mentioned, and trained staff leave shortly after qualification, attracted by significant pay increases elsewhere. Presently the office is well behind

even the other legislative audit offices, a group not known for its overgenerous remuneration.

I need to work within the current and recently improved framework within the public sector to make the office sufficiently competitive to attract and retain staff of the right quality but need an expanded financial envelope to do so. I have estimated that $1.5 million, plus any savings I can generate from within the office, will create opportunity for success in this regard.

Members, my office has an international reputation. This is a function of the people in the office, leadership over many years and the trust placed in the office by the Legislative Assembly and the citizens of this province. In the early days of my term it is clear that difficult times lie ahead.

This is not the normal "I want to create a crisis because I need more money" type of scenario. I've been there and seen the changes to the international financial reporting standards and the fundamental shifts that occur within accounting and auditing across the public sector — and survived. So I know it's possible.

There is a challenging program for transparency and accountability set by the government, and there are growing expectations for assurance work that is relevant to both legislators and citizens. These goals can be achieved, but only if the office is set up to succeed.

I'm happy to respond to any questions the committee may have. I have with me today Errol Price, the Deputy Auditor General, and in support there are Christine Davison, who's our director of finance and information systems and Jennifer O'Halloran, director of human resources.

The first one I'll ask is with respect to the million and a half dollars for staff compensation. I know that's a figure that isn't really exact, and probably you're not…. I mean, it might be low; it might be high. I wonder how you arrived at the million and a half dollars, and then, there's an adjunct to that.

When you spoke about having all of the funding through appropriation, I'm assuming what you're saying is that you would keep track of your costs, you would present to the Finance Minister a statement of costs, and she in turn would bill the entity that you did the financial audit for. First of all, I'll just ask: am I correct in that assumption? That's what you're proposing?

J. Doyle: As far as the costs are concerned, I do intend to develop a robust costing structure within the office so that I can identify the actual cost, with overheads, for all engagements that we undertake as an office. That would include the financial audit work, and it would also include the performance audit work. So if you were to come to me at any point and say, "How much did this report cost?" I would be able to tell you.

At the moment the foundations for that are in place, but we still need to do some more work to make sure that it's robust enough so that we can use it and be confident with the results. But yes, it is my intention to be able to fully cost all the avenues and lines of work that we do.

R. Hawes: The point that I'm trying to make is that there are entities that were being audited on a fee-for-service basis that rightly should — and you've said that — be paying fees. For example, most of the school boards hire private auditors. They pay market price for those audits. If the school boards that you have selected for audit from your department either escape fees or pay fees that are less than market rates, that's really an unfair subsidy to that school board.

I would like to make sure that that there is a bill issued to those entities that would be equivalent to what a market rate would be. To do that, if it were going to go through the Finance Ministry, they would need to have something from you that would allow them to put together a bill that would stand the test of fairness in comparison to market rates.

R. Hawes: Given that, I am assuming, then, that if a school board — using that as an example — were to hire a private auditor, the auditors that are working within that firm may even be staff that were lured away from your office because they're being paid more money. And I'm assuming that that would be built into the price that is paid by the entity that hired them. So some of the million-and-a-half-dollar ask, I'm guessing — and I don't have any idea how much, but some of it — could be offset within that billing structure, I am assuming.

R. Hawes: So it might be that you might not need a million and a half dollars.

J. Doyle: Well, if I'm being funded by appropriation, then I still need the right appropriation, but the net cost to the system could be lower because of the charging of market fees. So I'd still need the correct appropriation, but the government as a whole would be able to spread the cost of our work across the agencies in such a way that the net cost would reduce. I think that's the point you're making.

R. Hawes: Pretty close, yeah. Some of the million and a half dollars would, in a sense, be covered with the billing that goes out, so you wouldn't necessarily — well, perhaps you would — need the million and a half. We would recover it, I guess, is what I'm trying to say — or much of it.

J. Doyle: Over time, as IFRS comes in and as the changes to the standards come in, you will see audit fees and the costs of doing the accounting within agencies

increase dramatically. This may not occur today, and it may not occur tomorrow, but it will occur over time.

The kind of price rises that were impacting the profession in Australia during this similar sort of period were anywhere between 30 percent and 40 percent of the base cost. Whether or not that's going to occur here depends very much on how much of the new framework is adopted by Canada. Certainly, the pressure will be there for increased costs, and there will be a significant reduction in the people with the right skills to actually conduct that work. That's a given.

You'll see prices go up right across the board. All those agencies that at the moment have auditors that they're getting from the private sector are going to be struggling to hold their costs down as much as possible. That's just going to be the nature of the whole process for the next few years.

J. Horgan: Thank you very much, John, for your inaugural presentation to this committee. Welcome to Victoria and British Columbia.

J. Horgan: I wanted to spend a little bit of time probing the turnover and the recruitment and retention challenges that you've discovered on arrival.

I know you're recently in the position, so you haven't had an opportunity to do a detailed review of why the turnover would be so much higher in your office as opposed to the broader public sector. But if you could expand on your comments in that regard as well as conclude by focusing on what positions are most at risk, as you describe in your presentation, in terms of how you would allocate the $1.5 million.

J. Doyle: Thank you for your question. We probably have three different areas of pressure at the moment. The first and of the most concern to me in the short term…. We have youngsters that join the office and train to be chartered accountants. This is a three-year process which is very exacting, and it's a great credit to them that they get through all the exams after leaving university. They're basically trained within the office in how to be a chartered accountant working in practice. As soon as they qualify, they leave.

These youngsters, plus the ones that are in training, are a key ingredient to the successful work of the office. You need people who can conduct the controls testing. You need people who can do the substantive testing. You need people who are building up their skill base, and of course you need the infrastructure above them to ensure that the audit work is conducted properly. If you don't have these people in place, more senior people have to step down to actually conduct this work, and that lifts the costs very, very significantly.

What's happened over the last period of time is…. There have been difficulties attracting youngsters to join the office. Also, once they've qualified, they have moved on to the profession, where they're highly regarded, and they get a $5,000 to $10,000 pay increase as they move across. So we have, if you like, done all the work. They are now well-qualified, rounded individuals with highly relevant skills, and they move on.

We have another group that are taking their final exams at the moment, and we're due to get the results next week. We're obviously very, very keen to hold these people within the office and to keep them with us for another few years. Plus, we've expanded the recruitment of the more junior staff in the training process. We're beginning to see that the work style and the innovation and the less intense nature of the work within the office are starting to attract people back, but it's a trickle rather than the normal amount that we would get.

The next group that I've got concerns about are the mature people within the office. Some of them have been in the office quite some time, and they have incredible depth of knowledge and skill and experience in the conduct of audit — not just financial audit but also performance audit work.

The average age for quite a large cohort — I think 60 percent of this group — would seem to indicate that they're up for retirement within a relatively short period of time. If they were to leave as a block, then basically that would severely impact the operations of the office. Somehow I've got to be able to set up a situation where I can grow new people — the managers, the next level down from the directors — so that they're capable of taking on the role and stepping up, if you like, to the additional workload and the additional skills that they're going to need. I've got to train them now to set them up. That kind of training is currently being planned or is taking place right across the profession.

So there is a demand, if you like, that can only be met with a supply from certain areas, for people who are capable of taking on this load and moving forward to the more senior positions. Basically, when you're looking for a chartered accountant and you're looking for someone who's got audit or assurance skills and a broad knowledge across the public sector, there's usually only one place you go. That's the Auditor General's office or graduates from the Auditor General's office who have moved into the wider public sector.

The third area is: there needs to be turn in every organization. There needs to be some shift and change. If you have the same group of people working in an organization for many, many years, the freshness can be taken off. The innovation can disappear.

We're moving into a situation where there will be significant shifts and changes in the way we go about our business and in the skills that are required to conduct the work. Basically, all the rules are changing as we go forward.

It's usually career-minded, midterm people who are looking to respond well to those kinds of situations — not the guys that are going to retire in a few years. Although I must say that the ones I've met in the office are very, very enthusiastic and wish to move forward with technical expertise and so on. But typically it's the

midterm group. They need to be retained within the office, and they also need to be grown and developed.

Looking at all of that, I'm looking at the pressures now from their point of view. They're looking at: "I get a reasonable salary. I love working here, but basically I can get $10,000 or $15,000 a year more or different conditions elsewhere. I can move forward on my career better elsewhere." Yet those are the sort of things that we could offer and perhaps should offer just by keeping in line with our colleagues across the other provinces.

So it is a challenge. It's right across the board. We're looking at a strategy at the moment which will try and address all those issues, to try and retain people. Even the thought that a member of staff comes and says, "Look, I've been made an offer…." I would need to perhaps feel: "Yes, okay. Well, good luck. That's good for your career. Off you go." Or alternatively: "I'd like you to stay." Making a counteroffer is now something that we can consider more than we used to be able to consider in the past.

J. Horgan: Just a tiny bit on top of that. Have you any data to demonstrate to the committee that there is a parallel reduction in CAs graduating from Canadian universities versus other professions — medicine, law or engineering? I mean, we have a shortage in a whole host of skills. Are CAs among those that we're not training and producing at a rate that can meet the needs of the profession?

J. Doyle: The real issue for me at the moment isn't the youngsters that are coming out of university, and there seems to be enough of that. It's the midterm group. I haven't got any exact figures on the university.

If we're talking about statistics, I did just circulate a graph which looks at the gap that currently exists between the profession and the salaries that are offered within my office and the average of the other legislative offices and the salaries that are offered within my office. You'll see that there are some stark variations there.

By the way, this is pay and benefits, so it's the two together. I don't think I want to try and match the profession. It's a different place. It's a different way of doing work, and it may not be appropriate. But certainly we should be able to match our colleagues in the other offices.

D. Hayer: Thank you very much, Mr. Doyle. A very good presentation. I was just looking at the chart. It looks like almost everywhere the mark is much higher than the average Auditor General's field. It looks like we're behind everywhere.

When going to university, I remember looking at the articling students. What you're saying was true back in the early '80s. A lot of these students used to get the training and then go to try to work with somebody else so that they could get a different type of experience. Many of them, after that, maybe started their own professions. Some of the young CAs that I know in Surrey are going through that.

On the other hand, are you also looking at the people who are retiring — maybe bringing them back to use some of their expertise in helping? The generally accepted accounting principles change, so sometimes they have to get education to upgrade.

On the other hand, they might have other skills which new trainees might not have. We passed legislation that allows people retiring, in certain professions…. They could not work after 65, so we have said that they can work. The other one that we're trying to say is that instead of being full-time, maybe becoming part-time…. You have to enjoy the profession and enjoy that. Are you also looking at those types of options?

J. Doyle: Flexible working is an important strategy that we're going to move towards. We do have examples where staff have come back to the office after having left it. Some of them have gone because they could see the green fields in the profession. They've gone out there, they've suffered the shock, and then they've returned. It's not because it's easier where we are. It's just different.

I think it would be fair to say that the vast bulk of staff within the office want to be there because they have a commitment to the public sector and believe they're doing a good job for the province.

I think this flexibility is something that's going to be required into the future. In my office I don't just need chartered accountants. I need a whole array of different skills.

Information systems auditors. I've got some chartered accountants that have trained up, but I actually need some people who have graduated in IS systems. I need lawyers. I need social science graduates to conduct performance audit work.

I think there's a lot of scope there. There's a big workforce out there. They don't necessarily want to sit back on the porch and go to sleep. They actually still want to get involved, and I would harness that group, as well, and bring them in.

I do that at the moment with contractors to help fill gaps in what we do, but I'd like to see it as a natural part of the way we do business into the future so that we're not just full-time members of staff but actually have the variety we need to conduct the work we have to do.

The one thing I see about this is…. You asked for $1.5 million. Will it be enough? As soon as you get your first person coming up and wanting to negotiate their rate, I can see the office coming as a group to negotiate. How do you plan on handling that?

J. Doyle: I don't know if $1.5 million will be enough. Equally, it might be more than enough. As I mentioned in my presentation, the issue is that I'm going to be looking at the way the office operates at the moment, looking at what we do and determining how we should operate into the future, given the shifting requirements in the auditing and the accounting standards.

I believe there is scope there, with these shifts, to do things differently. I need to work that through with the staff I have. They're a group of professionals. There's a collegiate requirement to do that work together, rather than for me just to order people to do things. That isn't my style anyway.

I actually am not sure how much it's going to cost, but I know I need an extended envelope from where I am at the moment. I propose to do all the planning for the next few years by early April.

In doing so, I will have a clear picture of where we're going in regard to the coverage plan that we have. I'll have a clear picture of the cost of audit right across the whole sector and how that's being made up and who does the work. I'll be able to move forward in regard to how to retain the essential skills that I need within the office in order to continue to be effective.

You're quite right. It's a good observation. I'm not sure of the exact figure yet, so I've provided a figure which I think would get me moving forward. It's my hope that that would be adequate, but if it isn't, I will come back with explanations to you to explain why it is or is not adequate and where I want to move, going forward.

R. Hawes: Based on your commitment that there would be something brought forward to the Finance Ministry that they could use to bill out for those audits that used to be a fee-for-service audit through your office, I'm prepared to move your requests.

B. Ralston (Deputy Chair): I think we'd actually have an in-camera session where we'd deliberate and then issue our report. I think that's probably a strong indication from at least one member of the committee that you're on the right track as far as the….

I had a couple of questions myself. You've spoken about the $1.5 million, and clearly there's a measure of uncertainty there. I take it that your principal goal is to send a strong message to existing staff and to those who pay attention to the recruitment policy at the office that there is a change coming. That would send out a strong message that would help you begin to accomplish your goals.

J. Doyle: A strong message. It will also, if you like, focus on the important things, which are how we do our work, the quality of our work and how we should move forward providing the service we need to provide to the assembly.

As you all know, discussions with staff can get difficult, and you really don't want them to block the actual work of the office. I need to move forward. No one has ever accused me of being overly generous when it comes to negotiations regarding salaries, but equally, no one has ever accused me of being unfair.

I suppose all I'm asking is that we at least look at what our generous other audit offices have been doing and try and match where they're at — not go beyond that but try and match where they're at.

B. Ralston (Deputy Chair): The other point on deriving your entire revenue from the appropriation. You make the point in your material that this wouldn't impact the total audit costs for government as a whole, so that the mechanism you devise will offset whatever changes that funding it entirely from the appropriation causes. Is that correct?

J. Doyle: That should be the situation. I'll provide the information. What eventually gets charged obviously would not be my decision, but I would provide information about my costs and also about the market rates that exist out there at the moment. Then someone else would make a decision regarding how much would be invoiced.

Unless committee members have any other questions…. I see I've provoked a few.

I. Black: The question I had is actually just to take a lead from the Chair's line of thought there. You talk about the estimated audit fees of $2.4 million. That is an estimate based on historical trends, etc.

In the changing of the approach to have this included in your appropriation and then basically have it charged back through the Ministry of Finance…. In terms of having all the elements of a budget nailed down in terms of what's being spent and where, how do we get any degree of assurance that the estimated audit fee of $2.4 million — that increase in your appropriation — will be spent in that manner?

That is not to suggest anything negative at all, but I'm trying to understand how you connect the dots in that. Is that a moving target? Is that $2.4 million as a historical trend? Is that a really safe number?

I'm looking for a measure of confidence in the accuracy of the $2.4 million. That's where I'm going with this. If there's a change of priorities in your office — additional work and performance reporting, additional financial audit reporting — and that shift in terms of what, if you will, is billable versus non-billable work…. Would that free up resources, inadvertently, in other parts of your office, or the contrary: would you find yourself that's not actually enough to do the work that the $2.4 million is envisioned to do?

J. Doyle: That $2.4 million has shifted over time. At times it's been as low as $1-point-something million, and currently it's $2.4 million.

It would be my intention to look at all our work to see what should be charged out and then to provide the information to someone so that they can actually invoice the agency. No one should be paying more than market rates for what is being done.

It would be my responsibility within the office to make sure that we do things efficiently so that we don't subsidize one side for another side. And because I wouldn't be receiving the money, if the market rate

which was invoiced was higher than my cost base, then I wouldn't benefit from those additional funds at all. Those funds would lie elsewhere.

I think that figure is going to shift and change over time. That's why it's important for you to have an assurance from me that I'll be looking through the cost structures and the work that we mean to undertake over the next period of time so that you're comfortable the total amount I receive is being used wisely and sensibly.

I know a lot of that is part of the Public Accounts Committee overview, but it's probably important for this committee, as well, to see that the funds that have been provided to me are used wisely.

There will be some difficulties in the first year or so getting that new model structured properly. But I intend to be open about what it is that I do, how we go about our business and to demonstrate value for money in the work that's actually done by the office.

All I can do, really, is make that information available to you. I will not try and hide things, and I will explain things as they should be explained to actually give you a clear picture of what's going on.

For example, if we determine not to invoice a particular area because we feel that an invoice shouldn't be done or we decide not to do work in that particular area, then we won't need to spend the money. I won't just take that money, recycle it and use it elsewhere, without your permission.

Basically, what I'm asking for is an envelope of money, or a total sum, to be able to line up and marshal how we apply that money over the next period of time based on the review that I'll be conducting over the next few months.

In some respects it would have been easier, and we'd have a different conversation now, if I'd started in the office in June, and there hadn't been a gap between the previous Auditor General and myself. Unfortunately, that wasn't possible, and so, if you like, we're just slightly out of step in regards to that time frame. Really, I'll be in a position to answer a lot of your questions, in adequate detail, probably in April of next year.

B. Ralston (Deputy Chair): Thanks very much. I think that's all the questions the committee has. I notice that the committee Chair has arrived. I don't know whether he may have some questions for you, or he considers that the committee has asked all the questions that need be. Perhaps if we just give him a moment to settle. I want to give him the opportunity to ask any questions he might have.

B. Bennett (Chair): Good morning. Mr. Doyle, I'm sorry that I'm late. I did try to get down here last night from Cranbrook. The airplane had mechanical problems, and rather than try and take off with a problem, we decided to wait the night and come this morning.

I understand you're finished, and that's fine. Did you canvass the million dollars that was broken down between FTEs and inflation?

I was just wondering. You had a million dollars, I think, in your budget. The particular number I was curious about was the $1 million for FTEs. I don't have it right in front of me, but there were five or six FTEs, plus there was an amount for inflation as well. I just wondered what the explanation for that was.

J. Doyle: I will draw your attention to page 3, where there's a table which shows the million dollars broken down into two components. The first component is in respect to additional FTEs. This was presented as part of the plan last year — basically, one more technical person who would assist us in the shift and change of the auditing standards and how that impacts audit practice; and then five others who are going to be working on the performance audit area.

In addition to that, each year for the next couple of years…. If I could draw your attention to page 26, there is an item there which shows the additional FTEs over that period. You'll notice that there's a slow growth in the number of staff within the office, basically to build capacity.

That is what I am going to be reviewing over the next period of time to make sure that direction is still to be endorsed. That's what I'll have available for discussion, both within the office and outside the office, by April next year. The six people were new staff that were mentioned last year when this came up in front of the PAC and this committee.

The balancing figure is for cost of living and what have you and builds in some salary increases that have occurred. I think most of the public sector got a few percentage points in regard to salary, and that impacts not just the salary but also the benefits, which are usually considered as a multiple.

Then we've also experienced some shifts in cost. For example, I mentioned earlier that we would bring in people to help fill gaps in our staffing levels. We call these people contractors. Salaries have gone up by the 1-percent or 2-percent range. Contractors have gone up by 10 percent, maybe more. I consume $1.5 million worth of contractors a year. I can only bring in fewer and fewer each year, but I need to be able to cover their expenses and costs and try to rejig my expenses and costs in other areas.

Basically, those were just to bring us to the current price level. If you took what we were given last year and then you took what we need this year as a base, the $1 million is a shift in cost, and it includes the growth that was previously discussed with the committee.

B. Bennett (Chair): Just for personal confirmation purposes, the part of the $1 million that deals with the new FTEs was discussed at last year's committee meeting with the previous Auditor General.

B. Bennett (Chair): We will take a five-minute recess, then. Just try and make sure it's only five minutes.

B. Bennett (Chair): We're back on the record, and I think we should take another recess until the conflict commissioner arrives. We'll take a five-minute recess here, and I'll check and see where the conflict commissioner is.

B. Bennett (Chair): Mr. Oliver, welcome to the Finance and Government Services Committee. You've been here many, many times before, and we all know that this is your last meeting with this committee. I'm honoured to be in the Chair's seat for your last meeting. I've enjoyed working with you, and I'll probably have an opportunity to say that to you this evening over a glass of wine. At least, I hope I do, anyway.

H. Oliver: Thank you, Mr. Chairman. This is indeed my swan song. I have had the annual pleasure of appearing before this committee, if not from time immemorial, for at least the past ten years.

I've always been treated with the greatest of courtesy and appreciation. Speaking as someone who has over a professional lifetime appeared before a whole variety of finance committees and budget committees, that has not in the past been my invariable experience when appearing before such committees. However, I am glad to say that our relationship has always been a happy one.

You have, Mr. Chairman, budget projections for the next three years here. I think you have copies of those. I should make it clear that these were drafted on the assumption that the office will continue as it has done during my tenure, with the commissioner serving as a halftime officer of the House.

Rumours have reached me that that may not be so in the future and that the incoming conflict commissioner or commissioner-designate may be required to perform certain additional duties, some of which I suggested some time ago. If that should happen, and if the job becomes more than a half-time job, then it is to be assumed that the remuneration would be more than half-time remuneration.

However, the crystal ball which I have in my office is clouded by old age, and I cannot clearly foresee the future. I thought I would mention, by way of caution, that if the incoming commissioner is required to perform further duties and if his remuneration is to be increased, then of course, the necessary amendments will have to be made to this budget forecast.

I should say this too. If additional duties should be required — as for example, if the commissioner were to assume a measure of control involving political appointees such as ministerial assistants — then the present 1.6 FTEs of staff would have to be increased too.

I have at the moment, as you are aware, two ladies whom I inherited from my distinguished predecessor Ted Hughes who job-share one appointment as executive assistant, and I have a three-day-a-week research officer. Clearly, if further duties are thrust upon the office, some increase might be foreseeable there, although I leave that to Mr. Fraser, upon whom this crown of thorns — I'm sorry; this mantle — will descend on the first of January, to consider. I thought I would bring up this caution at this point for your consideration.

I would say this too. Throughout my tenure of office, it has always been one of my objects not only to keep within my budget but to come in well under my budget, in the naive belief that this might serve as a useful precedent or guide to other departments of the public service. Once again, this year we expect that that will happen; however, that is predicated on the assumption that the duties of this office will continue to be a half-time function.

When I say "half-time function…." I haven't operated on a half-time function for years — substantially more. However, that may just be because I'm a slow worker. I have never felt it necessary to come and ask for more money.

B. Bennett (Chair): Thank you, Commissioner. We appreciate your comments. We appreciate the heads-up, and we'll pay attention to that and wait and see if we hear from the new commissioner.

Committee members, I have one person on the speakers list, and that's John Horgan. Anybody else?

J. Horgan: Thank you, Commissioner, for your presentation this morning. I had occasion to bring a complaint to your office in the course of this parliament and, as a result of that, learned much, much more about the activities and inner workings of your office than I would have otherwise, I think.

In responding to that complaint, you touched upon some potential improvements that could be contemplated for the act, and you've raised some possibilities in your comments this morning.

Since we have the time, and you're in the chair, and we get to ask you questions — and you can answer if you choose to — I'm wondering if you would reflect on your time in the position and the current position of the act relative to other jurisdictions. We were a leader some years ago. Acts have been improved and changed in other jurisdictions, and we've stayed static. Any comments or thoughts on that, as you head for the door?

H. Oliver: Mr. Horgan, I should make it clear, first of all, that I am not in the chair. There is the chair; I'm in the hot seat.

I have suggested certain improvements, if you will, to our act. The Members' Conflict of Interest Act was a piece of high-speed legislation that was brought in at the beginning of the Vander Zalm situation and did not, perhaps, receive that care in drafting which legislation normally receives.

In addition to that, experience has shown that certain things might be improved. For example — and I wasn't expecting this question; I haven't got my working papers with me — the commissioner may recommend certain penalties in the event that he finds that someone has been guilty of an infraction of the act. The House may accept or reject the commissioner's report but may not tamper with the penalties the commissioner recommends.

They start with a reprimand. They proceed to a penalty not exceeding $5,000. That goes up to suspension from the House and, finally, expulsion, or a declaration that the member's seat be declared vacant. I have not found it necessary to recommend any of these things on any of these occasions, but there they are. I think that the $5,000 penalty limit is totally inadequate, and I will tell you why.

Assume, if you will, that the conflict commissioner of the day, following an inquiry, finds that a member has been guilty of a serious breach of the statute. Assume further that it's clearly more serious than a mere reprimand would suffice for. Let's forget for the moment about expulsion from the House, which is a political death sentence and would presumably only be imposed in the most extreme circumstances. But assume that the commissioner might think that a 30-day suspension might be an appropriate penalty.

It has always occurred to me that if the commissioner were to recommend a suspension like that, it would be penalizing the voters of the member's constituency, who would be deprived of representation for that period of time in the House. That is clearly undesirable. What, then, is one to do? One doesn't wish to penalize the voters, and yet a $5,000 fine might be quite inadequate in the circumstances.

I would like to see a substantial increase in that maximum penalty power to, let us say, $25,000 — something of that sort — so that a serious monetary penalty could be ordered in lieu of suspension. These are political matters not for the commissioner, but I've raised this as something the House might wish to consider.

One thing I've suggested is a change of the title of the act and of the commissioner. Conflict of Interest Act and Conflict-of-Interest Commissioner are terms which have a negative ring to them, as though we were a bunch of crooks likely to perform our duties unlawfully and unethically.

I much prefer the terms "integrity commissioner" or "ethics commissioner" and "integrity act" or "ethics act." Those have a positive ring to them. Those would demonstrate to the people of British Columbia that the Members of the Legislative Assembly are concerned about maintaining their high reputation and have even gone to the expense of hiring someone specifically to assist in that regard rather than having a conflict-of-interest commissioner. One conjures up a little man with sharp teeth and blood dripping from his fangs. I don't think that's the sort of image one ought to convey.

A lot of provinces use the terms "integrity commissioner" or "ethics commissioner." In England he's known as the parliamentary commissioner for standards or for standards of conduct in public life.

I throw this out for what it's worth. It is not an expensive change. It costs nothing. I know that improvements which cost nothing always appeal to the Legislature. I do think that cloaking the commissioner in a positive white robe rather than in the scarlet of the criminal judge might present a better image.

I'm trying to think what else I recommended. Oh yes. I thought it might be a good idea to give thought to having members disclose not only the corporations in which they have invested but the amounts invested in each case — not, I hasten to say, for public disclosure but for inclusion in the confidential disclosure statement.

I have had situations several times now where a member, on appointment to cabinet, has indicated that he thinks there is an investment in his portfolio in a company which perhaps might be inappropriate for the holder of that portfolio. The member was quite uncertain as to whether that was a substantial investment or not. I think of one occasion where we spent three days of correspondence with the operators of whatever fund it was, only to find out that the member's investment in that company was worth, I think, $26, which quite clearly would not pose a problem. You can be appointed Minister of Health even if you hold $26 worth of shares in Pfizer, or whatever it might be.

As I say, my recommendations contain some 16 suggestions, some of which I called important; some I

called unimportant. One thing which I regard as urgent is an amendment not to my statute but to the Freedom of Information Act. Whatever genius drafted that statute provided that the act should not apply to officers or Members of the Legislative Assembly.

A schedule of public authorities which were subject to the act was then added to the act, and prominent amongst these is the Office of the Conflict-of-Interest Commissioner. This is what is known in the legal profession as blowing hot and cold or, as a distinguished member of the bar, now long gone, of Irish heritage, once told the Court of Appeal: "My Lords, there are pros and cons for it and pros and cons against it."

I regard this as urgent. I had a situation some years ago where a well-known publication was seeking access to moneys paid in the course of an investigation by my office to certain members of the legal profession. We were not talking about any substantial sums. I declined, in reliance on the act. The reason for that was quite simply this: any experienced lawyer looking at the specialist lawyers from whom opinions had been sought would be able to figure out with some degree of accuracy what this investigation was all about.

It was a matter which was dismissed and didn't go ahead. But quite clearly, if tax lawyers, for instance, are retained, you don't have to be an intellectual giant to figure out what sort of problem is being dealt with.

The freedom-of-information commissioner then applied his mind to this problem and came up with the astonishing ruling that the Conflict-of-Interest Commissioner is an officer of the Legislative Assembly for the purpose of the Members' Conflict of Interest Act, but that for the purposes of the Freedom of Information Act, he is a government body subject to that statute. I may say that I treated that decision with all the respect I felt it deserved, and no further attempts have been made to apply the act.

But I urge on the members of the House to straighten out this ambiguity. It's not a latent ambiguity; it's a patent ambiguity in the act. We are both covered and excluded. You can't have it both ways.

The Conflict-of-Interest Commissioner is in quite a different position to the other statutory officers. They are officers of the Legislature, and the Legislature is His Honour the Lieutenant-Governor by and with the advice of the Legislative Assembly. But the Legislative Assembly is the assembly of the elected designates of the people, and if Her Majesty's representative seeks access, the door is slammed in his face and he has to come humbly seeking admission, which the House may grant or may withhold.

The Conflict-of-Interest Commissioner's effectiveness depends very largely on the total confidentiality in which he is able to operate and which enables all members of the House to speak to him freely and in the sure and certain knowledge that nothing they say to the commissioner on a confidential basis will go any further.

I can no longer promise that degree of confidentiality to members as long as the ambiguity under the statute exists. The ambiguity is not my fault, nor is it your fault. It is the fault of your predecessors in whatever the parliament was that enacted this statute in the first place. So please, if you want to do something for the Office of the Conflict-of-Interest Commissioner, an office which is there to serve and protect you and the people of this province, get rid of that ambiguity in the Freedom of Information Act.

I'm not asking for some favour. I am not one who feels that transparency is a bad thing. I'm a great believer in transparency, but I think that as far as my office is concerned, all that is really required is translucency, a slightly different situation. Either that or face it: you'll no longer be able to talk to the Conflict-of-Interest Commissioner, be it Mr. Fraser or whoever succeeds him, in the fullness of time with that confidentiality which you've always been able to be assured of when you've come and talked to my office.

We pride ourselves to this day, as we always have, on running the only leak-proof operation in government. Help us keep it leak-proof.

You've seen yesterday what can happen with a hole the size of a fist in the hull of ship. A fine Canadian ship was left lost in Antarctic waters. My job has been as a pilot to assist you in the navigation of the ship of state in the avoidance of shoal waters, assisting those charged with the navigation to arrive safely at the port at which they wish to arrive. Please, don't let's have this fist-sized hole in our hull.

That's what I have to say about a statute which is really not my statute at all, but I feel strongly on this issue. I've raised it from time to time over the years. I've run it up the flagstaff, but if anyone has saluted, I haven't noticed. I regard it as important, and I urge you, and all members of the House, to deal with this anomaly in one of your statutes — which, let's face it, makes the House look silly as long as it exists.

I don't know what else I can tell you about improvements to the act. I submitted a list of some 15 suggested improvements — some important, some minor — all of them designed, I think, to enable the conflict commissioner of the day to render better and more effective service.

I've had the privilege over the years of being consulted by legislators and legislative officers from a whole variety of jurisdictions — Germany, France, Thailand, Serbia. Last week I had the pleasure to address a group of visitors from the Kremlin, who were in the House, you may remember, a few days ago. They wanted to talk to me about political corruption. I suggested to them that they probably knew more about that than I did, but I told them something about what we do to combat it.

In the course of my address — which was on a sort of to-and-fro, question-and-answer basis — I talked to them about gifts to legislators and said something about protocol gifts. They wanted to know what protocol gifts were, and I told them. I said that all of us who go around making public speeches end up being presented with yet another plaque or little banner or plastic totem pole or whatnot — entirely useless things which are thrust upon us and which we then have to explain.

At the end of the dinner Mr. Putin's deputy minister, rather red in the face, presented me with a plate with a

In any event, as I say, we have been consulted, in this remote province in which we live, by a variety of foreign governments who seem to like what we do. The way in which I have endeavoured to operate this office, practising what I call "political preventive medicine," seems to have been approved elsewhere. All provinces, I think, are doing it now.

I had the pleasure of appearing before the Senate legal committee in connection with the accountability act that was then before the Houses of Parliament, and I spent some two hours being questioned by them. They seem to like what we do. The House of Commons didn't like it as much as the Senate, but then the House of Commons and the Senate, I'm told, don't invariably see eye to eye.

I think we've been able, in British Columbia, to make a contribution to the avoidance of anything in the nature of corruption. Canada, or I should say the Canadian provinces, are well regarded in that respect. I was going to say Canada, but recent happenings in our nation's capital lead me to revise that portion of my remarks.

British Columbia is particularly well regarded by the other provinces. I'm very much obliged to the members of the House for making it possible for me to make a small contribution in that regard and to the members of the Finance Committee for providing me with the wherewithal to fund these endeavours.

We pride ourselves at continuing to be the most modest, the most humble and the least demanding of all departments of government.

B. Bennett (Chair): Thank you very much, Mr. Oliver. We will be going in camera later, after we have heard from our next witness. When we do that, I'll seek some guidance from the Clerk and also from members of the committee as to whether or not it would be appropriate for us as a committee to send a letter to the Attorney General with regard to the legislation. We'll discuss that, and that's about as much as I can promise — other than we could also send him a transcript of your remarks, at the very least. We'll do one or both of those things.

D. Hayer: I want to make a small comment and say thank you very much. In my six and a half years I have enjoyed meeting with you. I appreciate the comments that I've received from the public saying what a great job you have done. Thank you for your contribution to British Columbia, and good luck with your future.

B. Bennett (Chair): Thank you, Commissioner Oliver, for coming in today. Thank you for your years of service to the province and to us elected people. We deeply appreciate it.

Good morning, Mr. Loukidelis. Welcome to the Select Standing Committee on Finance and Government Services for your annual discussion with us about your budget.

I'd like to begin by formally introducing Lanny Hubbard, who is the director of corporate services with the Office of the Ombudsman and who, under the shared-services arrangement we have with the Office of the Ombudsman, provides corporate services to our office.

I would like to take this opportunity, with your permission, to acknowledge the 35-plus years of dedicated public service that Lanny has given to the people of the province, in recent years through the Office of the Ombudsman to our office. I wanted to recognize the excellent work he's been doing for our office and other offices of the Legislature over the last number of years, which really makes it possible for us to operate as we do. I'm very grateful to him for that.

With your permission, following on my distinguished and learned colleague's comments, I would like to simply record for you briefly — looking to the future and being open and willing to engage in dialogue about the issue that he's raised — my adamant, unequivocal, well-reasoned and firm view that, with all due respect to Mr. Oliver, his concerns, as stated today, are without foundation.

Indeed, the decision to which he referred, which I made five years ago, was never taken to judicial review. He or his office is specifically and explicitly included in the definition of officer of the Legislature under the Freedom of Information and Protection of Privacy Act, which then extends the legislation to his office as well as to the offices of other officers of the Legislature — providing, however, that section 3(1)(c) of the legislation also specifically and explicitly exempts from application of the right of access to information any records in the custody or under the control of an officer of the Legislature that relate to the exercise of that officer's functions under an enactment.

This would include, of course, the Members' Conflict of Interest Act — which means, therefore, that not only is there not a breach in the hull of the legislation and of the confidentiality which members, I think, obviously have a right to expect when they're dealing with the commissioner, there is not even the slightest dent in the hull of confidentiality.

I can assure you, in any case, that even if the legislation applied as he has suggested to you, the records he has described would be fully protected by solicitor-client privilege, as the Court of Appeal has affirmed.

Also, the personal privacy protections and other provisions of the legislation would, in any case — even if his view, with the greatest of deference to him, were correct — fully protect the confidentiality that you have a right to expect.

That said, I would like now to turn to an overview, in fairly brief terms, of the budget submission that I'd like to make today.

B. Bennett (Chair): Mr. Loukidelis, just before you do that, we appreciate your providing that comment and clarification. Could I ask, if you haven't already, that you have that discussion with the new conflict commissioner? Or do you have a suggestion about how we might handle this differently than you having that discussion?

My concern is that if the outgoing conflict commissioner feels that way about the legislation, the incoming conflict commissioner may well feel the same way, and that might impact on the degree to which the conflict commissioner keeps notes, for example. Those notes could be very useful in certain situations, if elected people were challenged in some way in the future.

D. Loukidelis: I'd be happy to do that. As Mr. Oliver was making his remarks, I had already determined the course of action, arranging and meeting with Mr. Fraser at the earliest possible opportunity, so that in addition to congratulating him on his appointment, I could open discussions on this very issue. I'd be very happy to do that.

B. Bennett (Chair): Okay, thank you very much. Carry on with your budget submission, please.

D. Loukidelis: I'd like to begin with a brief overview, for the benefit of members, of the work we do under the three pieces of legislation with which we deal on a daily basis.

In the public sector, under the Freedom of Information and Protection of Privacy Act, we independently investigate and adjudicate access-to-information appeals and privacy complaints involving the more than 2,000 public bodies at all levels in British Columbia that are covered by the legislation — ranging from local governments, school boards, colleges, universities, ministries of the Crown, health authorities and, as we've heard, officers of the Legislature, with certain very strong protections in the last case.

These functions are at the core of an accountable system of government in Canada, and this has been recognized time and again by the courts and by elected officials across the country.

In the private sector, under the Personal Information Protection Act, we provide very important services in overseeing the privacy practices of more than 350,000 private sector organizations in the province — provincially regulated non-profit organizations and for-profit organizations that are subject to the legislation. In doing this, we ensure that their practices respecting the collection, use and disclosure of the personal information of all citizens and consumers — again, in the private sector — meet internationally recognized fair information practices found in the legislation.

Our third area of business, which is also about accountability and transparency, is in functioning as the office of the registrar of lobbyists under the Lobbyists Registration Act, which has been in force since 2002. It requires the registration of lobbyists and their activities in relation to provincial government organizations and ministries, with a view to ensuring a measure of accountability through transparency for the activities of business sector lobbyists, in-house lobbyists, as they attempt to influence government policy or secure passage of a bill.

In terms of some of the activities over the past year under these three pieces of legislation, beginning with the Lobbyists Registration Act, as of October 31 of this year there were 312 active lobbyist registrations, 91 of which were so-called consultant lobbyists retained by organizations, 140 of which were senior officers of organizations and 81 of which were in-house lobbyists — in other words, individuals who lobby as part of their employment duties with an organization.

Turning to the Freedom of Information and Protection of Privacy Act, in fiscal year 2006-2007 our office opened 1,717 new formal files under the legislation. This included 909 formal appeals and complaints from members of the public and others. In fiscal 2006-2007 we had a further 2,882 requests for information or assistance from public bodies, members of the public and business organizations.

Our statistics for this fiscal year beginning April 1, 2007, again to October 31, 2007, reveal that my office opened a total of 1,457 files, as compared to 1,303 during the same period last year. From this, I would say that it is safe to project that our caseload by the end of this fiscal year, the year ending March 31, 2008, will be some 2,497 formal files, including requests for information and formal appeals, as I say.

With respect to access-to-information appeals themselves, we have opened 532 cases for the period ending October 31, 2007, which projects out to the end of the fiscal year at 912 formal appeals.

The next point about our activities under the Freedom of Information and Protection of Privacy Act — and I think this is the most significant point to make — is that, largely as a result of our deemed refusal policy, which I can explain in a moment, we had 255 requests by public bodies for extension of the time to respond to access-to-information requests, compared to 135 such requests for the same period last year. Again, projecting forward to the end of the fiscal year, this means that we are looking at some 385 requests by public bodies for more time to respond to access requests, which means we will have had a 37-percent increase over the last fiscal year and a 63-percent increase over the fiscal year before.

Now turning to the details of the budget proposal that I've put before you. In the December 2006 report of the committee, the committee said that it was "sympathetic" to our request for additional staff resources, "especially since the OIPC qualifies as a lean organization compared

to other similar offices." We absolutely are lean by any measure, I would suggest, and that is of course appropriate for a taxpayer-funded organization such as ours.

Still, we need to be in a position to provide high-quality, timely services in ensuring that the three pieces of legislation that we oversee and enforce are respected and properly implemented. To do so, the funding proposed below adds modestly to our front-line service delivery personnel and adds one clerical support position for the entire office.

For the reasons given in the written proposal before you, I respectfully ask the committee to support our work by approving in full the request that I will now outline for you in some further detail.

For fiscal year 2008-2009 I am proposing $3.603 million in operating funds and a capital budget of $60,000. For planning purposes for fiscal year 2009-2010 and the year beyond that, the proposed budget for planning purposes is $3.453 million in operating funds and $45,000 for capital budget.

Now, of the requested increase for the next fiscal year, 23 percent of it, or some $150,000, is for special, one-time, one-year funding to design and build a new on-line lobbyists registration system for our functions under the Lobbyists Registration Act.

Of the requested increase, a further 28 percent, or $182,000, is the direct result of salary increases and associated benefits cost increases that are beyond my control. These increases all stem from the across-the-board, provincial public sector salary increase awarded last year and the statutorily-driven increase in my salary and, in either case, associated benefits cost increases.

Of the requested increase for next year, a further 13 percent, or $86,000, is for estimated increases in the operating costs and taxes charged on our office space, which are again beyond my control.

Of the requested increase, a further 13 percent, or $85,000, stems from increases in the charges by the Office of the Ombudsman for the corporate, human resource and other administrative services it provides to my office, which is based annually on a per-capita count. The increase this year reflects the current OIPC staffing count as opposed to the count that had existed some years ago.

The last point to make is that of the increase, 23 percent is for funding to make permanent the two temporary portfolio officer positions that the committee did approve last year, to add one position for our intake function — and this of course brings to mind the significant statistic about the increase in the requests for extension of time to respond to access requests, which is primarily a burden on our intake staff — and, finally, to add one support staff position for the entire OIPC, particularly given the need of our registrar of inquiries, who has a lot of work under the lobbyists registration legislation, to have more support in her work.

I'd like to turn, just for a moment, to give you some further information about our experience over the last year. It has to be said that the average file-closing times in our office are improving, and the size of our case backlog is down over the last fiscal year. The reduction in the case backlog is, I think, largely attributable to the temporary addition of two portfolio officers as recommended by the committee last year.

This temporary increase in staffing has also had a positive effect on the average time to close files. For example, in the last six months the average file-closing time improved to 15.1 weeks for complaint files down from a high last year of 23.3 weeks, and 12.3 weeks for requests for review down from 15 weeks.

The improvement to date — and I acknowledge that more improvement is needed, and I'll return to that point in a minute — is also attributable to the other measures we have taken.

During the last year we have implemented measures to increase efficiency by (1) an early intervention process to help quickly resolve simple requests for review and complaints; (2) the fast-tracking of inquiry objections; and (3) taking from within the existing staff complement some of our caseworkers, our portfolio officers, and giving them a role in assisting and mentoring other portfolio officers in the office to help bring them along in their development and to ensure that things are working as efficiently as possible.

All of that said, we still have a backlog, as of the end of October of this year, of 152 cases, which means that for the third year running, the office is unable to consistently meet the statutory time lines for resolving requests for review — these are the access-to-information appeals — which is 90 business days, and we are not consistently meeting the responsibility we have to investigate complaints within 120 business days.

Accordingly, we continue, as last year, to face challenges to our ability to meet our legislated duties. I'm asking the committee, as I say, to make permanent the two temporary portfolio officer positions that were approved last year.

This is necessary to get our backlog down to as close to zero as we can and to enhance our ability to provide input to government and the broad public sector, which is something that is often done on increasingly complex and larger projects such as, for example, e-health, the data-sharing initiatives within government to improve service delivery and citizen-centred services, and ID management proposals within the provincial government.

We need to enhance our resources somewhat so that we can proactively and cost-effectively assist government and other public bodies in making the right privacy choices and the right transparency choices as we move forward with large-scale information systems and other government initiatives.

Government seeks out our views and wants to know what we think. We add value by providing our expertise, but there's increasingly, in my view, a disconnect between our willingness to provide those services and our ability, in terms of having the resources we need to make those services available and to add value — in addition, of course, to meeting our statutory time lines for responding to appeals and complaints.

Another issue to mention is concern around the timeliness with which our adjudicators, who make formal

decisions under the access to information and privacy protection legislation in the private sector, write and issue their decisions in a timely manner. There are at present some 70 appeal decisions pending, and the average time between the holding of an appeal hearing and issuance of decision is several months at least.

We've added one new full-time adjudicator in the past year — again, using funds approved by the committee — and added one part-time temporary adjudicator, the latter position of which expires at the end of this fiscal year, to tackle the backlog of decisions and to get response times down.

In order to continue to improve services in that area, the funding proposal before you includes an amount to retain, on a one-year basis, a part-time — that is halftime — adjudicator to continue to help with decision-writing in the office. Again, this would be a temporary award of funding that would allow us to see how the situation stands again at this time next year and to continue the analysis in terms of what might or might not be needed for the following fiscal year.

The last point is about the intake function. To deal with the large increase in workloads, notably the projected 37-percent increase in the requests for extension of response time by public bodies, I'm asking the committee to approve funding for one new intake officer who, it is envisaged, would have some coordination and management responsibility within the intake unit's functions so that, again, we can not only deal with increased workloads but can continue to provide timely service to the public when it comes to substantive appeals and complaints, not just on the side of the requests for extension.

The final position that is included in the budget proposal before you is a support position for the investigative and adjudicative teams.

As I mentioned a few moments ago, at present the entire office operates without the benefit of any administrative support staff. We have one receptionist who answers the telephone, deals with couriers and mail and so on, and also provides a great deal of information to the public and public bodies who phone in looking for information. But my portfolio officers, intake officers and our registrar of inquiries prepare their own correspondence, do their own faxing, prepare letters for mailing out and other secretarial tasks. The time has come, in my view, to ensure that they're better able to devote their professional expertise to the substance of the disputes that we are asked to investigate, mediate and adjudicate by allowing them to have the support of one single position in the office of the nature that I've just described.

I'm particularly concerned that our registrar of inquiries — who basically runs all of the formal appeal mechanisms and looks to the scheduling of appeals and the exchange of submissions and affidavits and so on and also has a lot of work in the lobbyist registration function end of things — is simply not able to cope with the increases in demand for her services. This position would, I think, be particularly valuable to help her ensure that the appeal hearings run smoothly and according to the letter of the law.

Now, I mentioned earlier the one-time funding sought for the Lobbyists Registration Act. Last year I sought $100,000 in operating funds and $25,000 in one-time capital funds to enable us to assume responsibility for the lobbyist registration computer system which, up to that date and indeed today, continues to be hosted and run by the Ministry of Attorney General. The committee at that time approved some $30,000. I believe the number is $30,500.

Since then we have worked with the Ministry of Attorney General staff and an outside information technology consultant to decide how best to improve the system so that it better achieves the goals of the legislation. Two main points have flowed from this work over the past year, which has been headed up by the executive director of my office, Mary Carlson, who is here today.

First, it was decided in consultation with Ministry of Attorney General staff that my office did not, in fact, have the technical expertise and capacity to take on the system. So the agreement was that it would continue to be hosted and run by the Ministry of Attorney General.

Second, the outside IT consultant has recommended, having identified five options, that the system be rebuilt from scratch, and we have been working under business requirements for a new lobbyist registration system. Accordingly, this proposal seeks, again, one-time funding of $150,000 during fiscal year 2008-2009 to redesign and rebuild the lobbyist registration system.

Two further points must be made on this particular issue of cost and rebuild. First, the system can only be rebuilt, in my view, if the committee recommends the funding sought. If the committee does not make that recommendation and the money cannot be found elsewhere in provincial government funding, the system will just have to lurch along in its present state.

Second, the consultant's estimate of $150,000 for the design and build to operational status of a new system will obviously have to be something that is closely watched. Once a contract is awarded, it will have to be managed closely by the provincial government to ensure that the delivered system will provide the required solutions and to manage costs and time lines.

My office has not budgeted any funds beyond the $150,000 sought here for the project. If there are further costs, the funds will have to be found in other budgets, not the budget of my office.

I have the agreement of officials in the provincial government that any further costs will not come from my budget. I have today written to the provincial government to confirm this and have provided a copy of my letter to the Chair of the committee this morning, before the proceedings began. That is the gist of the budget proposal you have before you, and I'd be happy to take questions from members at this time.

B. Bennett (Chair): Thank you, Mr. Loukidelis. Before we start with questions, let me see if I can summarize just generally the ask that's coming from your office.

It looks like you're asking for an increase going into this next fiscal year of $651,000, of which $150,000 would be one-time for the creation of the new system.

It looks like — and correct me if I don't have this right — you're asking for a bump of $10,000 a year in '09 and 2010 for your capital. Last year it looks like the committee gave you $35,000 for capital in '08-09 and '09-10. You're asking to bump that up to $45,000.

D. Loukidelis: The figures I have for the current fiscal year capital budget are $60,000, and the proposal would be, for next fiscal year, to keep it at the $60,000 level. We are continuing to upgrade our software and office productivity programs. Then in fiscal 2009-2010 and the year following that, the capital budget proposal would be reduced by $15,000 to a level of $45,000 for each of those two years.

B. Bennett (Chair): Okay. Let me rephrase. Just on the capital, I think I had the years wrong. It's the second and third year that you're proposing to increase from $35,000 to $45,000.

B. Bennett (Chair): In the recommendations from the report last year, it says that the Office of the Information and Privacy Commissioner receive an annual capital budget of $60,000 in 2007-08 and then $35,000 in each of the next two fiscal years. So $45,000 is an increase of $10,000 per year.

L. Hubbard: If you're comparing to the recommendations of the committee last year, that's correct. The committee last year said for planning purposes, for fiscal 2009 and 2010, to assume $35,000. So this year when the budget is being presented, the request is for $60,000. Last year the actual budget award was for $60,000. So we're requesting flat line on the capital.

B. Bennett (Chair): I'm just trying to sum up for the committee the additional money that you're asking for, based on last year's recommendations from the committee.

D. Loukidelis: As Mr. Hubbard has confirmed, you're quite correct. If you compare the recommendations made by the committee to what you have here…. The resource summary, I should have said — I apologize to the Chair and members — is on page 13 of the budget submission.

D. Loukidelis: And then page 14 is the detailed, line-by-line breakdown of the budget for the next year and the two years following.

B. Bennett (Chair): Okay. So again, in terms of operating, you're asking for $651,000 more for this next fiscal year, $150,000 of which is the one-time development cost. Then you're asking for $60,000 capital…

B. Bennett (Chair): …which is actually $25,000 more than was recommended last year by this committee. Then $45,000 in the next two years, which is $10,000 more than was recommended.

J. Horgan: Thank you, David, for your presentation. The issue of the lobby registry has been a political issue over the fall, and I'm wondering, in addressing the public challenges that have been posed about managing and operating the registry, if the $150,000 that you're requesting is sufficient. Who else will you be working with to ensure that this is a structure that's useful for public policy for the Members of the Legislature and the general public?

D. Loukidelis: The work that has gone on over the last year involving both my office and Ministry of Attorney General representatives, as I mentioned, entailed the engagement of a consultant with IT expertise. The business requirements that have been identified through that forum of discussions indicate that the estimate of $150,000 is adequate.

We have had discussions over the last week with provincial government representatives about the firmness of that figure, because some of the discussions last week led me to have some concern about how firm that figure is. I think that many of us can accept that sometimes budgets and cost estimates in the world of IT, particularly in the current environment, have some malleability to them.

It's for that reason that having had discussions with senior provincial government representatives, I secured their agreement that the estimate was realistic and that in any case, if it is not realistic, any overruns — in terms of the prices that come in through the request-for-proposal process or overruns experienced, in fact, as the build proceeds — will be found elsewhere and will not come from the budget from my office.

Quite clearly, I believe very strongly that this system needs renewal and ought to be rebuilt. At the same time, when you have a budget the size of the budget from my office, it's a matter of concern if there is any

potential for cost overrun. So I wanted to be very clear that it wasn't something that we were going to be able to address beyond that.

I was also concerned or aware of the fact — and I do say this in the written proposal — that it is a substantial sum of money when considered against the rest of the proposal we've put in front of you. As I tried to outline earlier, for the vast majority of it — 77 percent — this is due to cost increases beyond my control: ordinary core salary increases, rent increases, added space, charges for shared services and so on.

I did not want to be in a position where I was asking, even if it was on a one-time basis, for a sum of money that might come, if you will, from other portions of the money that might otherwise be available to my office for the work that we do.

Thank you, David, for that. I understand, from what you said, that the Attorney General Ministry will pick up any additional costs, because they're the partner in this.

Since I've still got the mike, I'm going to ask you about the single administrative support position. It's commendable that your staff have been able to get by without any to this point in time. I'm wondering if the enthusiasm of having one person to help will be overwhelming for that one person. Is that going to be sufficient in years out — with your next year, I guess?

D. Loukidelis: On the first follow-up point, the letter that I wrote today was addressed jointly to the Deputy Attorney General and the deputy minister of the Ministry of Labour and Citizens' Services, which houses the chief information officer function and the IT functions of government.

I haven't said to either one of them any expectation on my part, other than to record the agreement reached last week in discussions with them that the funds, if any are needed — and obviously, we very much hope no more funds will be needed, and we'll do whatever we can to ensure that that's so — won't come from the budget of my office but that they will come from somewhere else within the provincial government's funding.

On the administrative support function, to be clear — and this is in the written submission — I have an assistant who assists me by typing orders and decisions and all of that kind of thing. At this time she does, whenever she can, ad hoc, help out the adjudicators, for example, with preparation of orders for release. When she can, she will provide other support functions — relief reception, primarily.

But the fact remains that the time has come to make better use of the time of my professional staff by allowing them to tackle the substance of the disputes that come before us and not to carry out their own secretarial functions. So I do hope that the position that I've suggested will be able to help them and our registrar of inquiries, who as I've mentioned, needs that assistance as well.

B. Bennett (Chair): Mr. Loukidelis, just to confirm your response to MLA Horgan about the potential for cost overruns over and above the $150,000. You sent the letter to the two ministries, Labour and Citizens' Services and the AG's Ministry, but you're not specifying where exactly the money would come from. Obviously, I don't think you have the authority to do that. You're just saying that it can't come from your budget.

D. Loukidelis: That's correct, and confirming that it's been agreed that any such further funding will come from somewhere else and not from our budget. The best that can be done under the circumstances…. I think, certainly, as I mentioned a moment ago, it's important that this rebuild go forward, and it was necessary to take this approach to try and make sure that it does happen next year.

I might mention to you, Chair, that the letter is going out just now. I wanted, of course, to make sure that I gave you your copy, but I wanted to make sure that the members had had the benefit of hearing what I had to say about it before even confirming to the provincial government what it is we discussed last week in general terms.

B. Bennett (Chair): Just for committee members' benefit, I received a copy of the letter about half to two-thirds of the way through the conflict commissioner's presentation, so I haven't had it very long either.

B. Ralston (Deputy Chair): I just wanted to confirm, then, the understanding about this $150,000 and the one-time funding. The Lobbyists Registration Act is part of the statutory responsibilities of your office. I appreciate that you're endeavouring to make sure that any overrun would be covered and not out of the budget of your office, but the decision to proceed, assuming that this committee agreed to fund the $150,000…. The decision to proceed, the decision to select the consultant — would that be your decision, or is that a decision that's going to be made jointly with the other two ministries that you mentioned?

D. Loukidelis: At the very least, the procurement process and the decision on who will provide the new system will involve consultation and participation with my office. The intention is for it to be managed by the Ministry of Attorney General or other provincial government resources that are appropriate for that task — workplace technology services and so on — because at the end of the day, the Ministry of Attorney General will continue to host and maintain that system.

We have, to date, through the executive director of my office, Mary Carlson, had extensive and full input into the business requirements for the new data model for the system. It'll be a condition of going ahead that that kind of input continues.

B. Ralston (Deputy Chair): I guess my concern would be — and I just want to register it — that given that this is a statutory responsibility of your office, I don't think the committee…. At least, speaking for myself, I wouldn't want to see that the advance of this project was slowed, if the committee decides to advance the $150,000, by some hesitation or foot-dragging on the part of other ministries given that it is your statutory responsibility. Obviously, I think that anyone who's looked at that website would agree that it's opaque, to say the least. So clearly, there's a need there.

D. Loukidelis: Part of the discussions I had last week with provincial government representatives dealt with the issue of the project proceeding next fiscal year, and part of the agreement reached with them was that the project will go ahead in the next fiscal year.

At present we're in the phase of the process where the final business requirements and data model are going to be submitted just after the new year for sign-off. The idea would be that by the end of February, if I have the date correctly, the procurement process could begin, with a view to starting the work on April 1, 2008, at the beginning of the next fiscal year.

B. Bennett (Chair): Mr. Loukidelis, before I go to Iain Black, could you just clarify the relationship that your office would have with regard to this new system, if and when it's developed?

You said in your formal remarks that you're essentially using an IT that is owned and operated by the AG's ministry. If the new system is developed, would your office be the only operators of that system? Would the whole responsibility, including the IT part of the responsibility for the lobbyist registration, move then to your office?

D. Loukidelis: No. The original thinking at this time last year certainly was that that would be the case. Once the new system was built — at the time it was thought we could just tweak the system and repair it and retrofit it — we would take over the actual back end. We would be hosting it on our servers, and our IT folks would be responsible for the day-to-day maintenance and operation of the system.

But as a result of discussions including folks who do the IT work in our office, it was decided that transferring the system to my office simply wouldn't work — we don't have the resources and expertise needed to maintain that type of system, which I believe is a Java-based system — and that it was best to leave it with the Ministry of Attorney General. The idea under this proposal would be that they would continue to be responsible for it on a day-to-day basis.

I will say that apart from the design issues that lead to some operational difficulties, my sense of it all along has been that the working relationship with Ministry of Attorney General and other IT people within the government has been very good. They've been very supportive of that function. I would certainly hope and expect that that relationship and quality of service would continue.

I. Black: I have two lines of questioning for you: one on the IT system and one on the staffing. First, on the IT system. What, if any, involvement has the provincial chief information officer had on this?

I notice from your time lines that there's no mention of his office's involvement in terms of provincewide standards for IT solutions. Could you just comment?

D. Loukidelis: My understanding is that to date, the discussions with the ITSD staff within the Ministry of Attorney General have been the focus of the work — applying throughout, though, the common governmentwide criteria around look and feel, for example, of the website, which does in fact share the common look and feel of provincial government websites — and that the standards that have been applied and used in devising the data model and the business requirements have been those of the central authority, if you will.

I did have discussions personally last week with the chief information officer along the lines that I've talked about this morning, in terms of the project proceeding next year and the costs around the project.

I. Black: And did he give you any reasons for concern? When you said you had conversations with him, the upshot of that was what?

D. Loukidelis: The upshot of that was, to me, great reassurance. As a result of that conversation and conversations he had with others, I received that commitment around the timing of the project and the issue of the funding for the project — namely, on the one hand the cost estimate and on the other hand the hold-harmless and first-line responsibility for any excessive costs, although it is believed that the estimate is realistic.

I. Black: Seeing as you mentioned that, on what are we basing our confidence that that estimate is realistic?

D. Loukidelis: We're basing that on discussions over a period of months of the working group, jointly involving my office and the Ministry of Attorney General IT folks, and the advice and recommendations of the consultant, who was engaged to come up with options for the system and ultimately recommended that the system be built. The estimate is as a result of both those processes, which obviously have interlinked because the consultant has been involved over the last few months in terms of discussions with the working group that I've mentioned.

I have with me the business case of the Ministry of Attorney General of June 25, 2007, version 2007.1. I can make that available to the committee, if you like. The cost estimate of $150,000 appears in this document. I also have here a copy of the document — and this is the title of the document: The Options for Moving Forward with the System — reflecting the information as at June

I. Black: My comments about the CIO's office were not so much with the focus on look and feel, although certainly that's important from a usability standpoint, but rather, if you will, the architecture underlying it — to make sure that's compatible with other government systems, if and when the need evolves to share the data between systems. You didn't mention that specifically. Is it fair to say that your conversations with the CIO would touch on that topic so we have that level of assurance that we're not building, if you will, a fortress of data information that cannot subsequently be shared, if and when required, across levels of government?

D. Loukidelis: I did not get into that area of discussion with the CIO. I would be happy to return a response to that in writing to the committee, if that's something you would like to see.

I can assure you that I personally wouldn't support a project going ahead that did anything other than adhere to the common requirements across the provincial government for the design and operation of these sorts of systems.

I. Black: Your answer there is more than satisfactory for me, but I'll defer to the rest of the committee on that point.

My last question before moving to the issue of FTEs. How far are you in the selection process with respect to who's going to do the work for you?

D. Loukidelis: We have not yet got even to the beginning of the procurement phase, and it's detailed in the budget submission. As I mentioned a moment ago, I believe that….

I. Black: I'm looking at it. Sorry. It says RFP to be issued in February of '08.

Let me ask the question a different way. Is there more than one group of people who can do this project for you, or is it a rather short list of qualified vendors that you're working with?

D. Loukidelis: The process to date involved us, in conjunction with the Ministry of Attorney General, reviewing the list of qualified vendors maintained by that ministry — from that list, selecting the existing consultant. A similar approach will be taken when it comes to the procurement — looking at the list of qualified vendors maintained by the Ministry of Attorney General. But in terms of the identity of who that will be, that's not something we've yet addressed.

I. Black: Is there concern that we're going to be stuck with the same individuals doing this project that did the first one, which has proven to be, in your words, unsatisfactory?

Obviously, with your shaking of the head…. Emphatically no at the back of the room.

D. Loukidelis: I think it's fair to say that from the perspective of my office, we'll want to make sure that we have a fully qualified service provider who can provide a system that functions in accordance with a new set of business requirements and the new data model, which we have learned from past experience. And I think that is something we'll be taking forward when it comes to selecting the vendor for this particular project.

Iain has a question with regard to FTEs. Before we go to that question, do any other committee members have any other questions with regard to the development of this new system, so that we could maybe not bounce our witness around too much?

I. Black: I'm trying to reconcile just a few things here. First of all, the $150,000 — I'll segue my own topics — requested for the rebuilding of the lobbyist registration system is listed in your summary chart on page 13. Unless I'm misreading it, I don't see it specifically itemized on page 14. Am I correct in my assumption that it's included in STOB 60, under "Contract services"?

I. Black: Okay. That then begs the question to do with the FTEs. I noticed that in your fifth bullet down on page 15, you talk about how the funding being sought on STOBs 50 through 52 will allow you to make permanent two portfolio officer positions for which our committee recommended temporary funding last year. That, of course, includes some of the salary bumps. But if you net out the $150,000 off the $210,000 lift on STOB 60, you're still left at $60,000 on "Contract services".

Can you explain what that extra $60,000 is going to be used for, given that we've just transferred those people into full-time employees under your model?

D. Loukidelis: Very good point. The remaining $60,000 under STOB 60 would be allocated to legal services — the cost increases and the frequency with which we're seeking those services in the ordinary course.

For example, we have at this time two judicial review applications in which we're actively involved, so I wanted to ensure that as we move forward with those two reviews heading towards court dates, we had an adequate amount of funding for those judicial review applications, which can indeed be quite costly.

I. Black: So that's a $60,000 increase on a base of what, in that expenditure line right now? At a minimum, that's a 25-percent lift on that one line. I'm still just trying to get my head around whether that reflects a corresponding increase in the amount of files that will be processed.

D. Loukidelis: In terms of the actual amount allocated now for legal services, I'll defer to Lanny Hubbard to provide that information to you.

L. Hubbard: The current budget in STOB 60, "Contract services", is $240,000. Adding $60,000 to that takes you to $300,000. Plus, the $150,000 for the lobbyists registry is where the $450,000 total comes from in STOB 60.

I. Black: But if I'm not mistaken, STOB 60, with $240,000, also includes the salaries and benefits for the two contract positions that are becoming full-time.

L. Hubbard: No, they weren't contract positions. They were retained as auxiliary positions, so their salary was paid for in STOB 50, under regular salaries.

I. Black: Thank you. That clears that up very nicely. But that's still a 25-percent increase. Are we going to see a 25-percent increase in the amount of files going through your doors?

D. Loukidelis: Not in the amount of ordinary case files. I hope very strongly that we're not going to see a continued increase in judicial review applications on the part of the government and others who seek to challenge our decisions.

It's very difficult to predict. That's one of the challenges we face. I know that others of my colleagues have a similar challenge, because when these things come in the door and when we're served with legal process, we have to respond.

I notice that you're recommending — at least, it looks like it — a salary increase of $19,000.

B. Bennett (Chair): I'm assuming that's what this officer of the Leg. salary is.

D. Loukidelis: That's right. That's correct. This is driven by the fact that my salary, in the Freedom of Information and Protection of Privacy Act, is tied statutorily to the salary for the Chief Judge of the Provincial Court.

B. Bennett (Chair): Oh, I see. That's probably why no other committee member asked that question.

On the capital side. Again, I know these aren't large amounts. I'm not vexed by them, but I'm just curious as to whether either one of you knows why you're going from $35,000 to $60,000 in the next fiscal year and then from $35,000 to $45,000 in the next two years. Did you have a specific capital acquisition in mind?

L. Hubbard: The capital acquisitions that impact on this office relate just to furniture and computer systems — hardware, servers and furniture. What I do is try to estimate, for the coming year, what the most realistic estimate that I can project is. That's really where that comes from.

A year ago, when we presented to the committee, the $35,000 as an out-year…. I looked at that as being the most reasonable projection at that time. Based on what my systems people are telling me this year, I think that $60,000 for the coming year will be realistic, and then dropping down beyond that.

Next year I might be here saying it needs to be $60,000. It might be that the $45,000 was a good estimate. We just try to make these projections as best we can for the coming year.

D. Loukidelis: If I could just add to that. Of course, part of the capital budget will be allocated to furniture and other equipment for staff, should that be approved.

If I might ask your indulgence, one point to make about the increase in contract services is that we don't necessarily have, in-house, all of the IT expertise that we would like to have when it comes to providing our views when consulted by provincial government ministries or other public bodies about other information systems that they're building — the privacy or access-to-information impacts of those.

In recent months we have been able to acquire some of that expertise on contract on a case-by-case basis. The thinking was that we would be able to allocate some of that increase in contract services to continue to acquire that expertise when we need it, in addition to having the portfolio officers be available for the less IT-heavy aspects of the advice that we do provide to public bodies.

B. Bennett (Chair): Okay. Thank you very much. I don't see any other hands in the air, so thanks, Mr. Loukidelis and Mr. Hubbard, for your presentation. We appreciate it.

B. Bennett (Chair): Before we go in camera, Iain Black has one item for the committee.

I. Black: I have the last official presiding nameplate that was used for Mr. Oliver, and this evening I have the honour of making some remarks as the Chair of the search committee that found his replacement.

I wanted to give this to him. I thought that if I could, I'll pass it around and have you guys sign the inside of it — our staff and colleagues alike. If you don't mind, I'll present that to him tonight as part of the….

B. Bennett (Chair): Please don't tape any hundred-dollar bills to that on the inside.

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Committee Staff:	Josie Schofield (Committee Research Analyst)
	Jeremy Wood (Committee Researcher)

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